The money that a business effectively saves by operating profitably is called "profit." More specifically, profit is the amount of money a business retains after covering all of its costs and expenses, including operating costs, costs of goods sold, and other financial obligations. Profit can be categorized into different forms like gross profit, operating profit, and net profit depending on which costs are deducted. Profitability itself refers to how efficiently a business converts its revenue into profit, measuring the portion of income that remains after expenses relative to sales or assets. By operating profitably, the business creates profit, which represents the money effectively saved and available for reinvestment, growth, or distribution to owners. In summary:
- Profit is the actual money saved and earned after expenses.
- Profitability measures how efficiently money is saved relative to revenue.
- Common terms related to operational profitability are operating profit and net profit.
Thus, the money saved by operating profitably is called profit, often understood through profitability metrics like profit margin or operating profit margin.