Profit
Profit (IPA: /ˈprɒfɪt/)
Profit is a financial gain, especially the difference between the amount earned and the amount spent in buying, operating, or producing something.
Etymology
The term "profit" comes from the Latin profectus meaning "advance or progress."
Definition
Profit is the surplus remaining after total costs are deducted from total revenue, and the basis on which tax is computed and dividend is paid. It is the best known measure of success in an enterprise.
Profit is usually used in several more specific senses:
- Gross profit: the difference between total revenue and the cost of goods sold (direct costs).
- Net profit: the gross profit minus overheads and interest payable for a certain period of time.
- Operating profit: the profit from business operations (gross profit less operating expenses) before interest and taxes.
- Profit margin: a measure of profitability. It is calculated by finding the net profit as a percentage of the revenue.
Related Terms
- Revenue: the income generated from normal business operations and includes discounts and deductions for returned merchandise.
- Cost: the amount that needs to be spent to buy, produce, finish and sell a product.
- Dividend: a distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.
- Tax: a compulsory financial charge or some other type of levy imposed on a taxpayer by a governmental organization in order to fund government spending and various public expenditures.
External links
- Medical encyclopedia article on Profit
- Wikipedia's article - Profit
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