Explain Like I'm Five

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What does it actually mean when they say "record profits?" (self.explainlikeimfive)

submitted 1 year ago by AyyShook to c/explainlikeimfive

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Obviously people are being price gouged, but just saying "record profits" without really being able to explain it feels like I'm just repeating what I've heard people say and not speaking on an informed level. What does it actually mean? Like before or after production and transportation costs? Before or after taxes? Raw product yeild? Something else?

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[–] [email protected] 3 points 1 year ago

Profit is the Revenue(all of the money that you get from selling the products) - all of the costs; so that includes, manufacturing costs, Labour costs, overheads, tax costs, marketing, transport/distribution, insurance, rent, etc.

Companies can increase their profits in a number of ways, but in simple terms they can either reduce their outgoing costs or increase their incoming revenue. Most of the time they try to do both. So they might be putting fewer of their products in each box but charging more for them, or reducing the quality of their packaging but charging more for the products, laying off employees but charging more, or dodging taxes but charging more etc. etc.