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Summary
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How to understand and analyze financial indicators?
Revenue shows the amount of money earned for a certain period before deducting any expenses.
Net profit shows earnings for a certain period after deducting all expenses.
Net profit = Revenue – all expenses
Profitability shows the share of revenue after deducting all fixed and variable costs. The larger this share the better. The general rule is that it is good when the profitability exceeds 25-30%. However, some types of businesses can not achieve such profitability due to their specifics.