Educational purposes only. This content does not constitute investment advice. Read our disclaimer
StockCram is not a broker-dealer, investment adviser, or financial institution. All content is for educational and informational purposes only and should not be construed as personalized investment advice. Consult a qualified financial professional before making investment decisions. Past performance does not guarantee future results.Simple Definition
Money left over after a company pays all its expenses.
Why It Matters
Profit is what shareholders actually care about - it's the money available for dividends, buybacks, or reinvestment. There are different types: Gross Profit (revenue minus cost of goods), Operating Profit (minus operating expenses), and Net Profit (the bottom line after everything including taxes). A company growing revenue but shrinking profits may have a problem.
Key Points
- Net Profit Margin = Net Profit ÷ Revenue. Higher is better. Apple's ~25% margin is exceptional; grocery stores run ~2%
- Profit can be manipulated through accounting tricks - compare to cash flow to check if profits are real
- Amazon famously had tiny profits for years while growing - they reinvested everything into growth
Related Terms
Common Questions
Money left over after a company pays all its expenses. Profit is what shareholders actually care about - it's the money available for dividends, buybacks, or reinvestment. There are different types: Gross Profit (revenue minus cost of goods), Operating Profit (minus operating expenses), and Net Profit (the bottom line after everything including taxes).
Profit is what shareholders actually care about - it's the money available for dividends, buybacks, or reinvestment. There are different types: Gross Profit (revenue minus cost of goods), Operating Profit (minus operating expenses), and Net Profit (the bottom line after everything including taxes). A company growing revenue but shrinking profits may have a problem.
Net Profit Margin = Net Profit ÷ Revenue. Higher is better. Apple's ~25% margin is exceptional; grocery stores run ~2%
Profit can be manipulated through accounting tricks - compare to cash flow to check if profits are real
Amazon famously had tiny profits for years while growing - they reinvested everything into growth