Revenue and profit are key indicators of the company's activities

The main goal of the enterprise is income and profit. What is the difference between profit and revenue?

Income is the main sourcethe formation of financial reserves, as a separate enterprise, and the state budget. The use of income as a key indicator of the effectiveness of activities makes it possible to establish a real economic effect on the performance of each individual enterprise.

Profit is the key financial indicator that reflects the result of the organization. Revenue and profit are interrelated. In the conditions of the market, the net income is presented in the form of profit. The unity of functions that performs income and profit in their mutual conditioning makes them the elements of management that reflect the economic interests of society, enterprise and each employee. In this regard, the problem of the formation and redistribution of income, as well as its solution in practice, ensures the dependence of the enterprise's activities on the amount of income received and remaining available.

In the conditions of market relations of the enterpriseare relatively independent. By setting a price for their products, they sell it, receiving in return a cash gain. However, this does not mean profit. In order to establish what kind of economic effect from the activity of the enterprise, it is necessary to compare the proceeds from production and sales of products with incurred costs, this is the cost of production.

The company in its activities is always in front ofby itself it sets the goal of income and profit, but not in all cases receives it. In order for this to happen, the revenue should exceed the cost price, in this case, the economic result of the enterprise speaks of making a profit. In the case where revenue covers the cost of production, you can only talk about reimbursement of costs for production. In such a situation, there is no profit, and hence the source of the development of the enterprise. If the costs exceed the revenue from the sale of goods and services, the organization incurs losses, which indicates a negative position of the organization and alleged bankruptcy.

The total revenue of the enterprise is includedincome and profit. The profit continues to participate in the turnover, as part of it is included in the payment of tax payments. As a result, the enterprise has the net profit amount, that is, the difference between the final financial result and the amount of taxes paid.

What is gross income and gross profit?

Gross income is income calculated inthe monetary value that an enterprise usually receives from the sale of products. The term "turnover" is a synonym for "gross revenue". Under the amount of gross income, either the whole of its amount can be presumed, or for a specified period of time.

Gross profit represents the difference between net income and the cost of production of sold products. At the same time, the prime cost does not include wages, taxes and other overhead costs.

As part of the transition to market conditions, income andprofit became the motive power of entrepreneurial activity. It is they who determine what is best to produce, how, what to do and for which customers to produce products. The receipt of income is the key goal of the enterprise, since it serves as a source of its development. The increase in income forms the basis for self-financing, which is the main condition of economic activity. This is based on the principle of full payback of expenses for production and expansion of the production base of the organization.

In the growth of profit indicators of the enterpriseBoth the enterprise itself and the state are interested in connection with the increase in the tax base. Thus, income is the main factor in assessing economic activity.