Profit is the financial gain obtained when the amount earned from a given business activity exceeds the amount spent in buying, operating, or producing goods and services. It is often calculated as the difference between total revenues and expenses and is one of the best measures of how successful an enterprise is. When expenses exceed revenues, then we say that an enterprise has made a loss.
The three main types of profit are gross, operating, and net profit. Each can be defined as follows:
Gross profit is obtained when revenues exceed variable costs – costs that vary with output, like wages, cost of materials used in production and so on. It can also be defined as the sales of a business, less the cost of goods sold.
Operating profit is sometimes called EBITA (Earnings before Interest, Tax, Depreciation, and Amortization). It is calculated by subtracting operating expenses, including salaries, general and administrative costs, from the gross profit.
Net profit is the revenue left after all expenses, including taxes and interest, have been removed.
https://www.investopedia.com/terms/p/profit.asp
Tuesday, May 7, 2013
What does profit mean?
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