profit

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Related to Accounting profit: Economic Profit

Profit

Revenue minus cost. The amount one makes on a transaction.

Profit

A company's total revenue less its operating expenses, interest paid, depreciation, and taxes. For example, suppose a widget manufacturer earns $1,000,000 in total revenue. The widgets cost $200,000 to make and his administrative and payroll expenses total $250,000. He also must subtract $50,000 in depreciation on his widget manufacturing equipment and pay $200,000 in taxes. His net income is stated as: $1,000,000 - $200,000 - $250,000 - $50,000 - $200,000 = $300,000.

profit

Profit.

Profit, which is also called net income or earnings, is the money a business has left after it pays its operating expenses, taxes, and other current bills.

When you invest, profit is the amount you make when you sell an asset for a higher price than you paid for it. For example, if you buy a stock at $20 a share and sell it at $30 a share, your profit is $10 a share minus sales commission and capital gains tax if any.

profit

the difference that arises when a firm's SALES REVENUE is greater than its total COSTS. GROSS PROFIT is the difference between SALES REVENUE and the COST OF SALES, while NET PROFIT is equal to gross profit less selling distribution, administration and financing costs. PROFIT AFTER TAX is the net profit attributable to shareholders after taxes have been paid.

Profit depends on two main factors:

  1. average profit margins or profit per £1 of sales. If costs increase the profit margins will be squeezed; if competition forces selling prices downward margins will be similarly squeezed, and vice versa;
  2. sales turnover. Any increase in sales value will tend to increase profits. See PROFIT AND LOSS ACCOUNT.

profit

the difference that arises when a firm's TOTAL REVENUE is greater than its TOTAL COSTS. This definition of‘economic profit’ differs from that used conventionally by businessmen (accountingprofit) in that accounting profit takes into account only explicit costs. Economic profit can be viewed in terms of:
  1. the return accruing to enterprise owners (entrepreneurs) after the payment of all EXPLICIT COSTS (payments such as wages to outside factor-input suppliers) and all IMPLICIT COSTS (payments for the use of factor inputs - capital, labour - supplied by the owners themselves);
  2. a residual return to the owner(s) of a firm (an individual ENTREPRENEUR or group of SHAREHOLDERS) for providing capital and for risk-bearing;
  3. the ‘reward’ to entrepreneurs for organizing productive activity, for innovating new products, etc., and for risk taking;
  4. the prime mover of a PRIVATE ENTERPRISE ECONOMY serving to allocate resources between competing end uses in line with consumer demands;
  5. in aggregate terms, a source of income and thus included as part of NATIONAL INCOME. See also PROFIT MAXIMIZATION, NORMAL PROFIT, ABOVE-NORMAL PROFIT, RISK AND UNCERTAINTY, NATIONAL INCOME ACCOUNTS.
References in periodicals archive ?
The quality of the accruals is the diagnostic criteria for proximity of accounting profit to cash.
Entrepreneurial profit is a required cost of construction, which is necessarily comprised of the RMEI and potentially comprised of an EMEI, while accounting profit (loss) is the residual of value minus costs excluding all profit.
The accounting profit for Product X was computed by setting r in Equation 1 to 0.
Accounting profit means that at the end of the day, you have an amount greater than zero to put in the bank.
The debate has been unclear on what is meant by profit maximization because there has not been an explicit distinction between economic, observable and accounting profit.
The accounting profit or loss on each case is then computed as the difference between the reimbursement the hospital received and the imputed cost.
For example, is the target company able to convert accounting profit into cash, is gearing (net debt as a percentage of net assets) increasing on the preceding year, have gross margins been eroded or sales declined?
Accounting profit (or loss, if negative) is calculated by subtracting accounting costs from revenue.
These two figures are rarely the same, as there will be some expenses included in arriving at the accounting profit that are not allowed as a deduction from taxable profit.
Operating accounting profit totaled NIS 125 million, compared to NIS 123 million last year - Operating profit (pro-forma) totaled NIS 137 million, compared to NIS 136 million last year.
Land Securities defines revenue profit as profit before tax, excluding the impact of exceptional costs or profits including bid costs, FRS3 accounting profit, interest charges on termination of financial instruments and reorganisation costs.

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