Gross profit is the main economic indicator

Every company in the market sees its main goal of making a profit. It is necessary to meet both the own and the needs of workers, as well as for the further development of production. Making any transaction, every businessman calculates all the risks, and most importantly - the possible income. In these calculations, gross profit is the main indicator.

The concept of income in trade expresses the price value of the surplus product, which was created by workers of this and other spheres involved in the production of this product.

Gross profit is an indicator that can be measured by a level or in a total value. This is the most important criterion that characterizes the end result of the activity.

The ratio of profit to turnover shows the level of profitability related to the sale of goods. This indicator characterizes the costs of circulation, the effect obtained from the use of fixed assets, the state of income, the result of the use of labor, the turnover of goods. Profitability characterizes the effect of the enterprise in the general concept.

Gross profit is the final result of the company's activities. It can be not only a plus. Sometimes the result is a loss as a result of excessive production costs or unforeseen expenses in the sale of goods.

Simply put, profit can be shown as the difference between the total gross income and all costs of circulation. The amount received in this way is called "gross profit". This is the financial result of the activity. Gross income is the total amount received in the production process.

However, the costs of circulation do not contain all the costs of production. Some of them occur at the expense of the profit itself. Therefore, if we consider all the costs of production, then it is necessary to summarize the costs of circulation and other costs, which are not included in them. As a result, we get economic costs that fully reflect the actual costs of production. Naturally, this indicator will be higher than the cost of circulation.

Depending on the category of expenditure used, economic profit is also differentiated. Gross revenue is the difference between the income received and all costs of circulation, and the economic ratio is the ratio of total income and economic costs.

The difference between them will correspond to the amount that costs are not accounted for in the costs of circulation.

Therefore, the ultimate goal of any activity of each enterprise is to obtain as much economic profit as possible. It shows the true result of production and its payback.

Analysis of the work of the enterprise implies the use of other indicators. These include the financial result of the sale of goods, fixed assets, net profit, income from any activity not related to the main production, and others.

The financial result of the sale is the indicator that is obtained by subtracting from the sale of distribution costs. The final result in this case can be not only an income, but a loss.

The profit from the sale of fixed assets is the difference between the sales value and the residual value. When calculating it , inflation rates are also taken into account , increasing the second indicator by the corresponding index.

The income can be received by the enterprise and from the sale of securities, bonds or in the form of dividends.

Profit is the main indicator that is used to assess the performance of an enterprise. It is necessary not only to cover costs and meet the needs of the company. Profit is used to form funds for various purposes.