Profit and Loss Made Simple

Understanding Business Success Year 8 Business Studies New Zealand Curriculum

What Makes a Business Successful?

Think about your favourite shop or restaurant What do you think makes them successful? How do they make money?

What is Revenue?

Revenue = All the money a business receives Also called 'sales' or 'income' Example: McDonald's sells 100 burgers at $8 each = $800 revenue

What are Expenses?

Expenses = All the money a business spends Includes: staff wages, rent, ingredients, electricity Example: McDonald's spends $500 on wages, rent, and ingredients

The Profit Formula

Calculate the Profit!

Pizza Palace sells 80 pizzas at $12 each Their expenses for the day were $720 Work with a partner to calculate: 1. What was their revenue? 2. What was their profit?

Profit vs Loss

{"left":"PROFIT (Good!)\n• Revenue > Expenses\n• Business makes money\n• Can expand and grow\n• Example: $1000 revenue, $800 expenses = $200 profit","right":"LOSS (Not good!)\n• Revenue < Expenses\n• Business loses money\n• Might need to close\n• Example: $600 revenue, $800 expenses = $200 loss"}

Real Example: Apple Inc.

2023 Revenue: $383 billion 2023 Expenses: $267 billion 2023 Profit: $116 billion That's why Apple can invest in new products!

Why Do Some Businesses Fail?

Think about businesses that have closed down What might have gone wrong? How could they have avoided making a loss?

How to Increase Profit

Option 1: Increase Revenue • Sell more products • Increase prices (carefully!) Option 2: Decrease Expenses • Find cheaper suppliers • Reduce waste • Improve efficiency

Business Advice Challenge

Scenario: 'Kiwi Café' is making a loss Revenue: $2000 per week Expenses: $2400 per week In groups, suggest 3 ways to help them make a profit Present your ideas to the class!

Remember This!

"Profit is not just about making money - it's about creating value for customers while managing costs wisely." - Key principle of successful business