Profit Enterprises: Essence, Species, Significance

Enterprises as individual commodity producers receive cash proceeds from the sale of their products. This revenue does not indicate a profit. To determine the financial result of the final activity of the enterprise, it is necessary to compare the revenue with all the costs of production and sales, attributable to the cost of production.

If the cost price is lower than the revenue, the financial result indicates a profit. If the revenue is equal to the cost, the financial result equals zero, that is, the enterprise only managed to cover the costs of production and sales. If the costs are higher than the proceeds, then the enterprise remains at a loss. This indicates a negative financial result.

Thus, profit is the main goal of entrepreneurial economic activity. The income and profit of the enterprise are correlated as follows.

The enterprise's income is an indicator of the increase in economic benefits, which is expressed as the receipt of assets or the reduction of liabilities, which in total result in the growth of the company's own capital (except for the cases of its increase due to contributions of owners).

Revenues are classified into the following groups: income from sales of products, other operating income (income from asset lease, exchange rate differences), financial income (from participation in capital, investment activities, interest, dividends), other income from investments, sale of assets.

The profit of the enterprise is the main part of the money savings, which is created by enterprises of all forms of ownership. It reflects the financial result of the economic entrepreneurial activity of the organization. The enterprise's profit as an indicator of production efficiency allows to determine the volume and quality of products, the level of prime cost, labor productivity. On the other hand, arriving stimulates the strengthening of commercial calculation and intensifies production.

By the profit measure, you can judge the plan and evaluate the enterprise's motivation.

Profit of the enterprise types of profit are distinguished by the following: gross, operating, profit from ordinary activity and profit remaining after taxation.

The financial result of the enterprise's activity is calculated in such a sequence.

1. Determine the net income from the sale of products (services) by subtracting from gross income from sales of VAT products and other taxes and fees.

2. The gross profit (loss) is calculated. It is defined as the difference between net income from sales and the cost of finished products sold.

3. The financial result from operating activities is calculated.

4. The profit (loss) from activity before taxation is calculated.

5. Profit (loss) from ordinary activities is recovered.

6. Profit is lost (loss) taking into account emergency activities.

The profit of the enterprise as the final financial result of hozdeyatelnosti represents a difference between the sum of incomes and expenses for manufacture and operations on realization of production in view of losses from all kinds of economic operations.

The net profit of an enterprise for the reporting period is determined by adjusting the profit from ordinary activities by the amount of income and expenditure that appears in extraordinary circumstances.

In the future, net profit is distributed to the capitalized and consumed part. The capitalized part is the means directed to investing in the development of production and the formation of reserve and insurance funds. The consumed part is spent on payment of corporate rights to owners, material encouragement of employees and the formation of social funds. The remaining part forms the retained earnings, at the expense of which the own capital is financed.