Based on the results of its main activity, the company receives a certain income. This amount, after deducting all expenses for the production and sale of products, as well as tax payments, is the net profit. There are several ways to determine the profit of an enterprise.
Instructions
Step 1
The activity of the manufacturer can be considered quite effective if the amount of profit is positive. This is often difficult to achieve, especially in a highly competitive marketplace. In one area, there are always several tens or even thousands of firms producing similar goods.
Step 2
The choice is always up to the buyer, so it is important to interest him, to make your products more attractive, including the price. Then the company can receive a decent income, but the profit takes into account not only this value, but also the numerous costs associated with the purchase of raw materials, payment for working time, purchase or lease of equipment, transport, etc.
Step 3
To determine the actual profit of the enterprise, the total amount of explicit costs should be deducted from the basic income. To do this, you need correct balance sheet data, which takes into account all the movement of funds on the relevant accounts:
PP = OD - NI, where PP is the profit of the enterprise, OD is the income from the main activity, NI is the explicit costs.
Step 4
Explicit costs are the cost of production. These include expenses for main production, rent of premises, warehouses, offices, as well as payment for the services of development engineers, lawyers, marketers, managers, accountants, etc. In other words, a whole team of specialists works to make the product appear on the market and buy it. a lot of resources are wasted. It can be concluded that one of the ways to increase profits is to develop methods to reduce the cost of production.
Step 5
Instead of accounting profits appearing in reports, financial analysts prefer to calculate economic profits. This value shows more clearly how effective the selected production strategy is. It is equal to the difference between the actual profit and the so-called implicit costs:
EP = PP - NI.
Step 6
Implicit costs are not documented. They represent an alternative income that could bring the enterprise the choice of other conditions for the implementation of its resources: monetary, labor, property and others.
Step 7
Sometimes, in the pursuit of revenue, manufacturers forget that the quality of their products may suffer. In this case, they violate the main entrepreneurial commandment, which speaks of the superiority of demand over supply. The main source of profit is the consumer's money, and he will not give it away for a product that no longer satisfies his physical or aesthetic needs.
