General formulas profit calculation.

Gross profit = revenue - the cost of goods sold or services sold

Profit / loss from sales (sales) = gross profit - costs
*costs in this case - selling and management costs

Profit / loss before tax= sales profit ± operating income and expenses ± non-operating income and expenses.

Net income (loss = revenue - cost of goods - expenses (administrative and commercial) - other expenses - taxes

Forex. Profit/cost calculator.

On Forex and other trading exchanges, profit / loss will be considered the number of points earned / lost, costs - spread and swap.

working lot fixed	number of points	number of transactions	spread in points	swap amount	income	net income	costs	profit/cost ratio
				-$	$	$	$	% /%

number of points - the number of points won
number of transactions - total concluded deals

This calculator uses 4-digit quotes and a fixed lot

For a quick count of points and the number of transactions, we use account monitoring.
For example: trader made 100 trades, currency GBPJPY, spread 7 points, working fixed lot - 1, swap amount approximately -50$ (for all trades),
there were profitable and unprofitable transactions, as a result, the trader earned 100 points.
we get: income $ 8050, net income $ 950, costs $ 7050, profit to cost ratio 11.88% / 88.13%, that is, the trader gives almost all the profit to the broker!

The trader must draw the appropriate conclusions.
The calculator is designed for a superficial evaluation of transactions. The calculator does not take into account the difference in the price of one point for different currency pairs (in this example, for the GBPJPY currency pair, the price of one point with a volume of 1 lot is $12.61, and in the example $10). Also, the calculator does not provide the ability to calculate when trading with different volumes and when trading several currency pairs with different spreads. In such cases, you can enter average values, but the calculation error will increase.

Accountants. Four ways to calculate profit.

Nuances of calculation in practice (+ examples):

The same percentage for the entire range

The method of calculating gross income for total turnover is used in the case when a single percentage of the trade markup is applied to all goods. With this option, first set the gross income, and then the markup.

The accountant must apply the formula that is given in the document:

VD \u003d T x PH / 100,

where T is the total turnover; РН - calculated trade allowance.

The trade markup is calculated according to a different formula:

PH \u003d TH / (100 + TH).

In this case: TN - trade markup in percent. Turnover is understood as the total amount of revenue.
example :
In LLC Biryusa, the balance of goods at the sale value (balance on account 41) as of July 1 amounted to 12,500 rubles. The trade margin on the balance of goods as of July 1 (balance on account 42) is 3,100 rubles. In July, products were received at the purchase price, excluding VAT, in the amount of 37,000 rubles. According to the order of the head of the organization, the accountant must charge a trade margin of 35 percent for all goods. Its size for goods received in July amounted to 12,950 rubles. (37,000 rubles x 35%). The company received 51,000 rubles from sales in July (including VAT - 7,780 rubles). Selling expenses - 5000 rubles.

Calculate the realized trade margin using the formula РН = ТН / (100 + ТН):

35% / (100 + 35%) = 25,926%.

Gross income will be:

HP = T x PH / 100

51 000 rub. x 25.926% / 100% = 13,222 rubles.

In accounting, you need to make the following entries:

Debit 50 Credit 90-1

- 51,000 rubles. - reflected the proceeds from the sale of goods;

Debit 90-3 Credit 68

- 13,222 rubles - the amount of the trade margin on goods sold was written off;

Debit 90-2 Credit 41

- 51,000 rubles - the sale price of goods sold was written off;

Debit 90-2 Credit 44

- 5000 rubles - written off sales expenses;

Debit 90-9 Credit 99

- 442 rubles. (51,000 rubles - 7,780 rubles - (-13,222 rubles) - 51,000 rubles - 5,000 rubles) - profit from the sale.

Each product has its own percentage

This option is needed for those who have different markups for different groups of goods. The difficulty here is as follows, each of the groups includes products with the same margin, so it is necessary to keep a mandatory record of turnover. Gross income (VD) in this case is determined by the following formula:
HP = (T1 x RH + T2 x RH + ... + Tn x RH) / 100,
where T is the turnover and PH is the estimated trade markup for groups of goods.
example:
The accountant of Biryusa LLC has the following data:
Small shops and stalls usually determine the trade margin by calculation - “manually”, since not every one of them can afford expensive software. Roskomtorg back in 1996, with its letter dated July 10, 1996 No. 1-794 / 32-5, approved “ Guidelines on accounting and registration of operations for receiving, storing and dispensing goods in trade organizations. In them, the committee proposed several options for calculating the realized trade margin: by total turnover; according to the range of goods turnover; by average percentage; according to the assortment of the rest of the goods. The experts of the Moscow Accountant magazine examined these methods in more detail. The method of calculating gross income for total turnover is used in the case when a single percentage of the trade markup is applied to all goods. With this option, the gross income is first set, and then the margin. The accountant must apply the formula that is given in the document: VD \u003d T x PH / 100, where T is the total turnover; РН - estimated trade markup. The trade markup is calculated according to a different formula: РН = ТН / (100 + ТН). In this case: TN - trade markup in percent. Turnover is understood as the total amount of revenue. Example 1 In Biryusa LLC, the balance of goods at the sale value (balance on account 41) as of July 1 amounted to 12,500 rubles. The trade margin on the balance of goods as of July 1 (balance on account 42) is 3,100 rubles. In July, products were received at the purchase price, excluding VAT, in the amount of 37,000 rubles. According to the order of the head of the organization, the accountant must charge a trade margin of 35 percent for all goods. Its size for goods received in July amounted to 12,950 rubles. (37,000 rubles x 35%). The company received 51,000 rubles from sales in July (including VAT - 7,780 rubles). Selling expenses - 5000 rubles. Calculate the realized trade margin using the formula РН = ТН / (100 + ТН): 35% / (100 + 35%) = 25.926%. Gross income will be equal to: VD \u003d T x PH / 100 51 000 rubles. x 25.926% / 100% = 13,222 rubles. In accounting, the following entries must be made: Debit 50 Credit 90-1 - 51,000 rubles. - reflected the proceeds from the sale of goods; Debit 90-3 Credit 68 - 7780 rubles. - reflected the amount of VAT; Debit 90-2 Credit 42 (reversal) - 13,222 rubles - the amount of the trade margin on goods sold was written off; Debit 90-2 Credit 41 - 51,000 rubles - written off the sale price of goods sold; Debit 90-2 Credit 44 - 5000 rubles - written off sales expenses; Debit 90-9 Credit 99 - 442 rubles. (51,000 rubles - 7,780 rubles - (-13,222 rubles) - 51,000 rubles - 5,000 rubles) - profit from the sale. This option is needed for those who have different markups for different groups of goods. The difficulty here is as follows, each of the groups includes products with the same margin, so it is necessary to keep a mandatory record of turnover. Gross income (VD) in this case is determined by the following formula: VD \u003d (T1 x PH + T2 x PH + ... + Tn x PH) / 100, where T is the turnover and PH is the estimated trade markup for groups of goods. Example 2 The accountant of Biryusa LLC has the following data: The balance of goods on July 1, rub. Goods received at purchase price, rub. Trade margin,% Markup amount, rub. Revenue from the sale of goods, rub. Selling expenses, rub.
Goods of group 1 4600 12 100 39 4719 16 800 3000
Group 2 goods 7900 24 900 26 6474 33 200
Total: 12,500 37,000 11,193 50,000

It is necessary to determine the estimated trade markup for each group of goods:
For group 1, the estimated trade markup will be:
PH \u003d TH / (100 + TH);
39% / (100 + 39) = 28,057%.
For group 2 goods:
PH \u003d TH / (100 + TH);
26% / (100 + 26) = 20,635%.
Gross income (the amount of realized trade margin) will be equal to:
(16,800 rubles x 28.057% + 33,200 rubles x 20.635%) / 100 = 11,564 rubles.
In the accounting of the company, it is necessary to draw up the postings:
Debit 50 Credit 90-1
- 50,000 rubles. - reflected the proceeds from the sale of goods;
Debit 90-3 Credit 68
- 7627 rubles. - reflected the amount of VAT;
Debit 90-2 Credit 42 (reversal)
- 11564 rubles. - the amount of the trade margin related to the goods sold has been written off;
Debit 90-2 Credit 41
- 50,000 rubles. - written off the selling price of goods sold;
Debit 90-2 Credit 44
- 3000 rubles. - written off selling expenses;
Debit 90-9 Credit 99
- 937 rubles. (50,000 rubles - 7,627 rubles - (-11,564 rubles) - 50,000 rubles - 3,000 rubles) - profit from the sale.

The simplest margin

The markup on the average percentage can be applied by any firm that takes into account the goods at selling prices. Gross income by average interest is calculated by the formulas:
IA \u003d (T x P) / 100, where P is the average percentage of gross income, T is the turnover.
The average percentage of gross income will be equal to:
P \u003d (TNn + TNp - TNv) / (T + OK) x 100.
The indicators given in the formula mean the following:
ТНн - trade markup on the balance of products at the beginning of the reporting period (account balance 42);
TNp - markup on goods received during this time;
TNv - for retired (debit turnover of account 42 "Trade margin" for the reporting period). In this case, disposal is understood as the return of goods to suppliers, write-off of damage, etc.;
OK - balance at the end of the reporting period (account balance 41).
example:
The accountant of Biryusa LLC revealed the balance of goods on July 1 (account balance 41). At a sale price, it amounted to 12,500 rubles. The amount of the trade margin on this balance is 3100 rubles. During the month received at the purchase price of goods for 37,000 rubles (excluding VAT). The mark-up charged on products received in July is 12,950 rubles. For the month, income from the sale was received in the amount of 51,000 rubles (including VAT - 7,780 rubles). The balance of goods at the end of the month amounted to 11,450 rubles (12,500 rubles + 37,000 + 12,950 - 51,000). Sales expenses - 5000 rubles.
Calculate the realized trade margin as follows. First, find out the average percentage gross income:
P \u003d (TNn + TNp - TNv) / (T + OK) x 100;
(3100 rubles + 12,950 - 0) / (51,000 + 11,450) x 100% \u003d 25.7%.
The amount of gross income (realized trade margin) will be:
(51,000 rubles x 25.7%) / 100% = 13,107 rubles.
In accounting, you need to make postings:
Debit 50 Credit 90-1
- 51,000 rubles. - reflected the proceeds from the sale of goods;
Debit 90-3 Credit 68
- 7780 rubles. - reflected the amount of VAT;
Debit 90-2 Credit 42 (reversal)
- 13,107 rubles. - the amount of the trade margin on the goods sold has been written off;
Debit 90-2 Credit 41
- 51,000 rubles. - written off the sale price;
Debit 90-2 Credit 44
Debit 90-9 Credit 99
- 327 rubles. (51,000 rubles - 7,780 rubles - (-13,107 rubles) - 51,000 rubles - 5,000 rubles) - profit from the sale (financial result).

Let's count what's left

When calculating gross income, according to the assortment of the balance, the accountant needs data on the amount of the trade margin. To obtain this information, it is necessary to keep records of the accrued and realized surcharge for each item of goods. At the end of each month, an inventory is carried out, determining these amounts.
The calculation of gross income for the assortment of the balance of goods is carried out according to the formula:
VD \u003d (TNn + TNp - TNv) - TNk.
The indicators mean the following:
ТНн - trade markup on the balance of goods at the beginning of the reporting period (balance of account 42 "Trade margin");
TNp - trade markup for products received during the reporting period (credit turnover of account 42 "Trade margin" for the reporting period);
TNv - trade markup for retired goods (debit turnover of account 42 "Trade margin");
TNK - markup on the balance at the end of the reporting period.
example:
The amount of the trade margin relating to the balance of goods on July 1 (balance on account 42) is 3,100 rubles. The accrued allowance for products received in July is 12,950 rubles. For a month, the company gained 51,000 rubles from the sale. The markup on the balance of goods at the end of the month according to the inventory data (balance on account 42) is 2050 rubles. Sales expenses - 5000 rubles. Calculate the realized trade margin:
VD \u003d (TNn + TNp - TNv) - TNk;
(3100 rubles + 12,950 - 0) - 2050 \u003d 14,000 rubles.
In accounting, it is necessary to draw up postings:
Debit 50 Credit 90-1
- 51,000 rubles - reflected the proceeds from the sale of goods;
Debit 90-3 Credit 68
- 7780 rubles. - reflected the amount of VAT;
Debit 90-2 Credit 42 (reversal)
- 14,000 rubles. - the amount of the trade margin on the goods sold has been written off;
Debit 90-2 Credit 41
- 51,000 rubles. - written off the sale price of the sold;
Debit 90-2 Credit 44
- 5000 rubles. - written off selling expenses;
Debit 90-9 Credit 99
- 1220 rubles. (51,000 rubles - 7,780 rubles - (-14,000 rubles) - 51,000 rubles - 5,000 rubles) - profit from the sale.

Let's sum up.

To calculate income tax, you need to know the purchase price of goods. It can be determined based on the value of the realized trade margin using any of these methods (with the exception of the average percentage method). However, do not forget about the possible deviations of the purchase price in the accounting and tax records. For example, in accounting, interest on a loan is included in the cost of goods. For tax accounting such interest is included in non-operating expenses.
With the method of determining the margin on the average percentage, the purchase price of the goods sold in accounting may not coincide with the same indicator in tax accounting. This is due to the fact that each group has its own allowance. When calculating the realized margin in accounting, all data are averaged, and in tax accounting, the sales proceeds are reduced by the cost of purchased goods (Article 268 of the Tax Code). The latter is determined in accordance with the accounting policy.

Section 1. The concept of net profit, calculation formula net profit.

Net profit - this is a part of the balance sheet profit of the enterprise, remaining at its disposal after paying taxes, fees, deductions and other obligatory payments to the budget. Net income is used to increase working capital enterprises, formation of funds and reserves, and investments in production.

The amount of net profit depends on the volume of gross arrived and quantities taxes; Based on the volume of net profit, dividends to shareholders are calculated enterprises.

Net profit is part of the gross benefits, which remains at the disposal of the enterprise after the formation of the fund payment labor and pay taxes, deductions, mandatory payments to the budget, to higher companies and banks. Net profit is used to stimulate the team and expand production;

Net profit is the sum of profits and sales tax. Net profit is the main source of formation of budget revenues and cash savings of the enterprise.

The concept of net profit, the formula for calculating net profit

Dividends are paid out of net profit to shareholders, investment investments in the production and formation of funds and reserves.

Net Profit = Gross Profit + Other Operating Profit + Financial Profit - Taxes

Net profit \u003d profit before tax - where

Gross profit = - original cost

Other operating income = Other operating income - Other operating expenses

Financial profit = Financial income- Financial expenses

Net profit is used by the enterprise at its own discretion. The main areas of use are:

Reinvested profit (accumulation fund) is intended for the development of production, the creation of a reserve fund, investment in other enterprises.

The consumption fund is intended to be paid to owners, shareholders, decisions social problems, charity and material incentives for staff based on the results of their work.

Part of the company's profit intended for distribution among its participants is distributed in proportion to their shares in the authorized capital of the company (clause 2 of article 28 federal law dated February 8, 1998 "14-FZ "On Limited Liability Companies").

Often, the financial accounting of many companies comes down to calculating gross revenue, gross costs and dirty profits. But the most important indicator is net profit ...

This indicator is an indicator of business success, it shows how well your idea sells. Net profit is the difference between gross profit and costs. Thus, 5 boxes of matches sold brought a gross profit of 5 rubles, and amounted to 13,000 rubles.

That is, your net profit is at the level of -12,995 rubles. Considering that there is a minus sign in front of the number, this is not the best indicator.

Sometimes it happens that the gross profit is taken as indicator success. Businessmen do not calculate the net profit from their business, which may not show the correct result. Therefore, it is imperative to follow the presented indicators.

Of course, the ideal way would be to master some interesting accounting program, but not everyone can afford it, it is not always possible. You can keep such records using simple office programs like Excel, for example.

But for this you also need to consult a specialist. And you can do bookkeeping in a regular notebook, but this one is tedious and not always accurate. You choose.

The only thing worth knowing is that using proper business accounting will allow you to control your business and find out how much net profit can be alienated monthly ...

Net income is possible for anyone firms- so many people think today. However, this idea is misleading. Few lines of business can actually provide net income. Even gold mining does not allow to achieve net income. Although it would seem that everything is simple and clear here ...

businessmen Those who operate at a loss are less useful than people who own a percentage of the net profit. Although the first is much more. Fourteen percent - the average size for net profit in business, calculated by experts. Even just a smaller profit is no longer considered as such.

And the formula - that's what you need to decide when starting to calculate net profit. Other operating income, the amount paid for period taxes, financial profit, gross profit - these figures should be known to you if the traditional formula is used for calculations. For calculations, all types of profits are taken, taxes are deducted from them. This is how net income is obtained.

The relative indicator of economic efficiency - that's what profitability is today. Also, this is the concept that always follows net income. Due to profitability businessman can assess how efficiently certain resources are used in the enterprise. The ratio of net profit to the assets and resources that form it is how you can calculate the profitability ratio. Losses from penalties, penalties, fines paid, losses from sales in relation to benefits - thus, the loss is calculated.

The most important tool for regulating the economy - that's what profit is for modern business. Only making a profit allows any enterprise to remain and be considered successful. In addition, only profit allows the business to develop further and expand it.

Net profit and its calculation mechanisms are mandatory knowledge for any entrepreneur who is just starting his journey in the modern market. Estimating the business itself and investing in it is the main task of calculating net profit. They were created not only to assure others of the success of any business. This is the only way to assess how successful the choice of the sphere in which a person starts his business was. This is important at least in order to make a decision - to continue doing this, or to look for yourself in something new. That is why you should take care of such calculations. It is not always necessary for a businessman to do this himself, you can hire special officer. Of course, it will cost a certain amount, but you can be sure that no details will slip away.

Net income (Net Income) is

Sources

Wikipedia - The Free Encyclopedia, WikiPedia

vedomosti.ru - Vedomosti

academic.ru - Academic Dictionary

glossary.ru - Glossary

finsector.com - Financial sector

buhgalteria.ru - Accounting

netexchange.su - Favorable currency exchange

Encyclopedia of the investor. 2013 .

See what "Net profit" is in other dictionaries:

Net profit- (available earnings) See: net income per share (earnings per share). (income profit) Any amount owed to a person or organization that represents net income and is not used to pay for capital. The… … Financial vocabulary

Net profit- (net profit) 1. Net profit before taxation: The profit of the organization after taking into account all receipts and payments. AT trade organizations net profit is obtained by subtracting from the gross profit (gross profit) all ... ... Glossary of business terms

Net profit- Net profit is the part of the company's balance sheet profit remaining at its disposal after paying taxes, fees, deductions and other obligatory payments to the budget. Net profit is used to increase the working capital of the enterprise, ... ... Wikipedia

net profit- Profit for the period received after deducting from the profit of all expenses for this period. Topics accounting EN net incomenet earnings ... Technical Translator's Handbook

NET PROFIT- (net profit) The profit of the organization after taking into account all expenses incurred. It can be calculated both before and after the deduction of the tax payable. Economy. Dictionary. Moscow: INFRA M, Ves Mir Publishing House. J. Black. General edition: d.e ... Economic dictionary

Net profit- NET PROFIT The company's gross income (see Total revenue) minus external costs (see Explicit cost). In financial statements, net profit is calculated as gross profit (see Gross profit) minus operating expenses. See Profit, Profit… … Dictionary-reference book on economics

net profit- profit for covering all expenses of the enterprise ... Reference commercial dictionary

NET PROFIT- - profit remaining at the disposal of the enterprise after paying taxes. It is calculated as the difference between gross profit and payments to the budget ... Concise Dictionary economist

Net profit is a concept that applies to both small businesses and large corporations. Increasing this part of income is the main task of every businessman. To correctly calculate profit, you need to know its main indicators and be able to use a special formula.

This article will serve you step by step guide in net income calculation and data analysis.

Net income: definition

Net income is a part of . This is the balance after payment of all mandatory taxes, fees, deductions and other payments. Due to the net share of profits, you can increase working capital, form various funds and reserves, as well as invest.

Net income is the main source of formation of the enterprise's budget, as well as its cash savings. This indicator allows you to stimulate the team and expand production. There are many ways to use this indicator. The task of management is to correctly distribute the available finances so that they continue to bring dividends.

Net profit indicators

In order for net profit indicators to work for the benefit of the company, they must be analyzed. This will help determine the effectiveness of each of them and the business as a whole. Based on the data obtained, you will be able to determine the prospects for growth, equipment modernization and assortment renewal.

It will also be possible to track how production volumes affect net profit. But first things first.

Revenue for the defined period

The analysis of this indicator is called horizontal. To study in, you will need the current balance sheet of the enterprise, income statements, financial plan companies. In some cases, it will be necessary to use other accounting documents.

You can analyze revenue for the month of work, quarter, year. It all depends on the scale of the business and the area in which it is represented. If this is direct sales, then every hour of work and the profit from it are important here. If you are engaged in production, then it is enough to carry out such an analysis once a quarter or a year.

Thus, the revenue indicator within a certain time frame allows you to determine the profitability of the enterprise and develop an optimal strategy for further development.

Production cost

- an important complex indicator that makes it possible to judge the effectiveness of the company's use of its available resources and the level of organization of work at the enterprise.

The cost price is expressed in monetary terms and allows you to determine the cost per unit of production. As a rule, the final amount includes the costs of preparation for production, manufacture and sale.

Analysis of the indicator makes it possible to determine at what stage production costs reach their maximum value and reduce them. This directly affects the net profit, which can be increased only by reducing costs.

In reality, this may be the purchase of cheaper raw materials or free shipping any components. It can also be benefits for electricity or water supply.

Calculation of net profit. Formula

The calculation of net profit is carried out within a certain period. As well as with the indicator of total revenue, this can be a quarter, a year or a month.

All data for calculating net profit are taken exclusively within the selected period of time.

The formula for calculating net income is quite simple:

PE \u003d FP + VP + OP - CH, where

PE - net profit,

FP - financial profit,

VP - gross profit,

OP - operating profit,

VP \u003d revenue - cost of production;

FI = financial income - financial expenses;

OP = operating income - operating expenses.

Also, net profit can be displayed in the form of the following formulas:

NP = B (revenue) - SP (production cost) - Management and selling expenses - Other expenses - Taxes

PE = Profit - Taxes

The economic meaning of each of the formulas is the same, so you can use the one that seems most convenient to you. The first one in this case is more detailed and will allow you to calculate all the components of your income.

According to statistics, the normal net profit in business is about 14%. If this value is less, then the company can be considered unprofitable. If the net profit does have negative meaning, then the business is clearly operating at a loss.

However, this is considered normal when a startup has just embarked on the path of its development and has not yet managed to return the invested funds.

Calculation example

We offer you a simple business example - a small publishing agency. The total profit from books sold for the month was $20,000. The rights to publish some works and some promotional materials to order were also sold. This brought in another $7,000 and $3,000, respectively.

The company's total profit was:

$20K + $7K + $3K = $30K

The total expenses of the publishing house for the current month amounted to $13,000.

Based on these data, you can determine the net profit (NP) by simple subtraction.

$30K - $13K = $17K

The company made a net profit of $17,000.

Example Analysis

The income of the company can be very different. This is both the sale of products and the sale of services. Also, interest on deposits, etc., can act as income. In our case, the publishing house receives income not only from the sale of books, but also the rights to various materials, and the production of advertising to order.

It should be borne in mind that if any of the clients needed to pay monetary compensation, then the amount would be deducted from the total profit.

The number of total costs also includes many indicators. Include in them all the funds spent during the reporting period. On the example of a publishing house, this is the purchase of raw materials, the remuneration of workers, electricity, the lease of space, and so on.

As for the net profit received, in the publishing house it can be used to purchase new equipment, for example, printing presses. This will lead to an increase in the number of products produced and in the future - to additional profit.

Thus, a one-time investment turns into long-term investments, which in the future will help increase net profit.

Conclusion

Net profit is not just money earned, but effective tool to develop your business. With proper use, you will provide the enterprise fast growth and development.

Net income can be used to:

• replenishment of inventory;
• development of innovations;
• renewal of production assets;
• creation of reserves;
• investments;
• charity;
• staff development.

Return at least part of the net profit received to the business. This will lead to a stable growth of the indicator up the chart.

Tracking the dynamics, over time, you will be able to enter the international arena and attract foreign investors to your project.

Business is endless statistics and graphics. Control net profit and other indicators of your income and your business will flourish!

Noskova Elena

I have been in the accounting profession for 15 years. She worked as a chief accountant in a group of companies. I have experience in passing inspections, obtaining loans. Familiar with the areas of production, trade, services, construction.

Reflecting the result of the effectiveness of the activities carried out, the profit of the company is a very broad concept. The well-known formula for profit is the difference between the proceeds from the sale of the released product and the costs of its production. But this general formulation is always adjusted by the economist conducting the analysis of the company's performance, and depends on the factors affecting its calculation and the profit figure, which can be considered from the point of view of including various cost items.

Net profit: formula

Net income is considered cash, remaining with the company after all taxes, contributions and other obligatory payments have been paid from the balance sheet. Net income remains with the company and is a financial source that goes to various needs firms, the development of the production base, the formation of reserve and incentive funds, the increase in working capital, the payment of dividends.

The formation of net profit is influenced by:

• Income from the sale of goods or the performance of services;
• The cost of manufactured products;
• The amount of mandatory payments, incl. tax.

How to calculate profit

Calculate the amount of net profit in stages:

1. First, you should collect all the costs incurred in the production process - the cost of materials and raw materials, wage and contributions to funds, depreciation production equipment and intangible assets, energy costs, communal payments, rent, selling and management costs. This is how the cost of production is formed;
2. Calculate revenue. She does:
   • from the sale of products;
   • from investments;
   • from the company's financial operations.
3. According to the formula for calculating profit "Profit = Revenue - Costs" calculate the gross income of the company;
4. An intermediate link between gross and net profit is the indicator of profit from sales, which is found as a decrease in gross profit by the amount of commercial and management costs;
5. The value of the profit before tax indicator forms the profit from sales, increased by profit from other activities;
6. Net profit is calculated by reducing the amount of gross income by the amount of tax and other necessary payments. Only extraordinary expenses incurred are deducted from net income.

Recall that the financial flows of companies are formed not only from trading revenue, i.e. operating activities. Many firms make money from financial activities and investment. These items must be included in the net profit remaining in the company. The process of formation of the company's profit is clearly demonstrated in the Statement of Financial Results. According to the principle of its compilation, all companies calculate the profit, regardless of the form of ownership and industry affiliation.

The calculation formula "Profit = Revenue - Costs" is simple and unchanged for any type of profit, but the changing amount of costs makes it possible to analyze this indicator from different angles.

Analysis of the profit and profitability of the enterprise

The main goal of any company is to obtain the highest possible profit from the resources invested in production - capital, material, labor, administrative. And, although the possibilities of extracting it remain within the framework of the general market conditions and existing competition, it is necessary to periodically evaluate how the invested resources affect the financial results and business performance. This allows you to see the analysis of profit and profitability of production.

Methods of analytical research of profit are diverse, they include the following types of analysis:

• structural;
• factorial;
• dynamic;
• index;
• comparative.

Determining the structure of profit, the economist sees what share in total mass occupies profit from the main activity and how it is affected by the growth or decline of the firm's work in other directions.

Composition changes are determined by the formulas:

• D op / pr \u003d P pr / P bottom,
• D pr / op \u003d P on / P bottom, where
  • D op / pr - the share of profit from operating activities,
  • P pr - profit from sales,
  • P bottom - profit before tax,
  • D pr / op - share of profit from other operations,
  • P on - profit from other operations.

Fluctuations in the composition of earnings are indicative of variations in profitability from operating activities: trends in profit growth from other activities (even with an absolute increase in operating profits) indicate a decrease in the productivity of the adopted business model.

Factor analysis studies the effect on profit of various factors:

• Cost of goods/services;
• Payroll costs;
• Volume of production and sales;
• Prices.

In this perspective, you can analyze any kind of profit. For example, you can calculate the impact of sales volume by the ratio of gross profit increments to revenue. The resulting value will determine the degree of change in gross profit with a change in revenue by 1 rub. More about factor analysis profits can be read in our article.

Dynamic analysis is used when comparing the growth rate of profit (any) with their value in similar previous periods. For example, you can find out the dynamics of gross profit growth for 2017 by the ratio of the absolute values ​​​​of gross profit for 2017 to it for 2016. If the obtained value is greater than 1, then an increase in the indicator is stated, and, conversely, an indicator less than 1 means a decrease in gross profit growth compared to since 2016.

To comparative analysis they are used to determine the effectiveness of the company in relation to other firms, while comparing the obtained profit values ​​​​with the indicators of competing firms, industry profit margins, etc.

Profitability analysis shows the level of profitability of the company. It is carried out by comparing the values ​​of profitability for different reporting periods, revealing a trend towards an increase or decrease in the efficiency of the use of available resources. Profitability is defined as a coefficient showing the percentage of profit derived from each ruble invested in production.

Profitability is calculated using the formulas:

• K op = BP / V x 100%, where K op is the overall profitability ratio, BP is balance sheet profit, B is revenue;
• Kvr = VP / V x 100%, where Kvr is the gross profit margin, VP is gross profit.

By the same principle, return on assets or capital is calculated.

The easiest way to determine net profit as the balance of income from activities after payment of all mandatory expenses from it. Sometimes net profit can be called "net income", "free balance", in the English-speaking world - "net profit", etc.

The intrinsic value of net profit lies in the fact that it is the ultimate goal of any entrepreneurial initiative. This is a real indicator of the commercial success of the enterprise.

The net income can be expressed in in absolute terms, i.e. in monetary terms and as a percentage of other values, such as gross income, the amount of investments, etc. All options for estimating net profit may be required depending on the goals of the analysis. For example, the total amount of net profit gives the entrepreneur the opportunity to decide whether the project is worth the effort, the percentage of net profit to investments determines the interest in the enterprise. In the same way, it is convenient to calculate internal economic processes, costs and other indicators.

Net Profit Formula

Net income is not an arbitrary concept. Its calculation is subject to clear rules. Calculation options differ only in the degree of generalization or detailing of income and expenditure items. For example, the most simple formula net income looks like this:

Net profit = total profit - the sum of all expenses.

The most common formula is:

Net income = profit before tax - income tax.

Net profit = Profit before tax -/+ Income tax -/+ Change in deferred tax assets -/+ Change in deferred tax liabilities -/+ Other taxes and fees calculated from profit.

The addition of the “+” sign to the “-” sign in the components of the formula is done in case the indicators of expenditure items have a negative value, this can happen, for example, when overpaid in past periods.

When calculating the term "net profit" can be transformed into "loss". In fact, this is one and the same concept, i.e. the result of the transaction in a positive or negative value.

Use of net profit

It may seem that net profit is the last link in the chain of calculations. This is not true. If the net profit can be claimed by several recipients, it becomes retained earnings. The amount of such income is subject to distribution among the owners in proportion to the shares in the total capital. This is called "earnings per share". The part of net income not used to pay dividends is called "retained earnings".

It is worth noting that not only net income, but also others, including unplanned income, can become the object of distribution.

In addition to dividing net profit into shares according to the number of owners, there are other options for distributing free funds. They can be spent on:

• Consumption - otherwise spending on the personal needs of the recipients. Paying dividends is usually referred to as this option;
• Accumulation - placement of funds in bank accounts, purchase of valuables and other liquid assets;
• Investing - here a distinction is made between external and internal placement investments. In the first case, the funds go to the development own enterprise, in the second - money is invested in extraneous projects in order to receive income from such an investment.

They also sometimes talk about creating reserve funds, investing in social sphere etc. However, all options for using net profit can be somehow reduced to the three categories listed above.