The surplus remaining after total costs are deducted from total revenue, and the basis on which tax is computed and dividend is paid. It is the best known measure of success in an enterprise.

Profit is reflected in reduction in liabilities, increase in assets, and/or increase in owners' equity. It furnishes resources for investing in future operations, and its absence may result in the extinction of a company. As an indicator of comparative performance, however, it is less valuable than return on investment (ROI). Also called earnings, gain, or income.

Use profit in a sentence

  • When the company accountant finish counting that quarter's earnings, she realized they were more successful than anticipated and had earned a large profit.

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  • It is sad that most of the people in the world are looking for how they can profit off of other people and what they can get out of it for themselves.

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  • When you are running a business at the end of the day the main thing that matters is how much profit you were able to make.

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Notable Quotes

  • Are Management's Compensation Plans Aligned with Shareholder Interest?
    "It has become fashionable at public companies to describe almost every compensation plan as aligning the interests of management with those of shareholders. In our book, alignment means being a partner in both directions, not just on the upside. Many "alignment" plans flunk this basic test, being artful forms of "heads I win, tails you lose." A common form of misalignment occurs in the typical stock option arrangement, which does not periodically increase the option price to compensate for the fact that retained earnings are building up the wealth of the company. Indeed, the combination of a ten-year option, a low dividend payout, and compound interest can provide lush gains to a manager who has done no more than tread water in his job. A cynic might even note that when payments to owners are held down, the profit to the option-holding manager increases. I have yet to see this vital point spelled out in a proxy statement asking shareholders to approve an option plan."
    - Warren Buffett
  • Profiting on Future Predictions
    "It's easier to predict the future than to create it, but it's more profitable to create it."
    - Tom Murcko

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