Shade circle in a Profit and Loss Statement - Online Editor

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How to shade circle in the Profit and Loss Statement

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in this video youll learn whats an income statement is Ill show you what it looks like and how you can use it to measure a businesss financial performance hey there welcome back to accounting stuff Im James and in todays video were going to cover the income statement also known as the profit and loss statement or the PL for short this is one of the three major financial statements in accounting along with a balance sheet and the cash flow statement collectively these reports give us an impression of the businesss financial health so its important that we understand how they work Ive already made videos covering the balance sheet and the cash flow statement which you can find linked up here and down below in the description but up until now I havent posted a video yet on the income statement and Ive received a lot of requests from you guys to cover this topic so thanks for all these particularly from one subscriber so Nili if youre watching this video goes out to you good

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Which rectangle represents the firms profit?

Now, to fill in the area that represents the profit or loss of the firm, use the blue rectangle (circle symbols) on the graph.

At what point will this firm make an economic profit?

The general rule is, if MR (Marginal Revenue) is higher than ATC, the firm is making economic profit. If MR is at ATC, the firm is making $0 economic profit and is therefore neutral. If MR is lower than ATC, the firm can still operate in the short run but it will exit the market in the long run.

How do you calculate the firms economic profit?

Economic profit is found when explicit and implicit costs are subtracted from total revenue. Economic Profit = Total Revenue - (Explicit Costs + Implicit Costs). Notice that economic profit can be negative even if profit is positive.

At what prices will a firm earn an economic profit?

If the price that a firm charges is higher than its average cost of production for that quantity produced, then the firms profit margin is positive and it is earning economic profits.

At what price is the firm making an economic profit?

The answer depends on firms profit margin (or average profit), which is the relationship between price and average total cost. If the price that a firm charges is higher than its average cost of production for that quantity produced, then the firms profit margin is positive and it is earning economic profits.

How do firms make economic profit?

economic profit: The difference between the total revenue received by the firm from its sales and the total opportunity costs of all the resources used by the firm. accounting profit: The total revenue minus costs, properly chargeable against goods sold.

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Shade circle in the Profit and Loss Statement in a few clicks