Total revenue minus total cost is equal to profit. This concept is fundamental in business and economics.
When a company generates revenue, it collects money from its sales or services provided. However, this revenue is not pure profit; businesses incur various costs to operate. These costs can include fixed costs (like rent and salaries) and variable costs (like materials and utilities).
When you take the total revenue and subtract all the costs involved in running the business, the remaining amount is the profit. Profit is crucial as it indicates how well a business is performing financially and provides resources for growth, reinvestment, and reward for the owners or shareholders.