How to calculate gross profit. Types of gross income

One of the most important indicators activities of the organization is gross income. Every entrepreneur should know what this is. It is this figure that will help determine the effectiveness of work and adjust the strategy.

Gross Income: What is it?

Gross income is the amount of funds received by an enterprise as a result of its main activities. This is the final result that reflects the total result of the enterprise’s activities in the field of economics, management and marketing. It is worth noting when considering gross income that it is not only individual, but also So, gross income is considered at the state level.

In some countries, this term is associated with such a concept as “turnover”. If we are talking about non-profit organizations(public, charities etc.), gross income means the annual amount of funding or gratuitous contributions.

Gross Income Value

Gross income from product sales is the basis for the functioning of the enterprise. Its meaning is as follows:

• reimburses depreciation charges that fall on non-current assets;
• used to pay taxes, fines and penalties, as well as other contributions to the state treasury;
• is a source of wages and bonuses for employees;
• acts as the basis for the formation of net profit and further development of the enterprise.

Formation of gross income

One of the most important indicators in the activities of any organization is gross income. What it is can be understood by understanding the mechanism of its formation. So, this process includes several stages:

1. Production of goods (or services).
2. Market launch with niche identification.
3. Sales to the end consumer.
4. Receiving income.

What does gross income include?

This indicator is much broader than cash receipts from the main activities of the organization. So, the components of gross income are as follows:

• funds received into the organization’s account by court decision;
• fines paid by third parties;
• material assets stored in accordance with the contract;
• insurance reserve;
• financial assistance or charitable contributions;
• royalties and dividends;
• income from the sale of securities;
• insurance proceeds.

Intangible component

It is worth noting that gross income also has an intangible component. This includes income from:

• capital investments and reinvestments;
• savings in pension accounts;
• non-cashed bank deposits;
• assistance under international financial agreements.

How to calculate

Calculation of gross income is carried out in several stages. So, you need to do the following:

1. First, you need to calculate your total gross income. To do this, you need to subtract direct cash from cash receipts from core activities.
2. Determine the full cost of manufactured products for the period (if necessary, take into account
3. Find the product of the number of units of goods (services) and the cost of their sale. All other components of gross income are added to the resulting indicator.

Calculation methods

There are several methods for calculating gross income. So, to calculate this indicator for turnover, you need to find the product of the total turnover and the trade markup, and then divide the resulting number by 100. This technique can be used if the markup for all products is the same.

If an enterprise produces a wide range of products with different trade markups, you need to find the product for each product separately, and then sum it up. The result, as in the previous case, is divided by 100.

The simplest way to calculate gross income, which is appropriate for almost any enterprise, is by the average percentage of gross income. This indicator is multiplied by the total turnover and divided by 100.

Factors Affecting Gross Income

Net gross income is one of the key indicators reflecting the performance of an enterprise. On this value The following factors may influence:

• The volume of products, as well as its range and structure. The more goods are sold, the higher the gross income will be.
• The size of the trade markup. Its feasibility and validity are inextricably linked with the gross income indicator.
• Availability additional services, which increase the prestige of the product and stimulate demand for it.
• Availability as well as quantity and stability of its sources.

Gross income planning

Knowing how to calculate gross income, you can plan its amount in advance. This process is simply necessary for the successful operation of the enterprise. Simplified, this process can be explained as anticipating the difference between the reporting and planned indicators. It is worth noting that in planned value gross income does not include VAT, proceeds from the withdrawal of fixed assets and the sale of intangible assets and currency.

Competent planning is the key to the prosperity of an enterprise. As for gross income, this indicator should include not only costs, but also net profit, the value of which will be significantly higher than in the reporting period. Also, in addition to expected income, when planning it is important to provide for possible losses. They may be as follows:

• losses of past periods that can be identified in the planning year;
• losses from markdowns of goods due to decreased demand;
• risk of order cancellations;
• possible fines.

Success Factors

It is worth noting when studying gross income that this is one of the main indicators illustrating the results of an organization’s activities. For its work to be successful, it is worth adhering to the following principles:

• to establish yourself well in the market, it is important to find optimal ratio prices and quality;
• the production capacity of the enterprise must be sufficient to produce the quantity of products that satisfies consumer demand;
• you need to constantly monitor market conditions in order to make timely changes to the assortment or expand it;
• special attention should be paid to logistics (the costs of delivering products to the consumer should be minimal).

Conclusion

When assessing financial condition organization or an entire state, the gross income indicator is certainly calculated. This is the basis for the well-being of the enterprise, which provides opportunities for further development.

What is meant by gross profit? In general, the concept of profit is defined as the difference between income and expenses, but gross profit is a characteristic of production efficiency and financial regulation in the enterprise as a whole. That is gross profit defined as the difference between the proceeds from the sale of goods or provision of services and their cost.

There are many factors that can affect gross profit. They are usually divided into two types, the first are activity-dependent enterprises, the second are independent. The first category includes:

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• Expansion of the range.
• Increase in production volume.
• Acceleration of product sales.
• Improving quality.
• Increased labor efficiency.
• Cost reduction.
• Improving marketing strategy.

• Geographical.
• Legislative regulation.
• Natural.
• Geographical.
• World changes.
• Changing the state's attitude towards private entrepreneurship.

More important, of course, are those factors that an enterprise can influence, because it determines whether its goods and services will be used.

Take, for example, the formation of pricing policy. In modern conditions market economy, entrepreneurs simply have no other choice but to competently formulate their pricing. They should know how to approach the buyer in order to both attract him and not lose extra money.

Of course, you should not strive to endlessly reduce the price tag, yes, this way you can increase trade turnover, but this is not best course to achieve the financial well-being of the enterprise.

A decent sales volume with a good price is better than trying to push in as much as possible and as cheaply as possible, in which case you never know what the next reporting period will be like.

Or, for example, profitability analysis, with a correct assessment of demand, you can increase the production of in-demand goods and reduce or completely remove from production any category of goods. This way, the company will receive maximum benefit from the necessary goods and reduce costs on unclaimed production.

Gross and net profit We have already dealt with gross profit a little, now we need to consider what net profit is and how it differs from gross. So, speaking in simple language

, net profit is the income received by the enterprise minus all payments in a certain period.

• It is obtained by deducting from the gross profit all funds spent on the main payments of the enterprise. Such payments most often include:
• Fines.
• Interest on loans.

Other operating expenses. It is on the basis of net profit that the quality of the organization’s work is assessed; it is reflected in the main financial document

– balance sheet.

Calculating net profit is usually not difficult, the main thing is to know some numbers. Initially, you need to decide on the time period for which the profit will be calculated. When the time period is determined, you can begin to calculate.

• When calculating, the following indicators are taken into account:
• Gross profit (denoted by a).
• Financial profit (this is b).
• Other operating expenses (c).
• Taxes (n).

So, the formula for calculating net profit is simple - Y= a+b+c-n.

You may ask, what is the difference between net profit and gross profit? Everything is very simple, net profit is the result that an enterprise receives after deducting all its costs not only for production, but also those funds that were spent on repaying payments on loans, fines and other categories. As for gross profit, as mentioned above, it is simply the difference between sales income and production expenses, excluding the cost of paying off payments.

Calculation methods

Gross profit can be calculated in several ways, each of which is chosen along the way least resistance- it’s easier, that’s what they think.

Through the average percentage

This method is the most commonly used in retail trade.

First, let's decide on the quantities we need:

• TO – trade turnover.
• SP – average percentage of gross income. It is calculated as follows – SP = (a + b – c) / (TO + d) * 100%.
  • Here a is the trade markup on the remaining unsold goods.
  • b – markup on goods newly received during the reporting period.
  • c – markup on goods no longer in circulation (return to supplier, spoilage, etc.).
  • d – balances of goods at the end of the reporting period

Thus, we obtain the formula for calculating gross profit: VD = TO * SP / 10 0

By product range

This method is used if the range of goods is quite large and all goods are different, and they have a different markup. If during the reporting period the trade markup changes for any group of goods, then the calculation for it is made separately for each period.

By remaining goods

This method of calculation is practically not used, but at the same time, it is no less effective than any of the ones given here. Its rare use is due to the difficulty in calculating and storing information; here it is necessary to obtain the sum of all markups for each product sold.

If a trade organization can track such information, then it will not be difficult to save any other information necessary for calculations in another way, for example, you can make calculations based on purchase prices.

The values ​​here will be the same as in the previous formula: VD = a + b – c – b

By trade turnover

This method is best used if the same percentage of trade markup is set for all goods that the organization sells. Trade turnover refers to the amount of revenue for all goods sold in a certain period, including VAT.

To determine gross income from turnover, you need to know the following values:

• Trade turnover (let's call it TO).
• Calculated trade margin(RTN), calculated from the formula RTH=TNO/(100%+TNO).
• Trade margin established by the organization (TNO).
• And let's denote gross income as FD.

So, we get the following formula: VD = TO * RTH

If the trade markup changes during the accounting period, this method can still be used, but it will be a little difficult since you will have to calculate the gross income for each period of the new markup and then add up the results.

Example of gross profit calculation

In the grocery store of JSC Post Torg, the same markup of 20% is established for all goods. Revenue in the reporting period amounted to 200,000 rubles, including VAT. The calculated trade margin in this case will be equal based on the formula - 20% / (100% + 30%) = 0.15. This means that the gross profit will be 200,000 * 0.15 = 30,000 rubles.

Checking Gross Profit Calculation

Once you have completed all your gross profit calculations, you can check them for accuracy. To begin with, the gross profit is divided by the net profit, thus obtaining the difference between the cost of the product and its selling price.

Next, this percentage must be compared with the trade margin; if these indicators are almost the same or do not differ at all, then you have performed the calculations correctly; if there are large discrepancies, you need to make sure that the calculations are correct and look for an error. The error can be contained anywhere - in sales volume, acquisition of inventory, other purchases and other expense items.

The goal of any company is to generate income. It can be calculated using different indicators. There are such concepts as revenue and net profit. Gross profit is a key indicator of a company's performance. It allows you to analyze the production efficiency of the structure.

What is gross profit?

Gross profit is the difference between income and cost. Taxes are not deducted from these funds. Cost means:

• costs of producing the product: costs of materials, equipment maintenance;
• purchase expenses finished product at the purchase price;
• payment for electricity;
• salary payments.

All these indicators constitute technical costs.

IMPORTANT! VP is calculated for a specific period. The time period depends on the company. The resulting figure is indicated in the balance sheet.

What influences VP?

Gross profit changes under the influence of external circumstances, such as:

• cost of transportation services,
• natural, environmental factors,
• socio-economic environment in which the enterprise operates,
• costs of production resources,
• foreign economic contacts.

VP is also influenced by internal factors:

• income from product sales,
• other sources of income: investments, provision of services,
• cost of goods,
• demand for manufactured products, sales figures,
• cost of manufactured goods.

Gross profit is also affected by negative factors possible during the operation of the enterprise:

• overestimated or underestimated cost of products sold;
• low quality of goods;
• disciplinary violations by the company's employees leading to losses;
• fines and sanctions.

The listed factors can affect the gross profit directly and indirectly. Factors that affect sales income have an indirect influence.

Gross profit composition

The VP may include the following financial resources:

• profit from sales of enterprise products and services;
• funds received from rural and logging farms;
• income from the sale of company property: equipment and other objects;
• amounts received from transactions not included in the main list of company activities. For example, a store sells goods. This is his main activity. However, the funds are spent on investments, the income from which is classified as non-operating profit;
• amounts received from the sale of shares.

The vast majority of EP, according to statistics, consists of income received from core activities.

Formula for calculating gross profit

Gross profit is calculated using the formula:

VP = D - (S+W)

The formula includes the following indicators:

• VP - gross profit;
• D - quantity of products sold;
• C is the cost of production of goods;
• Z - costs during production processes.

VP indicators can be calculated after the product has been produced and sold.

ATTENTION! Typically, gross profit is calculated once a year.

Example

The company produces electric kettles. Production costs amount to 20,000 rubles, costs - 10,000 rubles. 500 teapots were sold per day at a cost of 1000 rubles.

Calculations are carried out as follows: revenue per day is calculated. That is, the number of teapots sold is multiplied by their cost. We will receive 500,000 rubles. From this result you need to deduct all costs amounting, in total, to 30,000 rubles. From 500,000, 30,000 rubles are deducted. Gross profit will be 470,000 rubles.

Calculation features

The calculation of VP differs in a number of nuances, determined by the type of activity of the enterprise:

• If a company specializes in selling products, it is required to deduct all expenses from revenue, including discounts on goods and returns. Subtracted from the amount received. The result of the calculations is the gross profit;
• If an organization specializes in providing services, calculations are usually carried out according to a simplified scheme. Their revenues are deducted from discounts and other expenses. The resulting net profit is also gross profit.

The main stages of the calculation are standard.

Why is gross cost calculation necessary?

Gross profit does not reflect the actual income of a business. This indicator includes a lot extra expenses: payment for advertising, payment of salaries, rent. VP is required for other purposes. This is a narrow, not a general tool. It is used to analyze the production resources of an enterprise. Correctly calculated indicators ensure the achievement of the following goals:

• analysis of the difference between the cost of a product and the income from its sale;
• determining the optimal cost for a product or service;
• competent measures for planning the company’s activities;
• identifying problems and weak points enterprises.

Based on the analysis of annual VP indicators, it is possible to track the economic growth of the enterprise and the results of optimizing activities.

Reflection of VP in financial statements

It should be clear from the financial statements on what basis gross profit is calculated. Let's consider the components of the calculation formula from an accounting point of view:

• “revenue” (line 2110);
• “cost” (line 2120).

Recording of VP in documents takes into account the order of the Ministry of Finance defining accounting entries. Foreign exchange profit is indicated in line 2100.

How to increase gross profit?

Gross profit is a dynamic indicator. It constantly changes depending on the company's activities. The following activities help increase VP:

• use of LIFO technique in inventory analysis;
• tax reduction with the help of benefits that the enterprise is entitled to;
• regular write-off of bad debts from the balance sheet;
• optimization production processes, aimed at reducing costs;
• literate price policy, taking into account the demand for products and the general market situation;
• improving the quality of equipment to speed up the release of goods and improve their quality. Restoration or acquisition of equipment can be carried out at the expense of shareholder dividends;
• creation of reasonable standards to ensure control over intangible assets.

IMPORTANT! Gross profit is an indicator on the basis of which planning of an enterprise’s activities in the production sector can be carried out.

So.
Gross profit is the amount obtained after deducting costs and production costs. Determined by formula. The nuances of the calculation depend on the type of activity of the enterprise. The VP indicator is important for assessing the company's production resources. Is the basis for reasonable pricing. Gross profit is reflected in the financial statements using the appropriate entries established by the Order of the Ministry of Finance.

The purpose of any enterprise, regardless of its size or field of activity, is to make a profit. This indicator can be called one of the most important for analyzing the effectiveness of an organization. It allows you to determine how rationally its means of production and other resources - labor, money, material - are used. In a general sense, profit can be considered as the excess of revenue over costs and resources used for production. However, in the process financial analysis its various types are calculated. So, along with net gross. The formula for calculating it, as well as the meaning, differ from other types of income. At the same time, she plays one of the critical roles in assessing the efficiency of an enterprise.

Gross profit concept

The term comes from the English gross profit and means the total profit of an organization for a certain period. It is defined as the difference between the income received from sales and the cost of production. Some people confuse it with gross income. The first is formed as the difference between revenue from the sale of goods and the costs associated with their production. In other words, it represents the sum of net income and wages of employees. The gross formula of which will be discussed below is a smaller value. It is formed after paying taxes (except for income tax) and deducting labor costs. That is, not only material costs, but all total costs associated with production are taken into account.

Formula: gross profit

This value is formed as a result of the sale of all types of products and services, and also includes income from non-sales operations. It shows the efficiency of production as a whole. Let's see how gross profit is calculated. The formula looks like this:

sales income (net) - cost of goods/services sold.

Some clarifications should be made here. Net income is calculated as follows:

total sales income - the amount of discounts - the cost of the returned goods.

In general, we can say that this reflects the income from the transaction without taking into account indirect costs.

Or, for example, profitability analysis, with a correct assessment of demand, you can increase the production of in-demand goods and reduce or completely remove from production any category of goods. This way, the company will receive maximum benefit from the necessary goods and reduce costs on unclaimed production.

Gross profit takes into account only direct expenses . They are determined depending on the industry in which the company operates. So, for the manufacturer, the electricity that ensures the operation of the equipment will be expensive, and the lighting of the room will be overhead. When net profit is determined, indirect costs are also taken into account. Gross profit can be used to calculate it. The formula looks like:

gross profit - administrative, selling expenses - other costs - taxes.

The income received after paying all these payments is pure and can be used for various needs of the enterprise - social, related to the development of production, etc.

Conclusion

The most important indicator of production efficiency at an enterprise is gross profit. The formula for its calculation is given in the article and reflects the total revenue received from the sale of goods or the provision of services. It is determined taking into account the direct costs of the organization and does not include indirect ones. Thus, this type of profit shows the efficiency of using resources directly involved in the main activities of the enterprise.

Any commercial organization created for the purpose of making a profit. Therefore, the definition of this indicator is one of essential elements analysis of the enterprise's performance results. In general, profit is defined as the difference between sales revenue and costs. There are several types of profit, depending on what types of costs are included in the calculation. Let's look at how gross profit is calculated - one of the indicators most often used in analysis.

Gross profit concept

Gross profit refers to a company's profit before taxes. Those. in this case, when determining how to calculate gross profit, the calculation formula includes all costs of production and sales of products (goods, services). How to calculate gross profit in each specific case depends on the type of activity of the analyzed enterprise.

Gross profit is determined, as a rule, for a month or a multiple of a month (quarter, half-year or year). This is due to the fact that many types of costs can only be objectively assessed based on the results of the month. Such costs include, for example, wage, taxes, rent, utility bills, etc.

But if necessary, profit can be determined at other frequencies, and also calculated for individual projects, product groups, etc.

How to calculate the gross profit of a manufacturing enterprise

For production activities The gross profit of an enterprise is determined as the difference between sales revenue and the total cost of manufactured products.

• PR = B – SS

In this case, the cost includes all costs of production and sales of products, both direct and indirect. Cost items depend on the specifics of the activity specific enterprise, but the main ones can be seen when analyzing almost any production.

1. Raw materials and supplies.
2. Energy.
3. Services of third parties (advertising, communications, audit, etc.)
4. Taxes included in the cost price (on land, on property, etc.)

How to find gross profit when providing services

In this case, gross profit includes the same elements as for manufacturing enterprise. The only difference is in the composition of the costs, taking into account which the gross profit is formed. The calculation formula will be the same as for a manufacturing enterprise, but the cost structure will be different. In this case, a significantly smaller share of costs will be made up of raw materials and energy resources, and a significantly larger share of wages.

How is gross profit determined for a trading enterprise?

For a trading enterprise, the source of profit is income from the sale of goods. Therefore, this case uses a slightly different approach to determine how to calculate gross profit. The formula will look like this:

• PR = D – SS, where:
  • D – income from the sale of goods, defined as:
• D = TO – ST, where:
  • TO – turnover (analogue of sales revenue for a manufacturing enterprise),
  • ST – cost of purchased goods.

Cost in this case refers to the cost of selling goods. The main cost items for a trading company will be:

1. Salary with deductions.
2. Advertising.
3. Fare.
4. Maintenance costs storage facilities (public utilities, security, etc.).

Sometimes, when analyzing the activities of a trading enterprise, it is more convenient to calculate profit based on turnover. In order to determine income in this case, the average trade margin is used, and then the gross profit is calculated. The formula will be like this:

• PR = (TO – TO/(1+TN)) - SS, where:
  • TO – trade turnover,
  • TN – average trade margin (in %).

The part of the expression enclosed in brackets is the income of the trading enterprise from the previous formula. It is defined as the difference between the proceeds from the sale of goods and the cost of their acquisition.

Example

The turnover of Alpha LLC for the reporting period amounted to 120 million rubles. excluding VAT, average trade margin - 20%, costs of selling goods - 15 million rubles. without VAT. Gross profit will be equal to:

PR = (TO – TO/(1+TN)) – СС = (120 – 120/(1 + 0.2)) – 15 = (120 – 100) – 15 = 20 – 15 = 5 million rubles.

Gross profit - formula for calculating the balance sheet

It is convenient to use for express analysis of the results of an enterprise’s activities. financial statements. Its main forms are balance sheet and financial statements. financial results.

Gross profit is best determined based on the income statement data. The classic definition of gross profit in this form corresponds to profit from sales (p. 2200). To calculate it, you need to subtract the cost of sales, selling and administrative expenses from revenue.

• Page 2200 = page 2110 – page 2120 – page 2210 – page 2220

Conclusion

One of the main indicators characterizing the results of an enterprise’s activities is gross profit. This indicator is calculated based on revenue (income) and the cost of production and sales of products (goods, services). The specific calculation method depends on the direction of activity of the analyzed enterprise.