The financial expression of the bulk of the savings that is created by an enterprise of any type of ownership is profit. The profit structure includes the result achieved due to the entrepreneurial activity of the company, while the profit itself is such an indicator that most clearly reflects the efficiency of the production process, as well as the quality and volume of manufactured products, the level of cost and the general state of labor productivity. That is why you need to understand what it represents, how it is achieved and correctly used.
What is she like?
One of the most important indicators characterizing the plan and assessment of the economic activity of the company is profit. The profit structure allows you to provide financing for various activities aimed at the socio-economic and scientific-technical development of the enterprise, as well as the expansion of the wage fund of employees. It must be correctly understood that it is not only a source of providing various on-farm needs of the company, but also is gradually gaining more and more importance in the field of forming all kinds of budgetary resources, as well as charitable and extra-budgetary funds.
What is a structure?
Profit structure - these are ways of generating income by a business entity. It includes: income, margin, production, gross profit, controlled contribution to profit, net profit.
the main goal
In the current conditions of market relations, each company should strive to constantly increase its own profit. The profit structure should have such a volume that would allow the company not only to maintain extremely stable sales positions of its products on the market, but also achieve dynamic development of production processes in the existing competitive environment.
It is for this reason that any enterprise, before starting the production of goods, determines what income promises to carry out certain procedures. In this regard, we can say that the most important task of entrepreneurial activity and, in principle, its final result is profit. The structure of profit implies the receipt of income as the most important task of any business entities, and this should be ensured at the minimum cost by observing the most stringent savings in spending money, as well as their most efficient use.
The main source of financial savings of the enterprise is the revenue received from the sale of a product, or rather, specifically that part of it that will remain when deducting resources for the production and further sale of goods.
Functions and Economic Essence
In general, the profit of the enterprise is the difference between the income received and its costs.
At the enterprise level, in the current conditions of commodity-money relations, obtaining net income takes the form of profit, while on the product market, companies act as relatively separate producers of commodity products. Setting a specific price for their own goods, they sell it to end consumers, while receiving revenue in the form of cash, but this is not profit.
In order for the structure of the enterprise’s profit to be compiled and a clear financial result to be determined, the revenue should be compared with the costs allocated for production and sales, since they represent the total cost of a particular product. Only after such calculations have been made, it will be possible to determine the profitability of their work. If the revenue has a larger volume compared to the cost, then the financial result indicates that a certain structure of the company's profit is actually visible. Thus, everyone is trying to achieve exactly this result.
The entrepreneur, analyzing the structure of profit, sets the main task of obtaining the maximum amount of net income, but in fact it is far from always possible to achieve this. If the revenue is approximately equal to the cost, then this means that in the end it turned out only to compensate for production costs, as well as costs for the sale of these products. When the analysis of the profit structure shows that the costs exceed the revenue, this indicates that the company’s work is unprofitable, and a negative financial result is achieved, and in the end, such an activity can turn into a complete bankruptcy.
Profit from the sale of any product is the difference between the revenue received after the sale of any product and the cost of the product, including taxes and costs necessary for its sale and production. Accordingly, we can say that the analysis of the structure and dynamics of profit can be carried out upon receipt of gross income by the enterprise after the sale of manufactured products at those prices that are formed on the basis of supply and demand. In this case, gross income, that is, revenue from the sale of goods minus the necessary material costs is a form of net profit of the enterprise.
The more profitable products are sold by a particular organization, the better results will be shown by an analysis of the structure and dynamics of profits and, accordingly, the more stable the financial condition of the company will become. For this reason, the results of the work should be studied in extremely close relationship with the application and sale of various products.
Profit value
The structure of economic profit provides a lot of its functions:
- The economic effect that is obtained in the process of conducting activities of a particular enterprise.
- Stimulating function. Profit is both a financial result and the main component of the financial resources of any company. The real security of the existing principle of self-financing is completely determined by the income received.
- The source of budgeting at various levels.
From a practical point of view, profit is a general indicator of the economic activity of an enterprise, regardless of their form of ownership.
Kinds
To date, it is customary to distinguish two main types - this is economic and accounting profit. Economic represents the difference between the total revenue of the company and all necessary production costs (this includes external and internal), while accounting represents the difference obtained between the total revenue and various external costs.
In accounting practice, profit and its structure provides for a number of relevant indicators, such as:
- retained earnings;
- profit from the implementation of various works, goods and services;
- profit from another sale;
- taxable income;
- financial results obtained from non-operating operations;
- net profit.
Distribution and use
The composition and structure of profit provides for its distribution and use as one of the most important business processes, since it allows you to cover the needs of the entrepreneur, as well as generate state revenues.
The distribution mechanism should be formed in such a way as to provide comprehensive assistance to increase the efficiency of production processes. The distribution income is the balance sheet income of the enterprise, that is, the structure of sales profit, and its distribution means its direction to the budget, as well as for various articles of application of this company.
Principles
The basic principles in accordance with which profit distribution is carried out can be formulated as follows:
- income received by the company due to production and economic and financial activities, which are distributed between the state and the enterprise in the role of an economic entity;
- state profits are sent to appropriate budgets, such as taxes and fees, the rate of which cannot be changed arbitrarily, while the composition and rates of taxes, as well as the procedure for their calculation in the budget, must be established by the norms of the current legislation;
- the total profit of the enterprise, which remains at its disposal after taxes have been paid, should not reduce its motivation for further growth in production, as well as the continuous improvement of the results of financial and industrial-economic activities;
- the profit that remains at the disposal of the enterprise should be primarily aimed at accumulation, which will ensure its further development, and only then on consumption.
Among other things, it is worth noting the fact that the enterprises also distribute net profit, that is, that which remains at the disposal of the company after the full payment of various taxes and other obligatory payments. Already from it is the collection of sanctions paid to the budget and all kinds of extra-budgetary funds.
Legal regulations
The income remaining at the disposal of the company can be used by it independently or can be used to ensure the further development of entrepreneurial activity. No body, including the state, has any right to intervene in the process of how the structure of the company's net profit will be formed and the profit received will be used.
Together with the financing of production activities, the revenues that remain at the disposal of any company can be used to meet any social or consumer needs. Thus, one-time allowances and incentives for people retiring, as well as all kinds of pension allowances, are paid out of it. Among other things, the structure of profit indicators remaining at the disposal of the enterprise also provides for the cost of various additional holidays over the time period specified by the laws, as well as the cost of free or reduced-cost meals for employees.
Individual cases
If the enterprise violates the current legislation, the profit (the profit structure of the organization should include such an item of expenses) can be used to pay off all kinds of sanctions and fines.
If revenues are concealed from authorized tax authorities or contributions to various extrabudgetary funds are not made from them, appropriate penalties may also be levied on the enterprise, and the main source of their payment is the net profit received.
The distribution of net profit is one of the main directions of internal planning. In accordance with the current charter of the enterprise, specialized cost estimates can be prepared.
The structure of total profit may include distribution for social needs, which includes various expenses for the operation of specialized social facilities that are on the balance sheet of the enterprise, cultural events and many others.
Division into parts
All the profits that remain at the disposal of the company are divided into two main elements. The first allows you to increase the assets of the enterprise, and also takes a direct part in the processes of accumulation. The second characterizes the specific share of profit that can be used for consumption.
All sorts of changes in the profit structure that led to the presence of retained earnings used for accumulation, as well as similar indicators of previous years, indicate that the company is financially stable and has a source for further development.
