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INVESTOPEDIA EXPLAINS 'Profit'

Profit is the money a business makes after accounting for all the expenses. Regardless of whether the business is a couple of kids running a lemonade stand or a publicly traded multinational company, consistently earning profit is every company's goal.

The path toward profitability can be long. For example, online bookseller Amazon.com was founded in 1994 and did not produce its first annual profit until 2003. Many start ups and new businesses fail when the owners run out of capital to sustain the business.

Originally Posted by henry quirk

... The only purpose of a business (what 'it' does) is to make a profit for the owners of the business. ...

This is correct. Revenues realized in excess of expenses and sustaining a business's status quo are profit. The purpose of a business is profit. The goals of those who reap the profit may be reinvestment into the business to grow, diversify, conduct R&D to create new marketable goods and services; or, doing pro bono charitable work, wielding influence ... etc. Businesses, rather than personal fortunes, may be established to achieve those goals; but, goals can change - the purpose of a business does not.

Some businesses may take longer than others make a profit. Positioning a business for sustainability may take more time than simply meeting expenses. That does not; however, mean that the purpose of the business isn't profit, just that it hasn't fulfilled its purpose yet. Even a subsidiary business operating in the red as a tax deduction for the parent organization exists for the purpose of overall profit just as business charitable contributions sometimes do.

Counterpoints suggesting that revenues beyond expenses aren't profit when they're reinvested into a business would have to demonstrate that those revenues were limited to just sustainment requirements and not growth. Then it would mean only that the business isn't profitable now, that its purpose isn't yet fulfilled. NPOs are beyond the scope of the initial contention and rebuttal as are definitions of "profit" derived from jargon relative to specific disciplines.

LLAP