Originally Posted by Kaiora
Lecture time! *Gets out recent business studies courswork/notes*
Here we go;
Revenue:
This is the total value of sales made within a trading period.
Other terms for revenue that you may hear are, Income and/or sales.
Without a business ahving any revenue coming into the business to make a profit, there is no use of the business staying up and running. The businesses has used their money to set it up, also maybe taken out bank loans or used bank overdrafts to help set up the business. All income from a business is used to buy raw materials, wages, transport etc, whatever the businesses may require.
What is profit?
This is the amount left from revenue after costs have been deducted (wages, etc).
Revenue - costs = Profit/Loss.
If Habbo have very little revnue, they would make no profit what so ever, which would be a loss, and they may go bankrupt.
There are many ways of expressing profit,
Examples:
Gross Profit.
Net Profit or Even.
Profit after tax.
Each has a very precise definintion yet all of them measure some type of revenue minus some type of cost.
The relationship between the costs and revenue of a business will determine the profit it makes. If the business want to increase profits, it needs to earn the highest possible revenue yet reduce their costs to a minimum.
I hope you understand what I am trying to say here, if it is too complicated, then here is a shorter understanding statement;
Habbo need money, to run a business to make it better. End of ;)