The breakeven point is the level of production, sales volume, percentage of capacity, or sales revenue at which an organization makes neither a profit nor a loss. This critical financial metric helps businesses understand when they will start to become profitable.
In finance and accounting, 'capital' refers to various forms of assets, interests, or financial contributions that play a critical role in the functioning of an entity or the production process, enhancing productivity and enabling operations.
Capital gains refer to the profit realized from the sale of assets or investments, which exceeds the purchase price. They can apply to stocks, bonds, real estate, and other types of investments.
The cost convention refers to the basis used for recording costs charged against profit during an accounting period, which can be based on historical cost, current cost, or replacement cost.
Earnings, also referred to as net income or profit, is a crucial metric in financial reporting which forms the basis for calculating earnings per share. A key aspect of corporate finance, earnings definition and reporting have evolved to curb creative accounting and ensure transparency.
EBIT, an abbreviation for Earnings Before Interest and Taxes, represents a company's profit as indicated on the profit and loss account before the deduction of interest and tax expenses. This figure is instrumental in calculating multiple financial ratios and facilitates more straightforward comparisons between companies.
Factors of production refer to the resources required to produce economic goods, including land, labor, capital, and entrepreneurial ability. Each factor has an associated cost: rent for land, wages for labor, interest for capital, and profit for the entrepreneur.
A for-profit corporation is a business entity established with the primary goal of earning profit for its shareholders. Unlike non-profit organizations, for-profit corporations operate to generate financial returns for their owners.
To allocate capital to an enterprise with the objective of securing income or profit for the investor.
A long position is a financial strategy where an investor purchases a security or a derivative expecting that its price will rise over time, allowing for a profitable sale in the future.
The amount by which the cost of a service or product has been increased to arrive at the selling price. It is calculated by expressing the profit as a percentage of the cost of the good or service.
A merchant is an individual or business engaged in the purchase and sale of goods for the purpose of earning a profit. Under the Uniform Commercial Code (UCC), the term can also apply to various parties beyond traditional retail.
Return on investment equal to the original marketing expenditure; also known as payback. When a company recovers its investment plus the expected built-in return from launching or reintroducing a new product or service, it has realized a profit from its original capital outlay. A company's payout represents the minimum amount of dollar sales that must be generated to offset the cost of an advertising program.
Financial metrics used to measure a company's ability to generate profit relative to other key variables, such as sales, assets, or equity.
A scalper is a speculator who enters into quasi-legal or illegal transactions to turn a quick and sometimes unreasonable profit by reselling items at a higher price.
Selling short involves selling securities, commodities, or foreign currencies not actually owned by the seller, with the hope of repurchasing them later at a lower price to earn a profit.
In Marxist theory, surplus value represents the excess value produced by labor over the wage paid to laborers, considered a primary source of capitalist profit.
The term 'take' can have multiple interpretations depending on the context, ranging from profit realization to the act of seizing property, as well as particular connotations in the securities market.
An undertaking is any corporate body, partnership, or unincorporated association engaged in trade or business with the goal of earning a profit. Such entities are involved in economic activities and operate in various business sectors.
Undistributed profit refers to the profit earned by an organization that has not been distributed to its shareholders by way of dividends. Such sums are available for later distribution but are frequently used by companies to finance their activities.
