One of the key indicators characterizing the financial result of an economic entity is gross profit. The accuracy largely depends on the correct determination of this indicator. economic analysis carried out to determine promising directions for the development of the enterprise. In the article we will look at what gross profit is, how it differs from other types of profit, and we will study the calculation algorithm and how it differs from other results.

Gross profit concept

Gross profit refers to the difference between the proceeds from the sale of an organization's products, goods, works or services and the costs of their production or purchase. The main purpose of the gross profit indicator is to determine the rationality of spending labor, material and other resources of a legal entity.

As a rule, the reporting period for determining the amount of gross profit is month, quarter, half year and year. But for internal economic analysis and management accounting, depending on the company’s goals, gross profit can be calculated over a shorter period - a week, 10 days, a decade.

The difference between gross profit and other financial performance indicators

The gross profit indicator differs significantly from gross income, net, marginal and balance sheet profit.

Difference from gross income

Gross revenue (income) represents all the funds that a company received from its activities. This figure includes tax and other similar payments included in the price of assets sold. The amount of gross revenue depends not only on the price and number of sales, but also on the product range, labor productivity, demand and other indicators.

Gross profit refers to the difference between the amount of revenue from all activities and the expenses associated with them.

Gross and net profit

There is a main difference between these indicators. When determining gross profit, in contrast to net profit, the amount of taxes, fees and other similar payments is not taken into account. First, gross profit is calculated. After this, by subtracting the amount of taxes and fees accrued by the enterprise, the amount of net profit is determined.

Difference from contribution margin

The concept of marginal profit is closely related to the concept of variable costs, which are directly proportional to production output. These are materials, wages of workers engaged in production and sales. Marginal profit is calculated as the difference between the organization's income and variable expenses.

Its main difference from gross is that with the help of this indicator it is possible to determine the optimal production output in terms of volume and range, the most cost-effective option for production development. Gross profit characterizes the success of the company as a whole.

Balance sheet and gross profit: the same thing?

How to Determine Gross Profit

Gross profit can be calculated in different ways. The easiest way to define it is as the difference between sales revenue and sales expenses. You can calculate gross profit based on the amount of turnover. This does three things:

• turnover is multiplied by the estimated gross profit premium;
• the resulting value is divided by 100;
• The cost of sales is subtracted from the calculation result.

The estimated allowance is determined as follows:

• the trade markup as a percentage is divided by 100;
• the value of the trade markup as a percentage for the reporting period is added to the result obtained.

Indicators involved in determining gross profit

The indicators taken into account when determining gross profit will differ slightly depending on the type of activity of the economic entity.

Indicator	Manufacturing plant	Trading enterprise
Sales revenue	Products	Goods and paid services
		Fixed assets and intangible assets
	Products, goods, services of structural divisions	Securities
	Securities
Expenses for	Raw materials, materials, tools	Purchase of goods
		Transportation of goods
	Administrative expenses	Salary and contributions to funds
	Depreciation	Renting retail premises
	Overheads	For advertising and storage of goods
	Transportation of products	Other articles

Gross profit as a financial reporting indicator

Gross profit is shown in the income statement on line 2100. The value of this line is calculated by subtracting their cost on line 2120 from sales revenue on line 2110. The gross profit indicator can have either a positive or negative value. If, as a result of the organization’s activities, a negative gross profit is obtained, we are talking about a loss, which is written without the minus sign in parentheses.

For example, Raduga LLC is engaged in sewing workwear. The organization's reporting for the previous period contains the following data:

Gross profit is calculated by subtracting its cost from sales revenue: 50,000 – 40,000 = 10,000 rubles.

Gross profit accounting: postings

Account 90 “Sales” is used to reflect gross profit in accounting. To calculate the gross profit for the reporting period, you need to compare the loan turnover with the debit turnover of this account broken down by subaccounts.

Account 90/9 is closed monthly by writing off the balance to account 99 “Profits and losses”. A debit balance on account 90/9 means that the financial result for the usual activities of the enterprise was a gross loss, a credit balance indicates gross profit for the month. At the end of the year, subaccounts are closed on account 90.

Account correspondence		Contents of the operation
Debit	Credit
90/9	99	Write-off of gross profit
90/1	90/9	Sales revenue
90/9	90/2	Cost of sales
90/9	90/3	VAT
90/9	90/4	Excise taxes
90/9	90/5	Sales tax
90/9	90/6	Export duties

Let's look at the example of reflecting product sales and the formation of gross profit in accounting accounts. The main activity of the enterprise is the production of lungs metal structures(medals, orders, badges, metal fittings). In 2016, products were sold for 1,180,000 rubles (including VAT of 180,000 rubles). The cost of production was 700,000 rubles. In accounting, the accountant reflected the sale as follows:

• Dt62 Kt90/1 = 1180000 – shipment of products;
• Dt90/2 Kt43 = 700000 – write-off of production costs;
• Dt90/3 Kt68 = 180000 – VAT on shipped products;
• Dt90/9 Kt90/2 = 700000 – account closure;
• Dt90/9 Kt90/3 = 180000 – account closure;
• Dt90/9 Kt99 = 300,000 – sales result.

Gross profit, EBIT and EBITDA - what do they have in common?

Analyzing financial condition and the economic activities of the organization, EBIT and EBITDA indicators are used in world practice. In the Russian Federation, they are used mainly by the largest resource extraction companies (Lukoil, Gazprom, etc.). Among domestic small and medium-sized businesses, these indicators have not received much widespread and practical application.

Their difference from gross profit lies in the special “cleaning” of this indicator and the calculation algorithm.

EBIT and EBITDA are determined in Russia somewhat differently than under IFRS. In domestic practice, EBIT and gross profit are identical. EBIT is the difference between sales revenue and direct expenses. In the Russian Federation, when calculating it, you need to take into account the amount of net interest, income tax reimbursement and the balance of emergency expenses and income.

• EBITDA = EBIT + depreciation.

Gross profit in economic analysis

Gross profit analysis is necessary for making important management decisions and developing an organization's strategy for the future. On the basis of this value, profitability of sales, capital turnover and a number of others are determined. the most important indicators, characterizing the activities of an economic entity. Conducting financial analysis, you can compare indicators obtained based on gross profit values ​​for the period:

• planned and actual;
• previous and present (actual).

It is relevant to compare the indicator for the enterprise with the average value for the industry, as well as actual values ​​with standard values.

Answers to pressing questions

Question No. 1. What is the difference between concepts such as gross income and gross profit?

Question No. 2. What factors affect gross profit?

The amount of gross profit depends on factors of two levels of internal nature:

• first level – sales income, interest receivable and payable, operating and non-operating profit;
• the second level is the cost of production, the structure of goods sold, sales volume and the purchase price of goods.

Gross profit is affected by product quality, correct pricing of goods, fines and economic sanctions. Gross profit is also influenced by external factors - geographical, political, natural. On internal factors the organization's leadership can easily influence. In relation to the influence of external factors, the choice of a flexible enterprise strategy that can quickly change is required.

Question No. 3. What transactions reflect the formation of gross profit in a retail trade organization?

When selling goods at retail, the accountant makes the following entries:

• Dt50 Kt90 – cash received for the Goods sold;
• Dt90/2 Kt41/2 – write-off of the cost of goods (sales price);
• Dt90/2 Kt42 – trade margin of goods sold (the posting is reversed);
• Dt90/3 Kt68 – VAT payable;
• Dt90/3 Kt44 – write-off of distribution costs;
• Dt90/9 Kt99 – financial result from sales.

Question No. 4. The trade organization has established the same percentage of trade margins for all product groups (20%). Revenue for the reporting period amounted to 1,500,000 rubles. How to correctly calculate the implemented enterprise overlay?

When a trade organization has established a single percentage of trade markup for all groups of goods, then to calculate gross income (realized overlay) you can use the method of determining by turnover (T), that is, by the total amount of sales revenue.

• First of all, I determine the estimated trade margin:
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The commercial director is obliged to navigate the accounting and finances of the company, and for this he should understand the essence of the concepts of gross income and revenue, which we will consider in detail in this material.

You will learn:

• What is gross income, how is it formed and calculated.
• What is revenue, what is it formed from and how is it calculated.
• What is the difference between gross income and revenue with examples.
• What connecting and distinguishing factors exist between revenue and gross income.

Gross income

Gross income is the sum of all cash receipts the company as a result of its business activities and operations. Gross income is calculated without deduction tax payments, which are included in the price of goods. This is not only value added tax, but also various excise taxes, duties and customs duties. The bulk of this type of income is for trading and manufacturing companies constitutes sales income.

The gross income of the enterprise is determined quantitative indicators goods sold, services provided and work performed. The second indicator that affects the total gross income of an enterprise is the price per unit of goods (service, volume of work). The formula for determining gross income is as follows:

Gross Revenue = Price x Quantity

An indicator such as the level of profitability, expressed by the profitability ratio, depends on gross income. It can be defined as the ratio of gross income to the volume of products sold during this period of time.

Gross income is a kind of financial reference point for an enterprise. Since this type of income includes cost price and current costs for the purchase (production) of products, then it constitutes the bulk of these economic costs. The self-sufficiency of the organization’s activities or profitability ratio depends on this.

Profitability ratio = Gross income / Quantity of products sold x 100%

Also from a certain share of gross income is formed profit. And from it funds are formed, from which the development of the enterprise is financed, salaries and bonuses are calculated for staff, the income of the founders of the enterprise and much more. If an enterprise has a large gross income in proportion to the operating costs of organizing its activities, then it has a high level of self-financing. This has a positive effect on its development and financial performance.

Gross income consists of intangible aspects. These components include income from the organization’s investment activities and reinvestment operations. This also includes operations related to the accumulation and disposal of funds in pension accounts or bank deposits.

Revenue

Revenue is material assets expressed in monetary terms that an enterprise receives from sales of goods, provision of services or performance of work. The paths of these receipts are strictly determined by accounting standards. Not all cash receipts are considered revenue, but only those that come from main activity business. Receipts coming from other channels are income. Therefore, the difference between revenue and profit is colossal.

The company’s revenue can also be generated from other sources that were declared as the main ones according to OKVED. There are two types of revenue: total and net.

Total – the amount of all cash receipts for goods sold or services provided (excluding VAT, excise taxes, customs duties and duties).

Net – the sum of total revenue minus all additions to the price per unit of goods (services).

According to the accounting regulations, revenue is a component of income. Amounts of proceeds from sales are reflected in a separate report “Settlements with customers. Debit".

The amount of revenue consists of various factors (quality, price competitiveness or variety of product range). Revenue depends on how many products were planned to be released for sale. Revenue volumes are influenced by the consumer qualities and properties of the product, the timing of sales (especially important for perishable goods), and the market level of supply and demand. There are factors that do not depend on the company (mass events that provide an influx or outflow of people, economic and political reasons).

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Difference between income and revenue

For large organizations whose revenue structure is complex and has many sources of revenue, the concept of revenue will be very different from gross income.

For example, a company's revenue is always greater than zero. It may be equal to zero, but only in the case when the enterprise did not carry out trade and production activities. All cash deposits and receipts add up to a strictly defined value. Income may be negative. This happens when a company cannot cover all the necessary costs for production, procurement and preparation for sales of goods, as well as other operating expenses.

The calculation of revenue includes only receipts to the cash desk and to the current accounts of the enterprise only from the main activities of the enterprise. This could be the sale or production of goods, the provision of services and the performance of certain types of work.

Gross income, in contrast to revenue, is formed from the totality of all activities of the enterprise. This could be income from leased assets and non-residential areas, bank interest, investment and borrowed funds, sales of goods, provision of services or performance of work.

Receipt channels cash is what primarily distinguishes gross income from revenue.

Example: An agro-industrial company sold meat and vegetables to retail and wholesale buyers in the amount of 700,000 rubles. The company received another 150,000 rubles for renting out one of its harvesting machines to a farm during the harvest. The company also receives money from interest on investments in this farming(50,000 rubles) and rents out part of the offices in its administrative and economic building (50,000 rubles). Thus, the gross income of the agricultural holding was: 700,000 + 150,000 + 50,000 + 50,000 = 950,000 rubles.

And the enterprise’s revenue amounted to 700,000 rubles, since it only includes income from the main activity.

In rare cases, a company's revenue may be quantitatively equal to gross income. This happens when providing certain types of services in which there is no expense component for the implementation of the service.

Factors that differentiate the concepts of income and revenue

Experts in economics and accounting of an enterprise identify several distinctive factors by which the concepts of revenue and income can be divided. Next, we specify each factor.

• Formation. Revenue is a component of gross income and implies income only from the main activities of the company. Rent and other variable cash flows are income.
• Origin. The proceeds may be received by legal entities that conduct economic activities. Income can come from companies that do not conduct any active activities: this can be interest on investments or government subsidies.
• Meaning. Revenue is always greater than or equal to zero. If the company did not conduct economic activities in its main type, then there cannot be any revenue. A company's earnings can be either positive or negative. This happens when the cost of purchasing or producing a product exceeds its selling price.
• Ratio. Revenue always correlates positively with income, since it is part of it. The indicator is almost always greater than one, except in cases of provision of certain types of services.
• Calculus. To calculate revenue, we simply need to add up all receipts from clients. When calculating income, the terms can be negative numbers.

Thus, the concepts of revenue and gross income differ not only at the level financial statements. Understanding these differentiating factors, each manager can more clearly understand the essence of management decisions related to the concepts of revenue, income, and profit.

Conclusion

Gross income and revenue are concepts that managers businesses are confused and do not pay due attention to the differences between them.

When you know what the concepts of gross income and revenue are, you will be able to give more accurate orders and more objectively perceive the information in financial statements. To do this, you need to know not only the definitions of these concepts, but also distinctive features, methods of calculus.

Economists distinguish two types of enterprise profit - gross and net. What are the specifics of each of them?

What is gross profit?

Under gross profit It is customary to understand the magnitude of the difference between a company’s income and expenses, which arises from the fact that the company sells all types of goods and services, as well as receiving income through non-sales operations. It should be noted that the cost structure in in this case Operating costs are not included - those associated with payment for rent of premises, fuel and lubricants, transfer of license fees. All of these can be significant, so gross profit alone does not always reflect the actual profitability of the business. Only those costs that reflect the cost of producing goods or providing services are significant.

At the same time, based on the size of the indicator under consideration, the effectiveness of the enterprise’s business model is determined. That is, if a company manages to reduce costs without deteriorating the quality of goods produced and services provided, as well as without reducing the level of social support for employees, and at the same time maintain turnover, gross profit will increase, and this will indicate the effectiveness of business management.

Note that the cost of production can be calculated according to different principles in certain industries. Some criteria will be applied in trade, and others in production.

What determines the size of gross profit? Economists distinguish 2 groups of factors influencing the value of the indicator under consideration:

• managed;
• uncontrollable.

The first include those that the owners and managers of the company are able to directly influence. The effectiveness of their work determines the intensity of the impact of the noted factors on business processes, as well as the size of the company’s gross profit.

The factors in question include:

• the rate at which the company receives revenue - which is determined by the dynamics of brand promotion in the market, the effectiveness of the sales strategy;
• quality and range of goods;
• efficiency of production modernization - in order to increase the volume of goods produced;
• reducing costs on factory lines;
• efficiency of personnel management at the enterprise.

Factors of the second type (which the owners of the company and its managers, as a rule, cannot influence) include:

• market capacity;
• the geographical location of the company (affecting, in particular, the accessibility of transport communications, energy costs - if the territory where the company is located has a warm or, conversely, cold climate);
• foreign economic and political factors.

What is net profit?

Under net profit It is customary to understand part of the gross profit minus taxes and other obligations of the company to the budget. The owner of the company can use the amount that corresponds to the indicator in question at his own discretion - for example, use it to modernize production. But from it he will most likely pay salaries to employees - and this is supposed to be done first. Sometimes, due to net profit, the company's working capital is increased.

The value of the indicator under consideration depends, first of all, on gross profit. In addition, the amount of net profit is affected by:

• the tax regime in which the company operates;
• staffing structure, as well as the policy of attracting personnel through outsourcing, under contract agreements;
• efficiency of accounting and tax accounting in a company - if it is in high level, then the company will be able to avoid overpayments to the budget, as well as timely use deductions guaranteed by law;
• state policy regarding the regulation of taxes and fees.

Thus, the amount of net profit is influenced by both those factors that are controllable and those that cannot be influenced by the owners and managers of the company.

Comparison

The main difference between gross profit and net profit is that the structure of the first does not take into account taxes and fees. Otherwise, the considered indicators are the same. Based on gross profit - by subtracting taxes and fees from it - net profit is calculated. Those factors that influence the size of the first indicator indirectly determine the size of the second. Which, in turn, depends on the influence of a number of specific factors.

Having considered the difference between gross and net profit, we will record the conclusions in the table.

Table

Gross profit	Net profit
What do they have in common?
Net profit is calculated on the basis of gross profit and indirectly depends on the factors influencing it
Calculated without taking into account operating expenses
What is the difference between them?
Corresponds to the difference between the firm's revenue and expenses, which reflect the cost of goods	Corresponds to the difference between gross profit and cash transfers to the budget - in the form of taxes, fees and other payments established by law
Reflects the effectiveness of the business model	Reflects the efficiency of accounting and tax accounting

It is used to invest in production process, for the organization of reserve funds and for increasing working capital. Its size depends on several factors:

• tax burden on the organization, additional payments;
• enterprise revenue;
• cost of goods, etc.

1. Calculate all production costs (including material costs).
2. Calculate gross income (the difference between funds received from sales and the costs of manufacturing products).
3. Now you can calculate your net profit. The formula for calculating it is as follows:

Net profit = Gross income - mandatory payments (taxes and other payments).

What is profit - a detailed analysis of the concept

• what is the profitability of the divisions, taking into account the distribution of total expenses on them (or not);
• what is the cost and how does it affect pricing;
• what is the margin of financial strength?

Essentially, this is a method of generating operating profit by managing cost lines. It helps to find the optimal balance between:

• price of products;
• variable and fixed types of costs;
• production volumes.

The technique boils down to the fact that the results of several financial instruments are processed at once, including financial analysis, cost accounting, marketing research, etc. When managing costs, a whole range of results obtained from monitoring, analyzing and structuring costs is taken into account.

Operating profit: formula

In this article we will look in detail at the types of profit and how to calculate them, but we will immediately make a reservation that the terms “revenue” and “profit” should be distinguished. The amount obtained after subtracting costs from revenue is profit. Thus, general formula The profit calculation will look like this: Profit = Revenue - Costs (in financial terms) Contents

• What is net profit
• How to calculate net profit
• What is gross profit
• What is contribution margin
• What is operating profit
• What is book profit
• General concept of revenue
• What is gross revenue

What is net profit? The net profit of an enterprise is the funds remaining from the balance sheet profit after deducting taxes, fees, deductions and other established payments to the budget.

Operating profit (ebit) and the formula for calculating it

Attention

Operating profit (ebit) and the formula for its calculation Attention When calculating this indicator of operating profit, income from the rental of company property, from fluctuations in exchange rate differences, from the possible sale of working capital, as well as from the reimbursement of assets that were previously subject to write-off are not taken into account. Factors in the formation of a company's income The formation of a company's income from its core activities depends on the influence of many external and internal conditions. External conditions do not depend on the actions carried out by the company, but nevertheless have a significant impact on fluctuations in profit, so they must be taken into account.

What is operating profit: what is it made up of and how is it calculated. This is the sum of the organization’s rental, patent and interest income.

A bank's refusal to carry out an operation can be appealed. The Bank of Russia has developed requirements for an application that a bank client (organization, individual entrepreneur, individual) can send to an interdepartmental commission in the event that the bank refuses to make a payment or enter into a bank account (deposit) agreement.< … «Больничное» пособие: нужно ли выплачивать за отработанные дни болезни В случае, когда в день оформления листка нетрудоспособности сотрудник находился на рабочем месте и получил за этот день зарплату, «больничное» пособие за этот день не начисляется. < … Главная → Бухгалтерские консультации → Бухгалтерский учет Обновление: 22 августа 2017 г.

What is operating profit: what does it consist of and how is it calculated

What is Gross Profit Gross profit is the difference between the amount received from the sale of a product and the cost of that product. The difference between gross and net is that gross is the profit that is received before the deduction of mandatory deductions and deductions. It does not include expenses for paying taxes and other established payments.

To correctly calculate gross profit, you need to take into account all expenses, including the cost of goods. Cost is the total cost of producing a product, expressed in financial terms. Read also an article comparing the concepts: revenue, income and profit.
There are two categories of factors that influence gross profit.

Gross profit

• Features of the operating profit indicator
  • What is this indicator made of?
• How to calculate profit from the main activity
• Principles of generating and managing profits from core activities
• Operating profit indicator: what is it for?
  • Difference between net and operating profit indicators
• Factors generating company income

Features of the operating profit indicator Profit of this kind is a fairly important economic indicator, which is calculated on the basis of data reflected in the financial statements of the company and which is significant enough to determine its investment attractiveness.

Operating profit

Indicator name Line code For 2013 For 2014 Gross profit 2100 60,000 100,000 Selling costs 2210 5,000 7,000 Management costs 2220 15,000 25,000 Other income 2340 2,000 1,500 Other expenses 2350 3,000 3,000 Book profit 2,300 49,000 76,500 Interest payable 2,330 9,000 13,000 In this calculation example, operating profit is: OP2013 = GR – CE – ME – OE + OR + PC = 60,000 – 5,000 – 15,000 – 3,000 + 2,000 + 9,000 = 48,000 rubles OP2014 = GR – CE – ME – OE + OR + PC = 100,000 – 7,000 – 25,000 – 3000 + 1,500 + 13,000 = 79,500 rubles or OP2013 = BP + PC = 49,000 + 9,000 = 58,000 rubles OP2014 = BP + PC = 76,500 + 13,000 = 89,500 rubles What is the difference between operating profit and profit before tax Operating profit is not reflected in the financial statements and consists of the balance sheet profit and interest payable.
In other words, operating profit is the amount remaining after deducting depreciation, rent, payment for fuel and lubricants and other operating expenses from profit. Operating profit does not exclude funds for paying taxes and overpayments on the loan. It is calculated in general view, according to the following formula: OP = VP - KR - UR - PrR + PrD + Prts OP - operating profit VP - gross profit KR - commercial expenses UR - administrative expenses PrP - other expenses PrD - other income Prts - interest payable In general, Operating profit allows you to view the complex of costs and income of the enterprise as a whole, while simultaneously making it possible to evaluate in detail the most profitable or, conversely, unprofitable budget columns.
In addition, it makes it possible to finally prepare accounting documents for the preparation of balance sheet profit.
What does operating profit consist of? The main factors in generating operating profit include the following:

• Volume of finished products sold.

• The cost of manufactured products, their wholesale and retail prices.

• Assortment and structure of the product line.

Each of the described factors consists of smaller elements, for example, the cost of production includes labor costs and the amount of accrued depreciation. How to calculate operating profit? The following formula is used for the calculation: Operating Profit = Gross Profit (GP) + Operating Revenue (OR) – Operating Expenses (OE), where GP is the organization’s gross profit, OR is operating income, OE is operating expenses. The calculation procedure goes like this:

What is the difference between operating profit and gross profit?

The calculation of balance sheet profit looks like this: OP = BP + PC, where OP (operating profit) is operating profit, rub.; BP (balanceprofit) – balance sheet profit, rub.; PC (percent) – interest payable, rub. Balance calculation formula OP = line 2100 – line 2210 – line 2220 – line 2350 + line 2340 + line 2330, where line 2100 is gross profit, rub.; line 2210 – commercial expenses, rub.; line 2220 – management costs, rub.; line 2350 – other expenses, rub.; line 2340 – other income, rub.; line 2330 – interest payable, rub. or OP = line 2300 + line 2330, where line 2300 is profit before tax (balance sheet), rub.; line 2330 – interest payable, rub. Calculation example The company Ekran LLC is engaged in the production of drills for milling machines.