Profit facts for kids

Profit is the money a person or a company makes after paying for everything they spent. It's like finding out how much extra money you have left over.

You find profit by taking the money you earned (called revenue) and subtracting the money you spent (called expenditure).

What is Profit?

Imagine you run a small business. You sell things or offer services. The money you get from selling is your revenue. But to sell those things, you had to spend money first. This money you spent is your expenditure.

When you subtract your expenditure from your revenue, whatever is left is your profit. If you have money left over, you made a profit! If you spent more than you earned, that's a loss.

An Example of Profit

Let's say John wants to sell ice cream cones.

• First, John spends $15 to buy all the ice cream and cones. This is his expenditure.
• Then, he sells all the ice cream cones for $20. This is his revenue.

To find his profit, John subtracts what he spent from what he earned: $20 (revenue) - $15 (expenditure) = $5 (profit)

So, John made a profit of $5. This means he has $5 more than he started with after buying and selling the ice cream.

Why is Profit Important?

Profit is very important for businesses. It helps them:

• Keep running and growing.
• Pay their employees.
• Buy new things they need.
• Invest in new ideas or products.

Without profit, a business cannot last very long. It's how they know they are doing well and can continue to offer their products or services.