HA401 : The
Class : Finance
: Revenues : Profits
Profits
REVENUES — EXPENSES
= PROFITS Calculating profits is a simple formula but gets complicated
when applied to large businesses. Profits are what are left over when you take
all your revenues and then pay all your expenses. There are several different
profit levels that are used in financial analysis.
- DEPARTMENT PROFIT—
This is the specific profit for one of many departments in an enterprise or
business. For example, a hotel could have a rooms department, restaurant department,
lounge department and recreation or golf department. A Casino could include
individual departments for slots, keno, bingo, race track, food, beverage and
vending machines.
- OPERATIONING PROFIT—
This is the profit that measures management’s ability to maximize revenues
and minimize expenses. Management has the responsibility for the sales programs,
pricing, hours of operations and all other decisions that can impact revenues.
They also have the control and responsibility to manage expenses. Expenses that
they cannot control (mortgage, licenses, taxes, etc.) are not included in Operating
Profit.
- FINANCIAL PROFIT—This profit measure includes all expenses directly
relating to the operation of a performance or success of an operation business
or enterprise. It measures the financial and includes all expenses including
taxes, owner profit splits and capital expenditure reserves.
Once you have completed this module you should:
Go on to Reading 3: Percentages
or
Go back to Topic 1: Revenues
E-mail Lloyd Shelton at Lloyd.Shelton@nau.edu
or call (928) 527-7518
