What is Profit?

Profit Definition: Profit occurs when a company or business generates a financial or economic benefit from the revenue.

A profit is only recognized when the total revenue exceeds the number of expenses and cost of operations.

Profits are circulated back into a business in the form of dividends paid to shareholders as a reinvestment to expand or improve business operations and to allocate cash to company owners and staff.

On a financial statement, and for accounting purposes, the total profit minus expenses and other costs are considered the “bottom line” or net profit. A company’s profit is one of the essential factors in determining its overall success.

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