- Profit is the financial value or amount gained by a person or business after accounting for expenses.
- It is almost always positive and even has a simple formula for calculation.
- Generally speaking, the goal of businesses is to earn a profit.
Profit is the monetary benefit that comes from a business venture, activity, transaction, or investment. It is often a realized amount, meaning it is calculated based on the revenue. The amount of it that is earned can be the measurement of how successful a business venture is compared to its competitors.
Often, it is an amount which exceeds the expenses, taxes, and cost for said business activities, meaning that when you have a benefit, you gained more than what you spent to sustain the business. Hence the term “profitable business.”
On the flip side, the opposite of profit is a loss, which you can calculate as the amount which you lost in business activity. Additionally, getting back the same amount as you spent on the business is called “breaking even” and is not as good as profit.
Profit means more
“Profit” is a term which always has a positive connotation attached to it. People in business and financial analysts love hearing this word—it is, after all, what company is all about.
It is worth noting that anything gained in a trade usually goes to the business owner, who then has the freedom and the right to spend it on whatever he or she likes. In many cases though, profit is better used for expansions or more investments instead of personal use. Sometimes, the savviest businessmen and investors are the ones who know how to use benefits effectively.
In more mathematical terms and contexts, profit has a formula and typically is the Total Revenue minus the Total Expenses of business activities. It is pretty simple and can show you whether you made a profit, loss, or just broke even.
Generally, it is the money a person or a business makes after accounting for all the expenses spent on financial activities. Any business activity has a benefit, from the smallest companies like children selling lemonade to huge multinational corporations like Apple which span multiple continents and cultures.
Why earn it?
Well, why not? It is often and should be a businessperson or company’s goal. It is the bread and butter of any business entity. It applies to stocks and investment as well, where stock returns can be considered an advantage.
As long as you seek profit within ethical and legal means, you can become a helpful and meaningful participant in the economy. If you earn any money now, you’re likely already making a gain—and with continued effort, you’ll eventually make more.
Learn more about stock market lingo here.