Finance and valuation
Practice profitability
Practice profitability is how much money remains for the owner and the business after all costs are paid, shown by the income statement as profit or loss for a period.
A new-dentist blog from the ADA states that an income statement measures patient collections (sales), expenses and profit or loss over the reporting period. That makes the income statement the first place to look at profitability. Profit depends on collections, overhead and how much the owner takes as pay, so it can change without any change in production. The ADA's Guidelines for Practice Success also note that many businesses raise prices on a regular basis, typically to meet a specific profit margin. Owners can see the trend by comparing statements across periods. A CPA can help read them. See profit margin.