What is the relationship between income and profit?
Sometimes people are confused about the relationship between income and profit. Revenue is the amount of money that the company receives from the sale and other fees to customers. However, profit is the amount of money remaining from the company's income after deducting its expenditure, such as supplies for product creation, taxes, rent, marketing and even wages. The company may have income without profit, but cannot have profits without income. In some cases, the company's expenses exceed its income and are experiencing a loss rather than profit.
It is easy to think that the company earns profits if it collects fees and fees or sale of products or service to customers. However, the fact that money is handed over from a customer to an entrepreneur does not necessarily mean that the company is profitable. In some cases, the company may have significant revenue, but enjoys very little profits from its sale. This usually happens because the company's and the company is so high that they make profits more difficult for the company. But sometimes the income may be so lowKé that even small spending can eat the potential profits of the company.
Given the example, the relationship between income and profit can help. For example, if the company specializes in the sale of adapted shadows, its expenses may include the cost of purchasing inventory and shielding lamps; wages; rent or mortgage for commercial property; taxes; Advertising fees; tools; And a wide range of other expenditures. If this company has sold $ 10,000 (USD) to its own shadows in a month, it may seem to earn a high profit. However, deduction of $ 8,000 in the cost of sales would leave a less profit. Its profit would be $ 2,000 in this case.
business owners usually try to have income and profit, but sometimes the circumstances make it difficult. In some cases, businesses do not sell enough to ensure both income and profit. This is often not a fault of the company owner, but some entrepreneurs make bad decisions,that leave them without much profit. Sometimes the company's owner's expenditure is so high that they are experiencing a loss; This means that he not only could not earn profit, but also lost money for business. For example, if the company's revenue is $ 5,000, but its spending is $ 6,000, it loses money to operate their business.