Profit

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A company's profit is the amount of money it earns each quarter. However, profit is an inherently ambiguous term, because companies generally track several different profit metrics, each of which includes certain costs but not others.

For example,

  • Gross profit includes only the cost of goods sold - usually the costs of labor and materials used to produce the product. Gross profit is useful because it tells you what percentage of each dollar a company earns in revenue can be used to fund its operations - but it excludes a lot of costs of running a business - research and development, sales and marketing, etc...
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