Examples of for-profit in the following topics:
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- As the terms connote, the difference between for-profit and nonprofit marketing is in their primary objective.
- For-profit marketers measure success in terms of profitability and their ability to pay dividends or pay back loans.
- Continued existence is contingent upon level of profits.
- While they are allowed to generate profits, they must use these monies in specific way in order to maintain their non-profit status.
- There are several other factors that require adjustments to be made in the marketing strategies for nonprofits.
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- In contrast, a non-profit organization is legally prohibited from making a profit for owners.
- One component of nonprofit management that contrasts with the for-profit model is the existence of volunteer workers.
- A mutual-benefit non-profit corporation can be non-profit or for profit.
- For example, a manager of a for-profit company may be able to motivate employees through bonuses for sales targets or profit sharing.
- This strategy cannot work for a non-profit or mutual-benefit corporation.
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- While for-profit organizations exist to produce profit, non-profit institutions exist to benefit a society, regardless of whether profits are achieved.
- However, for-profit companies measure success in terms of the bottom line; that is, profitability, their ability to pay stock dividends or to repay loans.
- Despite their opposing objectives, for-profits and non-profits often come together to implement cause marketing programs.
- Cause marketing or cause-related marketing activities involve the collaboration of for-profit businesses and non-profit organizations for mutual benefit.
- Komen for the Cure.
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- Some firms decide to set prices to maximize profits for either the short run or the long run.
- Target revenue ($) is the corresponding figure for dollar sales.
- An alternative perspective relies on the relationship that, for each unit sold, marginal profit (Mπ) equals marginal revenue (MR) minus marginal cost (MC).
- Since total profit increases when marginal profit is positive and total profit decreases when marginal profit is negative, it must reach a maximum where marginal profit is zero - or where marginal cost equals marginal revenue - and where lower or higher output levels give lower profit levels.
- Recall formulas for calculating profit maximizing output quantity and marginal profit
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- Profit margin is one of the most used profitability ratios.
- Net profit is the gross profit minus all other expenses.
- The gross profit margin calculation uses gross profit and the net profit margin calculation uses net profit .
- The profit margin is mostly used for internal comparison.
- It is difficult to accurately compare the net profit ratio for different entities.
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- An economic profit of zero is also known as a normal profit.
- Despite earning an economic profit of zero, the firm may still be earning a positive accounting profit.
- The reasons for the positive economic profit are barriers to entry, market power, and a lack of competition.
- For example, firms can collude and work together to restrict supply to artificially keep prices high.
- In the long run for a firm in a competitive market, there is zero economic profit.
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- Therefore, it derives four dollars for each dollar of assets it owns.
- Profitability ratios show how much profit the company takes in for every dollar of sales or revenues.
- This ratio uses the bottom line on the income statement to calculate profit for every dollar of sales or revenues.
- The profit margin is mostly used for internal comparison.
- It is difficult to accurately compare the net profit ratio for different entities.
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- In general, profit is the difference between costs and revenue, but there is a difference between accounting profit and economic profit.
- For example, a paper production firm may own a grove of trees.
- The implicit cost of that natural resource is the potential market price the firm could receive if it sold it as lumber instead of using it for paper production.
- These consist of the explicit costs a firm has to maintain production (for example, wages, rent, and material costs).
- Economic profit also accounts for a longer span of time than accounting profit.
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- An inventory valuation allows a company to provide a monetary value for items that make up their inventory.
- Either of these methods should never be used as a substitute for performing an annual physical inventory.
- Gross profit ratio equals gross profit divided by sales.
- Furniture Palace has cost of goods available for sale of $5000.
- The estimated cost of goods sold on the income statement for the period is $$1000\cdot.25 = $250$.
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- Profit maximization is the short run or long run process that a firm uses to determine the price and output level that returns the greatest profit when producing a good or service.
- When a table of costs and revenues is available, a firm can plot the data onto a profit curve.
- The profit maximizing output is the one at which the profit reaches its maximum .
- The marginal revenue-marginal cost perspective relies on the understanding that for each unit sold, the marginal profit equals the marginal revenue (MR) minus the marginal cost (MC).
- Profit maximization is directly impacts the supply and demand of a product.