What is profit in simple words? Forms of profit Profit and its main forms

IN modern economy The following types of profit are distinguished:

Balance sheet profit - the final financial result identified during the reporting period based on accounting all business transactions of the organization and evaluation of balance sheet items.

Gross (banking) profit- net return on invested capital expressed in monetary form. It represents the difference between net revenue from the sale of goods, products, works, services and the cost of these sales without semi-fixed management expenses and sales costs (commercial expenses).

Clean economic profit - this is the profit remaining after subtracting all expenses from the total income of the organization.

Marginal profit- this is the excess of revenue over the variable costs of production, which allows you to reimburse fixed costs and make a profit.

Nominal profit is the profit indicated in financial statements, which corresponds to book profit.

Real profit is the nominal profit adjusted for inflation. To determine real profit, nominal profit is related to the consumer price index.

retained earnings represents the final financial result of the reporting period minus taxes and other similar mandatory payments, including sanctions for non-compliance with contracts. Its content corresponds to net profit.

Capitalized profit- this is profit aimed at increasing equity(assets) of the organization. It is the source of expanded reproduction.

Normal profit- this is the average market profit, which allows you to maintain your position in the market.

Firstly, it characterizes economic efficiency, the final financial result of the organization's activities. The amount of profit and its dynamics are affected by factors dependent and independent of the organization. Factors that depend on the organization include the level of management, the competence of management and managers, the competitiveness of products, the organization of production and labor, its productivity, the condition and efficiency of production and financial planning. Almost outside the organization’s sphere of influence are market conditions, financial policy state, price level for consumed raw materials and fuel and energy resources, depreciation rates.

Secondly, profit has a stimulating function. The organization's profit after taxes and other obligatory payments must be sufficient to pay dividends, expand production activities, scientific, technical and social development of the organization, material incentives for employees.

Thirdly, profit is one of the sources for the formation of budgets at different levels. Income tax, along with other revenues to the budget, is used to finance the performance of the state’s functions and the implementation of state investment, production, scientific, technical and social programs.

Profit - This is the monetary expression of the main part of cash savings created by enterprises of any form of ownership. As an economic category, it characterizes the financial result of entrepreneurial activity of enterprises. § 2. Types of profit and their composition

Overall financial result economic activity in accounting, it is determined in the profit and loss account by counting and balancing all profits and losses for the reporting period. Business transactions in the profit and loss account are reflected on a cumulative basis, i.e. cumulatively from the beginning of the reporting period.

The main types of profit are:

total profit (loss) of the reporting period - balance sheet profit (loss);

profit (loss) from sales of products (works, services);

profit from financial activities;

profit (loss) from other non-operating operations;

taxable income;

net profit.

Balance sheet profit(loss) is the amount of profit (loss) from the sale of products, financial activities and income from other non-operating operations, reduced by the amount of expenses for these operations.

Profit (loss) from sales of products ( works, services) is defined as the difference between revenue from sales of products in current prices without VAT, special tax and excise taxes and the costs of its production and sale.

Profit (loss) from financial activities and from other non-operating transactions is determined as the result of transactions reflected in accounts 47 “Sale and other disposal of fixed assets” and 48 “Sale of other assets”, as well as the difference between the total amount received and paid:

fines, penalties and penalties and other economic sanctions; interest received on the amounts of funds listed in the accounts of the enterprise; exchange rate differences on foreign currency accounts and on transactions in foreign currency; profits and losses of previous years identified in the reporting year; losses from natural disasters; losses from writing off debts and receivables; receipts of debts previously written off as bad; other income, losses and expenses attributed in accordance with current legislation to the profit and loss account. At the same time, amounts contributed to the budget in the form of sanctions in accordance with the legislation of the Russian Federation are not included in expenses from non-operating operations, but are included in the reduction of net profit, i.e. profit remaining at the disposal of the enterprise after paying income tax.

Taxable income determined by special calculation. It is equal to the balance sheet profit reduced by the amount of: contributions to the reserve and other similar funds, the creation of which is provided for by law (until the size of these funds reaches no more than 25% of the authorized capital, but not more than 50% of the profit subject to taxation); rent payments to the budget; income from securities and from equity participation in the activities of other enterprises; income from casinos, video stores, etc.;

profits from insurance activities; profits from individual banking operations and transactions; exchange rate differences resulting from changes in the ruble exchange rate in relation to quoted Central Bank Russian Federation to foreign currencies; profits from the production and sale of industrial agricultural and hunting products.

Net profit enterprises, i.e. the profit remaining at his disposal is determined as the difference between book profit and the amount of income taxes, rent payments, export and import taxes.

Net profit is used for production development, social development, material incentives for employees, the creation of a reserve fund, payment to the budget of economic sanctions related to the enterprise's violation of current legislation, for charitable and other purposes.

An integral feature of a market economy is the emergence of consolidated profits. Consolidated profit is the profit summarized from the financial statements of the activities and financial results of parent and subsidiary enterprises. Consolidated financial statements are a combination of statements of two or more business entities that are in certain legal and financial-economic relationships.

36.The essence of working capital management. Importance of money management. The company constantly needs to effectively use working capital. To do this, they need to be managed. On the one hand, it is necessary to use existing working resources more rationally (we are talking primarily about optimizing inventories, reducing work in progress, improving production, improving payment forms, etc.). On the other hand, currently enterprises have the opportunity to choose different options for writing off costs, determining revenue from the sale of products (works, services) for tax purposes, etc. The main goal of managing working capital of an enterprise is to maximize profit on invested capital while ensuring sustainable and sufficient solvency of the enterprise. An enterprise, in the case of effective management of its own and others’ working capital, can achieve a rational economic situation. The objects of working capital management include the following. 1. Inventories, the management of which means determining the need for them, ensuring an uninterrupted process of production and sales. 2. Accounts receivable, the management of which involves: – determining the policy for providing credit and collection for various groups of customers and types of products; – analysis and ranking of buyers depending on purchase volumes, history of credit relations and proposed payment terms; – control of settlements with debtors for deferred or overdue debts, etc. 3. Cash, which are managed by forecasting cash flow. Working capital management includes solving the following tasks: – calculating the minimum sufficient funds for advances of current assets for the purpose of uninterrupted and rhythmic operation of the enterprise (this problem is solved by rationing working capital); – development of accounting policies to optimize taxation by: selecting methods of depreciation of small business enterprises, writing off inventory, determining sales revenue, etc.; – accelerating the turnover of working capital at each stage of capital turnover. In order to manage working capital, a special system must be created at the enterprise. It must have the following elements: 1) personnel - these can be employees of the enterprise who are directly involved in managing working capital (employees financial service), or employees who, to one degree or another, perform the functions of managing working capital (for example, technologists who calculate the consumption rates of material resources); 2) appropriate organizational structure - work on working capital management should be coordinated within certain structural divisions of enterprises; 3) information support – data from accounting, planning, analytical, forecasting, statistical and other systems of the enterprise; 4) software and hardware of the enterprise - computers and appropriate programs must be used to manage working capital; 5) methodological support - for the correctness of calculations for working capital management, the enterprise must have uniform methodological recommendations.

37. Types of financial stability of enterprises.

The financial stability of an organization is determined by the level of its financial independence and the level of its solvency.There are four types of financial stability of an organization:

absolute financial stability; normal stability of financial condition, ensuring the solvency of the organization; unstable financial condition; crisis financial condition.

The stability of the financial condition of an organization is based on the relationship between the cost of inventories and the sources of their formation (own and borrowed). If the provision of these reserves with sources is the essence of financial stability, then solvency is the external manifestation of financial stability.

Types of financial stability of an enterprise

38. Selecting a Working Capital Management Policy The goal is to determine the volume and structure of current assets, sources of their coverage and the relationship between them sufficient to ensure long-term derivatives and effective financial. activities p/p. Liquidity is the most important financial thing. Har-ka p/p. - ability to extinguish short-term short-term faults in a timely manner. Shows the stability of economic activity; loss of liquidity is fraught with a stop in the production process. The simplest option for managing assets, with a min risk of loss of liquidity: the more  the excess of current assets over current liabilities, the  the degree of risk, i.e. we need to strive to increase net turnover capital. The relationship between profit and the level of volumetric capital. At low production levels the activity is not supported properly, loss of liquidity, operational failures, and low profits are possible. At the optimal level of capital turnover, profit becomes max. High level of working capital - the enterprise has temporarily free, idle current assets, and excessive financing costs, which reduces profits. The capital asset management policy must provide a compromise between the risk of loss of liquidity and operational efficiency. This is a solution to two problems. 1 ensuring solvency. A company that does not have an adequate level of working capital has a risk of insolvency. 2 ensuring an acceptable volume, structure and profitability of assets. A high level of inventories requires significant operating costs, and a wide range of GPs helps to increase sales and income. The decision on the level of DC, DZ and inventories must be considered from the position of profitability and from the position of the optimal structure of working capital.

It is calculated as the difference between the income received by the company and the expenses incurred by it related to various areas of work. Profit is the final result of the company’s functioning, performing a stimulating function and creating the basis for the expansion and development of the organization.

Forms of profit depending on economic meaning

• Accounting. The difference between revenue and costs, including amounts transferred to external suppliers of goods and services for raw materials, materials purchased, fixed assets, rented premises.
• Economic. A firm's income minus external and internal costs incurred in the course of business activities. Implicit (internal) are the costs that the company would incur if it did not have the resources, but acquired them from third-party suppliers.

Forms of profit depending on the calculation method

• Marginal profit. It is calculated as the difference between the organization’s revenue for the period, “cleared” of VAT, and its variable costs for the same time interval. The expenditure side includes costs, the volume of which is directly dependent on production volumes: for the transfer of salaries to personnel, the purchase of raw materials and supplies, and the payment of electricity. The higher the marginal profit indicator, the easier it is for the company to cover fixed costs, i.e. costs not directly related to production volumes (for the acquisition and maintenance of fixed assets).
• Balance sheet profit. The difference between the enterprise's income from all areas of activity, reduced by expenses incurred, calculated before tax. The indicator helps to determine what factors influence the financial and economic results and develop a company development strategy.
• Gross profit. The difference between the company’s revenue from its core activities (“cleared” of VAT) and the costs associated with its receipt. The calculation of the indicator does not include the organization’s commercial, administrative costs and its other costs. Gross profit shows what financial result the company's main activity produces.
• Net profit. It is calculated as the difference between the company’s income from all transactions carried out during the period, “cleared” of VAT, and incurred expenses of any type, reduced by the amount of tax paid to the budget. This indicator is the basis for analyzing the activities of the enterprise. It helps to identify the reasons for deviations from the plan and formulate a strategy for further development.

From what has been said it is already clear that income comes in various forms, the most important of which is profit. There are different concepts of profit in the economic literature. Marxist theory views profit as a transformed form of surplus value, as the unpaid labor of workers material production. A transformed form because it appears to be the product not only of wage labor, but also of all expended capital. The theory of profit and its rate was used to explain both the economic processes of education average profit in the course of competition, the price of production, rent and interest, and the class relations of wage labor and capital. Profit in a capitalist society is both the goal of production and driving motive technical process, economic growth.

In a centrally planned economy, profit was not put forward as the highest goal and motive of production; it acted as one of the indicators of production productivity at enterprises, the requirements of economic calculation. In essence, profit was a form of net income, quantified as the difference between revenue between sales and cost. As the monetary value of a surplus product, profit is distinguished by the fact that, firstly, it is formed through prices, reflects their type, market conditions and, secondly, it acts as a form of income from products already sold.

In modern neoclassical economic theory There is no single point of view on the essence of profit. Some Western economists view profit as a reward for entrepreneurial activity, or as compensation for the uncertainty of risk in entrepreneurial activity, others associate profit with the ability of monopolists to influence the price in their favor.

IN market economy we can distinguish: 1 - economic, 2 - risk and 3 - functional theory of profit. The first is based on the principle of the theory of marginal productivity, according to which capital participates in the production process and provides the same “productive” service as labor, and receives a corresponding share of the social product equal to the value of the marginal product created by capital - profit. In risk theory, profit is interpreted as a product of the activities of entrepreneurs in conditions imperfect competition, which is characterized by risk, uncertainty and the losses they cause, bankruptcy, unemployment. In this theory, profit is seen as compensation and as a reward for overcoming uncertainty. Proponents of the functional theory consider profit as a reward for the implementation of the functions of innovation, the introduction of scientific and technological progress and for economic services to the authorities of society. Profit is temporary, constantly appearing and disappearing.

The main forms of profit are economic and accounting profit. Accounting profit is the part of the company’s income that remains from total revenue after compensation for external costs, i.e. fees for supplier resources. With this approach, only explicit costs are taken into account and internal (hidden) costs are ignored. Economic, or net, profit is the part of a company’s income that remains after subtracting all costs (external and internal, including the entrepreneur’s normal profit) from the total income of the company.

The market mechanism also uses other forms of profit: gross, balance, normal, marginal, maximum, monopoly.

Gross profit is the company's total profit from sales and non-operating income.

Book profit is the total profit minus the losses incurred by the company.

Marginal profit is defined as the difference between marginal revenue and marginal cost. This is the profit per additional individual unit of production. For the company, this is a benchmark for increasing production volume.

Maximum profit is the profit received by a monopolist firm by limiting competition and, accordingly, production of products to increase prices. Monopoly profits are usually higher than average and are obtained through the redistribution of income between firms.

The firm's income and profit make a circuit in which production, distribution and use are distinguished.

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In a broad sense, profit is defined as the difference between the financial benefit received (revenue from the sale of goods or services produced) and the costs incurred (purchase, production, marketing and delivery of goods and services).
Profit is the most important indicator, which characterizes production efficiency and quality of products. This is an indicator of business profitability, the reason for which everything is carried out entrepreneurial activity.
It is for the sake of profit that goods or services are produced, costs are minimized, and the company develops.

Functions and role of profit

Profit performs certain functions:

• stimulating, as a factor in the development of production,
• reproductive, as an indicator of the difference between income and costs,
• control, as a criterion for assessing the effectiveness of an economic entity.

The dynamics of business development depend on profit, and it is this category that reflects financial performance economic activities of a firm, company, enterprise.
Part of the profit goes to the development of the company, that is, increasing wages and stimulating workers, improving conditions labor activity, purchase of new equipment, development of social infrastructure, etc.
The other part helps improve the well-being of the owners of the enterprise or company.

Types of profit

Depending on the conditions of its formation, the following types of profit are distinguished.
1) Based on the volume of distribution costs, economic and accounting profit are distinguished.

• Accounting profit is the simple difference between sales revenue (sales revenue) and expenses (operating costs).
• Economic (net) profit is the amount that is obtained by deducting additional expenses from accounting profit. Such expenses may include uncompensated own expenses that were not taken into account in the cost of the product, additional bonuses for employees, costs for officials, etc.

That is, net profit is income minus absolutely all costs.
2) According to the value of the final result, profit can be:

• normative or prescribed
• maximum possible or minimum acceptable,
• not received (lost profit), with a negative result (loss).

3) By the nature of taxation we can distinguish:

• and not taxable.

4) Depending on the types of activities performed, profit can be:

• From financial activities. This is the effect that is obtained from attracting capital from other sources on favorable terms.
• From production activities. This is the result of production and marketing.
• From investment activities. This is income from deposits and ownership securities, income received from participation in joint activities with other companies or the sale of property upon completion of the investment project.

5) According to the regularity of formation, profit can be:

• seasonal,
• normalized
• excessive.
• Marginal profit- additional profit received from the sale of an additional unit of production.

Marginal profit rate

It should not be assumed that a high marginal rate of return will guarantee high profits. One unusual example shows what can happen. Several years ago, an electronics company established a subsidiary to produce and distribute silicon chips. From the very beginning, it was clear that high levels of the minimum possible production capacity of the enterprise and, accordingly, the number of service personnel would lead to significant losses in the first years of operation. In the third year, a marginal profit of 74% was achieved. However, due to the fact that actual sales were still much lower than allowed production capacity, fixed costs amounted to 205% of sales revenue. The result was a loss of 131% of sales. The sharp contrast was next year, when sales almost tripled and modest profits were recorded.
Some managers believe that the rate of marginal profit achieved by certain species of goods or services produced will be almost the same. In many companies this is not the case. For example, if the average marginal profit rate is 45%, then for individual products or types of services the figures can range from 30 to 60%, and sometimes more.
Effective profit management requires maximizing more than just the total value of sales generated at a given level fixed costs, but also the total amount of marginal profit that can be obtained under such conditions.
When the marginal profit rate for each product or service is unknown, profit management is like shooting at random. Even worse, buyers have an uncanny talent for accurately recognizing low prices, even when the manufacturer himself does not suspect that the price he offers is too low. This means that the best sales performance of some goods or services may simply be the result of prices set that reflect low marginal profit margins.
Ignoring the marginal profit rate can lead to negative consequences. One computer components company suffered a drop in selling price from $2.25 to $0.79 in less than 18 months due to increased supply in the market.
The once profitable enterprise quickly slipped into large losses. To eliminate them, a strategic decision was made to increase market share. But the losses continued to mount. They called a professional “doctor” to save the matter. It was quickly discovered that the variable cost was $0.89, or 10 cents above the selling price, and that there was little room for improvement with the existing equipment. The company was quickly surpassed by competitors who used latest technologies, which made it possible to significantly reduce costs.
Knowing the marginal profit rate for each type of product or service allows the manager to increase profits by:

• concentrating marketing efforts on goods and services that provide a marginal profit rate above the average level;
• concentrations sales activities on product positions that give a marginal profit rate above the average level; if necessary, this can be stimulated by introducing differentiated commission rates on sales;
• “financial engineering” of “below average” goods and services in order to increase the rate of marginal profit by reducing variable costs.
• ensuring that the goods and services launched at least maintain the overall level of marginal profit margin achieved by the company.

Other components of effective earnings management include:

• knowledge of the “break-even point” of the business;
• product profitability management;
• level of profitability achieved for key clients;
• understanding the dangers of setting extremely low prices.

Each of these aspects is discussed below.

Payback point

The breakeven point of a business is the level of sales at which there is neither profit nor loss.
Knowing the total amount of fixed costs and the total rate of marginal profit allows you to calculate the payback point. The higher the marginal profit margin, the greater the impact of changes in sales volume on pre-tax profit, and vice versa.

Profitability of a product or service

In many companies, the calculation of profit (or loss) before tax received for a particular type of goods or services is based on certain assumptions. The reason is that in a multifaceted business, employees and production facilities are involved in more than one product or service. This means that accountants have to allocate or distribute the appropriate share total costs between individual goods or types of services. Words like “allocate” and “distribute” give the impression of a certain academic precision, when in reality much is done on the basis of experience and assumptions. As a result, the calculation of profit or loss for certain types of goods or services may be very inaccurate. This may lead to a decision to stop producing a particular product, based on both real and “allocated” costs. If the latter have nowhere else to go after this, the overall profit will be reduced.