It might seem obvious, but when managing a business, it's important to understand how your business makes a profit.
Your company needs a good business model and a good profit model. Your business sells products or services and earns a certain amount of margin on each unit sold.
The number of units sold is the sales volume during the reporting period. Your business subtracts the amount of fixed expenses for the period, which gives them the operating profit before interest and income tax.
It's important not to confuse profit with cash flow.
Profit equals sales revenue minus expenses.
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