what does it mean to make a profit?

[dpopiz]

what does it really mean when a company like amazon "hasn't made a profit"?

I mean, they have excess money to invest in new equipment and stocks (inventories), and all the employees get a salary.

so how do are they "not making a profit"?

 

[Heisenberg]

The net returns from the profits haven't equaled the investment capital yet.

/me waits for the business people to tell me I'm way off

 

[Zenmervolt]

Accounting profit or economic profit?

ZV

 

[z0mb13]

Originally posted by: Zenmervolt
Accounting profit or economic profit?

ZV

EVA (economic value added) is where its at!

 

[Ness]

Revenue - Expenses = Net Income

Net Income - Capital = Profit


Revenue is all money taken in (from services rendered, mostly.)
Expenses can be a wide range of things such as investments, supplies, equipment, property... the costs of any assets obtained and the cost of doing business...
Capital is the original amount put up to start the business.

As Heisenburg said, until the Net Income has become bigger than the capital, you haven't really made any money, because capital is money spent from the beginning and still must be accounted for.

 

[TommyVercetti]

That after all the expenses such as salaries, upgrade costs, rent, bandwidth, electricity has been paid, there is not money left over, or they had to pay it out of their pocket to cover for all that. The salaries are coming from the original amount, and the money that is made from the business.

 

[theNEOone]

companies work on accounting profit. and very simply, a company is profitable when revenues exceed costs. i really didn't think that would need explaining.


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