In economics, we can define profit as the economic benefit of a company, although there are also those who understand it as the profit or the profit, or what is the same is the main reason and the reason why a certain company is creates. From a more academic point of view of economics, profit or benefit would be the risk that is taken when an entrepreneur decides to form a company, taking into account rents, charges, taxes, production and distribution expenses, and interest, the profit would after all be the remaining part of profits less costs.
When it comes to classifying profit, economists usually distinguish between three types of benefits:
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- Low profit. It occurs when expenses are higher than profits, and therefore the company does not support itself. In this case, the best solution is the reorganization of activities, reducing expenses, or the association with other companies in similar or related sectors, in order to reduce costs to increase profit.
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The normal profit. In this case, the profit is an amount sufficient to cover expenses and to make the company it can maintain its operation on its own and as is, without the need for investment of capital.
- The excessive profit. It assumes that the profit is much higher than the costs, and therefore the profits are very high, in fact, the excess profit is always a sign that the company has some type of advantage in the market that makes it superior to its competitors, such as example a Brand Marketingconsolidated and strong, which makes customers prefer it over other competing brands.
Profit or profit in a company is an indicator of profit and, therefore, of wealth creation. The objective of a company must always be the maximum benefit, and the way to achieve it is in analysis of the the entire production process to reduce expenses seeking maximum profits so that profit is high.
