Net profit is the figure at the bottom of the income statement: what genuinely remains once everything is paid, tax included. It is the final verdict on performance.

Three levels of result

  • Operating result: generated by the core business (selling, producing).
  • Financial result: linked to loan interest and investment income.
  • Exceptional result: rare events (selling a building, settling a dispute).

Why separate them? A profit produced by a one-off sale is not worth the same as a profit generated year after year by the business. The first one will not happen again.

A positive net profit inflated by exceptional items should raise a flag: the underlying performance may well be fragile.

Key takeaway: look at where the profit comes from. Recurring operating profit is worth far more than a one-off windfall.