Profit is the money your business has earned after accounting for all expenses.
Profit is the financial gain in a business when it’s income exceeds the total costs and expenses incurred in operating the business. It’s also commonly referred to as net profit, net income, or simply surplus.
What gives your business profit?
Profit can be assessed on an overall scale for the entire business or analysed for specific products or services. This financial metric serves as an indicator to determine which aspects of a business are most lucrative and can inform strategic decision-making. For instance, a company may decide to discontinue products with low profitability and concentrate efforts on what gives higher profits.
The choice to focus on the most profitable areas is common; however, other considerations may impact such decisions, including long-term business goals, market positioning, and customer satisfaction. Profit is not solely a figure on a balance sheet, but a critical component used to drive growth, investment, and stability within a business.
What can you do with the profit?
Your business can re-invest the profit in the company. If the company has a large surplus dividends can also be paid to the investors.