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A
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Letter P
Profit
Profit is divided up into two categories gross profit and net profit. Gross
profit is the profit of a company before allowing for the expenses of running
the business. This is not a reliable measure of a company's ability to provide
income, as not all of the gross profit will be available to the owners for
distribution.
Net profit is the income of a company or self employed business after making
full allowance for the expenses of running the business (and, in the case of a
limited company, corporation tax.) This should be the amount available to the
owners of the business for their own benefit and consequently is the figure that
can be used to calculate their ability to service a mortgage.
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