Text b factors affecting profit

There are many factors that affect how much profit a business might make. Here are some of the most common.

Expenses. Expenses must be deducted from income to determine profit. The more the business's expenses increase, the lower profit will be. It is important for businesses to keep their expenses as low as possible.

Demand for the product or service. If the demand for the business's products or services remains the same or increases, profit increases too. And if demand decreases, profit decreases too.

Economy. Sometimes, the economy experiences a recession or depression – wages may be lower or people are out of work. A business's profit may be decreased simply because its customers do not have money to buy as many goods or services as in the past. The profits of businesses are more likely to increase, since more sales can be made.

Chance. Sometimes profits are affected by chance or luck. On occasion, this is good for the business. On the other hand, the chance of loss is always possible. And, even though a business is going well one year, there is no guarantee that factors, many times beyond control, will not change the profit picture.

Prices. Why don't businesses just raise their prices to cover any increase in the cost of merchandise or any decrease in demand? Actually, it is difficult for businesses to raise their prices because decreased sales might result. Customers who don't like price increases may show their dissatisfaction by not doing any further business with the company if they are able to get the same or similar products from another businesses. Because most of the businesses in the free enterprise system exist in a competitive environment, it is important that a business does not charge more than its competitors unless it gives some additional service to customers.

How to increase profit?

Profits are not fixed or guaranteed, there are many ways a business owner can help to increase profit. Increasing sales is a popular way to increase profit. Businesses try to increase sales by offering better quality products or services than competitors, by keeping prices at/or below the level of competitors, and by using promotional techniques, such as personal selling, creative displays, special sales, and advertising.

Profits can be increased when workers are more efficient. This means that workers must use scarce resources wisely. These resources include such things as time and supplies. For example, workers should spend time on the job working, rather than talking with others or taking care of personal matters. When workers are efficient, they are able to produce more for the company. Increased production can result in more sales and more profit. Many businesses reward employees for efficient work habits through monetary bonuses and other rewards. Some of the work habits, which are rewarded, are promptness, regular attendance, and superior performance. Increasing worker efficiency is receiving much attention as businesses realize just how much time and money can be saved.

Another way of increasing profit is decreasing expenses. Businesses can decrease expenses in several ways. They might consider eliminating some free services, such as delivery, gift wrapping, or alterations. Businesses must be certain that their expenditures in terms of cost of merchandise are at the best prices. Perhaps a new supplies would offer better prices or benefits than a current supplier. In addition, businesses should try to obtain the best rates for such expenses as advertising, insurance, etc., and should try to keep payroll expenses as low as possible without sacrificing service to customers. And, businesses should encourage workers to use resources wisely. For example, turning off lights and equipment when not being used and not wasting supplies. Decreasing expenses is the best way that businesses can help to increase profit.

Comments:

1. To deduct – вычитать

2. Recession – спад

3. In terms of – в исчислении

4. Rate – тариф

Divide the text into logical parts and copy out the topic sentence in each part that could be useful for composing a plan to the text.

Write a brief summary of the text. Use the following key-patterns.

1. As the title implies the first part of the text deals with ….. .

2. It is spoken in detail ….. .

3. In the second part of the text much attention is given to ….. .

4. The text gives the detailed analysis of ….. .

5.The text is of interest to ….. .

Answer the questions.

1. What are the most common factors affecting the profit?

2. What is the relation between expenses and profit?

3. How does demand influence the profit?

4. What do businesses experience during the recession?

5. Are there any guarantees that business will be successful?

6. Why does not price raising guarantee higher profits?

7. What is a popular way to increase profit?

8. What workers are referred to as “efficient workers”?

9. How do businesses reward their efficient employees?

10. How can expenses be decreased?

Summarize the information of the text and render its essentials.

Look through the text and fill in the gaps with the words given below.

Normal profit

..(1).. a component of the firm's opportunity costs. The time that the owner ..(2).. running the firm could be spent on running another firm. Normal profit is the ..(3).. the entrepreneur can expect to earn or the profit that a business owner considers ..(4).. to make running the business. When a firm ..(5).. positive economic profits, we say returns to entrepreneurial ability are ..(6).. . In the short run, a firm earning subnormal profits (i.e. an economic loss) can continue to do ..(7).. as long as revenues cover average variable costs. In a perfect market, positive economic profits cannot be ..(8).. in the long run as more firms enter the market and increase competition.

An ..(9).. profit arises when revenue exceeds the opportunity cost of inputs, noting that these costs ..(10).. the cost of equity capital that is met by "normal profits."

All enterprises can be stated in financial capital of the ..(11).. of the enterprise. The economic profit may include an element in recognition of the ..(12)..that an investor takes. It is often uncertain, because of incomplete information, whether an enterprise will succeed or ..(13)..

This extra risk is included in the minimum ..(14).. of return that providers of financial capital require, and so is treated as still a cost within economics. The size of that return corresponds to the riskiness associated ..(15).. each type of investment.

Risks, business, sustained, is, spends, economic, earns, with, return, supernormal, owners, include, rate, necessary, not.

Render the text into English.