Profit is the goal that every business person seeks.  Without profit a business venture cannot exist.  Often called the “bottom line,” it is the end product of business activity and the measurement of success of a business venture.

Simply defined, profit is the excess of income (revenue) over costs (expenses).  It is computed by using an income statement.  Understanding Profitability provides you insight into the concept of profitability and the elements of in income statement.  Developing an Income Statement for a Value-Added Farm Business is a detailed description of creating an income statement.  Analyzing an Income Statement gives you in-sights into the financial health of your business.

Business decisions are made based on their effect on profitability.  This is true whether the decision involves increasing efficiency, lowering costs, increasing sales, expanding the business, shifting to new products, or a host of other business decisions.

The search for profit is a never-ending quest of every business person.  For you to be successful in business you must join this quest.  In our rapidly changing business environment, the on-going search for profit is the price you pay for staying in the game.  Whatever you did to garner profits yesterday may not be sufficient tomorrow.  So you run the race for profits to stay even with your competitors.  If you run fast enough you may even get ahead.

Are You Making a Profit provides you with an overview of profitability and how it is calculated, along with the accounts needed to compute profitability.  To keep costs as low as reasonably possible without compromising their operations read Spending Less without Compromising Quality.

More information on profitability is presented in the box at the right.  Also see the calculators and worksheets available on the Business Workbench.