Hagnaðurinn

Hagnaðurinn is the definite form of hagnaður, an Icelandic term meaning profit or gain. In economic and business use, hagnaðurinn refers to the financial surplus earned from activities after costs are deducted. The root hagnaður comes from Old Norse hagnaðr, reflecting gain or advantage.

In accounting and finance, hagnaðurinn is a central indicator of performance. It is calculated as revenue minus costs, commonly distinguished as gross profit (revenue minus cost of goods sold) and net profit (profit after operating expenses, taxes, and extraordinary items). Profitability is often analysed with metrics such as net profit margin and return on investment, and is reported in financial statements for the period.

Financial reporting in Iceland follows national regulations and international standards where applicable. Companies publish annual statements that disclose hagnaðurinn for the period, along with related figures such as cash flow and disclosure of taxes. The concept is used in public discourse and policy discussions as a key measure of business performance, while recognizing its limits.

Critics argue that focusing on hagnaðurinn alone can overlook social, environmental, and long-term considerations. Proposals for broader evaluation emphasize stakeholder value, sustainability, and cash flow, alongside non-financial indicators, to provide a more complete picture of a company's health and impact.

See also: Profit, Net income, Return on investment, Icelandic accounting standards, Financial statements.