Evgeny Smirnov

# Business nuances

Ways to increase profitability

It is believed that profitability can be increased by reducing costs and expanding sales. This opinion is generally correct, but greatly simplified. In fact, to effectively control profitability, it is necessary to take into account many factors, internal and external.

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• Ways to increase profitability
• Formula for calculating profitability
• Cost optimization and cost reduction methods
• Assessing the profitability of attracting investments

There is no more important task for a business manager than increasing profitability. Every ruble, dollar or other currency invested in a business should yield maximum profit. It is towards this goal that management efforts are directed at all times. The article is devoted to ways and means of increasing profitability, regardless of whether it is high or low.

Ways to increase profitability

The term profitability comes from the German word Rentabel, which translates to profitability. It characterizes the efficiency of commercial use of resources available to the business structure. In general, the profitability indicator is considered as the ratio of results to costs. At its core, this is an economic analogue of the physical efficiency factor, only instead of energy parameters, financial parameters are used.

Objectively, there are only two ways to increase profitability: reducing costs and increasing turnover. Moreover, both methods are often interrelated and in practice have many side branches.

It is believed that profitability can be increased by reducing costs and expanding sales. This opinion is generally correct, but greatly simplified. In fact, to effectively control profitability, it is necessary to take into account many factors, internal and external. For this reason, specific indicators of profitability are distinguished: sales, assets, production, equity and debt capital, fixed assets and others. There is no point in considering all the coefficients in this article in detail - there are many of them, and they are available in our other articles.

The dual task of reducing costs and expanding sales is solved using general methods:

• introduction of innovations;
• diversification of material flows;
• optimization of credit policy and taxation.

At the same time, the application of each of the above methods can be implemented in various ways. The statement that an increase in sales profitability is facilitated by an increase in turnover can be explained using a simple example.

Let’s assume that the full reproduction cycle lasts exactly a year and the sold product brings 10% of net profit. Obviously, if an enterprise can produce and sell the same product twice as fast (in six months), then the increase in profitability will be 100%, and the profitability rate will rise to at least 20%, since the efficiency of investments for the same reporting period is taken into account. The “at least” clause is due to the fact that the profit of each cycle can also be invested in turnover and bring its own financial result.

The impact of cost cutting is equally clear. The smaller their share in the price of the product, the more profitable its production. The topic of cost reduction is very interesting and requires a more detailed discussion - a separate chapter will be devoted to it in the article.

The return on equity is affected by the share of borrowed funds in its composition.

The profitability of fixed assets increases if they are operated most efficiently.

Assets are also used with greater or lesser profitability. Conducting financial transactions (for example, on the stock or credit market) can help increase the overall profitability of the enterprise.

From all this we can conclude that in addition to overall profitability, its analytical accounting is necessary in certain areas and aspects of the financial and economic activities of the enterprise. Each of them has its own growth and decline factors. These include:

• rational organization of management and production;
• correct distribution of the structure of equity and debt capital;
• efficient use of available resources, including natural ones;
• production volume, quality indicators of the product and its range;
• production cost and additional production costs);
• profitability of individual types of activities by area;
• directions for using profits.

In turn, the income received by the enterprise can be used for various purposes:

• replenishment of reserve capital;
• formation of consumption and accumulation funds;
• self-financing (own sources of investment for new projects);
• investments in shares and bonds of third-party structures, formation of packages of securities (external profitable investment);
• other assets.

Other methods of increasing profitability are also practiced:

• savings on commercial and entertainment expenses;
• carrying out operations for the resale of property;
• reduction of commissions paid to intermediaries;
• minimizing fines, penalties, penalties, etc.

These expense items affect the so-called accounting profitability, the increase in which is due to the implementation of measures to improve financial discipline.

Return on assets reflects the profit generated by their operation. Ineffective fixed assets and property that is subject to property tax, but brings little benefit to the enterprise, are subject to liquidation, sale or transfer free of charge.

Formula for calculating profitability

In general, the formula by which you can calculate profitability or one of its types by direction is a fraction. It correlates the income received and the expenses incurred in order to achieve a financial result.

The value of the sales return indicator RR is calculated using the formula:

Where:
PR – gross profit from product sales;
TR – amount of revenue.

For ease of perception, the profitability ratios are summarized in a table.

The resulting coefficient should be multiplied by 100% to convert it into percentage form.

Average annual values ​​of funds (fixed and current) are most often determined as the arithmetic average of the values ​​at the beginning and end of the reporting period. The amounts of output volumes are taken in the balance sheet in line 12105 at the end of the reporting period.

Cost optimization and cost reduction methods

When developing measures to improve the economic efficiency of production, cost reduction is given the greatest attention.

Reducing unit costs has puzzled commodity producers since time immemorial, but industrialists used a system approach to solving this problem only at the beginning of the 20th century. The term “Fordization” has become synonymous with comprehensive cost optimization. The goal was to reduce the cost of products as much as possible while maintaining acceptable quality. At the same time, economists carried out the first theoretical research in this area, which was later significantly developed.

Reducing production costs is facilitated or hindered by internal and external factors.

The first, internal, includes everything that enterprise management can influence: the creation of an optimal management system, the level of automation, technology, methods of quality control, rationalization of production processes, etc.

At Henry Ford's factories, already in the 20-30s of the last century, a significant process was observed regarding the reduction of time costs, the organization of employee meals, the uninterrupted assembly line and other measures that helped increase profitability. At the same time, one of the most popular techniques among industrialists of that time - minimizing wages - was practically not used. In contrast, Ford's tariff rates were the highest in the United States.

The most important role in solving the problem of reducing costs is played by functional cost analysis (element-by-element economic analysis) - a separate area of ​​applied science, pioneered by the American M. Miles and the Soviet scientist Yu. M. Sobolev.

External factors include circumstances beyond the control of the managers of a single enterprise: state tax policy, changes in prices for raw materials, market conditions, fashion, tariffs of carriers and suppliers of necessary services, etc. External factors cannot be influenced, but they must certainly be taken into account when planning production, formation of assortment and other activities that help maximize profits.

The first place among internal factors for increasing profitability is the level of labor productivity. It affects not only the cost directly, but also the rate of capital turnover. In the example already considered, the increase in profitability takes on a value greater than 100 percent, which means not only a double increase in the rate of profit, but also a reduction in the turnover period by half.

In other words, if an employee produces a larger number of products during the same time, receiving the same fixed salary, then he will bring excess profit to the enterprise. At the same time, variable costs (raw materials, energy, depreciation, etc.) will increase in proportion to production volume. and the constants will remain at approximately the same level.

The second factor concerns automation and comprehensive mechanization of technological processes. Reducing the influence of the human factor reduces labor costs and, in some cases, improves the quality of the product.

The third thing that every specialist pays attention to is all-round savings. Profitable means profitable. The process needs to be optimized in the direction of reducing the share of waste, reducing energy intensity and other costly items.

The fourth internal factor is the optimization of partnerships and logistics. We are talking about purchasing raw materials at the lowest prices and finding the most profitable distributors. For example, reducing sales costs is an effective way to increase the profitability of a company's sales.

Finding ways to earn income from side activities. There are frequent cases of production enterprises providing non-commodity services (transport, service, etc.)

Increasing the level of qualifications of employees. There are two polar opposite approaches to the application of this factor. Supporters of the “Ford” concept strive to organize production in such a way that almost any employee who has undergone simple instruction can begin to perform work duties. An alternative concept involves the deep involvement of each worker in the process of material reproduction. Both strategies have a right to exist, but in the second case, it is necessary to take care of staff training.

Constant monitoring of cost efficiency and relevance is also an important factor in increasing profitability. The relevance of expenses means identifying the dependence of the amount of expenses on certain management decisions.

The listed factors in most cases apply not only to the conditions of a manufacturing enterprise, but also when providing services.

Introduction

1. Theoretical foundations for assessing the profitability of an enterprise

1.1 Profitability as a financial result of an enterprise’s activities

1.2 Economic significance and tasks of assessing the profitability of an enterprise

1.3 Methodology for analyzing enterprise profitability

2 Assessment of the profitability of an enterprise using the example of Orbita Plus LLC

2.1 Financial and economic characteristics of the activities of Orbita Plus LLC

2.2 Assessment of profitability indicators of Orbita-plus LLC

2.3 Factor analysis of enterprise profitability indicators

3. Main directions for increasing the profitability of the enterprise

3.1 Development of measures to increase the profitability of the activities of Orbita-plus LLC

3.2 Economic efficiency of measures to increase the profitability of the activities of Orbita Plus LLC

Conclusions and offers

List of used literature

Applications

Introduction

A general indicator of the economic efficiency of production is the profitability indicator. Profitability means the profitability of an enterprise. It is calculated by comparing gross revenue or profit with costs or resources used.

Due to the fact that the modern economic life of enterprises is extremely complex, such important indicators as profit and profitability are influenced (directly or indirectly) by a very large number of different factors. Moreover, if the influence of some factors literally “lies on the surface” and is visible even to non-specialists, then the influence of many others is not so obvious and only a person who is fluent in the methods of economic analysis can correctly assess their influence.

In economic analysis, the performance of enterprises can be assessed by indicators such as production volume, sales volume, and profit. However, the values ​​of the listed indicators are not enough to form an opinion about the effectiveness of a particular enterprise. This is due to the fact that these indicators are absolute characteristics of the enterprise’s activities, and their correct interpretation for assessing performance can only be carried out in conjunction with other indicators that reflect the funds invested in the enterprise. Therefore, to characterize the efficiency of the enterprise as a whole, the profitability of various areas of activity (economic, financial, entrepreneurial), profitability (or profitability) indicators are calculated in economic analysis.

It should be noted that profitability indicators are important elements that reflect the factor environment for generating enterprise profits. Therefore, they are mandatory when conducting a comparative analysis and assessing the financial condition of an enterprise.

In addition, profitability indicators are used in analyzing the efficiency of enterprise management, in determining the long-term well-being of an organization, and are used as a tool for investment policy and pricing.

Analysis of the profit and profitability of an enterprise allows us to identify a large number of development trends; it is intended to indicate to the management of the enterprise the path for further successful development, indicates errors in business activities, and also identifies reserves for profit growth, which ultimately allows the enterprise to more successfully carry out its activities.

The importance of economic analysis of such important indicators as profit and profitability of an enterprise can hardly be overestimated, because profit is the final financial result of the enterprise’s activities, which serves as a source of replenishment of the enterprise’s financial resources.

As a result of the above, the analysis of profit and profitability in an enterprise today becomes extremely relevant. The relevance of the problem determined the choice of the topic of the thesis, the purpose of which was to study the methodology and analyze the profitability of the enterprise, and develop proposals for increasing it.

In accordance with the purpose of the thesis, the following tasks are solved:

The regulatory and legislative framework, special literature on the topic are studied;

The current methodology for analyzing the profitability of an enterprise is considered;

A profitability analysis is carried out based on financial statements;

The main directions for increasing the profitability of the enterprise are considered.

The object of the study is the limited liability company "Orbita - plus".

To solve the problems, the following research methods were used: theoretical analysis of methodological literature, a comparison method, a method of balancing indicators, a tabular method of displaying indicators, and others.

The methodological basis for writing the thesis was the laws and regulations on organizing the financing of enterprises in the Russian Federation, scientific works of domestic and foreign authors on the problems of forming and analyzing the financial results of an enterprise. The degree of development of this problem is quite high. The problem is reflected quite fully in the textbooks of E.I. Krylov, V.M. Vlasova and I.V. Zhuravkova “Analysis of financial results, profitability and cost of production”, T.U. Turmanidze “Financial analysis of the economic activity of an enterprise”, I.A. Form “Financial Management”, etc. In economic periodical literature, questions of profitability analysis are given constant attention. Among the publications we can highlight articles by T.A. Barkova “Managerial aspects of the analysis of financial results based on the financial statements of the organization”, N.V. Lipchiu and Yu.S. Shevchenko “Problems of forming the final financial results of an organization”, I. Nikolaeva “Marginal analysis of profitability”, A.G. Khairullina “Managing the financial results of an organization” and others.

The structure of the thesis in accordance with the methodological instructions consists of an introduction, three chapters, conclusions and proposals, and a list of references.

1. Theoretical foundations for assessing the profitability of an enterprise

1.1 Profitability as a financial result of an enterprise’s activities

Profitability indicators are important characteristics of the factor environment for generating enterprise profits. Therefore, they are mandatory when conducting a comparative analysis and assessing the financial condition of an enterprise. When analyzing production, profitability indicators are used as a tool for investment policy and pricing.

In the economic literature, various authors classify profitability indicators differently. One of these classifications is the division into: indicators of profitability of economic activity; financial profitability indicators; product profitability indicators.

The overall profitability of associations and enterprises is determined by the ratio of profit to the average annual cost of fixed production assets and standardized working capital and is calculated using the formula:

P = P: (O f + O s) × 100%, (1.1)

P - profit;

O f - average annual cost of fixed production assets;

О с - average annual cost of standardized working capital.

The actual total profitability is determined by the ratio of profit to the actual average annual cost of production fixed assets and normalized working capital not financed by the bank. The actual balances of normalized working capital are established based on their balance on the balance sheet minus the debt to suppliers for accepted payment requests, the payment deadline for which has not arrived, and to suppliers for uninvoiced supplies, as well as depreciation of low-value and wear-and-tear items and a reserve for compensation of planned losses and upcoming expenses.

The level of profitability depends not only on the amount of profit, but also on the capital intensity of production. In enterprises of heavy industry associations with high capital intensity of production, the level of profitability in relation to production assets is lower than in associations of light and especially food industry enterprises. With an increase in the amount of profit and a decrease in the cost of fixed production assets and normalized working capital, profitability increases, and vice versa.

Estimated profitability is the ratio of balance sheet profit minus payments for production assets, fixed payments, interest on a bank loan, profit for special purposes (profit from the sale of consumer goods, new household chemicals, etc.), as well as profit received from reasons independent of the activities of the association or enterprise, to the average annual cost of fixed production assets (minus fixed assets for which payment benefits are provided) and standardized working capital.

When analyzing the work of associations and enterprises, especially when planning to assess the profitability of products, profitability is important, defined as the ratio of the amount of profit to the total cost of products sold. The profitability of individual types of products is calculated using the formula:

P = (O – C): C × 100%; (1.2)

where: P - level of profitability, %;

О is the enterprise's wholesale price for the product;

C – distribution costs.

The profitability indicator for products reflects the efficiency of living and material labor costs for product production.

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• Introduction
• Chapter 1. Theoretical foundations for analyzing the formation and use of enterprise profits
• 1.1. Enterprise profit: concept, types, areas of use
• 1.2. Factors influencing profit margin
• 1.3. Methods and stages of analysis of the formation and use of profit in an enterprise
• Chapter 2. Analysis of the financial results of the activities of LLC "SHMOLTZ + BICKENBACH"
• 2.1. Organizational and economic characteristics of LLC "SHMOLTZ + BICKENBACH"
• 2.2. Analysis of profit generation and profitability indicators of LLC "SHMOLTZ + BICKENBACH"
• 2.3. Analysis of the distribution and use of profits of LLC "SHMOLTZ + BICKENBACH"
• Chapter 3. Ways to increase profits and profitability of SCHMOLTZ+BICKENBACH LLC
• 3.1. Development of a set of measures aimed at increasing profits and increasing the efficiency indicators of SCHMOLTZ+BICKENBACH LLC
• 3.2. Evaluating the effectiveness of the developed set of measures
• Conclusion
• List of sources used

Introduction

In modern economic conditions, profit is the most important indicator of the financial and economic activity of an enterprise, one of the criteria for assessing its financial condition, and a source for its further development. Profit growth creates the basis for expanding the production activities of the enterprise, satisfying the social and material needs of the founders and employees. At the expense of profits, the enterprise's obligations to the budget, banks and other organizations are fulfilled. Thus, profit, being the main driving force of a market economy, ensures the interests of the state, owners and personnel of the enterprise. This importance of profit, of course, determines the need for managers and financial managers to constantly improve methods for effectively managing the formation and distribution of profit in the process of enterprise activity.

The problem of forming the financial results of enterprises requires the development of a rational mechanism for the accumulation and use of profits. The distribution of profits largely determines the consistency of economic interests of different levels: the founders of the enterprise, collective and personal. The profit distribution system has great potential for influencing production efficiency.

The relevance of the research topic of the final qualifying work is due to the increased interest of enterprise management in the process of generating profit and the search for approaches to organize its formation, distribution and use in such a way that the enterprise’s activities are successful, its financial position is strong and sustainable.

Problems of financial management and profit management of an organization are reflected in the works of Russian scientists: I.A. Blank, A.B. Volkov, A.N. Gavrilova, M.M. Gzalov, I.M. Karaseva, V.V. Kovalev, N.L. Zaitsev, I.A. Kanushkin, M.G. Lapusta, T.N. Batova, O.V. Vasyukhina, E.F. Tikhomirov and others.

Problems of the theory and practice of comprehensive analysis of the financial and economic activities of enterprises, including various methods for analyzing profit indicators and profitability, are covered in the works of: A.G. Artemenko, I.G. Balabanova, V.R. Bank, Z.V. Kiryanova, E.I. Sedova, A.A. Kanke, I.P. Kosheva, G.V. Savitskaya, N.N. Selezneva, A.F. Ionova, L.N. Chechevitsina, A.D. Sheremeta and others.

The purpose of the study is to analyze the theoretical and applied aspects of the formation, distribution and use of profit of a commercial organization using the example of the manufacturing enterprise SCHMOLTZ+BIKKENBACH LLC and to develop recommendations aimed at increasing the profit and profitability of the enterprise.

Achieving this goal predetermined the formulation and solution of the following tasks:

— explore the economic essence of profit, its functions and types;

— identify factors influencing profit margins;

— clarify the goals, objectives and methods of analyzing profits and profitability;

— give organizational and economic characteristics of LLC “SHMOLTZ + BICKENBACH”;

— conduct an analysis of the profit formation of LLC “SHMOLTZ + BICKENBACH”;

— investigate the effectiveness of the activities of LLC "SHMOLTZ + BICKENBACH";

— analyze the directions of distribution and use of enterprise profits;

— develop measures aimed at increasing profits and increasing the efficiency of SCHMOLTZ+BICKENBACH LLC.

The object of the study was the economic relations that arise in the process of managing the profit of an enterprise, its formation, distribution and use.

The subject of the study is the financial and economic activities and financial results of SCHMOLTZ+BICKENBACH LLC.

The theoretical and methodological basis of the work was the works of modern domestic scientists in the field of theory and practice of analysis of financial and economic activities, financial management, and economics of industrial enterprises. The research is based on general scientific methodology, which involves the use of systemic and institutional approaches, as well as methods of analysis and synthesis, hypothesis construction, logical assessment of events, factor analysis, graphical and other methods of collecting and processing information.

The information and statistical base of the study is the financial statements of SCHMOLTZ+BICKENBACH LLC, financial plans, constituent documents and other internal documents of the enterprise.

The theoretical and practical significance of the work is that the practical application of economically sound proposals aimed at increasing profits, improving the profit distribution mechanism, and improving the profitability indicators of SCHMOLTZ+BICKENBACH LLC will serve to improve its financial condition and will contribute to the further development and strengthening of competitive positions enterprises on the market.

The structure of the work is determined by the logic, purpose and objectives set in the work. The work consists of an introduction, three chapters, a conclusion, and a list of sources used.

Chapter 1. Theoretical foundations of the formation and use of enterprise profits

1.1. Enterprise profit: concept, types, areas of use

Profit is the simplest, but at the same time, one of the most complex categories of a market economy. It acts as the foundation and main driving force of a market-type economy, one of the main motivations for the activities of economic entities in market conditions.

Profit is a form of income for an entrepreneur carrying out a certain type of activity;

Profit is a form of income for an entrepreneur who has invested his capital in order to achieve a certain commercial success. The category of profit is inextricably linked with the category of capital - a special factor of production - and in average form characterizes the price of functioning capital;

Profit is not a guaranteed income for an entrepreneur who has invested his capital in a particular type of business. It is the result only of the skillful and successful implementation of this business;

Profit does not characterize all the income received in the process of entrepreneurial activity, but only that part of the income that is “cleared” of the costs incurred to carry out this activity;

Profit is a value indicator expressed in monetary form.

The role of profit in modern economic conditions is multifaceted. Key aspects of the meaning of profit in a market economy are shown in Figure 1.

Figure 1 - Characteristics of the role of enterprise profit in a market economy

As shown in Figure 1, the role of profit is multifaceted: it is the main goal of entrepreneurial activity, the main incentive for carrying out any type of business; creates the basis for the economic development of the state as a whole; acts as a criterion for the effectiveness of specific production (operational) activities; is the main internal source of the formation of the financial resources of the enterprise, ensuring its development, the main source of increasing the market value of the enterprise, the most important source of satisfying the social needs of society, the main protective mechanism that protects the enterprise from the threat of bankruptcy.

Thus, taking into account the considered main characteristics of profit, its concept in the most general form can be formulated as follows. Profit is the net income of an entrepreneur expressed in monetary form on invested capital, which characterizes his reward for the risk of carrying out entrepreneurial activities, representing the difference between total income and total costs in the process of carrying out this activity.

The essence of profit as an economic category is manifested in its functions (Figure 2).

Commenting on Figure 2, it should be noted that profit at an enterprise is considered not only as the main goal, but also as the main condition for its business activity.

When assessing the level or change in business activity, a distinction is made between the concepts of expected profit (which can be received in the future as a result of business) and actually received.

Taking this into account, the following profit functions are distinguished:

- investment - since the expected profit is the basis for making investment decisions;

- effective - the actual profit received evaluates the efficiency of the enterprise: the very fact of profitability already indicates the efficiency of the enterprise;

- financing - on the one hand, part of the received or expected profit is determined as a source of self-financing of the enterprise. On the other hand, profit is the source of revenue generation for budgets at various levels. It goes to budgets in the form of taxes and is used for various purposes in accordance with approved budget expenditures;

- stimulating - profit is the most important source of equity capital growth; part of the expected or received profit can be used as a source of material remuneration for employees of the enterprise and payment of dividends (rewards) to capital owners.

Maintaining the required level of profitability is an objective law of the normal functioning of enterprises in a market economy. A systematic lack of profit and its unsatisfactory dynamics indicate the inefficiency and riskiness of business and are one of the main internal reasons for the bankruptcy of enterprises.

When talking about profit as a specific indicator of an enterprise’s performance, various definitions, concepts and types of profit can be used. The general concept of profit accumulates its various types, which have many definitions. In this regard, in order to better understand the essence of profit, determine the directions of profit analysis and the key segments of effective and targeted profit management, it seems advisable to highlight the main classification characteristics of profit.

The classification of types of profit of a modern commercial enterprise in the context of the proposed characteristics is given below. Among the main such classification characteristics, it is proposed to highlight the following characteristics:

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— nature of reflection in accounting;

— the nature of the enterprise’s activities;

— main types of business operations of the enterprise;

— main activities of the enterprise;

— composition of forming elements;

- nature of taxation;

— the nature of inflationary “cleaning”;

— sufficiency of the level of formation;

— the period of formation under consideration;

— nature and extent of use;

— the value of the final result of management.

Signs of classification of enterprise profit and types of profit according to the corresponding classification criteria:

Nature of reflection in accounting:

— accounting profit;

- economic profit.

Nature of the enterprise's activities:

— profit from ordinary activities;

- profit from extraordinary events.

Main types of business operations of the enterprise:

— profit from sales of products;

— profit from non-operating operations.

Main activities of the enterprise:

— profit from operating activities;

— profit from investment activities;

— profit from financial activities.

Composition of forming elements:

— marginal profit;

- gross profit;

- net profit.

Nature of taxation:

— taxable profit;

- profit not subject to taxation.

Nature of inflationary cleansing:

— nominal profit;

- the profit is real.

Sufficiency of the level of formation:

- low profit;

- normal profit;

- high profit;

Formation period under consideration:

— profit of the previous period;

— profit of the reporting period;

— profit of the planning period (planned profit).

Nature of use:

— capitalized profit;

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— consumed profit.

Degree of use:

- retained earnings;

— distributed profit.

The value of the final result of management:

— positive profit (profit in its usual sense);

— negative profit (loss).

The specifics of determining the income and expenses of an enterprise, the formation of the tax base, the calculation, payment and reporting of income tax are determined by the Tax Code of the Russian Federation (Chapter 25 “Organizational Income Tax”).

The main form of financial reporting, which reflects the formation of profit and the final financial result, is the Profit and Loss Statement (starting with reporting for 2012 - the Financial Results Statement). According to financial statements, the following types of profit are distinguished:

- gross profit;

- revenue from sales;

— profit before tax (balance sheet profit);

- net profit.

Gross profit is the difference between revenue and cost of sales.

One of the key profit indicators characterizing the efficiency of the main (production) activity of an enterprise is profit from sales (profit from sales of products).

Profit from sales of products is the difference between revenue from sales of products and the total cost of production. Sales proceeds are taken into account without VAT and excise taxes. The generation of profit from sales can be expressed by the following formula

where P r – profit from sales of products;

P wholesale i – wholesale price of a unit of i-th product;

C p i – total cost of the i-th product;

N pi - volume of products sold in physical terms

n - number of product items.

In general, the amount of profit from product sales is influenced by such factors as changes in sales volume, structure of commercial products, selling prices, prices for raw materials, materials and components, labor costs for enterprise employees, energy and transportation tariffs.

If we consider the formation of profit from sales according to financial statements, then it represents the difference between gross profit and commercial and administrative expenses.

Balance sheet profit is the total amount of profit of an enterprise, characterizing the final financial result of its production and economic activities for a certain period. Balance sheet profit includes profit from the sale of marketable products, profit from other sales, profit from the sale of fixed assets and other property.

The Income Statement shows profit before tax. To obtain the balance sheet profit from sales profit, you need to subtract interest payable and other expenses of the enterprise and add income from participation in other organizations, interest receivable and other income. When determining taxable profit, the benefits applicable to the given enterprise are taken into account. Such benefits include: profit allocated for the re-equipment of production, for environmental protection measures in an amount limited by law, costs of maintaining social and cultural facilities on the balance sheet, contributions to charitable purposes, additional benefits for small businesses.

Net profit is the profit remaining at the disposal of the enterprise after paying taxes, fees and other payments to the budget. The amount of income tax is determined by the product of taxable profit and the income tax rate, which today, according to the provisions of the Tax Code of the Russian Federation, is generally

20 %. Of the transferred income tax, 2% is credited to the federal budget, and

18% goes to the budgets of the constituent entities of the Russian Federation.

To assess the efficiency of an enterprise, it is not enough to use only profit indicators. Profit is an absolute indicator characterizing the economic effect. However, having information only about absolute indicators, it is not possible to assess the degree of efficiency of the enterprise. For this purpose, profitability indicators are used.

Profitability is a relative indicator of production efficiency, characterizing the level of return on costs and the degree of use of resources. The basis for constructing profitability indicators is the ratio of profit (profit from sales, and, most often, net profit) to costs, to revenue, to total assets, to capital. Profitability indicators show how much profit the company received per unit of its assets, income received, capital generated, and costs incurred. That is, profitability indicators measure the profitability of an enterprise from different positions. The general profitability formula can be expressed as follows:

P = P / V (2)

where P is the organization’s profit;

V is the indicator in relation to which profitability is calculated.

Whatever indicators are used to calculate profitability, its growth means an increase in the efficiency of resource use, and as a result, strengthening the financial condition of the enterprise. Features of the distribution of profit of an enterprise depend on the economic and legal form of the enterprise and on the form of ownership. The common feature of the profit distribution mechanism is that the enterprise pays income taxes, real estate taxes, income taxes and local fees and taxes from profits. The differences lie in how the profit remaining at the disposal of the enterprise is distributed, since the procedure for distributing this part of the profit is established by the owner.

In the process of forming the enterprise’s profit distribution policy, its use is ensured in the following main areas, presented in Figure 3.

The main goal of the profit distribution policy remaining at the disposal of the enterprise is to optimize the proportion between the capitalized and consumed parts of it, taking into account the implementation of the strategy for its development and the growth of its market value.

Based on this main goal, in the process of forming a profit distribution policy, the following tasks are solved:

a) ensuring that owners receive the required rate of return on invested capital;

b) ensuring the priority goals of the strategic development of the enterprise at the expense of the capitalized part of the profit;

c) ensuring stimulation of labor activity and additional social protection of personnel;

d) ensuring the formation of reserve and other funds of the enterprise in the required amounts.

So, profit is the entrepreneur’s net income expressed in monetary form on invested capital, which characterizes his reward for the risk of carrying out entrepreneurial activities, representing the difference between total income and total costs in the process of carrying out this activity. Profit is the main result of entrepreneurial activity, meeting the needs of the enterprise itself, its employees and the state as a whole. The financial position of the enterprise, the possibilities for the development of production and the social sphere, and material incentives for workers depend on the amount of profit received.

Profit is an absolute indicator of the economic efficiency of an enterprise, and a relative indicator is profitability indicators, which can be used to determine the efficiency of assets, capital, fixed assets, production and other activities of the enterprise.

Distribution of profit is the process of forming directions for its future use in accordance with the goals and objectives of the development of the enterprise. The basis of the mechanism for distributing the profit of a particular enterprise is the analysis and consideration in the process of this distribution of individual factors that link this process with the current and future economic activities of this enterprise.

1.2. Factors influencing profit margin

The amount of profit is formed under the influence of a large number of different factors that have both positive and negative influence on it.

Based on the nature of their occurrence, all factors influencing the formation and distribution of profit can be divided into two main groups:

a) external (generated by the external conditions of the enterprise’s activities);

b) internal (generated by the peculiarities of the economic activity of a given enterprise).

One of the global external factors, which combines several different factors, is the state of the external environment, or, in other words, the macroeconomic environment in which the enterprise operates.

The main external factors that shape the profit of an enterprise include the following factors:

— the general state of the economy and banking sector of the country;

— market conditions, economic situation in the market, characterized by the level of demand and supply of the enterprise’s products

- market volume. The turnover of an enterprise depends on the market capacity. The greater the market capacity, the greater the enterprise’s ability to make a profit;

— development of competition. It has a negative impact on the amount and level of profit, as it leads to averaging of the profit rate. Competition requires certain expenses that reduce the amount of profit received;

— the state of the industry (industries) with which the enterprise operates;

— price level for consumed material and technical resources, energy resources, etc.;

— taxation system.

Among the internal factors influencing the profit margins of an enterprise, the following factors can be identified:

— volume of products sold. With a constant share of profit in the price, an increase in the volume of products sold allows you to receive a larger amount of profit;

— competitiveness of products (goods). The better the quality of the product (goods) and the greater the demand for it in the market, the greater the sales volume;

— level of organization of production and labor. With the rational organization of production and labor, labor productivity increases and the production potential of the enterprise is used to the greatest extent;

— competence of management and managers. Almost all aspects of its activities related to making a profit largely depend on the level of professionalism of the enterprise’s managers;

— state of in-production planning. The enterprise must draw up adequate production plans taking into account the production goals and objectives of the enterprise, internal and external environmental factors;

— number and composition of employees. Sufficient numbers at a certain level of technical equipment of labor make it possible to fully implement production plans to obtain the required amount of profit;

— forms and systems of economic incentives for workers. The influence of this factor can be assessed through the indicator of labor costs, as well as through the indicator of profitability of labor costs;

— labor productivity of industrial enterprise workers. An increase in labor productivity, other things being equal, entails an increase in the amount of profit and an increase in the profitability of a manufacturing enterprise;

— capital-labor ratio and technical equipment of workers. The higher the equipment of workers with modern means of labor, the higher their labor productivity;

- return on assets. With an increase in capital productivity, the volume of production per 1 ruble of funds invested in fixed assets increases;

- the amount of working capital. The greater the amount of working capital an enterprise has, the greater the amount of profit it receives as a result of their turnover alone;

— implementation of the economy regime. This makes it possible to relatively reduce the current costs of production enterprises and increase the amount of profit received. By saving mode we mean not an absolute, but a relative reduction in current expenses.

The factors influencing the proportions and efficiency of profit distribution are also very diverse; The degree of intensity of their manifestation also varies. One group of these factors determines the prerequisites for the growth of the capitalized part of profit; the other group, on the contrary, inclines management decisions in favor of increasing the share of its consumed part. These factors are also divided into external and internal (Figure 4).

External factors are considered as a kind of restrictive conditions that determine the boundaries of the formation of the proportions of profit distribution. The most important of these factors include: legal restrictions, a system of tax incentives for reinvesting profits; the market rate of return on invested capital, the growth of which is accompanied by a tendency to increase the share of the capitalized part of the profit, and, conversely, its decrease causes an increase in the share of consumed profit; the cost of external sources of investment resources (if its level is high, it is more profitable to use profit, and vice versa); inflation rates, etc.

Internal factors have a decisive influence on the proportions of profit distribution, since they allow them to be formed in relation to the specific conditions and results of the management of a given enterprise. The most important of these indicators include:

- the level of profitability of the enterprise, with a low value and a correspondingly small amount of distributed profit, most of it goes to the creation of mandatory funds and reserves, to the payment of dividends on preferred shares, to social programs, etc.;

— the presence of highly profitable investment projects in the enterprise’s portfolio;

— the need for accelerated completion of initiated investment projects;

— the level of the financial leverage ratio (the ratio of debt and equity capital), which is one of the indicators of financial risk and one of the factors determining the return on equity capital;

— the presence of alternative internal sources for the formation of investment resources (depreciation fund, proceeds from the sale of fixed assets and financial assets, etc.);

- the current solvency of the enterprise, at a low level of which the enterprise must reduce the consumed part of the profit.

To organize effective activities, each enterprise must provide for planned measures to increase profits. In general terms, these activities can be of the following nature:

— increase in production output;

— improving product quality;

— selling or leasing excess equipment and other property;

— reducing production costs through more rational use of material resources, production capacities and areas, labor and working time;

— diversification of production;

— expansion of the sales market, etc.

From the above list of activities it is clear that all of them are directly related to other areas of the enterprise’s activities, aimed primarily at reducing production costs, improving product quality and the use of production factors.

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Currently, the economic situation in the world changes almost every day. Entrepreneurs constantly have to think about how to maximize their profits by making tactical and strategic plans. The situation is complicated by the fact that each industry has its own individual characteristics of increasing profits and there is no single answer to how to achieve high profitability of an enterprise.

Analysis and sources of increasing the organization's profit

First of all, in order to maximize the profit of an enterprise, you first need not to develop specific methods, but to analyze the market, competitors, customers and much more. Analysis is the basis on which any actions are based to increase the company’s own profit.

Sources of profit in an organization can be:

• reduction in production costs;
• diversification of production;
• implementation of budgeting and financial planning;
• cost reduction;
• opening new markets;
• competitive advantage;
• increasing the volume of products sold;
• sale or rental of unused property;
• introduction of the latest technologies and equipment in production;
• restructuring.

Ways, methods and ways to increase company profits

Motivating employees is one of the most effective ways to increase profits. It is necessary to show employees that their personal income depends on the profitability of the enterprise. This will encourage them to put as much effort into their work as possible.

The introduction of new technologies and automation of production will lead to the possibility of reducing the number of employees, and accordingly, will reduce wage costs.

The riskiest way would be to increase prices. To use this method, the manufacturer must be confident that customers are willing to purchase the product, even if prices increase.

Another way is to reduce costs. But it is important to understand that reducing costs always leads to a decrease in product quality. Because of this, most buyers may go to competitors. This method is more suitable for mass production.

Factors and reserves for increasing the profit and profitability of a company

There are many factors that can affect profit growth. And it is not always possible to accurately assess the degree of influence of one or another factor.

Factors influencing the amount of profit can be divided into internal and external.

External (uncontrollable) factors include:

• extraordinary events (natural disasters);
• political changes in the country;
• changes in legislation;
• competitors;
• social conditions in the state;
• inflationary processes;
• changes in the banking and financial sector of the economy;
• suppliers and partners;
• buyers.

Internal (controllable) factors:

• financial policy within the enterprise;
• social (trainings and courses for company employees);
• introduction of new technologies;
• release of new products.

Gross profit increase

An increase in turnover inevitably leads to an increase in the gross profit of the enterprise. For this reason, it is important to monitor dynamics and ensure that production volumes are stable. Unsold products lying in the warehouse have a negative impact. To prevent this, you can sell products at discounts.

An analysis of the profitability of products sold will make it possible to understand which products need to be paid special attention to when selling them or removed from sales altogether in order to reduce the costs of their production.

An assessment of fixed assets will allow you to understand whether they generate gross profit. Otherwise, it would be better to sell off unprofitable fixed assets.

Increasing the authorized capital at the expense of retained earnings

The authorized capital of an enterprise can be increased at the expense of retained earnings. This requires the consent of all participants and the inclusion of a clause on increasing the authorized capital at the expense of retained earnings in the charter of the enterprise. Then you need to submit documents to the inspectorate for state registration of amendments that will be made to the constituent documents of the enterprise, as well as changes to the Unified State Register of Legal Entities.

In joint stock companies, the authorized capital can be increased at the expense of retained earnings in two ways:

• additional issue of shares;
• increase in the nominal value of shares.

The procedure for increasing the authorized capital takes place in the following order:

• consent of all shareholders to increase the authorized capital at the expense of retained earnings in one of two ways;
• approval of the decision on additional issue of shares;
• state registration of shares issue;
• placement of shares on the stock exchange;
• providing a report on the placement of shares to the Federal Financial Markets Service;
• registration of a new version of the charter.

Increase in authorized capital due to net profit

The concepts of “net profit” and “retained earnings” are very similar in meaning. The main difference between these definitions is that the term “retained earnings” is used most often when talking about profits that have been accumulated for the reporting year and previous years. The term “net profit” is the profit for the reporting year only.

Based on this, we can conclude that the methods for increasing the authorized capital at the expense of net profit will be the same as if retained earnings were used for this purpose. These methods have already been described previously.

Measures to increase profits

The main measure to increase profits is profit planning.

Profit planning can be done in three different ways:

• direct account;
• revenue relationships;
• analytical approach.

The first method is the most common in organizations. The essence of the method is that profit is calculated as the difference between the proceeds from the sale of goods and its full cost.

The essence of the second method is to group expenses into fixed and variable.

The analytical method is used as an addition to the direct counting method and is used mainly with a large range of products sold.

Development of activities and strategies to increase profits

There are several strategies to increase profits:

• creation of new products. Allows you to expand your circle of clients and expand your business scope;
• cross-selling system. This method is relevant in online stores. When a buyer selects a product, recommendations for a similar product that might interest him pop up;
• system of regular touches. Most businesses notify their customers about discounts or new product releases 2-3 times. If the client does not buy anything after this, then he is added to the list of hopeless ones. But, as the experience of many companies shows, if you notify the client 7-8 times, the percentage of sales will increase significantly;
• educational marketing. The essence of this method is that before you sell something to your potential client, you first need to teach him something useful that will help solve his problems.

Increase store profit

One of the ways to increase a store’s profit is to increase the average check. For example, when a buyer goes to the checkout to order a product, the seller offers him to buy something else at a discount or as related products. Many customers agree to purchase another item at the checkout.

Very often in stores, especially if it is a clothing or cosmetics store, customers come in just to “look”. In this case, the seller should ask “Are you visiting us for the first time?”, and then offer the client an SMS newsletter with information about upcoming promotions or a club card.

To attract a client, and, accordingly, increase the amount of profit from sales, you can offer to purchase discount or bonus cards or issue them when purchasing products over a certain amount.

Various promotions, sales, discounts on certain days on certain products will increase profits, since there is a high probability that the client will buy the product not only at a discount, but also additional products in the store.

As an example: increasing restaurant profits

The main ways to increase restaurant profits:

1. Brag. If a restaurant has the best chef or the most talented singer in town, be sure to tell them about it.
2. Increase in order cost. When ordering, the waiter can recommend an accompanying dish, for example, if a guest orders meat, then he can recommend a side dish (which turned out to be incredibly tasty today).
3. Improvement of employee qualifications. The main thing in a restaurant is its waiters. In fact, waiters are the face of any restaurant. If the waiters are polite and know how to create a cozy atmosphere, then the guest will definitely come back again.
4. Positive reviews. The more positive reviews about a restaurant are heard in the city, the more people will want to come there.

Exhibitions as a way to attract new clients and partners

Thematic exhibitions are an excellent way for a start-up company to express itself and acquire potential clients. One of the largest complexes in Russia, on the territory of which exhibitions of various types are constantly held, is the Expocentre Fairgrounds.

The main advantage of participating in the exhibition is that the company has to analyze the interests of the buyer and, based on them, produce products that will be successful in the market. Such an event is a good opportunity to interest future potential partners and suppliers.

Determining the final results for each type of activity allows you to analyze the results of management in each area and activate economic leverage to improve them. The volume of profit from product sales is influenced by factors affecting:

• -growth in income from sales (revenue) of products, namely: prices, range and quality, marketing actions to increase demand, credit policy of the enterprise, etc.;
• -optimization of costs by reducing unnecessary costs, inventories of valuables, and improving their structure;

Increasing the level of profitability of products by reducing the production of unprofitable products, increasing the production of highly profitable products (better quality, new products, etc.).

These factors are interrelated and can have a positive impact on profits if the following rules are followed:

• 1) prices are based on production and sales costs, taking into account real market conditions, the relationship between supply and demand for specific goods;
• 2) the costs of selling products are optimized (the volume of costs per unit of production, the total amount of costs and their structure);
• 3) product profitability does not decrease sharply, remains the same or tends to grow;
• 4) sales revenues grow faster than total costs.

At the enterprise under study, the following measures can be proposed to improve financial results:

• 1. Reducing production costs. Various factors can contribute to reducing production costs:
  • -reducing the consumption of raw materials for the manufacture of products,
  • -changes in reinforcement manufacturing technology,
  • - rational use of fuel and energy resources.

These factors will reduce the cost of production by 6.9 and 4.9 million rubles. As a result, the profit increase reserve will amount to 11.8 million rubles.

2. A significant reserve for increasing the profit of an enterprise is improving the quality of products. Thus, at the enterprise, as a result of ongoing activities and changes in product manufacturing technologies, it is possible to improve the quality of concrete slabs. This makes it possible to increase the price of slabs by 2.0 thousand rubles. a piece. The planned improvement in quality will provide a profit reserve in the amount of:

Profit reserve = 2.0*12.0 thousand units. = 24 million rubles.

3. The analyzed enterprise is undergoing technical re-equipment, as a result of which it is planned to increase production by 2.5 thousand units. Then, thanks to re-equipment, time standards will be revised, as a result of which it is planned to increase production volume by 3.1 thousand units.

Table 17. Reserves for increasing profits by increasing production volume

Table 18. Initial data for determining reserves for increasing profits, million rubles.

Profit before introduction of precast concrete measures

19705 - 17435 = 2270 million rubles.

After - 21269 - 18819 = 2450 million rubles. The reserve is 2

450 - 2270 = 180 million rubles.

An increase in production volume by 5.6 thousand units will allow the company to make a profit of 180 million rubles. (Table 3.2.).

The enterprise has developed measures necessary for the economical and careful use of fuel and energy resources. To achieve the energy saving target, the following energy saving measures must be completed in 2009:

Table 19. Measures to save fuel and energy resources