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Company Profit

Community Veteran
Posts: 7,912
Thanks: 592
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Registered: 02-08-2007

Company Profit

Exactly what does it mean when a company says it has made a profit ?
For example let us use Supermarket X who made a profit of 1 billion pounds in the last year of trading.
Is that 1 billion after all tax, outstanding bills, shareholders dividends and other payments including depreciation of premises are made or do some or all of these things need to be paid out of the profits ?
If it's 1 billion then what is the money likely to be used for ?
3 REPLIES
nanotm
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Posts: 5,671
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Registered: 11-02-2013

Re: Company Profit

it depends on what sort of profit they declare, is it operating profit gross profit or net profit, net would be after all deductions and write downs and taxes are paid, gross  would be before write downs or taxes are paid, and operating is supposed to be the amount left in the bank after all bills were paid that week/month/quarter/year but ignoring liabilities such as write downs or taxes .....
just because your paranoid doesn't mean they aren't out to get you
Community Veteran
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Registered: 18-01-2013

Re: Company Profit

Most companies publish a P&L statement (Profit and Loss) which details everything from income, outgoings, depreciation, interest income/outgoings etc.
I suspect the profit is what is left over after all the above is taken into account.
Community Veteran
Posts: 18,545
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Registered: 12-08-2007

Re: Company Profit

Net profit is the very bottom line after all expenses have been paid. The net profit can sometimes be in millions of pounds and many would look and see this as excessive. Expressed as a % of turnover it possibly isn't. Supermarkets are a good example. They need to sell lots of product because they sell at fairly low margins. If turnover goes so does net profit (Tesco is a good example at present)
The net profit is needed to fund future growth. Think how much it costs to open a new supermarket.  It's hundreds of thousands of pounds.