1. Factors Affecting Profit
Project #2 :: Snapshot
Principles of Business

2. Definitions
Profit: the difference between revenues and costs (expenses)
Profit motive: to make money $$$
Income: the amount of money received during a period of time in exchange for labor or services
Expense: something spent to attain a goal
Cost of goods: the direct costs attributable to the production of the goods sold by a company

3. Operating expense: the expense a business incurs as a result of performing its normal business operations
Gross profit: a company’s total sales revenue minus its cost of goods sold
Net profit: the amount of money earned after all expenses, including overhead, employee salaries, manufacturing costs, and advertising costs, have been deducted from the total revenue

4. Factors Affecting Profit
Number of employees
Salaries of employees
Cost of capital goods
Source of products sold
Advertising budget
Overhead
The economy
Demand
Chance
Expenses
Pricing

5. Ways to Increase Profit
Sell more products
Increase price on products
Look for ways to save on overhead
Increasing sales – decreasing expenses

6. Why Businesses Need Profit
Reinvestments
Research and development
Expansion