0
What is the importance of costs and revenue and profit for a business organisation?
Wiki User
∙ 11y ago
To start with, you spelled organization wrong in your question, and if you're a finance or accounting student you may want to rethink your career path. In answer to your question, all you need to do is look at an income statement and put the pieces together. The top line is revenue (sales price multiplied by number units sold, in a rather simplified "accounting" version of the equation). Costs are the funds used to make the goods that are sold. The major importance of these two numbers are that they are part of your marginal profit (a crucial part of cost accounting that you will no doubt get to later). If your margins suck (sales-costs, again extremely simplified and missing innumerable possible factors) your profits will also suffer. This is very bad for an organization, as any publicly traded firm knows by experience. Low profits = mad investors due to mismanagement of their funds, who in turn sell your shares (if they are able to, due to market reaction to poor profits) and you stock price will tank.
I hope this helps answer your question
Wiki User
∙ 11y ago
Add your answer:
Earn +20 pts
Why is cost important in business?
because the lower the cost the more profit the business makes profit = revenue - cost
Cost of revenue?
The cost of revenue is the money spent to make profit for a business. All business have to spend money to make money.
Difference between net income and revenue?
Revenue is all the money a business brings in. Net income is revenue minus all the expenses of the business. Net income is profit.
What is the importance of business calculations?
The importance of business calculations is that it helps in gauging the performance of a business. This will measure the growth of the business through computations of profit margins.
Why is earning profit considered as one of the objective of business finance?
Well, every business finance anywhere in the world is guided by profit motivation. Without profit motivation, no business finance can be fruitful and the organisation is bound to be debarred from growth and natural expansion. In competetion scenario,no organisation can even survive without the goal of earning profit. The organisation is answerable to the share holders, as the later would not be foolish to retain shares in a loss making organisation.Since profit in business covers the cost of production and also create a surplus for undertaking expansion and diversification work and leads to the survival of business. Hence, it is considerd as one of the objective of business finance.
What is the importance of revenue to a business?
revenue is what pays the expenses of running the business and hopefully you can even make enough revenue above expenses to make a profit
What is an importance of revenue?
The importance of revenue to a business is, it shows how much money goes into the business & also if you subtract if from costs then it shows how much profit has been made. Hope this helps!!
The importance of profit to a business like HMV?
the importance of profit to a business?
What is the difference between the revenue that a company brings in from selling goods and services and the cost of generating this revenue called?
For a normal business it is Profit or Loss (depending upon which is greater) For a non-profit organisation (eg a Charity) it is Surplus or Deficit.
What is importance of revenue cost and profit?
Chicken Sandwitch with curry < How immature.
What is the importance of revenue costs and profit?
Chicken Sandwitch with curry < How immature.
Why is cost important in business?
because the lower the cost the more profit the business makes profit = revenue - cost
What remains after all business expenses have been deducted from sales revenue?
Profit Profit
Cost of revenue?
The cost of revenue is the money spent to make profit for a business. All business have to spend money to make money.
Difference between net income and revenue?
Revenue is all the money a business brings in. Net income is revenue minus all the expenses of the business. Net income is profit.
Which is grammatically correct a non-profit organisation or an non-profit organisation?
I have read this book and it really helped a full step to step guide on how to start, a non profit business. check out my page
Describe the purpose of communication in business?
To promulgate the organisation's interest whether those are profit or non profit making interests.
