In financial statements, net profit and net revenue are two important concepts that reflect different aspects of an enterprise's operating results. Net profit, in simple terms, is the net profit of an enterprise after deducting income tax, which is the actual return of the enterprise's total profit under the national tax policy. And net revenue, also known as net operating income, is the balance of the enterprise's revenue minus all costs and expenses, covering the components of the enterprise's operating profit, gross profit and net profit.
By definition, net profit focuses on after-tax profit and involves the calculation of income tax, while net revenue has a broader scope, which encompasses the entire operating results of an enterprise. Calculated, net profit is derived by subtracting income tax expense from gross profit, while net revenue is the difference between total income and total expenses.
Net profit is an important indicator of an enterprise's operating efficiency, which is directly related to it. Income tax rate has a significant impact on net profit, the higher the tax rate, the net profit decreases accordingly. China's corporate income tax is divided into a general 25% tax rate and a specific 15% tax rate preferential situation, which to a certain extent affects the level of net profit of enterprises.
Overall, although both net profit and net revenue reflect the profitability of an enterprise, their focus and calculation methods are different, and an understanding of these differences will help to more comprehensively evaluate an enterprise's financial position.