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The Profit calculator computes firm's profit which is equal to its total revenue minus its total expenses.
INSTRUCTIONS Enter the following:
- (R) Total Revenue
- (E) Total Expenses
Profit (P): The calculator returns the Profit in U.S. dollars and as a percent of revenue. However, these can be automatically converted to compatible units via the pull-down menu.
The Math / Science
Profit is a financial gain or benefit that is obtained from an investment or business operation. It represents the positive difference between the revenue earned from selling goods or services and the total costs incurred in producing or providing those goods or services.
The basic formula for calculating profit is:
Profit = Revenue−Costs
where:
- Revenue: The total amount of money generated from sales, services, or any other income-generating activities.
- Costs: The total expenses incurred in the production, operation, or provision of goods and services. Costs include direct costs (such as materials and labor) and indirect costs (such as overhead and administrative expenses).
Profit is a fundamental concept in business and economics, reflecting the financial success or performance of an enterprise. It is a key indicator of a company's ability to generate value and sustain its operations. There are different types of profit, including gross profit (revenue minus the cost of goods sold) and net profit (revenue minus all expenses, including taxes and interest).
Profit is often expressed as a percentage of revenue, known as profit margin, which provides insight into the profitability of a business relative to its sales. High-profit margins generally indicate efficiency in cost management and strong financial performance.
Resource:
- Mankiw, N. Gregory. "Chapter 13:What Are Costs?" Principles of Microeconomics. 6th ed. Mason, OH: Thomson/South-Western, 2004. 260. Print.
