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.