Hagnaður

Hagnaður is the Icelandic term for profit or gain, referring to the surplus that remains after costs are subtracted from revenues in business activities. It is a central concept in accounting and financial reporting in Iceland and is used to describe how much value a company creates from its operations. The term is commonly encountered in corporate statements, press releases, and financial analyses.

In practice, hagnaður is calculated as revenues minus expenses. Different variants exist depending on what is included in the calculation. Common forms include hagnaður fyrir skatt (profit before tax) and nettóhagnaður or hagnaður eftir skatt (net profit, after tax). If expenses exceed revenues, the result is a tap (loss). A simple example: a company with revenues of 1,000 and expenses of 800 reports a hagnaður of 200.

Hagnaður is used by managers, investors, creditors, and policymakers to assess profitability, efficiency, and value creation. It is influenced by operating performance as well as non-operating items, taxes, and accounting methods, so analysts often examine related measures such as gross margin, operating profit, and cash flow in conjunction with hagnaður. While it provides a bottom-line view of financial success, it should be interpreted within the context of the company’s accounting policies and industry practices.