profit


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Related to profit: net profit, profit margin

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 classic literature ?
When you squeezed out the three small groceries here in Berkeley by virtue of your superior combination, you swelled out your chest, talked about efficiency and enterprise, and sent your wife to Europe on the profits you had gained by eating up the three small groceries.
You don't say that you like to squeeze profits out of others, and that you are making all the row because others are squeezing your profits out of you.
When he says "free opportunity for all," he means free opportunity to squeeze profits, which freedom of opportunity is now denied him by the great trusts.
It is true that we smaller capitalists are after profits, and that the trusts are taking our profits away from us.
Do not forget," he said, "that we had tacitly agreed that liberty in your case, gentlemen, means liberty to squeeze profits out of others.
While you diligently pursued that favorite phantom of yours, called profits, and moralized about that favorite fetich of yours, called competition, even greater and more direful things have been accomplished by combination.
There is no doubt that the total profits of the large oil companies have been high of late, though even the recent industry profit margins are close to the national average.
From a traditional, capital-oriented perspective, economic profit equals the difference between return on investment (ROI) and cost of capital (COC), multiplied by invested capital (IC), such that:
Focusing on pricing for profits and growth is a low-risk/high-upside concept that enables you to collect the hidden profits.
183(d) creates a presumption that if an equine activity produces a profit in two years out of seven, it is engaged in for profit.
Are companies that primarily own career and trade schools, and acquire or build degree-granting institutions, willing to adjust their historic benchmarks for profit margins and instructional cost (the quality tax) to reflect the additional revenue required to produce quality academic degree programs?
The logic of marginal reasoning is quite similar for either decision; with respect to choosing the profit-maximizing quantity of output, over the range of output for which marginal revenue exceeds marginal cost for a ppm, increased production will increase total profit because total revenue will increase more than total cost; over the range of output for which marginal revenue is less than marginal cost, decreased production will increase total profit because total revenue will decrease less than total cost.