If you need total explicit costs and accounting profit and you already have depreciation, interest, operation expenses, total revenue and taxes, this calculator does the substitution for you. It suits a quick check, a homework answer you want to confirm, or any figure you need to sanity test.
What Is the Accounting Profit Calculator?
The accounting profit calculator takes depreciation, interest, operation expenses, total revenue and taxes and turns them into total explicit costs and accounting profit.
It is the kind of calculation you would otherwise do on the back of an envelope: mechanical, repeatable and easy to get subtly wrong without noticing.
How the Accounting Profit Figure Is Built
Each result is calculated from the ones before it, so the working is fully visible. That matters when the answer is going to be quoted to somebody else and you need to be able to explain where it came from.
The figures are exactly as good as the assumptions underneath them. Check the rates, the periods and the tax treatment before you rely on the result.
Reading the Result Sensibly
A small change in an input can move the result by much more than you would expect, particularly where the calculation divides by one of the figures you supplied. That is worth understanding before you rely on a figure.
For anything that will be committed to, write the inputs down beside the result. A number you can reproduce is worth far more than one you cannot explain.
A Worked Example
Working through an example, with depreciation set to 10, interest set to 5, operation expenses set to 2, the calculator returns total explicit costs of 27, and accounting profit of 73. Substitute your own figures and the same steps produce the same kind of answer.
Frequently Asked Questions
What do I need to work out total explicit costs?
Enter depreciation, interest, operation expenses, total revenue and taxes. The calculator then works through the relationship and reports total explicit costs and accounting profit.
What does the accounting profit actually calculate?
It takes depreciation, interest, operation expenses, total revenue and taxes and converts them into total explicit costs and accounting profit using the standard relationship for this problem. Each step is applied in turn, so every output is traceable back to the numbers you typed in.
How should I enter depreciation?
Use the value you actually have, in the unit shown next to the field. Enter every value in the same unit system. The calculator assumes the figures you supply are consistent, so it cannot correct a mistake that happens before the calculation starts.
Do I have to fill in every field?
Only the fields a particular result depends on. If you leave one blank, the results that need it simply show a note instead of a number, and everything else still works.
Can I use this for a quick estimate as well as a precise answer?
Yes. The calculator is built for quick checks, so round your inputs to a sensible number of significant figures and the result will be just as useful. If you need more precision, keep the same method and add digits to the inputs rather than adjusting the method itself.