Net profit is the most important indicator of the work of an enterprise

In a market economy, modernenterprise, or rather their leaders must have a mass of knowledge and skills in order to "stay afloat." Ignorance of the basic rules and laws of business leads to disastrous results, with this comes very quickly. The article below is an attempt to deal with such a concept as net profit - the most important factor that affects the profitability of any enterprise and analysis which gives an opportunity to understand whether or not to maintain and develop the business further, or should look for other possibilities of earnings.

In theory, the net profit is part of thebalance sheet profit of each enterprise, which remains at the disposal of the owners or shareholders after all taxes, fees, deductions and other obligations to the budget have been paid. In most cases, net profit is used to increase the company's working capital, to form funds and reserves, and also to reinvest in production.

Of course, there is a dependence of the amount of netprofits from the gross profit margin, as well as the size of taxes. In addition, it is based on the amount of available net profit that dividends are paid to the shareholders of the company.

Indicators of net profit for each enterpriseare very important. Net profit can be considered the result of the enterprise, for the period in which this profit was demonstrated. The indicator of net profit clearly demonstrates the amount of funds received by the enterprise after payment of all tax collections, payment of wages, as well as other payments that are mandatory. It is clear that an increase in net profit means that the company has worked well in a certain period and, conversely, a decline in its indicators, much less their withdrawal into "minus" means that certain measures should be taken to prevent bankruptcy. That is why it is important to know how the net profit is determined. The simplest instruction on calculating this most important indicator is given below.

1. Calculating net profit is not such a difficult task. Initially, you need to determine the time period for which you will calculate.
2. In addition to the time period that calculates net income, a person will need a formula that will be used to make all the calculations.
3. The net profit (PE) of an enterprise can beis determined if the indicators presented by gross profit (VP), financial profit (FP), amount of taxes (HF) paid for the period, other operating profit (OP) are known.
4. To calculate net profit, the following simple formula is most often used

ЧП = ФП + ВП + ОП - СН

1. The calculation of net profit requires the data contained in the financial statements.
2. Determination of gross profit, requires data provided by revenue for a defined period and the cost of production. To get the gross profit from the first indicator you need to subtract the second one.
3. Operating income is determined as the differenceother operating income and expenses for the period. Financial profit is calculated by subtracting from the financial income of expenses included in this category.
4. After calculating all the necessary indicators,you can determine and net profit. In the event that the net profit is shown by the indicator with the sign "-", we can state that the enterprise worked at a loss.

Net profit can be usedenterprise for any purpose. Most often, according to the decision of the management, the net profit is directed to the payment of expenses incurred by the enterprise at the current time. Quite often the net profit is accumulated or used for charitable purposes.