Profit from sales of products and ways to increase it

The goal of any business is to obtain a result, in this case, in the form of profit. You need to know how it is calculated to determine the profit from the sale of products. Formally, it is calculated as follows: from sales proceeds, cost, commercial expenses and management costs are taken away.

The enterprise sells products, receives revenue, and, in order to identify financial results, compares revenues with funds spent for production, as well as sales of products produced by the enterprise (services provided or works performed). In the economic literature, two approaches to determining costs (costs) are considered:

- economic;

- Accounting.

And the profit is considered, proceeding from these two aspects.

Economic profit is understood as revenue minus aggregate economic costs, which are both explicit and implicit. It is a payment for uncertainty and risk and is the result of the introduction of innovations, as well as entrepreneurial initiatives.

Revenue minus accounting costs that are explicit is the accounting profit.

Types of profit and its functions.

Each enterprise has three indicators:

1. Balance sheet profit;
2. Profit, which is taxed;
3. The profit is clean.

Balance sheet profit is an important indicator demonstrating the financial state of an enterprise. It includes three elements:

1. Profit from the sale of products, which in the balance sheet has the largest specific weight;
2. Profit received from the sale of fixed assets, other property;
3. The profit received from non-operating operations, taking into account losses, considered as financial results.

Net profit is distributed to the following funds: consumption, accumulation, reserve.

The formation of profit can be represented in the following sequence:

1. Proceeds from the sale of products;
2. Cost of production;
3. Profit from sales of products;
4. Profit from the sale of fixed assets of the enterprise, other operations;
5. Non-operating income ;
6. Balance sheet profit;
7. Profit adjustment;
8. Taxable profit ;
9. Profits tax;
10. Net profit from the sale of products.

Profit performs the following functions:

- clearly demonstrates what economic effect is obtained as a result of economic activity;

- is the main element of the formation of financial (monetary) resources of the enterprise;

- Thanks to the profit there is a formation of budgets of different levels.

Ways to increase profits.

Increasing it is possible as follows:

- technical methods of increase, which are based on the improvement of production technology, on the installation of modern equipment, and as a result, quality improvement, as well as the quantity of products produced by the enterprise, accordingly, the volume of sales of products must increase;

- organizational ways, which consist in improving the organization of production, organization of labor and management;

- economic levers for increasing profits are as follows: material encouragement of staff for creative approach to work, ensuring the growth of the enterprise, growth of its business activity; Formation of a competitive environment that promotes profit growth, through the search and use of reserves, and the production of competitive products; Stimulation of the enterprise through regulatory documents.

More fully final results of management analyze profitability indicators. They show, whether the enterprise works effectively and how effectively, whether various directions of activity are profitable. With the help of these indicators, an analysis is made of the volume of sales of products, evaluation of the enterprise as a whole, and also, as an instrument of investment policy and pricing. The value of profitability indicators visually demonstrates the relationship of the effect with available resources and used resources.