Average annual net profit. How to find net profit - formula. How to calculate net income correctly

Net profit is the goal of any entrepreneurial activity, the most important indicator of the company's performance. There are several options for calculating it. Let's figure out what net profit is, how to calculate and analyze it correctly

What is this article about:

What is net income in simple words

The net profit of an enterprise is a part of the balance sheet profit that remains at the disposal of the company after paying taxes, fees, and other payments to the budget. In simple words, the net profit of an enterprise (hereinafter referred to as NP) is equal to the difference between all income and all costs, including the tax burden (see also about income tax in 2019: rate, calculation, when to pay). Negative profits are called net losses.

Net Profit Formula

There are several calculation options.

PE = profit before tax - tax deductions.

PE \u003d total profit (financial, gross, operating) - tax deductions.

How to explain to the CEO and owners why there is net profit, but there is no money in the accounts

If the owners are asked to explain why the net profit differs from the balance on current accounts and what the money was spent on, a special report must be drawn up. He will show where the money went and that it was not stolen.

How to calculate net profit on balance sheet

In the balance sheet, the net profit of the organization is reflected under article 2400.

The formula for calculating the balance will look like this:

2400 = 2110 - 2120 - 2210 - 2220 + 2310 + 2320 - 2330 + 2340 - 2350 - 2410

where 2110 - "Revenue";

2120 - " Cost of sales »;

2210 - "Business expenses";

2220 - "Administrative expenses";

2310 - "Income from other organizations";

2320 - "Interest receivable";

2330 - "Interest payable";

2340 - "Other income";

2350 - "Other expenses";

2410 - "Income tax".

Excel model that will help predict the change in the company's net profit

See how to use Excel to conduct a scenario analysis of net income and find out what factors it depends on, how sensitive it is to changes in capital, income and expense items. The proposed model can be easily adapted to your company.

What to consider when calculating

The difficulty in calculating the indicator arises due to the peculiarities of accounting for income and expenses in accounting, tax accounting, IFRS, c.

When calculating the amount of profit in accounting and tax accounting, the difference may arise for several reasons:

1. When accounting for income:

• in accounting, it is possible to record revenue on an accrual basis (except for small businesses, cash accounting is possible for them), in tax accounting, income can be recorded on a cash basis and on an accrual basis;
• there are some features of accounting for income as the main revenue, non-operating, other income. There are also cases when income cannot be taken into account at all in tax accounting.

2. When accounting for expenses:

• some expenses are not taken into account in the tax, but are taken into account in the accounting. Therefore, the taxable base (profit before tax) in accounting will be less. From the point of view of tax accounting, a company can spend some types of expenses only at the expense of the state of emergency, for example, fines and penalties transferred to the budget;
• discrepancies in accounting for normalized costs. For example, daily allowance for business trips. Norms for determining the fixed asset and the possibility of its depreciation;
• differences in the time of recognition of certain types of expenses: on a cash basis and on an accrual basis, in the calculation of exchange vestments. Due to the moment of accounting for fixed assets requiring registration;
• differences due to the choice of different depreciation systems, the useful life of fixed assets.

3. When creating reserves

• for vacation pay;
• for doubtful debts. In tax accounting, it is not necessary to create such a reserve, in contrast to accounting, and the methods for creating a reserve in these accounts are different.

Due to these differences in accounting and tax accounting, the company receives different profit before tax. There are differences in other types of accounting.

Analysis of the net profit of the enterprise

1. Analysis based on the income statement. It is carried out in several stages:

• , connection with other forms of reporting;
• calculation of analytical indicators of the structure and dynamics of income, expenses, profits;
• structural-dynamic analysis;
• trend analysis;
• ;
• calculation of profitability indicators, their analysis, including factorial.

Profitability indicators are an important component in the analysis, as they allow you to find relative values. For example, it is worth calculating the net profit margin (R NP)

R NP = NP / Revenue

When comparing the R NP indicator in dynamics over several periods or in comparison with other enterprises in the industry, one can draw qualitative conclusions about the work of the company. Sometimes during the analysis it is useful to calculate the profitability of gross and / or operating profit.

2. Analysis of enterprise management data.

An analysis of the statement of financial results shows which factor is the most significant in the composition of profit. A more detailed analysis can then be carried out based on the management data of the enterprise. For example, most companies form a budget. Analysis of the implementation of the company's plan as a whole and in section of the Central Federal District , structural and dynamic analysis of indicators, identification of external and internal factors affecting net profit - all this can provide useful information. This will help identify revenue growth reserves and develop measures to mobilize them.

Also, the analysis can be carried out not only in comparison with the planned indicators, but also in comparison with the base ones (for example, for the previous period). However, the base period is not the best option for analysis. In the last 10 years, the economy of almost every country is very volatile, and the set of base period factors will be very different from the current situation.

When analyzing the PE, it is important to identify its change due to quantitative or qualitative factors. A qualitative change is possible by increasing the return on the resource potential of the enterprise. For example, due to the intensification of the use of the main factors of production, the increase in labor productivity.

An example of calculating and analyzing the net profit of an organization

For example, let's take Alfa LLC, which is engaged in metallurgical activities. For analysis, let's consider the report on financial results for 2015–2016 in a more detailed form than is customary in financial statements (Table 1).

Table 1. Income statement

Thanks to the relative values, the significant increase in net income in 2016 becomes more evident. At the same time, profit before tax changed by almost the same amount - 61.5%, and the increase in the income tax itself amounted to 63.4%. This suggests that there are temporary and permanent differences in the accounting of Alfa, but in 2016 they did not exist - the effect remained almost at the level of 2015.

findings

Net profit is one of the most important performance indicators of almost any enterprise. And it includes many factors, the analysis of which allows you to more effectively manage the company. However, due to the peculiarities, this is not always a sufficiently informative indicator. Therefore, EBIT is also used, , additional indicators of profitability.

The purpose of commercial activity is to make a profit, therefore, in economic science, much attention is paid to its analysis.

The possibility of development of the organization in the long term depends on the level of net profit.

Definition of net profit, its meaning and characteristics

profit is a positive result between costs and revenues received for a certain period of time.

This is an important indicator that characterizes the business in the market, the efficiency of using the company's capabilities and the quality of the final product. The profit of the enterprise is one of the sources of formation of budget revenues that support the welfare of the country.

The management of the company has net profit, which represents the financial result after payment of payments to the budget, payment of dividends to shareholders.

This financial result characterizes the stability of the company in the market, allowing it to attract investors, thereby reducing the risk of bankruptcy. Socially responsible organizations allocate resources from net profit to raise wages and pay bonuses to employees.

The need to classify financial results lies in the fact that at different stages of activity are used various methods of determination arrived. Conducting an analysis of each type separately allows you to identify problems at an early stage.

In economics, profit is classified according to various factors.

Main classification directions:

• type of activity (production, provision of services);
• profit period (year, quarter, month);
• a variety of business transactions (rent, investment activities, work with securities);
• income grouping method (economic, accounting, operating, non-sales).

If you have not yet registered an organization, then the easiest this can be done using online services that will help you generate all the necessary documents for free: If you already have an organization and you are thinking about how to facilitate and automate accounting and reporting, then the following online services come to the rescue, which will completely replace an accountant at your plant and save a lot of money and time. All reporting is generated automatically, signed with an electronic signature and sent automatically online. It is ideal for an individual entrepreneur or LLC on the simplified tax system, UTII, PSN, TS, OSNO.
Everything happens in a few clicks, without queues and stress. Try it and you will be surprised how easy it got!

Calculation formulas

Each type of business profit characterizes efficient use of enterprise resources, allows management to make decisions for further development.

Gross

Gross profit characterizes the efficiency of managing the enterprise's funds and is calculated by the formula:

VP \u003d B - SP

where VP - gross profit, B - revenue, SP - cost.

When calculating the costs of producing goods (services), the cost of goods (services), taxes paid to the budget (excluding income tax), salaries to employees and other indirect costs related to the production process are taken into account.

operating room

This type of profit is the financial result that the company received in the course of its core activities.

The calculation formula is as follows:

OP \u003d B - SP - OR - A

where OP is operating profit, B is revenue, SP is cost, OR is operating expense, A is depreciation.

In some sources, you can find the statement that operating profit and EBIT are one and the same, but this is a misconception. These indicators are calculated before tax, however, when calculating EBIT, not only expenses from core activities are taken into account. While, the operating financial result does not include investment income, including funds received from subsidiaries.

When making a decision, lenders pay attention exclusively to the calculation of operating profit, since it is this profit that shows the efficiency of the company's main production.

balance sheet

Balance sheet income represents the income that the company received from the sale of the main activity and other.

The calculation formula is as follows:

BP \u003d V - SP - PR + PD

where BP - balance sheet profit, PR - other expenses, PD - other income.

This type of income can be calculated using the gross profit indicator, reducing it by other expenses and adding income from other sources. The data for the calculation are taken from the income statement.

From sales

An important indicator of the company's performance is the profit from sales, since revenue is cleared from the costs of selling products and paying funds to managers.

The calculation has the following form:

Profit from sales \u003d B - Kr - Control

where Кр - commercial expenses, Ср - administrative expenses.

This type of company's income is corrected by reducing costs, or by increasing the volume of sales of products on the market.

taxable

According to the Tax Code of the Russian Federation, entrepreneurial activity is subject to taxation, in connection with this, in financial accounting, such a category of profit is distinguished as taxable income. During the calculation, this type of income is reduced by the level of expected benefits for a particular type of activity.

Calculation formula:

NP \u003d VP - SVP - I - A + PR

where VP - gross profit, SVP - adjusted VP, I - costs, A - depreciation, Pr - increase in assets.

margin

This type gives an idea of ​​the company's coverage of fixed costs and the formation of net income, is calculated as:

M \u003d B - PZ

where B is revenue, PZ is variable costs.

If the company is engaged in the production of different types of products, this type of profit will allow you to identify the most profitable in terms of profitability.

Unallocated

Retained earnings are reflected in the balance sheet and represent income that has not been distributed by the owners of the company. In the Russian accounting system, it is accounted for on account 84.

Calculated according to the formula:

NP = NP + D - Div

where NP - retained earnings, D - income of the current period, Div. - dividends.

Retained earnings are part of the company's equity and indicate that shareholders did not use these funds to replenish assets.

Estimated

Estimated profit is calculated on the basis of future expenses and income for the implementation of the economic activity of the company. According to the legislation of the Russian Federation, the calculation of the estimated profit is carried out as a percentage and has the form:

Ni \u003d (SP - Z) x 100%

where SP is the expected profit, Z is the cost.

The estimate is drawn up at the conclusion of contracts with the customer, unforeseen expenses are not taken into account as part of the profit.

economic profit

This type of profit is the financial result that remains at the disposal of the organization after taking into account all expenses and payment of tax liabilities and the income received.

EP = TR - TC

where TR is the income received, TC is the sum of all expenses.

When calculating economic profit, all expenses, including long-term ones, are taken into account.

Algorithm and formulas for calculating net profit

The ultimate goal of any commercial activity is to make a profit, the absence of this indicator leads the company to exhaust its resources and bankruptcy. Positive dynamics, on the contrary, allows replenishing working capital, forming reserves and developing production.

Calculation net profit carried out on the basis of the income statement. The calculation algorithm is that variable costs are deducted from the sales proceeds, resulting in a marginal profit. We reduce by fixed costs, we get operating profit, the reduction of which by other expenses gives profit before tax. At the end of the calculation of net profit, the indicator is reduced by tax and other deductions to the budget.

Russian accounting practice also applies formula definitions of net profit:

PE \u003d FP + VD + OD - N

where FP is profit, IA is gross income, OP is operating income, and T is taxes.

Currently, companies that cooperate with foreign countries apply in financial accounting international standards, according to which net profit is formed as:

1. + Tax expenses
2. – Income tax that is refunded
3. (+ contingencies)
4. (- windfall income)
5. + Interest payable
6. – Interest receivable
7. =EBIT
8. + depreciation
9. – Revaluation of assets
10. = EBITDA

Distinctive features of EBITDA and net profit indicators are discussed in the following video:

The procedure for calculating the rate of return

The rate of return is the ratio of profit for the reporting period to the advance payment at the beginning of the period, otherwise it is called the rate of return on assets or investments.

This indicator is calculated as:

Np \u003d Pv / Yes x 100%

where Yes - advanced funds; Pv - profit.

Advances are the sum of production costs and labor costs.
In other words, the rate of return is the level at which the invested capital in the enterprise has increased at the reporting date. Its normative value is the achievement of 50%, 100% refers to excess profit.

The rules for calculating profits are set out in this video:

Analysis of the results

To analyze the results of net profit, we use a number of methods:

1. vertical and horizontal the analysis is carried out on the basis of changes in reporting items;
2. trendy allows you to track the change in the indicator in dynamics, comparing the reporting period with the previous or base one.
3. factorial, this method is based on the calculation of coefficients.

DEFINITION

net income represents the amount of income that remains at the disposal of companies after all tax payments included in the price of a product (service) have been paid.

Among these tax payments, the main ones are:

• VAT (value added tax),
• excises,
• Customs duty, etc.

The net income of an enterprise is often referred to as all assets that have become the property of an enterprise over the past reporting period minus all expenses.

In practice, such an indicator as net present value is often used, which is the accumulation of the discounted effect over a certain period of time. Indicators of net income and net present value reflect the excess of the amount of cash receipts over the amount of costs for the implementation of a particular project (or for a certain period of time). In this case, the calculation can be carried out with and without taking into account the effects that relate to different periods of time.

Net present value in most cases is used to evaluate investments.

Net Income Formula

The net income formula is as follows:

BH = VD - N

Here BH is the sum of net income,

VA - the amount of gross income,

H - tax payments included in the cost of production.

For this formula, we can determine the gross income by the following formula:

HP \u003d C * Q

Here, VA is gross income,

C - the price of the goods,

Q is the quantity of goods.

Also, to the result obtained according to the gross income formula, the amounts of other income received are added, which are taken into account when calculating the gross turnover:

• dividends,
• charitable receipts,
• the amount of funds from the sale of securities, etc.

Net Income Formula Based on Gross Revenue

Another option for calculating net income is the following formula:

BH \u003d BB - (PostR + PerR) - N

Here BB is the amount of gross revenue,

PostR - fixed costs,

PerR - the amount of variable costs,

H is the amount of tax payments.

Gross revenue refers to the funds that the company receives in cash in the course of commercial activities. These incomes include:

• Cash (cash and non-cash form),
• Material assets (for example, equipment, raw materials, materials),
• Intangible values ​​(trademark, patent, technology, etc.)

The value of gross income

The net income formula is most commonly used when estimating and adjusting sales revenue for expenses. The amount of expenses takes into account the amount of tax payments, the amount of depreciation, interest rate, etc.

The net income indicator shows the profitability of enterprises for the corresponding period of time. If a negative value is obtained during the calculation, then we can say that the company received a net loss.

Many businesses use net income to calculate earnings per share, which reflects the amount of income contained in each share of the business.

Net profit- This is an indicator of the effective commercial activity of the company. In our article you will find the formulas for calculating this indicator and learn about the nuances of their application.

Many financial indicators take part in the calculation of net profit, and the formula for calculating it is not as simple as it seems at first glance. In the accounting of any company, net profit is reflected in line 2400 of the income statement (OFR), and all indicators in column 2 of this report are involved in determining net profit .

Learn about the structure and purpose of the OFR from this.

A detailed algorithm for calculating net profit is given in the next section.

How to calculate net profit?

The question of how to calculate the net profit of the company arises before every merchant. The most common algorithm for calculating net profit is the line-by-line filling of the OFR, the final line of which is the net profit indicator.

Schematically, the formula for calculating net profit (NP) in a simplified version can be represented as follows:

PE \u003d B - SS - UR - KR + PD - PR - NP,

B - revenue;

CC - cost of sales;

UR and CR - management and commercial expenses;

PD and PR - other income and expenses;

NP - income tax.

In the OFR lines, it looks like this:

Page 2400 = page 2110 - page 2120 - page 2210 - page 2220 + page 2310 + page 2320 - page 2330 + page 2340 - page 2350 - page 2410 ± page 2430 ± page 2450 ± page 2460.

The calculation of net profit begins with the determination of revenue (B) and cost of sales (CC). These are the main inputs for calculating net profit.

Find out the formula for calculating gross profit.

The resulting difference is then adjusted for the amount of selling (KR) and administrative (SG) expenses that the company incurred during the same period.

As a result of simple mathematical operations with these indicators, profit from sales is revealed (line 2200 OFR). Then, in order to calculate net profit, the profit from sales indicator undergoes further refinement: it is increased by the amount of other income (PD) and reduced by the amount of other expenses (PR).

What is included in other income, we will tell in the publication .

After such actions, another type of profit is determined - profit before tax (line 2300 OFR). It is also specified in order to obtain an indicator of net profit: the amount of current income tax is deducted from it and the impact of changes in deferred tax liabilities (IT), deferred tax assets (ITA) and other influences that are not reflected in the previous lines of the FFR are taken into account.

As a result of these adjustments and clarifications, the net profit of the company is determined. Calculations of net profit are possible for any period of work: shift, day, week, decade, month, etc. The main thing is that all indicators involved in the calculation of net profit be calculated for the same period of time.

In the next section, we will talk about how the net profit is determined in another way.

The impact of the company's key performance indicators on net profit

Net profit is a multi-component indicator - this can be seen from the composition of its calculation formula. Moreover, each parameter involved in the calculation is also complex. For example, a firm's revenue may be broken down into different lines of business or geographic segments, but all of it must be reflected in the formula for calculating net income.

For information on how revenue and gross income of a company are related, see the article .

Such an indicator as the cost price in certain companies may have a different structure and affect net profit in different ways. So, one should not expect a large net profit if amounts equal to or exceeding the amount of revenue received are spent on the company's products (this is possible with material-intensive or labor-intensive industries or the use of outdated technologies).

The impact on net profit of selling and administrative expenses is obvious: they reduce it. The amount of such a decrease directly depends on the ability of the company's management to rationally approach the structure and volume of this type of cost.

However, even with zero or negative sales profit, which is affected by the indicators listed above, you can get a net profit. . This is due to the fact that, in addition to profit from the main activity, the company can earn additional income. This will be discussed in the next section.

The role of other income and expenses in the formation of net profit

Often the company's core business does not bring it the desired net profit. This happens especially often at the initial stage of the formation of the company. In this case, additional income received by the company can serve as a great help.

For example, you can make a profit from participating in other companies or successfully invest free cash in securities. The resulting income will contribute to an increase in net profit. Even an ordinary agreement with a bank on using the balance of money on the company's settlement accounts for a certain percentage will allow the company to receive additional income, which will certainly affect its net profit.

But if the company uses borrowed funds in its work, the interest accrued for using the loan can significantly reduce the net profit indicator - you should not forget about such an impact of the fact of raising borrowed funds on net profit. The amount of interest on borrowed obligations (even calculated at the market rate) can seriously reduce net profit, and in certain cases lead to losses and bankruptcy.

Can the company's debts be collected from the chief accountant in case of bankruptcy, find out by.

A significant impact on net profit is provided by a variety of income and expenses that are not related to the main activities of the company. For example, renting out unused space or equipment can bring in a good additional income and have a positive impact on the bottom line. Net profit will increase if the company's assets that are not used in its activities are sold.

At the same time, one should not forget about the need for constant monitoring of the composition and amount of other expenses - with their growth, net profit decreases. For example, net income may decrease as a result of excessive spending of money on charity and in other similar cases.

How to reflect charity expenses in accounting, we will tell in this.

The net profit of the enterprise is an indicator calculated in different ways.

Net profit, the calculation formula of which was described in the previous sections, can be determined in another way. For example:

Page 2400 = page 2300 - page 2410

Net profit, the calculation formula of which is given above , equal to pre-tax profit less income tax.

Such an algorithm for calculating net profit is simplified and can be used, for example, by small businesses that have the right not to apply PBU 18/02 “Accounting for income tax calculations”.

IMPORTANT! The criteria for small enterprises are given in the Federal Law of July 24, 2007 No. 209-FZ "On the development of small and medium-sized businesses in the Russian Federation."

For more information about the criteria for small businesses, see this.

Information on deferred tax assets and liabilities is formed in accounting and is required to reflect the differences that arise between tax and accounting accounting.

Results

Net profit is a complex indicator that includes all types of income received by the company, taking into account the costs incurred. If the company's costs exceed the totality of sales proceeds and additional other income, then we can talk about the absence of net profit and the unprofitability of the company's activities.

Net profit allows merchants to expand their business, master new technologies and sales markets, which, in turn, has a positive effect on the amount of net profit growth.

This article is devoted to deciphering concepts that seem to be synonyms. It will be about profit, revenue and their types.

Definition and calculation formula

profit It is customary to call the difference between the proceeds from the sale of goods / services and the costs of their production / provision.

Profit is an important economic indicator that serves to reflect the effectiveness of entrepreneurial activity.

Profit and revenue are not the same thing. The formula for calculating profit is very simple:

Revenue - Expenses = Profit

Net profit

Net profit is the money that remains with the enterprise after various deductions, taxes and other payments are deducted from the balance sheet profit. Net profit is a source of financing for production processes. It also forms reserve funds, and it is due to it that working capital increases.

The main factors affecting the volume of net profit are:

• the amount of tax and other payments;
• company's income from the sale of goods/services;
• cost price.

How to Calculate Net Income

The volume of net profit is calculated in several stages.

1. 1. The first step is to calculate how much money was spent on the production of goods (the cost of the material is also taken into account).
2. 2. Then you should make a calculation. Gross income is the result of subtracting production costs from revenue (i.e., funds received by the enterprise as a result of the sale of goods).
3. 3. This is enough to find out the amount of net profit:

   To calculate net income, you need to subtract mandatory deductions (taxes, etc.) from gross income.

Gross profit

To calculate gross profit, you need to subtract the cost of goods from the amount received by the enterprise as a result of its sale.

What is the difference between gross profit and net profit? And the fact that all tax and other deductions are “included” in the gross.

For the correct calculation of gross profit, it is necessary to accurately calculate the amount of expenses, including and.

Cost price is the company's cost of producing the product.

Factors affecting profit

Factors affecting the volume of gross profit are divided into two groups: internal and external. Internal depend on the management of the enterprise. Here they are:

• trading performance;
• improving the quality characteristics of the goods;
• increase in production volume;
• reduction of production costs;
• rational (most efficient) use of production capacities;
• work to expand the range;
• effective advertising campaign.

As for external factors, management cannot influence them. Let's list them:

• location of the enterprise;
• ecological situation in the region;
• natural features;
• business support by the state;
• political situation in the country and the world;
• features of the economy (country and world);
• provision of transport and necessary resources.

What is the revenue

Revenue is what a business receives from the sale of goods or services. It is no wonder that any company seeks to receive revenue. Revenue and profit, as already mentioned, are not identical concepts, because profit is the difference between revenue and expenses.

Sources of income may vary. There are the following types of revenue (based on its source):

1. 1. Revenue from the sale of a product or service. It includes all the funds received by the enterprise as a result of the sale of its products within a certain period.
2. 2. Investment income.
3. 3. Revenue received as a result of financial transactions.

total revenues is the sum of funds received from all these sources.

About gross revenue

Gross revenue is the total income received by the company as a result of the sale of goods, as well as other operations not related to the sale. However, the main component of gross revenue is sales revenue. The following formula is used to determine gross revenue:

BB = Quantity of item * Unit price of item

Since gross revenue does not take into account production costs, it cannot be considered the main indicator of the company's performance. But when it comes to a comprehensive assessment of performance, gross revenue is also taken into account.

To summarize, let's look at the formula again. So:

Profit = Revenue - Expenses

This formula shows that profit and revenue are not synonymous. When calculating profit, all expenses of the enterprise are taken into account, and not just the cost of goods. In addition, the profit can be negative.