Yu.A. Inozemtseva, expert on accounting and taxation

How to “spend” your net profit correctly

As is known, the net profit (NP) of a company is distributed by the owners. But whatever their decision, the accountant must reflect it in accounting and reporting. The catch is that in regulations accounting only talks about how to calculate profit clause 83 of the Regulations, approved. By Order of the Ministry of Finance dated July 29, 1998 No. 34n. During the year, it accumulates on the credit of account 99 “Profits and losses”, and when drawing up the annual financial statements sum net profit debited from account 99 to the credit of account 84 " retained earnings». Credit balance according to account 84 - this is your retained earnings (RP). But the accounting regulations say practically nothing about how to “spend” the profit; there is only a mention in the Chart of Accounts.

The procedure for distribution of private equity is established by the Laws on JSC and LLC subp. 11 clause 1 art. 48 of the Law of December 26, 1995 No. 208-FZ (hereinafter referred to as the Law on JSC); subp. 7 paragraph 2 art. 33 of the Law of 02/08/98 No. 14-FZ (hereinafter referred to as the LLC Law). At the same time, joint-stock companies are obliged to send part of the state of emergency to reserve fund, and LLCs can do this if they wish pp. 1, 2 tbsp. 35 of the Law on JSC; clause 1 art. 30 of the LLC Law. Shareholders (participants) can distribute the remaining profit at their own discretion. Thus, subject to certain conditions, they can use profits to pay dividends in Articles 42, 43 of the Law on JSC; clause 1 art. 28, art. 29, paragraph 1, art. 30 of the LLC Law. And sometimes owners decide to use emergency funds to purchase new operating systems or pay bonuses to employees. But the Laws on JSC and LLC do not say how to reflect the distribution of NRP in accounting in these cases.

To understand this issue, let's first talk about what IUU fishing is from a reporting point of view.

What is capital and profit

Retained earnings are part of the organization’s capital; it is reflected in Section III “Capital and Reserves” of the balance sheet.

The standards establish rules only for the recognition of assets and liabilities, and capital is the arithmetic difference between them. There are no capital accounting rules in either RAS or IFRS.

In turn, profit is the difference between income and expenses and paragraph 7 IFRS (IAS) 1 “Presentation of financial statements”.

As in the case of capital, the standards establish only the rules for accounting for income and expenses, and profit is a derivative value.

Accounting for income is regulated by a special standard PBU 9/99, and expenses - PBU 10/99. Moreover, the concepts of “income” and “expenses” are also defined using the categories “assets” and “liabilities”.

Thus, an organization’s income is an increase in its economic benefits as a result of the receipt of assets or the repayment of liabilities, with the exception of participant contributions to clause 2 PBU 9/99. As can be seen from the formula for calculating capital, as a result of the receipt of assets or the repayment of liabilities, capital increases.

An organization's expenses, on the contrary, are a decrease in its economic benefits as a result of the disposal of assets and (or) the emergence of liabilities, with the exception of a decrease in contributions by decision of participants (owners of property) clause 2 PBU 10/99. As a result of the disposal of assets or the occurrence of liabilities, the capital of the organization decreases.

Of course, these are only general definitions of income and expenses; for their recognition, certain conditions established in PBU 9/99 and 10/99 must be met, but we will not consider them in this article.

Note that an increase or decrease in the economic benefits of an organization that occurs as a result of transactions with its owners (for example, payment of dividends) is not recognized as either income or expenses. True, this is directly stated only in IFRS, but in fact this rule also applies to RAS paragraph 109 IAS 1 “Presentation of financial statements”.

CONCLUSION

Capital, including NRP, is not the property of an organization, but abstract financial categories that represent the arithmetic difference between assets and liabilities (income and expenses).

We distribute profits

The question arises: if profit is not money, but an abstract indicator financial statements, then how can it be distributed or “spent” on something? Conventionally, we can say that profit is “spent” when its value in the balance sheet decreases. This happens when paying dividends and creating a reserve fund. Let's consider these and other options for profit distribution, as well as their impact on reporting indicators.

Dividends

The most common way to distribute profits is by paying dividends. As we have already said, the outflow of assets in connection with the payment of dividends is not recognized as an expense of the organization. Therefore, the accrual of dividends to participants relates directly to the reduction of NRP and capital of the organization, reflected by the posting: debit of account 84 “Retained earnings ( uncovered loss)” – credit to account 75 “Settlements with founders”.

Dividends can be paid in money or property, but in any case, payment of dividends will lead to a decrease in the organization’s assets and clause 1 art. 42 of the Law on JSC. When paying in money, the posting will be as follows: debit of account 75 “Settlements with founders” – credit of account 51 “Current accounts”. And the payment of dividends with property (for example, goods) is reflected as a sale by postings:

• debit of account 76 “Settlements with various debtors and creditors” – credit of account 90-1 “Revenue” - revenue from the sale of goods transferred for the payment of dividends is recognized;
• debit of account 90-2 “Cost of sales” – credit of account 41 “Goods” - the cost of goods is written off;
• debit of account 75 “Settlements with founders” – credit of account 76 “Settlements with various debtors and creditors” - the debt to the participant for the payment of dividends is offset.

CONCLUSION

The distribution of profit on dividends leads to a decrease in capital (including line 1370 of the NRP) and assets.

Reserve Fund

As we have already said, JSCs are required to create a reserve fund. Its size must be at least 5% of the authorized capital of the company, and the charter of the joint-stock company can be determined and larger size background yes clause 1 art. 35 of the Law on JSC. If an LLC creates a reserve fund, its size is determined solely by the charter clause 1 art. 30 of the LLC Law.

The reserve fund is created by posting: debit to account 84 “Retained earnings (uncovered loss)” – credit to account 82 “Reserve capital”. And is reflected in the balance sheet on line 1360 in section III “Capital and reserves”.

Thus, from the point of view of financial reporting, the creation of a reserve fund leads to a redistribution of amounts within Section III of the balance sheet (part of the NRP is, as it were, “shifted” to another capital item). As a result of such redistribution, the structure of the organization's balance sheet improves. After all, only NRP can be distributed for dividends, and the reserve fund will remain in the capital theoretically forever. Since, despite what is written in the Laws on JSCs and LLCs, reserve capital cannot be spent. And in the balance sheet assets, the reserve fund corresponds to resources (property, money) secured by the organization’s own funds, which is certainly good.

From a financial (but not legal) point of view, a reserve fund can be compared to authorized capital. It is no coincidence that in the Law on JSC, when we're talking about on the requirements for the structure of the balance sheet (for example, when deciding on the payment of dividends), the reserve fund is mentioned along with the authorized capital. For example, on the day the decision to pay dividends was made net assets should not be less than the sum of the authorized and reserve capital and clause 1 art. 43 of the Law on JSC.

The reserve fund can be used to cover losses if the owners have made such a decision. On the date of its adoption, a posting is made: debit to account 82 “Reserve capital” – credit to account 84 “Retained earnings (uncovered loss)”. The decision by the owners to repay losses using reserve capital must be disclosed in the notes to the financial statements and clause 10 PBU 7/98. As you understand, as a result of using the reserve fund, as well as when creating it, the organization’s capital will not change. Covering losses with the reserve fund has a rather psychological effect - a “break-even” balance looks more attractive to investors.

In addition, according to the Law on joint stock companies The reserve fund can be used to pay off bonds and buy back shares. However, in our opinion, this statement does not make sense. After all, paying off bonds (or buying back shares) means paying money to their holder. Consequently, only assets, and not a capital item, can be used to redeem and repurchase securities.

The issue of bonds is reflected in the same way as raising a loan, by posting to the debit of account 51 “Current accounts” and the credit of account 66 “Settlements for short-term loans and loans" clause 1 PBU 15/2008.

Accordingly, the redemption of bonds is reflected by the following posting: debit of account 66 “Settlements for short-term loans and borrowings” – credit of account 51 “Current accounts”. As a result, assets and liabilities on the balance sheet simultaneously decrease. This operation does not affect capital items. However, in the commentary to account 82 of the Instructions for using the Chart of Accounts it is stated that the repayment of bonds from the reserve fund is reflected by the posting: debit of account 82 “Reserve capital” - credit of account 66 “Settlements for short-term loans and borrowings”. However, we cannot agree with this. After all, as we have already said, the credit of account 66 reflects the issue of bonds, and not their repayment.

CONCLUSION

Creating a reserve fund at the expense of an emergency and using it to pay off losses leads to a redistribution of amounts within capital items. It is not possible to use the reserve fund for other purposes (for example, to pay off bonds).

Accumulation and consumption funds

Sometimes owners want to use NRP to purchase new operating systems, to pay bonuses to employees, or to charity. Usually in such cases they decide to create so-called accumulation and consumption funds.

The accountant needs to reflect the owners' decision in the accounting. But how to do this, because such funds are not mentioned either in the Laws on JSCs and LLCs, or in the current accounting regulations. Let’s say right away that there is no need to create any funds in accounting.

WE TELL THE PARTICIPANTS

Clean Profits can only be spent on dividends. There is no need to create consumption and accumulation funds from net profit, since real money, not profit, is still spent on acquiring assets.

The very concept of funds at the expense of profit came to us from Soviet accounting. For example, Soviet enterprises created production development funds, the funds of which were used to purchase new equipment. The Instructions for the 1985 Chart of Accounts state that the funds of such a fund intended for the purchase of equipment must be kept in a special account in the bank.

Profit is the most desirable thing for any enterprise. But to thrive, it should not only be received, but also spent wisely. Therefore, we will consider the profit of the enterprise, the distribution and use of profit in the framework of this article.

general information

What is the main property that the company receives? The distribution and use of profits should provide financial resources for the needs of reproduction thanks to the installation optimal ratio between the means that are directed towards accumulation and consumption. In this case, special attention is paid to the state of the competitive environment. It must always be taken into account. After all, the state of the competitive environment can have a significant impact in terms of production potential, its expansion and renewal. Based on a number of factors, a decision is made on how the profit will be generated, distributed and used. Will the funds be used for financing? capital investments, increasing working capital, ensuring research activities, introducing new technologies or something else - is decided during this process.

What is profit?

This is the name given to the monetary expression of savings that are created by enterprises regardless of their form of ownership. Thanks to profit characterize financial results company activities. It is an indicator that most fully reflects production efficiency, the quality and volume of products created, the level of cost and labor efficiency. Thanks to all this, profit is one of the main economic and financial indicators of the plan on which the assessment is based economic activity subject. It is thanks to profits that activities for the socio-economic, scientific and technical development of the enterprise are financed and the number of employees is increased. At the same time, it is not only a source for satisfying the existing internal needs of the company, but also has a significant influence in the formation of extra/budgetary resources and charitable funds. The profit of an enterprise is the money that remains after deducting the cost of processes and taxes.

Specifics

In existing market relations Every business is trying to make the maximum profit possible. At the same time, it must not only be able to firmly maintain the sales of its products on the market, but also ensure dynamic development in a competitive environment. Therefore, before you start producing or providing something, you first study what kind of profit from sales can be received. An analysis of the potential sales market is carried out and it is determined how successfully the task can be achieved. After all, making a profit is the main goal of entrepreneurship, the end result of this type of activity. An important task that is solved in this case is to obtain highest income at minimal cost. This is achieved thanks to a strict regime of savings in the matter of spending funds and a constant desire to optimize their spending. At the same time, the main source cash savings is the revenue received from the sale of goods or services (or more precisely, that part of it that remains after deducting the amount spent on production and sale).

Important aspect

When profits from activities are distributed, they are divided into consumed and capitalized parts. This point may be focused on the constituent documents, the interest of the founders, or depend on the chosen development strategy of the company. Each organizational and legal form of an enterprise has a legally established mechanism for the distribution of funds that remain at the disposal of the subject. Its features depend on internal structure, as well as the specifics of regulating the company’s activities. It should be noted that the state cannot directly influence how the enterprise’s profits will be spent. The distribution and use of profits can only be stimulated through certain tax benefits. So, most often they talk in this spirit about innovation, charity, environmental measures, and the like.

Balance sheet profit of the enterprise

It is an object of distribution in any enterprise. This means directing profits from certain items to be used for specific purposes. The law stipulates that part of the profit must go to the budget of the state or local authorities under the guise of taxes or other obligatory payments. Everything else remains the responsibility of the company itself. Thus, the company decides for itself where to direct most of the profits from sales. The procedure for the distribution of profit and its use is prescribed in the constituent documents and individual provisions that are developed by economic and financial services and is approved by the manager (owners) or the governing body of the enterprise. How does this process happen? A review of the existing this moment situations.

What is profit distribution based on?

This process reflects the order and direction of use of funds and is determined by legislation, the objectives and goals of the enterprise, as well as the interests of its founders (owners). Own profit is spent based on the following principles:

1. The obligations undertaken to the state must be fulfilled.
2. It is necessary to ensure the financial interest of employees in the process of achieving the best results with minimal expenses;
3. Care should be taken to accumulate equity, thanks to which the process of continuous business expansion will be ensured;
4. It is necessary to fulfill the obligations undertaken to the founders, creditors, investors and other persons.

Profit distribution example

Now that we have paid attention to the principles on which the process under consideration is based, let us consider the situation with a society with limited liability. In this case, taxation and distribution of funds is carried out in general procedure, which is set for legal entities. Thus, part of the funds can be directed to which, according to the law on limited liability companies, must be formed for the timely fulfillment of their obligations. If one of the founders wants to withdraw their contribution, everything will be paid from these funds. In addition, there are savings and consumption funds. The first includes funds that in the future will be used for the development of the company and various investment projects. That is, profit management involves the allocation of separate amounts for these areas, which accumulate until the required amount of money is available. The consumption fund is engaged in social development, material incentives and pays the founders certain amounts, proportional to earnings and their contributions.

Economic essence

So, we have already examined the profit of the enterprise, the distribution and use of profit in general terms. Now let's pay attention theoretical aspects this topic. So, if we talk about the level of the enterprise, then in the conditions of commodity-money relations, here net income receives the form of profit. Having set prices for their products, companies begin to sell them to consumers. At the same time, they receive cash proceeds. But this does not necessarily imply the presence of profit. To determine financial results, revenue should be compared with expenses for the production of goods or provision of services and the amounts for their sale. Together they take the form of cost. So what to do with these indicators? When revenue is higher than cost, we can say that the financial result confirms the receipt of profit. It should be noted once again that it is always a goal for an entrepreneur. But receiving it is not guaranteed. So, if revenue and cost are equal, then only expenses were reimbursed. In such cases, production, scientific, technical and social development. If expenses exceed revenues, the company incurs losses. This suggests that he will have a negative financial result, a difficult situation that does not even exclude bankruptcy. At the same time, there are various profit factors that can affect the final state of affairs. First of all, you should focus on the fact that you need to sell profitable products. It is also a necessary condition that the price of goods and services must be higher than the cost.

What functions does profit perform?

1. Characterizes what was obtained as a result of the enterprise’s activities.
2. Has a stimulating effect. In other words, it is at the same time the main element financial resources at the enterprise, and performance indicator. This aspect is a very good illustration of the principle of self-financing, the size of the implementation of which depends precisely on the amounts received.
3. Profit serves as a source for the formation of budgets at various levels.

What else can I say?

Separately, it is worth noting that there is a distinction between economic and accounting profit. The first refers to the difference between revenue received and production costs. slightly different. It refers to the difference between total revenue and only external costs. It should also be noted that in accounting practice there are slightly different approaches to analyzing business activities, which use different kinds profit: balance sheet, taxable, net, and so on.

Distribution and use

The amount of profit may vary, but the patterns are repeated in different enterprises. The distribution and use of money is an important economic process, which provides coverage for the needs of the people who created the enterprise and generates state income. The mechanism for allocating funds must be structured in such a way that it contributes in every possible way to maximizing the efficiency of production and sales. The object of distribution is book profit. It is sent to the budget and used for specific items of use.

What principles of profit distribution exist?

So, our article is already coming to its logical conclusion. Accounting for the distribution of profits is simply impossible without taking into account certain principles and without violating the law. So:

1. Profit received by an enterprise as a result of its production, economic and/or financial activities distributed between the company itself and the state.
2. Budget revenues come in the form of fees and taxes. Rates cannot be changed arbitrarily. Their list, the procedure for accrual and transfer is established by law.
3. The amount of profit that remains with the enterprise after paying taxes should not reduce its interest in improving its activities.

From what remains after making mandatory payments, fines and penalties may be collected in case of violation of the law. And it should be remembered that the profit, which remains at the disposal of the enterprise itself, is used as it wishes. Neither the state nor individual bodies have the right to interfere in this process or in any way influence it. The only acceptable option is to create conditions for the entrepreneur by providing tax benefits. Then profits from sales will be directed to what is beneficial to the state.

In the goods market, enterprises act as relatively isolated commodity producers. Having set the price for products, enterprises sell their products to consumers, receiving cash proceeds for them. However, this does not yet mean making a profit. To identify the financial result, it is necessary to compare revenue with the costs of production and sales, i.e. With .

• if revenue exceeds cost;
• if revenue is equal to cost, then it is only possible to reimburse the costs of production and sales of products and there is no profit;
• if costs exceed revenue, then the company receives a loss, i.e. negative financial result, which puts him in a difficult position financial position, which does not exclude bankruptcy.

Profit and its role

Profit is one of the most important economic categories market economy, perhaps the most important, since profit is the goal entrepreneurial activity, its meaning. Entrepreneurship, as a result of which only costs will be covered, is uneconomical and practically unnatural.

Main source origin of profit - This is entrepreneurial activity, or rather, the essence of this activity, the meaning of which is making a profit.

The stimulating essence of profit has a dual character:

• in some cases, profit is a real incentive for entrepreneurial activity; in a socially oriented market economy, everyone receives the money they earn: the entrepreneur receives profit, employees receive wages;
• in other cases, the essence of profit is truly its exploitative essence, associated with the entrepreneur’s ability to appropriate the results of other people’s labor on the basis of private ownership of the means of production, capital. The amount of profit in certain cases inversely proportional to level wages. Therefore, if the owner of an enterprise increases profits by reducing workers’ wages, then this part of the profit will have an exploitative nature.

Of course, there should be no equalization of income, just like there should be no lawlessness, since this contradicts the principles of a market economy; the level of income of owner-entrepreneurs suffers in some cases, and in others the wages of workers are less than the possible and necessary level.

The role of profit in the activities of the state and all sectors of the economy, including the real one, is enormous.

Profit is an indicator of efficiency, the financial result of any business activity, the main indicator for assessing the activities of enterprises based on profitability indicators, in the form of the ratio of profit to revenue, cost, assets or equity. Another base is also used.

Profit is the main source of equity capital of any enterprise, both for current activities (net assets) and for the development of production (investments) and other own needs.

Profit is the main source of solving the problem of increasing market value. This goal requires constant growth of the enterprise's own funds.

Profit is the main source of saving an enterprise from bankruptcy. The “profit - own funds“, while the main thing in this regard is its constancy in sufficient quantities.

Profit is the most important source of meeting national needs, since income tax is one of the basic taxes of the country’s tax system. As a result, the profit ensures:

• completeness of budget system revenues;
• development of social needs of the entire population, i.e. medicine, education, science, children's institutions, etc.;
• financing the country's defense.

The greater the profit of a country’s enterprises and organizations, the stronger the national currency unit- ruble. This means macro stabilization economic indicators and as a result. — reduction in inflation, growth in the material well-being of the population.

Enterprise is the profit of the company, which is obtained after deducting all tax payments, wages to workers and other passive deductions. The company can distribute its own profit among the founders (a joint stock company will distribute it among shareholders in proportion to the number of shares each has) or include it in order to expand the scale of activity.

The value of the volume of own profit

Depending on the degree of development of the company, the volume of work performed and market well-being, your own profit may vary. Sometimes the volumes differ only slightly, sometimes (especially in the context of economic restructuring) they may differ by several tens of percent at different times. reporting periods. What are the functions of own profit other than remuneration to the founders of the company?

The first function is that your own profit can increase negotiable enterprise. In many joint stock companies, by voting at the Board of Directors, a decision is made not to pay dividends, but to use them to increase production volumes. Once invested, your own profit can significantly increase the profit of subsequent years or quarters. If you make absolutely no investments, most likely your profits will decrease.

The second function is that depending on the volume of its own profit, the company’s popularity for investors can be different. Magnit company on Russian market food trade has reached enormous proportions in a short period of time. Magnit's own profit grew steadily, several times taking first place in terms of annual growth. Of course, investors began to look at the company more closely, and the volume of investments increased. If your own profit did not grow at all (as happens in the initial stages of business development), then there would be no stunning success.

The third function is that the company’s own profit affects the prices of its securities, if any are issued. If we analyze the main stages of development of the Gazprom company, we can note the steady dynamics of growth in the share price, which increased simultaneously with the company’s own profit. Now many investors are talking about the lack of prospects long-term investment in Gazprom, because its own profits are not increasing as much as before (due to the escalating situation of the economic crisis).

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Every entrepreneur should know what the income and profit of an enterprise are, and how they differ from revenue.

Profit and income are the main financial indicators of the economic activities of various organizations, regardless of their form of ownership. They can give an idea about overall profitability enterprises.

The costs of social and production development of the company must be financed from profits. Source of funding state budget is considered corporate income tax.

What is revenue (turnover)

Revenue - money received (proceeds) by an enterprise, firm, entrepreneur from the sale of goods and services, proceeds from sales. That is all sum of money, which was obtained after the sale of the goods.

Example of revenue (turnover), Petya sold 100 phones for 10,000 rubles. Revenue will be 100*10,000 = 1,000,000 rubles.

Revenue from the sale of certain products is divided into two main types - net and gross:

• Under net revenue amount implied Money after all possible deductions, tax collections, discounts and cost of returned goods.
• Gross revenue is the total amount cash receipts after the sale of certain products or provision of services.

Income = revenue (turnover) - the cost (or purchase price) of goods or services. Taxes are also deducted from this amount. Material costs– these are funds that were spent on the purchase of products or necessary equipment. Such costs include various social contributions. The issuance of wages has nothing to do with this category.

Income example, let’s say the cost of Petya’s phones is 5,000 rubles. There are only 100 pieces, which he sold for 10,000 rubles each. Then income = 100*(10,000 - 5,000) = 500,000 rubles.

Labor costs and profits are the main components of the income of a particular enterprise. Market price goods and general market conditions have a direct impact on the organization’s income level. Possible receipts from individuals and legal entities do not belong to the income side of the company.

If income is taxed tax payments, then after deducting them, a sum remains that includes the following elements:

• Insurance and investment income. These are the amounts received during investment activities and costs for insurance premiums.
• Consumer funds whose activities require social expenditures.

Incomes can be marginal, total and average.

• Marginal Revenue- this is the difference by which the organization’s total income changes after the sale of a certain unit of goods. Demonstrates the overall return on investment of the firm.
• Total income- this is the final result of the company’s economic activity, the difference between the cost of goods and production costs.
• Average income received after the sale of one unit of goods. It is equal to the price of a specific product sold.

Experts also highlight the concept of other income. These include various penalties and interest for placing a deposit.

What is profit

Profit is the difference between costs and revenues, where the latter are an indicator of financial activity.

Example of profit, Petya’s income from the sale of phones amounted to 500,000 rubles. But you still need to pay taxes, pay the manager’s salary, pay rent, etc.

Maximizing profits has always been one of the main goals of a successful businessman. It is considered the most important evaluative general indicator of the activities of a particular company.

This concept includes the following main components:

• Profit from the sale of property and sales material assets.
• Funds that were received from additional (non-core) activities of the organization. Meaning securities, dividends, funds from real estate rental.
• The difference between the funds received from the sale of a certain product and its real value.

If it has been revealed that the enterprise’s profit is zero, costs can be considered the result of such economic activity. The limiting indicator of this concept can be obtained by selling an additional copy of the product.

There are several main functions of enterprise profit:

• Provides funds for the development of the company.
• Forms taxes on profits of commercial enterprises.
• Shows the final economic result activities of an ordinary enterprise.

For productive profit management, experts recommend taking into account its maximum indicator, which you need to focus on. Some company managers actively practice lowering their pricing policy. But this should not be aggravated. If there is a high demand for a product, the profitability of the enterprise as a whole can drop catastrophically.

Experts advise offering your clients inexpensive analogues of goods and services that are considered the most in demand. Such measures will help maintain the attractiveness of products and a normal price category.

This financial indicator has several classifications. Based on the results of economic activities:

• Minimum permissible and maximum possible, which occurs with minimal costs and maximum profits.
• Regulatory– this is the standard minimum indicator provided by the enterprise.
• Underreceived– a loss that occurred due to the fact that one of the parties to the transaction violated its obligations.

Profits may or may not be taxed. It is differentiated into economic and accounting depending on costs. The first is the difference between accounting profit and additional, forced expenses.

As for the second option, it is positioned as the difference between the costs incurred and the income of the enterprise.

Gross profit represents the difference between the total income of a particular organization and the amount of costs. Net profit can be calculated by subtracting all associated expenses from gross profit.

About EBIT and EBITDA profit

These are two more types of profit that should be emphasized separately.

EBIT profit is positioned as an intermediate value between gross and net indicators. Some people think that this is operating profit and are mistaken. This concept may also include non-operating profit. The amount of EBIT profit can be calculated based on the amount of profit and loss before payment tax contributions. This indicator must be positive.

The value of profit directly depends on the depreciation rate and the method of its calculation.

EBITDA is the amount of earnings before interest, depreciation and amortization, and shows only the inflow of cash. This analytical indicator is calculated on the basis of the financial statements of a particular organization and is the main indicator of how profitable the company’s activities are overall, regardless of various debts and depreciation methods.

Having determined EBITDA, you can calculate the organization's debt load. To do this, debt indicators are divided by nominal profit.

Specified values EBIT and EBITDA come down to one thing - “bringing to a common denominator” the economic indicators of organizations from different countries. Tax systems different states are not alike. This means that income tax rates will not be equal either. Introduction to accounting practice EBIT and EBITDA profits help correct this situation.

Experts in economic sphere have a generalized point of view on maximizing profits for a particular company. It is necessary to equate marginal revenue with marginal cost. In this case, the profit of the enterprise should be maximum. But still, this is individual for different organizations.