Future Business Leaders of America (FBLA) Agribusiness Practice Test

What is net profit?

1. Gross income after expenses

2. Profit before income taxes

3. Profit left after income taxes have been paid

4. Net revenue minus operating costs

The correct answer is: Profit left after income taxes have been paid

Net profit refers to the amount of money that remains after all expenses, including taxes, have been deducted from total revenue. This figure is crucial for businesses as it indicates the company’s profitability and overall financial health. When calculating net profit, one includes all types of expenses such as operational costs, interest, and taxes, which is why this definition encompasses the complete picture of profitability. This is essential for stakeholders who assess the effectiveness of a company’s management in generating profit from its operations. In addition to providing a clear view of financial performance, net profit can influence investment decisions, dividend distributions, and strategic planning for future growth. Other options may describe different aspects of profit calculation or financial metrics but do not encompass the full breadth of what net profit represents post-tax obligations, making option C the most accurate definition.