How to Know If Your Business Is Making a Profit or Loss: A Step-by-Step Guide

To determine whether your business is making a profit or loss, calculate total revenue for a specific period, then subtract the cost of goods sold or services delivered, operating expenses, financing costs, and applicable income taxes. A positive result indicates net profit; a negative result indicates a loss.

For example, revenue of 30,000 minus sales costs of 18,000 and other expenses of 8,000 produces a net profit of 4,000, assuming no additional items. Review your income statement monthly and distinguish profitability from cash flow. Try Cash Cloud for free to explore accounting and financial reporting tools.