Here is how you reach net profit on a P&L (Profit & Loss) account: Sales revenue = price (of product) × quantity sold Gross profit = sales revenue − cost of sales and other direct costs Operating profit = gross profit − overheads and other indirect costs EBIT (earnings before interest and taxes) = operating profit + non-operating income Pretax profit (EBT, earnings before taxes) = operating profit − one off items and redundancy payments, staff restructuring − interest payable Net profit = Pre-tax profit − tax Retained earnings = Profit after tax − dividends