not-for-profit
(noun)
A company or organization that is not meant to make a profit.
Examples of not-for-profit in the following topics:
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Disadvantages of Corporations
- This is the concept of double taxation: first the company was taxed for its profits, and later shareholders were taxed for their dividends.
- It will be very hard for you to determine if these bonuses were justified or not and if it was in the best interests of the company.
- One solution to this (as in the case of the Australian and UK tax systems) is for the recipient of the dividend to be entitled to a tax credit, which addresses the fact that the profits represented by the dividend have already been taxed.
- In other systems, dividends are taxed at a lower rate than other income (for example, in the US) or shareholders are taxed directly on the corporation's profits and dividends are not taxed.
- For example, S corporations in the US do not pay any federal income taxes.
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Profitability Ratios
- This figure should be compared to its competitors in order to determine whether this is healthy or not.
- Profitability ratios show how much profit the company takes in for every dollar of sales or revenues.
- This ratio uses the bottom line on the income statement to calculate profit for every dollar of sales or revenues.
- The profit margin is mostly used for internal comparison.
- It is difficult to accurately compare the net profit ratio for different entities.
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A Study of Process
- This company manufactures a top-quality adhesive tape called "Magic Tape. " Magic Tape is used for everyday taping applications, but it offers attractive features that most other tapes do not, including smooth removal from the tape roll, an adhesive that is sticky enough to hold items in place (but not too sticky that it can not be removed and readjusted, if necessary!
- Since 3M had no proprietary control over the transformation process for VHS tape that would allow the company to protect its profit margins for this product, it dropped VHS tape from its offerings.
- It does not matter whether the organization is a for-profit company, a non-profit organization (religious organizations, hospitals, etc.), or a government agency; all organizations must strive to maximize the quality of their transformation processes to meet customer needs.
- Magic Tape is used for everyday taping applications, but it offers attractive features that most other tapes do not, including:
- Since 3M had no proprietary control over the transformation process for VHS tape that would allow the company to protect its profit margins for this product, it dropped VHS tape from its offerings.
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Net Income
- Net income is a distinct accounting concept from profit.
- Profit is a term that means different things to different people, and different line items in a financial statement may carry the term "profit," such as gross profit and profit before tax.
- Often, the term income is substituted for net income, yet this is not preferred due to the possible ambiguity.
- As profit and earnings are used synonymously for income (also depending on United Kingdom and U.S. usage), net earnings and net profit are commonly found as synonyms for net income.
- Often, the term "income" is substituted for net income, yet this is not preferred due to the possible ambiguity.
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Profit and Value
- Earnings Before Interest and Taxes (EBIT), or operating profit, equals sales revenue minus cost of goods sold and all expenses except for interest and taxes.
- Earnings Before Tax (EBT), or net profit before tax, equals sales revenue minus cost of goods sold and all expenses except for taxes.
- It is a standard economic assumption (though not necessarily a perfect one in the real world) that other things being equal, a firm will attempt to maximize its profits.
- " Note that economic value is not the same as market price.
- As such, it is important for a firm to be able to accurately determine its present value.
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For-profit marketing versus nonprofit marketing
- As the terms connote, the difference between for-profit and nonprofit marketing is in their primary objective.
- For-profit marketers measure success in terms of profitability and their ability to pay dividends or pay back loans.
- Continued existence is contingent upon level of profits.
- While they are allowed to generate profits, they must use these monies in specific way in order to maintain their non-profit status.
- There are several other factors that require adjustments to be made in the marketing strategies for nonprofits.
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Profitability analyses (e.g. by customer, product, region)
- While it is good to know such things intuitively, it is better to know them for sure.
- And knowing them for sure requires that systematic analyses be prepared.
- "Quite often a very small percentage of the firm's best customers will account for a large portion of firm profit.
- While it is usually clear what revenue each customer generated, it is often not clear at all what costs the firm incurred serving each customer".
- In this case, cost of goods sold is substituted for "allocated costs" in column three of Exhibit 40, and column four will show gross margin by customer instead of profitability by customer.
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Return on Investment
- Marketing not only influences net profits but also can affect investment levels too.
- ROI and related metrics (ROA, ROC, RONA and ROIC) provide a snapshot of profitability adjusted for the size of the investment assets tied up in the enterprise.
- Marketing decisions have obvious potential connection to the numerator of ROI (profits), but these same decisions often influence asset usage and capital requirements (for example, receivables and inventories).
- For a single-period review, just divide the return (net profit) by the resources that were committed (investment):
- Return on investment (%) = Net profit ($) / Investment ($) × 100
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Cost-Based Pricing
- Information on demand and costs is not easily available, and managers have limited knowledge as far as demand and costs are concerned.
- Cost-plus pricing is a method used by companies to maximize their profits.
- It is a way for companies to calculate how much profit they will make.
- Cost-plus pricing is used primarily because it is easy to calculate and requires little information, therefore it is useful when information on demand and costs is not easily available.
- Therefore, cost-plus pricing is often considered the most rational approach in maximizing profits.
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The Goals of a Business
- The primary purpose of a business is to maximize profits for its owners or stakeholders while maintaining corporate social responsibility.
- According to economist Milton Friedman, the main purpose of a business is to maximize profits for its owners, and in the case of a publicly-traded company, the stockholders are its owners.
- For example, Alibaba, a Chinese Internet venture, strives to operate in the zone that Clinton calls "double-bottom line capitalism. " The emerging new mantra is to create social progress as well as create profits.
- They do not believe that workers or consumers have special rights over the property, other than the right not to be harmed by its use without their consent.
- The profit-maximizing output level is represented as the one at which total revenue is the height of C and total cost is the height of B; the maximal profit is measured as CB.