🎯 Goal: Understand how a business earns and why high revenue isn't always profit.
A business turns effort and capital into money. Revenue is total sales; profit is what's left after all costs; margin = profit ÷ revenue, showing how much of each sales dong is kept.
Let’s explore
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Revenue = total money from sales/services. It's the "input" before costs are subtracted.
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Profit = revenue − all costs (materials, wages, rent, tax). That's the money truly kept.
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Margin = profit ÷ revenue. Two firms with equal revenue but different margins are differently "healthy".
Practice activity
🧮 A shop sells 200M with 170M of costs. What are profit and margin?
Worked example: Profit = 200 − 170 = 30M. Margin = 30 ÷ 200 = 15%. If another shop has the same 200M revenue but 190M costs, its margin is only 5% — much weaker for the same revenue.
Quick quiz
1. How is profit computed?
→ Revenue − all costs
2. Margin = ?
→ Profit ÷ revenue
3. Revenue 500M, costs 450M. Margin?
→ 10%
4. Does high revenue guarantee high profit?
→ No, it depends on costs
5. Of two firms with equal revenue, the higher-margin one usually?
→ Keeps more money
🎯 Real-life mission
Pick a shop or stall you visit often. Estimate: roughly how much they sell per day (revenue), what their big costs are, and guess whether the margin is high or low. Write 3–4 sentences explaining your reasoning.