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What is the importance of costs and revenue and profit for a business organisation?

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


Are you interested in purchasing a property directly from the owner, or would you prefer to work with a buyer agent?

Are you interested in buying a property directly from the owner, or would you rather work with a buyer agent?


Are you interested in buying a car directly from the owner, rather than going through a dealership or third party seller?

Are you interested in purchasing a car directly from the owner, instead of using a dealership or third-party seller?


Why is Icahn Enterprises' dividend so high?

Icahn Enterprises' dividend is high because the company aims to distribute a significant portion of its profits to shareholders as dividends, rather than reinvesting all profits back into the business for growth. This strategy is favored by some investors who prioritize receiving regular income from their investments.


Why do some stocks not pay dividends?

Some stocks do not pay dividends because the company may choose to reinvest its profits back into the business for growth and expansion, rather than distributing them to shareholders.

Related Questions

Cash flows more important than profits?

1. Why are we interested in cash flows rather than accounting profits in determining the value of an asset?


Cash flow rather than accounting profits in determining the value of assets?

You will want to use cash flows because that is what's being used. It shows you what's going in and out


What kind of organizations and businesses can you work for?

Any you like. Choose something that you are interested in rather than just aiming for profits!


What fund accounting?

Fund accounting is the accounting system emphasizing on accountability rather than profitability


Why is accounting described as a service activity?

Accounting services is mostly provided by certified accountants. Many organizations stay busy in generation profits and have no time to concentrate on their company's finances. For such situation, accounting companies in Dubai such as Flyingcolourtax come forward to give a helping hand by offering outsourced accounting services in Dubai. If you're looking for any kind of expert accounting services then contact Flyingcolourtax by visiting the link mentioned below: " www . flyingcolourtax . com "


What is the definition of manual accounting?

manual accounting means making records of transactions in record books rather than computers.


Signs of men who likes a women?

A man will initially hold eye contact with a woman - rather, seek eye contact. If the woman reacts in the same way, however fleetingly, she likely is interested in determining if there is potential for further communication. Or just sport!


If you are only accounting student working in accounting do you call it accountant?

First of all, with language skills like these, you need not be in the accounting profession. An accountant is one who practices accounting as his/her profession. Therefore, I would argue that students involved in higher level accounting education are still considered to be students, rather than accountants.


Is a change from the cash basis to the accrual basis a change in accounting principle?

Yes it is a change in accounting principle. And a rather drastic change. Accrual Basis of accounting is the most fundamental accounting assumption which is regarded throughout the world. Thus if a person either departs or adopts the accrual basis its a change in accounting principle.


What is a non-cash item accounting?

A non-cash item accounting refers to an entry on the cash flow that correlates to the expenses. These expenses are usually essentially just accounting entries rather than the actual movements of cash.


Explain the differences between financial accounting and Management Accounting?

Management accounting is a tool that managers use to perform day-to-day operations in an organization. This type of accounting usually does not provide exact numbers, but rather estimate and forecast. Financial accounting is a tool used to present the financial status of the organization to its external stakeholders. This type of accounting provides accurate numbers.


Explain the difference between financial accounting and management accounting?

Management accounting is a tool that managers use to perform day-to-day operations in an organization. This type of accounting usually does not provide exact numbers, but rather estimate and forecast. Financial accounting is a tool used to present the financial status of the organization to its external stakeholders. This type of accounting provides accurate numbers.