Gross profit - expenses =

• A. Net Profit
• B. Turnover
• C. Gross Profit
• D. Net Cash Flow

Answer: (D)

Understanding how profit is built helps. Gross profit is what you have left from sales after you’ve paid for the goods you sold. When you subtract operating expenses like wages, rent, and other costs from that gross profit, you arrive at net profit—the actual profit the business has earned after paying day-to-day costs.

Net cash flow, by contrast, is a measure of cash movements: the cash that comes in minus the cash that goes out. It can differ from net profit because profits include non-cash items (like depreciation) and timing differences between when revenue is earned and when cash is received, or when expenses are incurred and when cash is paid. For example, a sale might be recorded as profit even if the cash hasn’t been received yet, or you might pay for stock upfront which affects cash flow but not the profit calculation.

Quick example: turnover 100, cost of goods sold 60 gives gross profit 40; expenses 15 reduce it to net profit 25. The cash position would depend on the timing of receipts and payments, so net cash flow isn’t determined simply by gross profit minus expenses.