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 ?
Above and beyond simply earning a positive economic profit, hold each business unit accountable for its own unique performance targets, specifically the economic profit and revenue growth that management promised to deliver when its current strategy was approved.
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.
In addition, transfer pricing rules confer an unintentional benefit upon integrated producers by allowing the producer to mask economic profit behind bloated accounting costs of production.
For these reasons, no economic profits are allowed in the model presented here.
The five new terms introduced are market value of the total assets of the business, total intangible assets, identified intangible assets, residual intangible assets, and capitalized economic profit.
Maximization of observable profit results in maximization of economic profit since the two are identical when markets exist and function smoothly.
Part two of the SEE rules (the substantiality test) disallows the allocation of tax items when such allocation lowers the tax liability of all partners taken as a group and the special allocation does not change a partner's share in economic profits and losses.
if, except for its monopsony, the firm is also marginal, the economic profits of the firm are clearly attributable to its monopsonistic power alone.
Due to mid-term uncertainties related to the tariff policy and GenCos' profitability, we believe an economic profit model is a more appropriate valuation instrument:
Specifically, W Ratings measures a company's ability to achieve higher economic profit than rivals and sustain that competitive advantage through moats, or barriers to entry, as rated by consumers.
In the region, grouper fishery is a major activity as its commercial exploitation generates economic profits of over 351 million pesos for 16,000 families in the main fishing ports of both entities.

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