How to calculate profit

As strange as it may sound, but in order to calculate profit, one must first count all the expenses. Because the profits may not at all be on the results of a full cycle of the business. However, even if there is no profit, that's not a reason to despair and stop working. As they say, many entrepreneurs, at first you feed the business, and the business begins to feed you.

Instruction

1. To calculate profit in the future to be able to implement the correct financial and managerial decisions, primarily at the outset it is necessary to organize a complete financial accounting. It should reflect all the amounts that you invest in a business (personal or credit funds), proceeds with shipment (if they do not match), as well as all costs that you carry out, article by article (procurement of goods, rental of retail space, shipping, utilities, etc.).
2. After a certain period, e.g. one month, keep all the calculations in one table. The first line will allocate the proceeds received for the month, in the following lines specify all the made expenses. If we sum up the total cost, you will be able to find the difference between revenues and costs and, thus, to calculate the profit. However, in this report note that in business practice there are often moments of discrepancy at the time of occurrence of certain liabilities and payment for them. Let's say you took the production, or has shipped the goods, and get paid for it later. In addition, a similar situation may be and to other counterparties, for example, advance payments for rent or electricity. All these points should be taken into consideration to make such a shipment report, that is the time when the obligation arose, not when they were paid to have them in front of the net financial picture of the month.
3. You can also calculate profit as a percentage of revenue. This index is called the margin, and analysis of its changes over time helps to make better management decisions. To determine the ROI, divide the amount of your income per month on the amount of the proceeds, and then multiply the result by 100%. For different types of activity characterized by its level of profitability, but on this indicator it is possible to compare your business with other similar.