What does net profit represent in a company?

Net profit represents the difference between revenue and all expenses incurred by a company during a specific period. It is a key indicator of a company's financial health, reflecting the total earnings that remain after all operating expenses, interest, taxes, and other costs have been subtracted from total revenue. This measurement provides insight into how efficiently a company is operating and its ability to generate profit from its operations.

While total revenue generated indicates the overall sales performance of the company, it does not account for the costs associated with running the business. The cost of goods sold relates specifically to the direct costs of producing the goods sold, which is a component of the overall expenses but does not encompass all financial obligations. The total amount owed to creditors refers to liabilities, which are distinct from profit measurement, as liabilities represent debts rather than earnings. Thus, the most accurate representation of net profit is the distinction made by calculating revenue after all expenses have been accounted for, confirming the significance of option B.