Question 50 - HPE0-V27 discussion

Business value is a measure of the benefits that an organization or a project delivers to its stakeholders, such as customers, employees, shareholders, or society1.

One way to quantify business value is to calculate the profit, which is the difference between the revenue and the expenses of an organization or a project2.

Revenue is the income that an organization or a project generates from its products, services, or other sources2.

Expenses are the costs that an organization or a project incurs to operate, produce, or deliver its products, services, or other outputs2.

Therefore, the formula to calculate profit is: profit = revenue - expenses2.

For example, if an organization has a revenue of $100,000 and an expense of $80,000, its profit is $20,000.

The other options are incorrect because they do not reflect the correct relationship between revenue, expenses, and profit:

A) profit = revenue / expenses would imply that the profit is inversely proportional to the expenses, which is not true. For example, if the revenue is $100,000 and the expense is $80,000, the profit would be $1,250, which is lower than the actual profit of $20,000.

B) profit = revenue + expenses would imply that the profit is equal to the sum of the revenue and the expenses, which is not true. For example, if the revenue is $100,000 and the expense is $80,000, the profit would be $180,000, which is higher than the actual revenue.

C) profit = revenue * expenses would imply that the profit is equal to the product of the revenue and the expenses, which is not true. For example, if the revenue is $100,000 and the expense is $80,000, the profit would be $8,000,000, which is unrealistic and unreasonable.

The references are:

1:What is Business Value?2:What is Profit?