The big idea
📊
The money, simply
Profit is what’s left after costs. Understand the three and you understand the engine.
Business · Lesson 5
Revenue, Cost and Profit
beginner⏱ 14 min · 9 cards
The core equation
Revenue − Cost = Profit
Everything else is detail.
Know your numbers
Four essentials
Tap each.
Compare
Two kinds of cost
Fixed
Flat, whatever you sell
Tap.
tap for example ↻
Variable
Rises per unit
Tap.
tap for example ↻
Below a certain volume, fixed costs go uncovered no matter how good the bread.
Key term
The quiet killer
Can a profitable business run out of money?
tap to reveal ↻
Profit ≠ cash
Yes. Deliver in March, get paid in June, owe wages in April. Profit says the model works; cash decides whether you survive to enjoy it.
Nuance
Trap
Think like a Maester
Growing revenue while losing money on each sale just loses money faster.
Recap
Key takeaways
- ✓Revenue is money earned; cost is resources consumed; profit is the difference.
- ✓Growing revenue with faster-growing costs is not success.
- ✓Fixed costs stay flat with volume; variable costs rise with each unit.
- ✓Profit and cash differ in timing, and the gap can be fatal.
Quick check
Which best describes what a business is?
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