# Advice 1: How to calculate retained earnings

In English retained earnings (Retained Earnings) refers to the portion of net income not used to pay dividends. This part acts as the investment in their own business or to settle debts of the company. In the rows of the balance sheet retained earnings is shown under column "equity".
Instruction
1
The calculation of retained earnings is very simple, just to substitute the values in one of the following formulas and to know the amount of net profit/loss of the company.
2
In order to calculate retained earnings will require knowledge of the following indices: retained earnings at beginning of the period net profit (Net Income or Net Profit) or net loss (Net Loss) and cash dividends paid.
3
After collecting all data for calculations, substitute the values in the following formula:
RE1 = RE0 + Net Income – Dividends,

where RE1/RE0 - retained earnings at the end/beginning of that period;

Net Income – net profit;

Dividends – dividends paid to shareholders.
4
In the event that the company in the current period received no net income, but rather net loss, the calculation is carried out according to the following formula:
RE1 = RE0 - Net Loss – Dividends,

where, as has become clear Net Loss - net loss.
Note
When the net loss for this period of time more retained earnings over the same period, the amount of retained earnings can be negative, creating a deficit.
Often, many firms use the net profit of the enterprise as a tool of investment for more income. Such areas can be treated and the purchase of innovative equipment and implementation of investment projects, and even conducting research.

To adjust the account of retained earnings should always, when you change the account of income and expenditure, adding a new record.

English term Retention Ratio (or Retained Surplus) also refers to retained earnings, however, known as "retention of profits".

Only the owners of the firm make decisions by the General meeting of shareholders or members on the distribution of profits.

# Advice 2 : How to calculate net profit

The indicator of net profit for any business is the most important. Net profit is the result of the activities of the company for a certain period. It shows the amount of cash that was obtained by the enterprise by paying all taxes, wages to their employees and other payments which are mandatory.
Instruction
1
To calculate net profit is quite simple. It is necessary to determine the period for which the calculation will be performed.
2
To determine the net profit necessary to determine the formula that will be used for all calculations.
3
The net profit of the company can be determined when known, the following indicators: gross profit, financial profit, the amount paid for the period taxes other operating income.
4
The formula for net profit calculation are as follows:
Net income = financial income + gross profit + other operating profit – taxes.
5
To calculate net profit, you need to use the data from the financial statements. Net profit (RAS) is formed on the account "gains and losses".
6
To calculate gross profit, you need the following data: earnings for the designated period and the cost of production. To obtain gross profit subtract from the first indicator and the second.
7
Other operating profit is defined as the difference between other operating income and expenses. In order to calculate your financial gain, you should subtract from the financial income expenses in this category.
8
After you calculate the metrics, you can determine the size of net profit. If you received value with the sign "-", respectively, the company during the study period suffered losses.
9
The resulting net income is typically used by company at the discretion of management. As a rule, the net profit goes to pay operating costs. Sometimes net profit to accumulate or used for charitable purposes.

# Advice 3 : How to calculate profit

Profit characterizes the end results of the production process, is an indicator of the financial condition of the company. Of course, on the size of the profit may influence the variables, for example, the political situation in the country, natural disasters, as the reputation of the firm, etc., under the influence of which a profit may fluctuate in the short term. The same effect may have conducted extensive advertising campaigns of the company. Overall, however, the profits for the stable functioning of the enterprise is the value more or less constant, and this figure allows owners to plan for future activities.
How to calculate profit?
Instruction
1
Size gross income – total revenue from sale of goods or services, as well as net income – total revenue from sale of goods or services minus the cost of returned goods (services) and discounts to the customers.
2
We expect the total cost of production of goods and services included in the cost of production.
3
Calculate the gross profit of the enterprise, which represents the difference between net sales revenue and cost of goods sold (services).

I.e., gross income = Net income – Cost of production.
4
Determine the net profit.
Net profit = gross profit – Taxes, penalties, fines, interest on loans Operating expenses.
Operating expenses include the costs of searching for partners, conclusion of deals, the cost of training employees, the costs caused by force-majeure situations.
The net profit indicator just displays the final result of the activities of the company, shows how profitable the implementation of this kind of activity. Net profit (RAS) is used by entrepreneurs to increase working capital, the formation of various funds and reserves and for reinvestment in production. Net profit depends on the size of the gross profit and the magnitude of tax payments. If the company is a joint-stock company, dividends to shareholders are calculated, just based on the amount of net profit.
Note
Profit is a key indicator of economic activity of the enterprise, reflecting how efficiently organized the production and sales process, not whether the inflated costs and is advantageous in General, the existence of this business unit.
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