Analysis of profit generation. What is Gross Profit

Gross profit analysis begins with research and dynamics, both total amount, and in the size of components and elements. This is the so-called horizontal (time) analysis. In this case, each reporting item is compared with the analytical indicators of the base period. Then a vertical analysis is carried out, which reveals the structure of changes in the composition of gross profit, the influence of each reporting item on the result as a whole.

Comparison of the rate of change in such components of balance sheet profit as profit from sales of products, profit from financial economic activity seems quite important. It allows you to determine the factors that had a greater and lesser impact on the final financial result - balance sheet profit.

The main objectives of analyzing the financial results of an enterprise are: assessing the dynamics of profit indicators, the validity of formation and the distribution of their actual value; identifying and measuring the effect of various factors on profit; assessment of possible reserves for profit growth based on optimization of production volumes and costs.

Profit is the final financial result of an enterprise’s activities, which generally characterizes the effectiveness of its work. Profit is the most important factor in stimulating production and entrepreneurial activity enterprise and creates a financial basis for its expansion. Income tax is one of the main sources of state budget revenues. Profits are used to repay the enterprise's debt obligations to creditors and investors. The profit received by an enterprise is determined by the volume of sales of products or services, their quality and competitiveness, the level of costs, the efficiency of enterprise management, including its production, marketing, financial, technological, personnel and investment strategy.

Consequently, profit is the most important general indicator in the system of evaluation indicators of the efficiency of production, commercial and financial activities enterprises.

Profit has the following functions:

1. characterizes the economic effect obtained as a result of the enterprise’s activities;

2.has a stimulating function;

3.profit is one of the most important sources of budget formation.

The main objectives of analyzing the financial results of an enterprise are:

1. systematic monitoring of the implementation of the product sales plan and profit generation;

2. determination of the influence of both objective and subjective factors on financial results;

3. identifying reserves, increasing the amount of profit and profitability;

5. development of measures to use the identified results.

The basis for determining the final, “net” result of an enterprise’s activities is a clear classification of income and expenses, profits and losses. Classification is necessary for:

Determining from what source the main part of the income of the reporting period was received;

Separation of production costs of products and non-production expenses, including management and sales costs, as well as expenses for financial activities;

Separating fixed and variable costs for analysis purposes.

To determine the sources of profit, all activities of the enterprise are divided into:

1) main or operating activities (production and sale of products, works, services);

2) non-operating activities (operations not related to the main activity), including:

a) financial activities (obtaining loans and issuing them to other enterprises; participation of the enterprise in the activities of other companies; operations of the enterprise in financial markets, including those related to fluctuations in exchange rates;

b) other non-operating activities (operations that are not typical for the activities of the enterprise and are of an emergency nature).

This division is very important because it allows you to determine what specific gravity income received both from the main activity of the enterprise (sales of products, works, services) and from other sources, including those that are not typical for of this enterprise and cannot be considered as a permanent source of income.

It follows that the following indicators of income and profit are used in the financial management and analysis system:

Net proceeds from sales of products (works, services)– is the gross proceeds from sales minus VAT and excise taxes. It is this indicator that is the real basis for the subsequent calculation of profit indicators and assessment of the profitability of the enterprise.

Gross profit from sales– net sales revenue minus production costs for products sold. This indicator allows you to analyze the efficiency of the enterprise's production activities.

Profit (loss) from sales– gross profit from sales minus management expenses and sales expenses. This indicator reflects the impact of management and sales costs on the financial result of sales.

Profit (loss) from financial activities– balance of income and expenses from financial activities. This indicator is necessary in order to separate the profit from the production and economic activities of the enterprise from such sources of profit as the receipt of interest and dividends by the enterprise, transactions with foreign currency, etc.

Book profit (loss), or profit before tax– the amount of profit from financial and economic activities and profit (loss) from other non-operating operations.

This indicator is the transition point from accounting profit to taxable profit. Accounting profit is profit calculated in accordance with accounting requirements. It reflects the efficiency of the enterprise for the reporting period.

Taxable income– balance sheet profit adjusted in accordance with the tax legislation of the country.

Net income (loss)– profit after tax that remains at the disposal of the enterprise. In conditions market economy This is the most important indicator of the enterprise's performance. It is the focus of attention of management and financial markets; the very existence of the enterprise, jobs for its employees, and the payment of dividends in a joint-stock company depend on its dynamics.

In the analysis of the dynamics and composition of profit, the data contained in the Profit and Loss Statement (Form No. 2) is used, which allows you to analyze the financial results obtained from all types of activities of the enterprise and establish the profit structure.

For example, let's use the data from table No. 15.

Table No. 15. Analysis of the composition and dynamics of profit (thousand rubles).

Gross profit is one of the key indicators of the financial performance of an enterprise. Below you will find a definition of the term, a formula for calculating gross profit and a description of the meaning of the indicator.

What is gross profit

Gross profit is the company's revenue minus the cost of the product. If a pottery workshop sold 10 pots worth 10,000 rubles in a week, to calculate the gross profit you need to know the cost of their production.

It includes the cost of clay, water, electricity, and wages for the craftsman. Expenses should also include depreciation of the potter's wheel and the cost of renting the premises. If the pots were sold through a nearby store, the cost should include the costs of transporting the products and the distribution network’s commission.

If the amount of expenses is 6,500 rubles, and the revenue is 10,000 rubles, then the gross profit of the workshop is 3,500 rubles.

Formula for calculating gross profit

Gross profit is calculated using the following formula:

Vyr – C = PRval

The variables are deciphered as follows: Vyr - revenue, C - cost, PRval - gross profit.

This is the classic formula used by manufacturing companies. Merchants calculate gross profit using the gross revenue variable:

Inhalation – C = PRval

Traders operate with the “gross income” variable, since they redistribute a significant part of the proceeds in favor of producers. For example, in order to sell a ton of apples for 10 thousand rubles, a retail chain must buy this product from the manufacturer for 8 thousand rubles. After the sale, the merchant’s revenue will be 10,000 rubles, and the gross income will be 2,000 rubles.

What is the meaning of the “gross profit” indicator?

Gross profit is one of the key performance metrics manufacturing enterprises. It shows how effective business processes are in general and the production activities of the organization in particular.

A simplified example of a pottery workshop shows that its activities are effective. The cost of manufactured products was 6,500 rubles. And the proceeds from the sale of pots amounted to 10,000 rubles. At the same time, the cost included all expenses for production activities, including depreciation of equipment.

Despite the positive gross profit, the activities of a hypothetical pottery enterprise may be unprofitable. This will happen if the amount of taxes and fines exceeds 3,500 rubles or the amount of gross profit. In this case, the net profit will be negative.

To increase gross profit, a company can reduce the cost of production or increase its cost to consumers. The second way reduces the competitiveness of the organization, so it should be used only after all possibilities for reducing production costs have been exhausted. Specific steps depend on the industry, economic situation and a variety of other factors. Some of the most obvious ways to reduce product costs include:

Reducing labor costs. In this case, you will have to increase the workload on existing specialists, but not hire new ones.

Reducing the cost of raw materials.

Scaling production.

Energy saving.

Reduced logistics costs.

Reducing costs for selling products.

Improving marketing efficiency.

Trading enterprises practically do not use gross profit to evaluate performance. Enterprises of this type focus on profitability and sales volume, net profit and other indicators.

So, gross profit is an indicator of the financial performance of an enterprise. It is calculated as the difference between revenue and production costs. Gross profit is convenient to use to evaluate the performance of manufacturing enterprises.

The activities of any company are aimed at making a profit, which is a qualitative indicator of the feasibility of its activities. Gross profit is characterized by the rational use of all enterprise resources.

Concept of gross income

Profit is the division of the costs of producing products (rendering services) by revenue from their sales.

Gross profit shows the feasibility of the enterprise. This is the ratio of the cost of production to the income from its sale.

When comparing gross profit with net profit, it is important to remember that the former consists not only of production costs, but also of taxes.

Calculation formula

Gross profit can be calculated as follows:

VP = D - (S+Z), where:

• VP - gross profit;
• D - volume of sales of manufactured products (services) in monetary units;
• C - cost of production of products (or services);
• Z - production costs.

To calculate, it is necessary to subtract the cost of products (services) sold from the amount of revenue.

Gross profit formula for financial statements

The indicator “Gross profit” (line 2100) is calculated as follows: “Cost of sales” (line 2120) is subtracted from “Revenue” (line 2110).

The essence of a competent calculation of gross profit is a detailed study of all cost items that are included in the cost of products (services provided). It is necessary to take into account all cost items, especially those not taken into account initially and those that appeared during the sale of products (services).

There are quite well-known definition cost: these are all the resources that were spent on the production and marketing of products (services), they are usually expressed in value terms.

Only if you have a complete picture of the costs of producing and selling products (services) can you get a full calculation of the gross profit for the selected period.

Factors influencing gross profit

Gross profit is influenced by a large number of factors. They are divided into companies dependent on management and independent.

The first group of factors includes the following:

• indicator of growth in the production of goods (services) and their sales;
• improving the competitiveness and quality of goods (services) in general;
• replenishment of the range of goods (services);
• reduction in production costs;
• improving staff productivity;
• full utilization of production assets;
• systematic research marketing strategies enterprises, and, if necessary, their adjustment.

Among the factors that do not depend on control are the following:

• natural, environmental, territorial, geographical conditions;
• making amendments to legislation;
• changes in state business support policy;
• transport and resource transformations in global terms.

As a result, it is necessary to have a management strategy that can be quickly adjusted, and the ability to quickly transform the policy for the production and sale of products (services).

Terms of release and sale

These actions should be aimed at maintaining the company in optimal condition. The first category of factors involves adjustment and intervention in the strategy on the part of the enterprise management. By increasing the volume of production and sales of products (services), the enterprise simultaneously increases turnover, which has a positive effect on the growth of the indicator.

An important role is given to maintaining the pace and volume of production of products (services) at fairly high positions and trying to prevent them from decreasing, as this will negatively affect the size of the gross profit.

It is important to note that finished goods inventories negatively affect the production picture, being an unprofitable load for the company. However, their implementation would help increase revenue.

Some businessmen use various ways For the most profitable sale of these unclaimed balances, they try to return at least part of the resources used for them. But these actions have a very small impact on gross profit.

Gross profit, the formula of which contains a term such as “cost”, indicates that the latter requires regular monitoring. It is important to apply innovative production technologies, search and develop more optimal options delivering products to consumers, looking for economical energy resources and their alternative sources. These steps will help to significantly reduce costs, resulting in an increase in gross profit.

What can affect the size of the “gross profit” indicator?

The calculation formula indicates that the indicator under consideration may be influenced by the pricing policy of the enterprise. High competition forces entrepreneurs to reconsider their pricing policies. However, there is no need to strive for a constant reduction in the price of goods (services). It’s better to build a strategy to set the optimal price and stick to it, consistently making a profit, albeit a small one. In addition, it is important to regularly analyze demand in order to understand in time which product (service) it is better to refuse. After all, it is the sale of profit-generating products that provides the company with the opportunity to receive the maximum possible gross income, while simultaneously increasing the size net profit.

It is also important to monitor the level of inventories that this moment are unclaimed. Storing them most likely does not pay for itself, so it is important to quickly develop measures to get rid of these stocks. The cash generated in this way increases the gross profit.

Income items such as interest on deposits or shares, rental of real estate and other sources also contribute to the growth of the enterprise’s gross profit.

How to properly distribute profits

Having sold a batch of goods and received a certain amount of income, it is important to manage it wisely. This distribution might look like this:

The highest level is occupied by gross profit.

• rent;
• payment of interest on loans;
• all kinds of taxes;
• charity.

The result is net profit.

The following expense items come from net profit:

• formation of social infrastructure of the company and the state;
• training;
• environmental funds;
• cash reserves;
• own profit of the owners of the organization.

As a result of such a distribution of gross profit, the enterprise will have the opportunity for optimal development, improvement of production, and growth of personnel potential. This will also allow you to increase your net profit in the future.

Summary

Gross profit is revenue minus cost. It differs from net profit in that it does not include variable and operating costs, as well as taxes.

Gross profit formula:

PV = B - C, where:

• B - revenue;
• C - cost.

To obtain the optimal gross profit, it is important to first determine the cost items that are included in the cost of goods (services), including variables that were not previously taken into account. Having an idea of ​​all the costs of producing and selling goods (services), you can accurately calculate the amount of gross profit for a certain period.

Conclusion: analyzing the table data, you can see that the cost of gross output in comparable 1994 prices at the enterprise in 1999 compared to 1997 increased from 2293 thousand rubles. up to 6451 thousand rubles. (the value of gross output in comparable 1994 prices increases by 181%). This may indicate that the company is increasing its output. Price commercial products also increases by 59%. This, in turn, can be associated both with an increase in production output and with an increase in the level of inflation and an increase in product prices. The percentage of increase in the cost of OPF is very high. In 1999 compared to 1997 it is 359%. The average annual number of employees increases by 8%. However, the total area of ​​agricultural land remains unchanged throughout all those years - 84 hectares. From the data in Table 1 it is clear that the Ovoshchevod agricultural production company does not produce livestock products; the enterprise only owns bees, the number of which increases by 88% in 1999 compared to 1997. Along with the increase in the cost of products in comparable prices, there is a decrease in the value of the enterprise’s property by 59%, including equity capital by 59.3%. At the same time, gross income increases by 35%. The amount of gross income depends on the volume of products produced, prices for them and the size material costs. Thus, an increase in gross income is associated with an increase in costs, sales volumes and sales prices. An increase in costs may be associated with an increase in energy prices, with an increase in costs associated with the sale of products (increase in transportation costs, etc.). The amount of net profit decreases by 7%, and the level of profitability of sold products - by 43%, i.e. profit for every ruble spent decreases. This is evidenced by an increase in total cost by 67% and a decrease in profit by 5%. The amount of gross income depends on the volume of products produced, prices for them and the amount of material costs.

To characterize the specialization of enterprises, they use indicators of the structure of commercial products, which reflect the combination of industries and represent the share individual species products in total volume. The level of specialization is determined by the share of individual types of products in the total volume of monetary revenue.

Table 2 Composition and structure of revenue from sales of products at the Ovoshchevod agricultural enterprise

Conclusion: The largest revenue from sales at the Ovoshchevod agricultural production company comes from the production of vegetables in protected soil. In 1998, this figure increased to 14,141 thousand rubles. and amounted to 98.5% of the share of total sales revenue. However, in 1999 this figure drops to 14,018 thousand rubles. This may be due to an increase in transportation costs (increase in gasoline prices), or with an increase in product prices. In 1998 and 1999, the share of revenue from the sale of crop products in the total revenue from the sale of products was 100%, which indicates that that the enterprise specializes in the production of crop products, namely vegetables. No livestock products are produced at the enterprise.

In order to most fully determine the efficiency of an agricultural enterprise, they characterize the composition and structure of land and the level of its land supply. The ratio of individual types of land is called the structure of the overall land area. The composition of the land fund distinguishes between the total land area and the area of ​​agricultural land. The total land area includes the entire territory assigned to the farm; to agricultural land - arable land, hayfields, pastures, forests, ponds.

Table 3. Composition and structure of land holdings of SEC “Ovoshchevod”

Gross profit- this is the difference between the organization’s revenue and the cost of products sold, goods or services.

The activity of any production unit is based on the law of making a profit with minimal risks.

Gross profit as an indicator of efficiency

Profit is one of the main indicators. It is this that is the source of the development of the enterprise. One of its types gross profit, is one of the most important indicators of enterprise performance.

Good dynamics of gross profit indicates that the organization operates quite effectively in a competitive market environment. Gross profit gives big picture production efficiency, helps to successfully manage the finances of the enterprise.

Gross Profit Formula

The gross profit formula is as simple as two:

VP = BP – S, Where

• VP – gross profit,
• Вр – revenue after the sale of goods, services,
• C is the cost of goods and services sold.

To correctly determine the VP ( gross profit), it is necessary to determine the cost as accurately as possible.

Presentation on Gross Profit Growth

What influences gross profit growth?

The question of why profit depends is very important. A clear understanding of it allows you to find additional opportunities to increase it. It makes sense to systematize the factors that influence the dynamics gross profit.

Internal factors

• Unit price of a product or service.
• Cost of manufactured products.
• Volume and speed of turnover of products sold.
• Revenue from products sold.
• Marketing costs and promotion.
• Competitiveness of goods or services.

External factors

• Market conditions, fashion.
• Government regulation of some economic processes, including depreciation and tax deductions.
• Changes in consumer demand.
• Changes in the pricing policy for raw materials, an increase in the supply of goods and services on the market.
• Political climate, emergency situations.

Internal factors change in accordance with the actions of the organization itself, which means that for now they may well change it to achieve acceptable dynamics of the gross profit indicator.

External factors only indirectly affect gross profit, but they are able to influence production costs and sales volumes.

Unsold goods have a negative impact on gross profit. Instead of profitability, they only bring losses and unexpected expenses. In such a situation, it would be appropriate to use a system of discounts, markdowns of goods and materials (inventory assets), and the involvement of barter transactions. These measures will not significantly increase gross profit, but it will make it possible to return the investment spent on production.

Working with an indicator such as gross profit will help identify profitable products. This, in turn, will allow you to adjust the range of goods and services.

There are several other items that affect gross profit growth. For example, funds from the sale of fixed assets, disposal of illiquid materials, non-operating income.

What influences the calculation of gross profit?

In order to obtain higher gross profits, it is necessary to regularly address cost issues. All measures should be aimed specifically at reducing this indicator.

There are different ways for each industry: searching for profitable logistics options, modernizing technological processes, and even adopting alternative sources energy resources! All these activities will automatically lead to the fact that gross profit the organization will grow.

For the same purpose, prices for manufactured products can be increased. But in this matter you need to act carefully, and not violate the fine line between price and demand. Otherwise, you may not realize anything and be left without any profit at all. In order to correctly raise prices, you can study competitors' prices or conduct a customer survey.

An increase in the volume of goods and services sold will have a positive effect on gross profit. If the demand for them is consistently high, it is advisable to find opportunities to satisfy it. By the way, a drop in the volume of goods promoted on the market can provoke a rise in prices. Successful enterprise management consists of understanding all the nuances.

You can count on additional size increases gross profit, if you organize your advertising campaign correctly. The right strategy in this direction will certainly have a positive impact on sales. Modern technical capabilities and possession of statistical information provide ample opportunities for promoting products in the market for goods and services.

Once funds are received, they must be distributed correctly. In this case, it is advisable to take into account all cost items. This distribution of gross profit has great importance. It must guarantee the fulfillment of obligations to the state regarding taxation. In addition, it must meet the production and social needs of the production structure.

After gross profit has been reduced by the amounts required to operate commercial activities, it is distributed to other income and expense items: income from the rental of property, dividends on shares, from bank accounts, etc. At this stage, income tax and other mandatory payments are subtracted from the amount of profit received.

• with the environment,
• with staff training,
• with social programs,
• with the creation of a reserve fund
• with personal profit.

Artificially increasing your share at the expense of other expense items can lead to a decrease in the company's profitability.

Any responsible production manager understands. That investing part of the profit in labor collective, in his training, in the social security of employees, will certainly pay off over time, will have a positive impact on labor productivity, and therefore on increasing profits.

Offtopic: economics in our lives

During the day modern man operates repeatedly economic concepts. Where to buy something, how to pay for it, where to get a loan. At the same time, he is forced to plan his budget in order to satisfy all his needs. Otherwise, there may simply not be enough funds.

Living in an economic environment and encountering it every day, not everyone can say what economics is. This concept is very general. It includes too much to be confined to a small rule. The literal translation of this term means the ability to manage a household.

In fact, economics studies the various production activities of society and helps to properly distribute its resources. The main task of the economy of any country is to provide its citizens with goods and services that fully satisfy them. The basis of any good economy is large production structures and work activity citizens.