Profit
Business: Cambridge International GCSE (2027 Exams), topic 5.3.1
Profit
Profits are what shareholders can take home.
Profit
- Profit = Revenue − Cost
Importance of profit
- Profit is the reward for enterprise in the private sector.
- Profit is important because it rewards entrepreneurs for taking risks.
- Profit can also be used as a source of finance to reinvest in the business for future growth.
Difference between profit and cash
- Profit is the difference between revenue and costs.
- Profit is only from sales.
- Cash flow is the difference between cash inflow and cash outflow.
- Cash inflow can be from many different sources. -Cash is needed to pay bills and keep the business running daily.
- Whereas profit may exist “on paper” but not be available to spend immediately.
Test yourself on Profit
What is the equation for profit?