What does the term 'net profit' refer to?

The term 'net profit' refers specifically to the amount that remains after all expenses, including operating costs, interest, taxes, and other expenses, have been subtracted from total revenue. This figure is a crucial indicator of a company’s profitability, as it reflects the actual earnings available to shareholders and can influence investment decisions, management strategies, and overall business health.

In contrast, the other choices do not accurately define net profit. The total revenue earned before any deductions captures only the gross inflow of cash and does not account for the costs incurred, which are essential for determining net profit. The cumulative profit over several years is more related to retained earnings or accumulated profits rather than a specific period's performance. Finally, profit from core operations may refer to operating profit but does not encompass the full picture of net profit, which includes all revenues and expenses. Thus, the correct understanding of net profit is pivotal for evaluating the financial success of a business.