Hello! In this article we will talk about related, but not identical concepts: revenue, income and profit.

Today you will learn:

1. What is included in the company's revenue?
2. What is the company's income and profit derived from?
3. What are the main differences between these concepts?

What is revenue

Revenue – earnings from the direct activities of the company (from the sale of products or services). The concept of revenue is found exclusively in business and entrepreneurship.

Revenue characterizes the overall efficiency of the enterprise. It is revenue, not income, that is reflected in accounting.

There are several ways to account for revenue in an enterprise.

1. The cash method defines revenue as the actual money received by the seller for providing services or selling goods. That is, when providing an installment plan, the entrepreneur will receive proceeds only after actual payment.
2. Another accounting method is accrual. Revenue is recognized when the contract is signed or the buyer receives the goods, even if actual payment occurs later. However, advance payments do not count towards such revenue.

Types of revenue

Revenue in an organization is:

1. Gross– the total payment received for a job (or product).
2. Clean– used in . Indirect taxes (), duties, and so on are subtracted from gross revenue.

The total revenue of the enterprise consists of:

• Revenue from core activities;
• Investment proceeds (sales of securities);
• Financial revenue.

What is income

The definition of the word “income” is not at all identical to the term “revenue,” as some entrepreneurs mistakenly believe.

Income - the sum of all the money earned by the enterprise through its activities. This is an increase in the economic benefit of an enterprise due to an increase in the company's capital by the receipt of assets.

A detailed interpretation of the ways of generating income and their classification are contained in the Regulations on Accounting “Income of Organizations”.

If cash revenue is funds received by the company’s budget in the course of its core activities, then income also includes other sources of funds (sale of shares, receipt of interest on a deposit, and so on).

In practice, enterprises often conduct diverse activities and, accordingly, have different channels for generating income.

Income – the overall benefit of the company, the result of its work. This is an amount that increases the organization's capital.

Sometimes income is equal in value to the organization’s net revenue, but most often companies have several types of income, and there can be only one revenue.

Income is found not only in entrepreneurship, but also in Everyday life a private person not engaged in business. For example: scholarship, pension, salary.

Receiving funds outside the scope of reference entrepreneurial activity will be called income.

The main differences between revenue and income are given in the table:

Revenue	Income
Summary of main activities	The result of both main and auxiliary activities (sale of shares, interest on bank deposits)
Arises only as a result of conducting commercial activities	Allowed even for unemployed citizens (benefits, scholarships)
Calculated from funds received as a result of the company’s work	Equal to revenue minus expenses
Cannot be less than zero	Let's say it goes negative

What is profit

Profit is the difference between total income and total expenses (including taxes). That is, this is the same amount that in everyday life could easily be put into a piggy bank.

In an unfavorable situation, and even with a large income, the profit can be zero, or even go negative.

The main profit of the company is formed from the profit and loss received from all areas of work.

The science of economics identifies several main sources of profit:

• The company's innovative work;
• An entrepreneur’s skills to navigate the economic situation;
• Application and capital in production;
• Company monopoly in the market.

Types of profit

Profit is divided into categories:

1. Accounting. Used in accounting. On its basis, accounting reports are generated and taxes are calculated. To determine accounting profit, explicit, justified costs are subtracted from total revenue.
2. Economic (excess profit). A more objective indicator of profit, since its calculation takes into account all economic costs incurred in the work process.
3. Arithmetic. Gross income minus miscellaneous expenses.
4. Normal. Necessary income for the company. Its value depends on lost profits.
5. Economic. Equal to the sum of normal and economic profit. Based on it, decisions are made on the use of the profit received by the enterprise. Similar to accounting, but calculated differently.

Gross and net profit

There is also a division of profit into gross and net. In the first case, only costs associated with the work process are taken into account, in the second - all possible costs.

For example, the formula by which gross profit in trade is calculated is the selling price of a product minus its cost.

Gross profit is most often determined separately for each type of activity if the company operates in several directions.

Gross profit is used when analyzing areas of work (the share of profit from which activity is greater), when the bank determines the creditworthiness of the company.

Gross profit, from which all costs (loan interest, etc.) have been subtracted, forms net profit. It is accrued to the shareholders and owners of the enterprise. And it is net profit that is reflected in and is the main indicator of business performance.

EBIT and EBITDA

Sometimes, instead of the understandable word “profit,” entrepreneurs encounter such mysterious abbreviations as EBIT or EBITDA. They are used to evaluate the performance of a business when the objects being compared operate within different countries or are subject to different taxes. Otherwise, these indicators are also called cleared profit.

EBIT represents earnings as they were before taxes and various interest. It was decided to highlight this indicator in separate category, since it is located somewhere between gross and net profit.

EBITDA- This is nothing more than profit without taking into account taxes, interest and depreciation. It is used exclusively to evaluate the business and its characteristics. Not used in domestic accounting. for commercial equipment.

Thus, income is funds received by an entrepreneur, which he can subsequently spend at his own discretion. Profit is the balance of funds minus all expenses.

Both income and profit can be predicted by taking into account past earnings, fixed and variable costs.

The differences between profit and revenue are as follows:

The line between the concepts may be unclear for an ordinary worker; it does not matter to him how revenue differs from profit, but for an accountant there is still a difference.

Net profit - important element analysis of the efficiency of the enterprise. This is the balance of gross profit after taxes. Simply put, these are the ones funds that remain at the free disposal of the organization.

At the expense of these finances, the enterprise forms reserve capital, increases working capital, buys new equipment, acquires shares of other companies. Part is spent on employee incentives: bonuses, corporate events, travel vouchers, gifts, assistance in purchasing housing or treatment.

The size of the indicator depends on several factors:

• revenue amount;
• production cost;
• amount of taxes;
• volume of other income and expenses.

Negative profits are called net losses. Many enterprises turn out to be unprofitable, despite successful activities during the year. Conversely, a small company without a huge turnover and a wide range of products can bring in colossal amounts.

How to calculate it? Formula options

This indicator can be calculated using several formulas. The meaning of all methods is the same, and the final amount will not differ, so you can use any of them.

Expanded formula

PP = FP + VP + OP - N, Where

• PE - net profit;
• FP - financial profit. It is calculated by subtracting similar expenses from income from financial activities;
• VP - gross profit. Calculated as sales revenue minus production costs;
• OP - operating profit. Expenses are deducted from income from other activities;
• N - amount of taxes.

Calculation example. For example, in 2015, Firma LLC sold products worth 600 thousand rubles, the cost of which was 400 thousand rubles. One of the premises was also rented out, the proceeds amounted to 100 thousand rubles. Income from financial investments in other enterprises - 70 thousand rubles. Other costs - 100 thousand rubles.

• Let's calculate the gross profit: 600 - 400 = 200.
• Financial profit: 70 thousand rubles.
• Operating profit: 100 - 100 = 0 rub.
• Tax: (200 + 70)*20% = 54 thousand rubles.
• Net profit will be: 70 + 200 - 54 = 216 thousand rubles.

Simplified formula

CP = B + PD - SP - UR - PR - N, Where

• B - revenue;
• PD - other income;
• SP - cost of production;
• UR - administrative expenses, advertising costs;
• PR - expenses for other activities;
• N - the amount of taxes paid.

Data for calculation using this method can be taken from the company’s financial performance report for the required period.

Calculation example. Let’s say the reports of the Korabliki store indicate the following amounts:

• Net profit will be: 150 + 2 - 60 - 15 - 20 - 1.5 - 11.1 = 44.4 thousand rubles.

Folded formula

PP = P - N, Where

• P - profit;
• N - amount of taxes.

In this calculation option, profit is understood as the difference between the organization’s total income and costs for the reporting period.

Calculation example. Let the income of LLC “Organization” in the reporting year amount to 500 thousand rubles. Cost - 300 thousand rubles. The machine was sold for 20 thousand rubles. Other costs - 100 thousand rubles.

• First you need to calculate all income: 500 + 20 = 520 thousand rubles.
• Next, we determine the costs: 300 + 100 = 400 thousand rubles.
• We determine the final profit: 520 - 400 = 120 thousand rubles.
• We charge income tax: 120*20% = 24 thousand rubles. to the budget.
• Amount of net profit: PE = P - N = 120 - 24 = 96 thousand rubles.

Balance calculation formula

Page 2400 = page 2300 - page 2410, Where

• line 2400 - net profit;
• line 2300 - profit before tax;
• line 2410 - amount of income tax.

The data for this calculation method must be taken from the income statement.

Calculation example. Let’s say the financial statements of LLC “Enterprise” contain the following data:

Index	Line	2015 (thousand rubles)
Revenue	2110	150
Cost price	2120	60
Business expenses	2210	15
Management costs	2220	20
Other income	2340	2
Other expenses	2350	1.5
Balance sheet profit	2300	55.5
Income tax	2410	11.1

Net profit will be:

• (150 - (60 + 15 + 20) + 2 - 1.5) - 11.1 = 44.4 thousand rubles.
• 55.5 - 11.1 = 44.4 thousand rubles.

What is the indicator used for?

The amount of net profit most reliably characterizes the efficiency of the enterprise. An increase in this amount compared to the previous period indicates quality work firms, reduction - about the wrong policy of management personnel.

The indicator is used by many internal and external users of information about the organization:

• Owner and shareholders. Using this data, the company owner evaluates the results of the enterprise's activities and the effectiveness of the selected management system. This amount is also used to calculate dividends and attract individuals as investors in the authorized capital.
• Director. He evaluates the financial stability of the company, the correctness of management decisions, and also develops new development strategies. The indicator directly affects profitability, which is why analysis of the balance of available funds is important for top managers.
• Suppliers. It is especially important for them that the organization is able to pay for raw materials, and the indicator is used to assess the stability of the company. If she has little money, then some suppliers may refuse to enter into an agreement because they will not be sure of payment for services and materials.
• Investors. Based on the indicator, they consider the possibility of financial investments. The higher the amount of free income, the more attractive the company is for investors. First of all, they plan to get additional income from shares.
• Creditors. Borrowers determine the solvency of the company. Money has the greatest liquidity, that is, the ability to be quickly sold. The more of them an organization has at its disposal, the faster it can pay off its debts. Accordingly, there is a greater chance of getting a loan from a bank.

Revenue is a key indicator of an enterprise's performance. Revenue is the material or economic benefits received by a company by providing goods or services to consumers. That is, funds from the sale of products.

Essence

The profitability and sustainable position of the company is determined by revenue. The organization's income occupies a large share of the company's total profit.

The amount of revenue in accounting is the receipt of funds from the main activities of the enterprise. That is, what the company was created for: the sale of goods and services and other types of work. Other income - income and expenses.

In reporting, revenue is recorded net of indirect taxes.

Another feature of reported revenue is volume. The amount received from the sale of goods is not always considered profit in full. For example, commission trading: the seller receives funds from the buyer, but the company's remuneration will be a small percentage. The remaining amount is sent to the consignor - the manufacturer of the goods.

To understand what an enterprise’s revenue is, you need to know about the total profit of the company for a certain period from the results of the company’s activities. Revenue is divided into total and net income. The total amount is funds from the results of the organization’s work:

• main activity - sales of goods, services provided and work performed;
• investments - sale of securities and non-current assets;
• financial activity is a type of income as a result of the placement of company securities by investors.

Net profit is funds from the sale of products minus indirect taxes (VAT, excise taxes, mandatory payments), various fees and discounts on transactions. The net profit indicator has two main functions:

• assessment of the company's performance;
• A company's actual gross income as opposed to its potential profit.

Types of revenue

The concept of what revenue is includes its types.

1. Sales revenue is the result of the commercial and economic production work of the enterprise. Corresponds to the sales volume of the company's products.
2. Profit from pawnshop services is funds received from the valuation and storage of various property accepted as collateral. Also interest on a short-term loan with collateral movable property population provided for personal use.
3. Gross view - profit from the sale of goods and moral values.
4. Foreign exchange earnings are profits from exports of products and international loans in foreign currency.
5. Marginal type - the increase in funds from the sale of an additional unit of goods.
6. Hidden profit - funds that are not reflected in accounting or hidden under the guise of various transactions.
7. Average revenue is the total profit from sales divided by the number of items sold. Must be equal to the price for which the product was sold. But with the condition that all goods were sold at the same price.

Revenue calculation method

Revenue for a period—year, quarter, or month—is calculated in two ways.

1. Cash method - the amount of funds received during the reporting period to the cash desk or to the account of the enterprise. Calculated based on actual receipt of money. Used by companies with income up to 1 million rubles per quarter during the year.
2. Accrual method - the sum of the cost of goods sold without taking into account the receipt of money. The moment of receipt of profit is the date of shipment of the product.

Revenue of small and medium-sized businesses

Business entities - consumer cooperatives and commercial companies, except for state and municipal organizations. What is the revenue from sales and services provided by small and medium-sized businesses:

• up to 60 million rubles per year - microenterprises;
• up to 400 million rubles per year - small business;
• up to 1 billion rubles per year - medium business.

Revenue of individual entrepreneur (individual entrepreneur)

Revenue for an individual entrepreneur is funds received by an individual for goods or services. Features of profit - cash method for accounting amounts. Products are transferred to the consumer with deferred payment. Income is not accrued until the funds arrive in the account. The method has reverse side— an advance on goods is considered profit.

IP revenue is divided as follows:

• pure type - the activity of an entrepreneur does not depend on the size and composition of taxes and excise taxes included in the cost of sales of goods;
• gross type - the total amount of funds for services or products.

Revenue of LLC (limited liability company)

A company created by one or more persons with authorized capital, - OOO. What is the revenue of a statutory enterprise? The result of the sale of goods minus material costs, contributions to extra-budgetary funds, depreciation and other costs.

LLC earnings are a source of financial income as profit from the company’s core activities and deductions.

Depreciation charges are part of the price of fixed assets in the cost of manufactured products and services provided.

Corporate revenue

Corporation - legal entity with association individuals with self-government functions. What is corporate revenue? Profit from sales of products and rent for enterprises with the activity of providing their assets for temporary use under an agreement.

IN financial statements Corporation revenue is reflected in the amount of funds equal to the amount of receipts of money and other property or receivables.

Revenue is one of the easiest concepts in modern economics to understand. This term denotes the funds that a company receives for goods or services provided to its counterparties. In other words, the remuneration for all existing contracts will be considered fairly received revenue.

This parameter is recognized as one of the most significant indicators of the success of an enterprise; it is not surprising that the volume of revenue is calculated in terms of the number of contracts, employees, in the reporting period and for the entire year at once. There is also the concept of average annual revenue. But let's start small to eventually arrive at the average annual revenue. Typically, accountants calculate revenue based on the results of the past month.

By the end of the year, if everything went as it should, the economist will have twelve numbers characterizing revenue for each month. To determine the average monthly income, you should sum up the revenue for each month and divide the resulting amount by 12. There is another option - having the annual revenue volume, divide it by 12 months. Having carried out these manipulations, we will receive an indicator of average monthly revenue, not average annual revenue, please note.

The annual average should include income values ​​over the past several years. Some companies consider it for 2-3 years, others take a longer period. The number of years taken into account directly depends on the goal pursued by the specialist. Obviously, an annual indicator based on data for 10 years will show more global trends in the development of an enterprise than an average annual indicator calculated for three years.

Factors

Annual revenue is the total income for all reporting periods(months). It characterizes the dynamics of the development of the enterprise and shows whether the company is experiencing an upturn or is at an economic peak.

The annual revenue of an average enterprise is influenced by various factors, we will tell you about the most significant of them.

• The volume of goods sold or services provided.
• Range of products/services.
• Quality and competitiveness.
• Price policy.
• The rhythm of the company's work.
• The nature of work with partners/contractors.
• Dynamics of demand.
• Forms of payment for products/services.

The amount of income depends not only on the quality of the product, which we have reflected in the list, but also on the general economic situation, demand, and even on what forms of cooperation the enterprise uses. Obviously, more revenue - due to the large number of concluded contracts - will be received by a company that provides installment plans and loans to counterparties.

Size per year

There are two main methods for calculating revenue at the legislative level.

1. A company can count income when goods are shipped or services are performed.
2. It is calculated upon the transfer of funds to the cash desk, to the account of the enterprise.

The methods pursue the same goal, but have different specifics. Large companies usually use the method of calculating revenue at the time of transfer of goods, since in their work it is important to take into account even funds that have not yet been received for calculation financial stability. In addition, large enterprises constantly provide installment plans to their counterparties - and all this time they have the so-called receivables.

Of course, certain risks remain when accounting for funds that have not yet been received. Accounts receivable may become problematic if the money is not transferred on time. However, it is this calculation system that allows economic giants to plan activities several months in advance and monitor financial stability.

The second method of accounting for profit is easier to understand - it does not use forecast data, and revenue is calculated upon receipt of funds into the account or cash register.

Let’s assume that during a reporting period of 1 month, a furniture manufacturing company received an income of 100 thousand rubles. But they managed to transfer only 80 thousand rubles to the cash register. If the first method is used, the accountant will take into account all 100 thousand rubles for which obligations were fulfilled. And according to the second method, the remaining 20 thousand will go into another period.

Formula

To calculate the profit received for any period, we will need the following data: the volume of sales of products or services provided, as well as the price of the product.

To find out revenue (B), we multiply the quantity of goods by its cost, the formula will look like this: B = Q x P, Where

• Q is the quantity of goods sold.
• P – price of the product/service sold.

It is used both for the cash method and for the forecast method.

Instructions

Period and calculation method

To determine the amount of revenue, you need to decide on the calculation method and period, which interests us. Suppose a company wants to find out the amount of annual revenue using the cash method. That is, we will count the money that was transferred to the cash desk during the year.

Data

Depending on how the business was conducted and how often monthly profits were calculated, we may or may not have the necessary data at hand. In the first case, you can use estimated income information for each month.

Example

Let’s take, for example, an online store specializing in the sale of interior doors. In 2017, he was selling a new economy collection, and sold 2,150 units of goods this year, making a profit of 4 million 730 thousand.

We obtained this figure by multiplying the cost of the door, 2,200 rubles, by the number of units sold.

As you can see, it is very easy to calculate annual revenue, while the indicator remains one of the most important in the process of analyzing the success of a company. The amount of income is influenced by various factors. Not only how actively the company sells the product, but also its position in the market, the level of demand and the economic situation as a whole.

Any accountant can calculate the amount of annual revenue using the formula:

B = Q x P, Where

• Q – quantity of goods.
• P – price.

If income is calculated over several years, then we should talk about the average annual parameter. The most popular and sought-after value remains annual revenue. It is analyzed and compared to understand where an individual company should move next.

An enterprise strategy always includes information about the planned volume of production and sales, as well as the potential price.

These indicators are based on an analysis of past periods and taking into account all external factors. The general indicator in the strategy is revenue.

What it is

Revenue is the primary indicator of income from the main activities of the enterprise. It is the revenue that becomes the basis for what follows.

It does not take into account any expenses and income from non-operating activities. But it is revenue that is planned first and foremost, and then the indicator is used to create more specific plans.

How is revenue calculated?

The algorithm for calculating revenue is quite simple - you need to take data on sales volumes and unit price. When the selling price changes, revenue is calculated for each delta.

Also, the indicator is calculated separately for each category of goods and then the resulting numbers are summed up. It must be remembered that other income is not reflected in the total revenue.

Calculation formula

IN general view The formula for calculating revenue is as follows:

TR = P * Q, Where

TR (total revenue) – revenue, rub.;

P (price) – price, rub.;

Q—sales volume, units/pcs.

The primary data for calculating revenue is information for internal use and is not reflected in financial statements. The indicator is usually calculated based on the results of the period - once a quarter and once a year.

Calculation example

The company Ekran LLC is engaged in the production of drills for various milling machines. Internal reporting for Last year contains the following data:

In this case, the revenue is:

TR = P * Q = 300 * 100 + 100 * 500 + 200 * 200 = 120,000 rubles

Revenue from a set of products allows you to manage your assortment. In this case, it is obvious that if there is demand, the enterprise must increase the volume of production and sales of drill 2 and reduce the volume of drill 1. When making such a decision, it is also necessary to evaluate the costs of production of each type of product.

The difference between revenue and profit

Just a few years ago, revenue was clearly classified as a type of profit and was reflected in the income statement. There is currently controversy surrounding this issue, but formally revenue is still considered a type of profit.

But now the document is called “Income Statement”. It is more correct to call revenue income from core activities.

The revenue indicator is important for the enterprise, because... is the basis for developing a development strategy and calculating all types of profit. Revenue reflects how much an enterprise can receive by selling a certain volume of manufactured products.

Video - income statement starts with revenue: