Profit is
Sales Revenue (Cash Received from Sales )
Less
- Direct Expenses (Cost of Goods, Transportation,…)
- Indirect Expenses (Rent, Salaries, Electricity, Taxes,…)
Profit is an indicator that a company is financially healthy.
Common Mistake most entrepreneurs make is that they treat Sales revenue (Cash received) as Profit and spend it accordingly not allocating to Direct & Indirect Expenses first.
The first responsibility of business is to make enough profit to cover the costs for the future. If this social responsibility is not met, no other social responsibility can be met. Peter F. Drucker
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