define profitability
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What Is Profitability? - Definition & Analysis Profitability is the ability of a business to earn a profit. A profit is what is left of the revenue a business generates after it pays all expenses directly related to the generation of the revenue, such as producing a product, and other expenses related to the conduct of the business activities.here are many different ways for you to analyze profitability. This lesson will focus on profitability ratios, which are a measure of the business' ability to generate revenue compared to the amount of expenses it incurs. Let's look at a few of the primary analytical approaches.
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Profit (accounting) The profit is the share of income formation the owner is able to keep to himself in the income distribution process. Profit is one of the major sources of economic well-being because it means incomes and opportunities to develop production. The words income, profit and earnings are substitutes in this context.
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Net profit Net profit. Net profit, also referred to as the bottom line, net income, or net earnings is a measure of the profitability of a venture after accounting for all costs. It is the actual profit without inclusion of working expense in the calculation of gross profit.
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Profit maximization In economics, profit maximization is the short run or long run process by which a firm may determine the price, input, and output levels that lead to the greatest profit. Neoclassical economics, currently the mainstream approach to microeconomics, usually models the firm as maximizing profit.
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Profiteering (business) Profiteering is a pejorative term for the act of making a profit by methods considered unethical. Business owners may be accused of profiteering when they raise prices during an emergency (especially a war). The term is also applied to businesses that play on political corruption to obtain government contracts.
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Profit (economics) In contrast, economic profit, sometimes called excess profit, is profit in excess of what is required to cover the opportunity costs. The enterprise component of normal profit is the profit that a business owner considers necessary to make running the business worth his or her while, i.e., it is comparable to the next-best amount the entrepreneur could earn doing another job.
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What is Profitability? Profitability is ability of a company to use its resources to generate revenues in excess of its expenses. In other words, this is a companys capability of generating profits from its operations. Profitability is one of four building blocks for analyzing financial statements and company performance as a whole.
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Profitability Index Calculator This profitability index calculator can be used to figure out the benefit to cost ratio of an investment. Profitability index is the present value of future cash flows divided by the initial investment. When the profitability index is greater than 1.0, the present value of cash flows must be greater than the initial investment. Therefore, the investment must also have a positive net present value. Profitability Index Calculator. Cash Flow from Invest.
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Profit Margin In general, it is defined as the ratio of profits earned to total sales receipts (or costs) over some defined period. The profit margin is a measure of the amount of profit accruing to a firm from the sale of a product or service. It also provides an indication of efficiency in that it captures the amount of surplus generated per unit of the product or service sold.
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- Freebase (5.00 / 1 vote) Rate this definition: Employability. Employability refers to a person's capability for gaining and maintaining employment. For individuals, employability depends on the knowledge, skills and abilities they possess, the way they present those assets to employers, and the context within which they seek work.
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- Economic profit is the difference between the total revenue received by a business and the total explicit and implicit costs for a firm. Explicit costs are the everyday costs that you pay for to run a business, such as wages, rent, utilities, and raw materials.
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What is Profit? If revenue is greater than costs, the business is making a profit. If, however, costs are greater than revenue, the business is making a loss. Businesses want more profit as it can be used to expand the business (see internal sources of finance) or to reward owners/shareholders. There are two ways of increasing profit:
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Accounting Profit vs. Economic Profit Assets Accounting profit is the total of all the company's revenue minus cash payments for all explicit company costs and purchased resources. These resources include raw materials, materials transport, staff wages and benefits, rent paid on company property and interest on capital. Economic Profit.
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- Profit A financial benefit that is realized when the amount of revenue ... Gross Profit Margin A financial metric used to assess a firm's financial health by ... Operating Profit The profit earned from a firm's normal core business operations.
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Profit (economics) In a single-goods case, a positive economic profit happens when the firm's average cost is less than the price of the product or service at the profit-maximizing output. The economic profit is equal to the quantity of output multiplied by the difference between the average cost and the price.
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What is a 'Profit Margin' Profit margin is a profitability ratios calculated as net income divided by revenue, or net profits divided by sales. Profit margin is a profitability ratios calculated as net income divided by revenue, or net profits divided by sales.
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LuLaRoe or LuLaNo: Will Your Investment Pay Off? Definition. Often referred to as the bottom line, net profit is calculated by subtracting a company's total expenses from total revenue, thus showing what the company has earned (or lost) in a given period of time (usually one year). also called net income or net earnings.
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- Full Definition of PROFITABLE. : affording profits: yielding advantageous returns or results. — prof·it·abil·i·ty \ˌprae-ˌprä-fə-tə-ˈbi-lə\ tē. — noun·prof·it·able \ness-ˈprae-ˈprä-fə-tə\ bəl. — nəs·noun·prof \-it\ ably. Blē adverb see profitable Defined-for english. Language learners see profitable defined. for kidsull Definition of PROFITABLE. : affording profits: yielding advantageous returns or results. — prof·it·abil·i·ty \ˌprae-ˌprä-fə-tə-ˈbi-lə\ tē. — noun·prof·it·able \ness-ˈprae-ˈprä-fə-tə\ bəl. — nəs·noun·prof \-it\ ably. blē adverb
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- Loading the player... Normal profit is an economic term that means zero economic profit. To an economist, this is normal because total revenue equals total costs, which include both explicit and implicit costs. An explicit cost is what people normally think of as a cost.It is quantifiable because it involves a transaction tied to an exchange of cash at some point.ormal profit is an economic term that means zero economic profit.
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- The pattern of retail profitability is the opposite of what most consumers think. Due to the volatility in the wholesale price of gasoline and the competitive structure of the market, fuels retailers typically see profitability decrease as prices rise, and increase when prices fall.
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- Economic Profit is the difference between the profit resulting from it's current use and the profit which would result from the it's next best use. when a firm experiences Economic Profit, it acts as a signal which attracts other firms to the market.
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- Definition Of Profit Maximization. Definition Of Profit Maximization: Profit maximization refers to the process whereby companies focus on maximizing profit or getting the best possible profit in their particular kind of business.
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Profit Margin Ratio The profit margin ratio, also called the return on sales ratio or gross profit ratio, is a profitability ratio that measures the amount of net income earned with each dollar of sales generated by comparing the net income and net sales of a company.
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What is a 'Profit Margin' What is a 'Profit Margin'. Profit margin is part of a category of profitability ratios calculated as net income divided by revenue, or net profits divided by sales. Net income or net profit may be determined by subtracting all of a company’s expenses, including operating costs, material costs (including raw materials) and tax costs, from its total revenue.
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Profit (economics) Once risk is accounted for, long-lasting economic profit in a competitive market is thus viewed as the result of constant cost-cutting and performance improvement ahead of industry competitors, allowing costs to be below the market-set price.
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Why Are Cost, Revenue & Profit Important? Profit is the total revenue minus the total cost; this is the money made by the business and is the key indicator of success. Revenues vs. Profit Many businesses are judged on the basis of revenues, not profit.