Describe a formula to show how profit is calculated
The formula to calculate profit is as follows:
Profit = Revenue - Expenses
Where:
- Profit is the amount of money earned after deducting all expenses
- Revenue is the total amount of money earned from sales or services
- Expenses are the costs incurred in running the business, such as rent, salaries, utilities, and supplies.
By subtracting the total expenses from the revenue generated, a company can determine how much profit it has made during a specific period of time. This formula provides a clear and concise way to understand the financial health of a business and make informed decisions to maximize profitability.