Profit Equals Revenue Minus Expenses

Net profit is equal to revenue minus the cost of goods sold cogs operating expenses and taxes and interest.

Profit equals revenue minus expenses. Profit is equal to total revenue minus total costs if a firm wants to maximize its profit it has to lower the cost of producing a given level of output and or increase the item price if there is. But your business s other expenses are not included in your cogs. Explicit and implicit costs and accounting and economic profit privately owned firms are motivated to earn profits. Net sales gross sales customer discounts returns allowances gross profit net sales cost of goods sold operating profit gross profit total operating expenses net profit operating profit taxes interest net profi.

Your cost of goods sold cogs is how much money you spend directly making your products. Under a perpetual inventory system the cost of goods sold is determined each time a sale occurs. Operating profit is gross profit minus all other fixed and variable expenses associated with operating the business such as rent utilities and payroll. Sales revenue minus operating expenses equals gross profit.

The difference between gross profit and net profit is when you subtract expenses. Profit is the difference between revenues and costs. The bottom line. Cutting back on operating expenses or the cogs can increase net.

Gross profit is your business s revenue minus the cost of goods sold. To sum up it equals total revenue minus the cost of goods sold operating expenses interest taxes preferred stock and debt repayments. Net sales and gross profit are different. Net sales minus cost of goods sold is called.

Net sales is usually under revenue and indicates the amount of products or services sold. Revenue minus expenses equals profit. Operating expenses are subtracted from revenue for a service enterprise and from gross profit for a merchandising enterprise. By wil schroter mar 18 2007 11 00pm cdt updated mar 15 2007 1 42pm cdt.

Ask any experienced entrepreneur who s been through the.