Profit, Loss, and Break-even

1. What is Profit?
2. What is Loss?
3. How to determine profit?
4. How to determine loss?
Businesses are typically established in order to gain a profit. Profit is referred to
as the bottom line of every business. There are two types of profit: gross profit
and net profit.
Note: Whenever we mention “profit” we will only be dealing with net profit.
The term “profit” is usually associated with the term revenue and expenses. We
can define “revenue” (which is commonly referred to as income) as the amount of
money that a company receives for its goods and services. On the other hand,
the cost of expenses is the amount of money that a company spends to either
produce its goods or perform its services.
The difference between the revenue and the cost of expenses is called the profit,
which is also referred to as the net income or net earnings. This means that the
profit is the amount of money that is left over from a company’s revenue after it
pays for its expenses in doing business.
To compute the PROFIT:
The profit P is calculated by subtracting the total expenses E from the total
revenue R.

                                                           P =R-E
     In any business, it is inevitable that sometimes a company earns less than what is
spends; that is, its revenue R is less than the expenses E. Using the formula P =
R - E,
     we will derived a NEGATIVE VALUE. This negative values indicates the
company's LOSS.
 BREAK-EVEN POINT, TOTAL COST OF EXPENSE, &
TOTAL REVENUE
1. What is Break-even Point?
2. How to determine Break-even Point?
3. How to determine Total Cost of Expense?
4. How to determine Total Revenue?
To avoid or offset the loss, using the previous problem of Bareg when he loss ₱ 18,
Bareg may sell the remaining doughnuts at a lower price or do certain promotional
strategies like a "buy-1-take-1" offer. If he will be able to earn exactly ₱ 18 (amount
he loss) from any of those activities, then the difference between the total revenue
and the total expenses will become zero. When that occurs, we can say that he was
already able to break-even.
In the business contexts, break-even point is the point when the total cost of
expenses and the total revenues are equal.  Thus, it is the point when there is
neither a profit nor a loss.