Profit (e.g. in the form of EBIT) is often not understood properly and used in the wrong context – especially when talking about profit maximising. The idea of profit maximisation for the management of an institution is void of purpose. More importantly, the opposite is helpful – the profit minimum: this answers the questions how much one has to earn as a minimum to be able to stay in business in the future. This is usually a lot higher than the idea of the „maximum profit“ that can be made.
Profit, according to the strategic navigation system of Gälweiler, is one the control variables for operational management. It is defined by the difference between the effort and return of an institution. Profit, growth and capital management are forerunning control variables of liquidity.« Back to Glossary Index