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I teach investors how to analyze businesses so they can invest with confidence. Follow me for posts about accounting & investing. Grab my free accounting eBook (See Link) ⬇️
How profit works: 📚 Grab my FREE accounting infographic ebook: 🔗 → https://lnkd.in/geciS9nM SALES - EXPENSES = NET INCOME The revenue generated (sales minus all costs incurred (expenses) equals the company's net income (profit). OPERATING REVENUES Sales from the company's core business operations, such as product sales or service fees. NON-OPERATING REVENUES Income from sources outside the core business, like interest income or investment gains. EXPENSES OPERATING EXPENSES Costs directly associated with running the business, including wages, rent, utilities, and raw materials. NON-OPERATING EXPENSES Costs unrelated to the core business, like interest payments on loans. TAXES Income taxes paid by the company. NET INCOME The remaining profit or loss after subtracting all expenses from revenues. Why is it important? - Measures financial performance. - Provides insights into profitability. - Helps with decision-making and budgeting. - Demonstrates the ability to generate profit. Follow Brian Feroldi for more content like this. If you found this post useful, please repost ♻️ to share with your audience.
Good one
Thanks for breaking it down so clearly, Brian! Now I can finally explain to my dog why we can't afford that gold-plated doghouse. 🐶🏠✨ Great content as always!
If I understood you correctly, you are talking only about accounting profit. For an accountant, this is normal. But profit can be not only accounting. For example, economic or managerial. Profit is too multifaceted a concept and, I would say, ambiguous. It is always worth clarifying what kind of profit we are talking about and what alternatives should not be overlooked.
Where is the production cost?
I assume taxes refers to Corporation Tax as VAT would need to be accounted for at Gross Profit level. Meaning ‘Sales’ = ‘Net Revenue’?
Revenue vanity, profit sanity, cash flow reality - capturing working capital cash cycles and conversion in this image would be magic to see
Excellent breakdown of profit concepts! The clear and concise visuals make complex financial topics easy to grasp. A must-read for anyone looking to enhance their understanding of business finances. 📊💡
I have seen many P/L’s in my business life but this is the most understandable and clear one comparing to ….. Revenue ,GM,EBITDA,NIBIAT, NIAT etc ordering from top to down..👏
Segampang ini visual nya
Indeed, understanding profit is crucial for financial performance because it measures financial health, provides insights into profitability, aids in decision-making and budgeting, and demonstrates the ability to generate profit.