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 ?
Contrary to the usual practice, a considerable amount of information on the distribution of after-tax income is contained in CBO reports.
Real consumption, real after-tax income, and market work time are lower for married single earner households compared to married dual earner households and are lowest for unmarried single earner households.
The time trend variable shows real consumption, real after-tax income, market work time, and real after-tax wage rates all increased over the study period.
The negative parameter estimates for the variable YR = 1984 in equations (2) and (5) indicate there was a statistically significant downward shift in 1984 in the positive time trend for real after-tax income and real after-tax weekly wages.
The data are available to calculate the relative contribution of changes in real after-tax wages and market work time to changes in real after-tax income for the household groups.
The first entry gives that part of the percentage change in real after-tax income resulting from changes in the real after-tax wage rate, and the second entry gives that part of the percentage change in real after-tax income resulting from changes in market work time.
In contrast, if real after-tax income fell, with real after-wages falling but market work time rising, then it must be that real after-tax wages fell more, in percentage terms, than real after-tax income.
First, real after-tax wage changes were a negative contribution to changes in real after-tax income for a large majority (24 of 27 comparisons) of the cases over the 1972 to 1984 period.
Changes in market work time were a positive contribution to changes in real after-tax income in a large majority of the comparisons.