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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.

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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.

Harsha SH

Process Specialist (Record to Report)

2mo

Good one

Rushabh Deliwala, CA

Transforming accounting & bookkeeping practices across globe | Offshore Accounting Expert | Chartered Accountant |

2mo

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!

Vladimir Goloviznin

Independent researcher, analyst, consultant/ Applied Economics & Finance/ Unit Economics & Managerial accounting

2mo

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.

Amabilis Jelliarko Palgunadi

Leverage creativity and a systematic approach to help organizations win the competition | Plastics, colors & additives advocate | Plastic re- & upcycling practitioner | Innovation project consultant & lecturer

2mo

Where is the production cost?

Lee Sandwith

Experienced Start-up Co-Founder and CEO.

2mo

I assume taxes refers to Corporation Tax as VAT would need to be accounted for at Gross Profit level. Meaning ‘Sales’ = ‘Net Revenue’?

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Brad Magrath

Head of Portfolio and Platform, AHL Venture Partners

2mo

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. 📊💡

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Ertan Çakır

Energy-Petrol-Distribution-Imp/exp-food)

2mo

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..👏

Ardha Fendyka Satya Sapin

Enabler Postingan Sepi || Tukang nyuruh-nyuruh tim pajak nya famima || Bercerita Tentang Tax dan Accounting di Indonesia and tell others how to maintain and abuse it *wahaha

2mo

Segampang ini visual nya

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