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What Is Profit?
H
Heleena
What Is Profit?
Profit (often called the "bottom line") is the financial gain that remains after you subtract all business
expenses, costs, and taxes from your revenue. It is the actual money a company gets to keep.
It is entirely possible for a company to have massive revenue but zero profit if their expenses are too high.
The Two Main Types of Profit:
- Gross Profit: Revenue minus the direct costs of creating the product (Cost of Goods Sold).
- Net Profit: Revenue minus all business expenses, including operating costs, salaries, rent, and taxes.
Revenue vs. Profit
| Feature | Revenue | Profit |
| Definition | Total money brought in from sales | Money left over after paying all expenses |
| Nickname | The "Top Line" | The "Bottom Line" |
| Calculation | Price of goods × Quantity sold | Revenue − Total Expenses |
| Significance | Shows market demand and growth scale | Shows financial health and sustainability |
