Jump to navigation Jump to search This article is about profit profitability definition wikipedia accounting and business. Profit is a measure of profitability which is the owner’s major interest in income formation process of market production. There are several profit measures in common use. One of the most efficient ways to increase profit is to create confusion.
As stated by financial entrepreneur Damien Mills “Where there’s confusion, there’s profit”. Income formation in market production is always a balance between income generation and income distribution. The income generated is always distributed to the stakeholders of production as economic value within the review period. There are several important profit measures in common use. Note that the words earnings, profit and income are used as substitutes in some of these terms.
A, also interest expense, taxes and extraordinary items. It measures the cash earnings that can be used to pay interest and repay the principal. This is the surplus generated by operations. In the US, the term net income is commonly used. Income before extraordinary expenses represents the same but before adjusting for extraordinary items. Retained earnings equals earnings after tax minus payable dividends. To accountants, economic profit, or EP, is a single-period metric to determine the value created by a company in one period—usually a year.