profit

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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 ?
9% had a negative relative TSR but a positive cumulative five-year economic profit.
Nevertheless, directors must make the time to understand the major sources and drivers of economic profit at least at the business-unit level to do their much more important job of actually protecting the shareholders from poor strategic investment practices.
Stern Stewart & Company, a financial consultancy, created a tool known as Economic Value Added (EVA) to provide an accurate measure of a corporation's economic profits by attributing an opportunity cost to firms' capital employed by their investments.
33) To demonstrate the difference between economic profit and accounting costs, consider the following example.
Economic Profit = ($240,000 - $140,000) X 12 = $1,200,000
It is unclear, however, whether the definition is referring to accounting profit or economic profit, (11) which is fundamental in determining the extent to which revenue should actually accrue to the entrepreneur.
The phrase ''sustainable development'' has become common among policy-makers and scholars when dealing with issues where short-term economic profit could backfire in the long term with a deterioration in the environment.
The brutality of a society, whose dominant trait can be clearly described as maximization of economic profit, is reflected in the fate of those without rights and of animals," Holler and Trockel contend.
Accounting for transactions where economic profit is not relevant must be covered, perhaps by example.
If your skills justify a $40,000-a-year job and you can't bring in this amount with your small business, then there is no economic profit and maybe you should keep the job.

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