Some companies like Newman’s Own say “100% of profits to charities”. Obviously, their employees still get paid, and the fact that new cookie brands come out means that some of the money is re-invested in the company. Presumably those two financial factors are not considered part of profits since they aren’t going to charity.
So at other companies, where do the profits go? If they aren’t going into either the company or any of its employees (including the CEO), where else could it go and still be considered profit?
In: Economics
Profits are whatever money left over after paying all expenses. So “All profits” means for every $5 box of cookies you bought, if they spent $2 on ingredients, $1 on labor, 50 cents on factory, 50 cents on packaging and distribution, 50 cents on marketing, and then 50 cents that remains are the profit on that box of cookies. That’s what would be donated if 100% of profits go to charity.
Normally, profits are retained in the business for investment (save to build a new factory down the road) or to get company through leaner times (like now, when they still need to pay rent and payroll despite sales being down), or get paid out to owners/shareholders as dividends.
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