Factors affecting the amount of profit

Profit as the main form of cash savings is the difference between the sales proceeds at the relevant prices and the full cost. Therefore, the growth of profit depends, first of all, on the reduction of costs associated with the production and sale of products, as well as on the increase in the volume of products sold.

The implementation process is a dual procedure - it is:

1) the material process of transferring products, performing work and providing services;

2) the process of payment for products, works and services.

The named processes may not coincide in time, therefore, according to the provisions of accounting, the proceeds from the sale can be determined by different methods:

1) cash;

2) accrual method.

When using the first method, revenue is determined as the shipment and payment for products, works and services, i.e. upon receipt of funds in case of non-cash settlements to the accounts of enterprises in banking institutions, in case of cash settlements - to the cash desk of enterprises. This method is traditional for domestic accounting and, other things being equal, leads to a decrease in the reliability of the calculation of the financial result, since, on the one hand, the accrual of expenses (wages, depreciation, services, materials) occurs in one billing period, on the other hand, revenue for the shipped products arrive, as a rule, in the next (next) reporting period (periods).

There is a discrepancy, the more significant, the longer the gap in time between production and sale. The advantage of the method lies in the fact that the enterprise can dispose of the funds actually received in its cashier or bank account.

The second method is widely used abroad: shipped products, work performed or services rendered are considered to be sold. The method provides greater reliability in calculating the financial result and should increase the speed of product deliveries and payments for it. A significant drawback here is that if the buyer fails to pay, the seller immediately has a debt for value added tax and income tax, which is not secured by real money. The difficult financial condition of many enterprises, the chronic shortage of working capital lead to the fact that the degree of use of the second method is insignificant. Most often, it is traditionally used in construction, transport and communications enterprises, enterprises created jointly with foreign partners.

Currently, an enterprise can independently choose the method of accounting for revenue for tax purposes (except for income tax), fixing it in its accounting policy, however, revenue is reflected in the financial statements on an accrual basis.

Proceeds from the sale of products, works and services are subject to distribution. Subtracting from it the costs of the enterprise, they receive a profit from the sale.

In a market economy, the leading place in determining revenue is the value of selling prices. Today, enterprises use free prices, the value of which depends on supply and demand. Free (market) prices are set by the enterprise itself.

Specialists in financial management distinguish two main stages of the pricing process in the enterprise.

Stage 1. Determining the base price, i.e. prices without discounts, markups, transport, insurance and other components.

Stage 2. Determination of the price, taking into account the above components.

There are several methods for determining the base price. Let's take a look at the main methods.

The full cost method is based on determining the price based on the total cost of a unit of production and the planned profit. This method is typical for the Russian economy, but has significant drawbacks: the elasticity of demand is not taken into account, and competitive incentives to minimize costs are reduced.

The marginal cost method involves the mandatory division of costs into variable and fixed costs. To the variable costs per unit of output is added an amount that covers the costs and provides a sufficient rate of return. It calculates the minimum and maximum price. The considered method provides ample opportunities for pricing: full coverage of fixed costs and profit maximization.

In marketing valuation methods, prices are often set almost arbitrarily and there are no quantitative valuations.

To assess the possible consequences of making price decisions, the indicator of elasticity of demand is used. Elasticity measures the interaction between economic indicators.

The elasticity of demand (E) is calculated using the following formula:

E = Percentage change in revenue: Percentage change in price

Demand is said to be elastic if its elasticity is greater than one, and vice versa. If the demand for manufactured products is elastic, then an increase in the price per unit will lead to a decrease in total revenue; if demand is inelastic, then there is the possibility of increasing prices for manufactured products to achieve maximum revenue.

Consider the planning of revenue from sales of products. In the process of management, the financial services of the enterprise plan the proceeds from the sale. Such planning is mandatory, since revenue is the basis for planning cash flows, profits of the enterprise.

Sales revenue can be planned in several ways. One of the methods is a calculation method based on the volume of products sold, adjusted for input and output balances:

B_p= O_H+T-O_k,

where B_p- revenue from the sale of products;

O_H - balances of unsold products at the beginning of the planned year;

T - commercial products intended for release in the planned year;

O_k - balances of unsold products at the end of the planned year.

When planning the balance of unsold products at the beginning of the planning period, the enterprise does not have complete data on the actual value of the balances, therefore, the expected balances of unsold products are taken into account.

Under the cash method of accounting for revenue, the balances of unsold products consist of finished products in stock, goods shipped.

When planning the balance of finished products in the warehouse at the beginning of the planning period, they proceed from their actual availability at the last reporting date and the expected release of marketable products, taking into account their shipment in accordance with existing orders.

The planning of the balances of goods shipped is carried out on the basis of an analysis of the structure, schedules, methods of payment under the concluded agreements, as well as the prevailing terms of the document flow for intra-city and out-of-town settlements.

At the end of the planning period, the balance of unsold products consists of the balance of finished products in the warehouse and goods shipped, the payment deadline for which has not come.

The balance of finished products in the warehouse at the end of the planning period is determined based on the need to accumulate them to fulfill contractual obligations, the validity of which is outside the planning period, the terms of sale, etc.

Planning of goods shipped at the end of the year is based on the calculation of the average duration of the document flow based on the conditions of shipment in the planned year.

When planning revenue on an accrual basis, only finished products in stock at the beginning and end of the planning period are considered unsold.

In modern conditions, the method of revenue planning has found wide application by forecasting the volume of sales and calculating collection coefficients; it reflects the prevailing trends in terms of payment for shipped products.

When planning, a sales budget and a cash flow schedule are compiled. This budget combines information on sales volumes, prices and, accordingly, sales revenue. It is the starting point of the budgeting process. Preparing a sales budget always starts with a sales forecast.

The group (element) “Material and equivalent costs” reflects the cost of:
- purchased raw materials and materials that are part of the manufactured products, works and services;
- purchased materials used to ensure a normal technological process, for packaging, other production and household needs, as well as spare parts for the repair of equipment, tools, inventory, overalls and other low-value items;
- purchased components and semi-finished products;

- work and services of an industrial nature performed by third-party organizations or enterprises and enterprises that are not related to the main type of activity (performing individual operations for the manufacture of products, testing to determine the quality of raw materials, monitoring compliance with established technological processes, transport services of third-party organizations for the transportation of goods within the enterprise and the delivery of products to warehouses, to the station - port, departure pier);
- natural raw materials (natural resources payments);
- all types of fuel purchased from outside and used for technological purposes;

- purchased energy of all types, spent on the production and economic needs of the enterprise. Costs for the production of electrical and other types of energy generated by the enterprise itself, as well as for the transformation and transmission of purchased energy to the places of its consumption, are included in the corresponding cost elements;
- losses from a shortage of incoming material resources within the limits of natural loss.

The cost of material resources, reflected in the group under consideration, is formed at their purchase prices (excluding value added tax and excise tax), markups (surcharges), commissions paid to supply, foreign economic organizations, brokers, customs duties, fees for transportation, storage and delivery by third parties.

The costs associated with the delivery (including loading and unloading) of material resources by transport and personnel of the enterprise are subject to inclusion in the relevant elements (groups) of production costs (labor costs, depreciation of fixed assets, etc.).

From the cost of material resources included in the cost of production, exclude the cost of returnable waste. Recyclable waste is understood as the remains of raw materials, materials, semi-finished products, heat carriers and other types of material resources formed in the process of manufacturing products, performing work, rendering services that have lost all or part of the consumer qualities of the original resource and, therefore, are used at increased costs (lower output ) or not used at all for its intended purpose.

When determining the amount of expenses when writing off raw materials and materials for production in accordance with the accounting policy adopted by the enterprise for tax purposes, one of the following methods for assessing raw materials and materials used in their production is used:
1) at the cost of a unit of stocks;
2) at the average cost;
3) at the cost of first time acquisitions (FIFO);
4) at the cost of the latest acquisitions (LIFO).

The composition of the group "Costs of labor" is very diverse. This group (element) includes:
- payment of wages for actually performed work at piece rates, tariff rates and official salaries in accordance with the forms and systems of remuneration adopted at the enterprise;
- the cost of products issued as payment in kind to employees;
- incentive payments under system provisions — bonuses (including the value of in-kind bonuses) for production results, including remuneration based on the results of work for the year, bonuses to tariff rates and salaries for professional excellence, etc.;
- compensatory payments related to working hours and working conditions (bonuses and additional payments for night work, overtime work, combination of professions, etc.);
- the cost of utilities, food and groceries provided free of charge to workers in some industries, the cost of paying for free housing provided to workers;
- the cost of items given out free of charge (including uniforms) remaining in the personal permanent use of employees;
- payment for regular and additional vacations (compensation for unused vacations), travel to a place of rest for employees of enterprises in the regions of the Far North;
- payments to employees laid off due to staff reductions;
- lump-sum remuneration for seniority;
- payments conditioned by the regional regulation of wages;

- payment for study holidays;
- wages at the main place of work for employees, paid for the period of their training with a break from work in the system of advanced training and retraining of personnel;
- remuneration of employees who are not on the staff of the enterprise for the performance of work by them under concluded contracts, including work contracts;
- employers' payments under compulsory insurance contracts, as well as employers' payments under voluntary insurance contracts concluded in favor of employees with licensed insurance companies;
- other types of payments.

The cost of products, works, services does not include the following payments to employees of the enterprise in cash and in kind, as well as the costs associated with their maintenance:
- bonuses paid out of special purpose funds and earmarked revenues;
- material assistance, interest-free loan for home improvement, home improvement and other social needs;
- payment for additional leaves provided under a collective agreement (in excess of those stipulated by law) for employees, including women who are raising children;
- pension supplements, lump-sum benefits for retired labor veterans, income (dividends, interest) paid on shares and contributions of the enterprise's labor collective;
- payment for travel to the place of work by public transport, special routes, departmental transport;
- price differences in products provided to employees or sold by subsidiary farms of the enterprise;
- payment for vouchers for treatment and recreation, excursions and travel, etc.;
- other types of payments not directly related to wages.