Category:Profit
From Eurêka
Profit
Profit (Profitability) Financial gain resulting from the use of capital. in a transaction after all expenses have been paid. Profits are measured before tax and after tax. Listed as a category on the statement of earnings.
Gross profit (Gross income) Difference between a company's total revenue and its cost of producing the product to generate the revenue.
- Gross profit margin (GPM) Divide gross profit dollars by total revenue.
Example: If a computer manufacturer sells a computer for $10,000 and pays $6,000 in materials and labor to manufacture and ship it, the gross profit would be $4,000, the gross profit margin is 40%.
Net profit Gross profits less interest on loans and depreciation.
Normal profit Income (i.e. the residue left after subtracting all opportunity costs of inputs) which is just sufficient to keep the firm in business.
Excess profit (sometimes, Super-normal profits) All profits above normal and regarded as the return to the entrepreneurial activity, i.e. risk.
- Windfall profit Unexpected profit.
Reported profits Corporate profits reported to the government for the purposes of taxation
- Quality of earnings Measure of profits from current production. The measure takes overall profits as reported to the government, subtract inventory profits caused by inflation and adds back an adjustment for excessive depreciation.
Inventory profits Profits which come from selling goods at high profit margins owning to the gap in time between manufacture and sale, but which must be replaced at higher prices.
- Depreciation profits Increased profits due to changing tax laws on depreciation. For example, in the US 1981 Tax Act, companies were allowed to accelerate greatly the depreciation of new assets. That meant they were able to pay far less tax than otherwise. When adjusted for these savings, corporate profits soared. But the 1986 Tax Act to much of the depreciation gains away and reduced corporate profits by this method and depreciation did not exceed reality as much as before.
Operating profits As percentage of sales
Marxian theory of profit Marxian theory of profit relies on the notion of surplus value.
Profit Malfeasance
Massaging the numbers Stretching or contracting sums on a balance sheet or business plan to make the mathematics look good.
