Revenue is a key concept in the activities of the enterprise. The difference between revenue and income How revenue differs from sales profit

If you are an active investor who independently researches a company, then you cannot but be interested in such concepts as its income, profit and revenue. But are they synonyms? Can revenue be greater than income? Why can't all expenses be considered expenses? Is it possible to legally reduce profits and why do it? You will find answers to all these questions in this article.

Revenue and income

Income is an inflow of assets or a reduction in accounts payable resulting in an increase in capital. The exception is the contributions of the owners.

According to PBU 9/99 "Income of the organization", two large groups of income can be distinguished:

• Income from the main activity (revenue);
• Other income.

There is no definition of the concept of "revenue" in legislative acts. But PBU 9/99 provides examples of receipts that are revenue for various organizations. Based on this list, the following definition can be given.

Revenue is the total amount of claims made against customers for sold products(or services rendered). At the same time, the sale of these products should be the main activity of the company.

Example. Consider the operation of a retail grocery store.

Revenue is income from the sale of food products.

Income that is not revenue:

• from renting free retail space;
• for the sale of unused warehouse and commercial equipment;
• interest on loans issued to third parties;
• Supplier penalties for breach of contract.

Summarize. Income is a broader concept. In addition to revenue, it includes other income. This means that revenue will always be greater than or equal to revenue.

Profit

If revenue and income reflect the receipt of funds (or a decrease in debt), then profit shows financial results companies. In a simplified form, its calculation is as follows:

Profit = Income - Expenses

But in practice, everything is somewhat more complicated.

Why not all expenses can be recognized as expenses

By Russian laws, all companies are required to pay income tax: common system taxation rate is 20%. Naturally, few people want to give the state a fifth of their profits - and here the business owner is tempted to write off the maximum possible amount as an expense. For example, write yourself a large cash reward.

To prevent such abuses from occurring, the tax code clearly defines what can be attributed to expenses. In the example with remuneration, it can be attributed to expenses only if the possibility of its accrual is specified in employment contract, the provision on bonuses or in other local regulations. Otherwise, you will also have to pay tax on this amount.

General requirements to the costs are given in Art. 252 of the Tax Code of the Russian Federation. There are two of them:

1. Expenses must be justified, i.e. All expenses must be economically justified. Of course, the business owner can spend money as he wants, but the tax authorities will not deduct such expenses, and tax will be charged on them.
2. Expenses must be documented, and their price must correspond to the market. For example, if a company paid 300 thousand rubles for the repair of the premises, and the average price of such repairs is 100 thousand, then the tax office may have questions.

What is not considered an expense

Article 270 of the Tax Code of the Russian Federation contains a list of expenses that are not taken into account when calculating taxable profit. It does not prohibit making these expenses. However, they will not affect the amount of tax. Such expenses include, for example:

• Dividends paid to shareholders.
• Penalties transferred to the budget.
• Acquisition of shares in other companies.
• Free transfer of property.
• Expenses for the creation or acquisition of property subject to depreciation.
• Contributions to public organizations and trade unions.
• Financial assistance and other remuneration of employees not provided for in employment contracts.

How to legally reduce profits

It would seem that the legislation clearly defines the procedure for recognizing income and expenses. However, there is still room for maneuver, and tax optimization can help the company save significant amounts. Here is just one example of legal optimization.

The organization decides to reconstruct the production building. To do this, a contract is concluded with a third-party company for reconstruction. As a result of the work performed, an object is obtained. Accordingly, expenses cannot be written off in the current period, since the cost of fixed assets is written off by accruing depreciation. It turns out that the organization spent a lot of money, but on paper it still remained profitable, because the write-off of these costs will stretch for many years.

The organization can conclude two contracts with the contractor:

1. For reconstruction. This will include the creation of a project, the dismantling of walls and ceilings, construction works, redevelopment, etc.
2. For repairs. This contract includes painting walls, replacing floors, plumbing, windows, installing equipment, etc.

Nothing can be done about the reconstruction: these costs will have to be written off through depreciation. But the organization will be able to take into account the repair costs immediately after they are made. This will reduce income tax in the current period and leave the saved money in circulation (which actually means receiving an interest-free loan from the state).

And this is not how you can do it

The example from the previous chapter does not violate any law of the Russian Federation and is completely legal. For clarity, we will give an example of an illegal reduction in taxable income.

A manufacturing organization creates its subsidiary in an offshore zone with a zero income tax rate. All manufactured products are sold at cost to their "daughter". That, in turn, is engaged in the implementation of the final consumer. As a result, a company located in the Russian Federation, according to the documents, barely makes ends meet, and a small offshore office makes a huge profit.

Naturally, this method is illegal. Yes, the company has every right to sell its products to anyone, but the tax authorities will very quickly become interested in pricing methods. If the sale price turns out to be significantly lower than the market price, and if the connection between these two companies is revealed, the organizer of such a scheme will be in serious trouble. But it's no secret that connections at the top play an important role in Russian realities.

An example of calculating indicators

Consider, as an example, the reporting of the Magnitogorsk Iron and Steel Works (MMK). The screenshot shows a fragment of his reporting for the first quarter of 2019. Negative values ​​are given in parentheses.

Revenue - $ 1836 million.

Revenue – $1844 million . This included:

• revenue - $ 1836 million.
• other operating income – $3 million.
• financial income - $ 5 million.

Expenses - $1564 million . These include:

• The cost price is $1321 million.
• General and administrative expenses – $51 million
• Selling expenses – $141 million
• Change in expected credit losses – $6 million
• Financial expenses - $7 million.
• Impairment losses and allowance for land reclamation – $2 million.
• Foreign exchange expense – $14 million.
• Other expenses - $22 million.

Taxable income - $280 million ($1,844 million - $1,564 million)

This taxable income was subject to an income tax of $55 million.

Profit for the period was $225 million.

Summing up

Revenue are income from the main activity of the company.

Income is the total income. Thus, income is a broader concept. It can be equal to revenue or be greater than it.

In these definitions, receipts mean not only the receipt of funds, but also the emergence of receivables or a reduction in accounts payable.

Profit is the difference between income and expenses for a certain period. It shows the results of the business and can be both positive and negative (loss).

For a novice investor, it is important not to confuse revenue and profit: the former may well be much larger. In our example, revenue exceeds profit by more than 8 times.

The terms revenue and profit are considered by many to be equivalent, but the difference between them is significant. Biznes.ru explains how profit differs from revenue and why it is important not to confuse one with the other.

Financial parameters: profit and revenue

The commonality of terms lies in the fact that revenue and profit are indicators characterizing the financial condition of the company. However, their meaning is different and they occupy different positions in the structure of the totals. economic activity.

The fundamental difference between profit and revenue is the reflection of economic benefits:

revenue shows the volume of sales;

profit accumulates the overall financial result of the company's operation from all sources of income minus total costs;

high revenue does not mean high profitability of the business.

Correct display of profit and revenue is an important point in the company's accounting. If you do not have time to understand the intricacies of financial document management, entrust it to outsourcing professionals. Glavbukh Assistant specialists will free you from the need to prepare paperwork, calculate profits and report to the tax office.

Revenue generation

The purpose of the indicator is determined from the name itself. The parameter consists of the proceeds from the provision of services, the performance of work, the sale of goods for activities prescribed in the charter as the main one. Other receipts are classified as income.

According to what criteria the revenue and profit of the enterprise are recognized in accounting, it is regulated by the Accounting Regulation PBU 9/99 (Order of the Ministry of Finance of the Russian Federation No. 32n). Revenue is recognized if:

the company has a documented right to the proceeds, and the rights to the product itself are transferred to the counterparty (the service has been rendered);

you can determine the amount to be received and the costs of operations;

the economic benefit of the company increases - the company receives an asset (money, property) or is sure of receiving them.

The proceeds from operating activities are formed from sales and receivables. Gross revenue is income from the sale of goods or services, taking into account taxes payable (VAT, excises). After they are retained, net revenue is formed - a parameter that is necessary to determine profit and profitability.

Some entrepreneurs mistakenly believe that the proceeds and profit from the sale are considered according to receipts to the current account and to the cashier. In fact, for the shipped goods, services rendered, funds can be received in installments, on terms of deferred payment. In this case, the resulting receivables are also included in revenue for accounting purposes. Organizations using the simplified accounting scheme are allowed to recognize revenue based on financial receipts, if the ownership of the goods has not been transferred to the counterparty.

Regardless of the accounting scheme used, simplified or standard, it is better for a qualified specialist to handle the documents in the company. This way you will avoid confusion arising from errors in reporting profits. We advise you to pay attention to the service Glavbukh Assistant: with its help it is easy to be convinced of the benefits of outsourcing accounting. It is convenient, reliable and economical.

The indicator is calculated for the company as a whole and for the types of activity: core, financial and investment. According to clause 18.1 of PBU 9/99, revenue over 5% of all income is reflected separately by type. Accounting is kept on credit account 90 "Sales" on the corresponding sub-account. It is important that the indicator of proceeds cannot be negative - this is another criterion for the difference between profit and revenue.

On our portal there is additional material by which mathematical expressions revenue is calculated. Examples on specific numbers will help you independently cope with the definition of this financial parameter: "Revenue - formulas and application".

Definition of profit, types

Unlike proceeds from the sale of funds, profit is not income received from activities, but an increase, an increase in the capital of the company. Profit from sales is the difference between sales revenue and the cost of creating a product. The balance can be positive or negative, in rare cases, in the absence of costs, coincide with the amount of revenue.

The “profit” parameter has many meanings, more often in small businesses they operate with such terms:

Gross - the cost of the workflow is included in the calculation. If the company operates in several directions, the gross profit is determined by the types of activity. Parameter used for analysis economic efficiency(profitability) of general activities and in the context of areas;

Net or balance - all other costs, taxes, fines, interest on loans, etc. are taken into account. This is the financial result of the reporting period according to accounting data.

The result of activity positive (profit) or negative (loss) for the reporting period is reflected on account 90 on the sub-account "Profit/loss from sales". The financial result for the year is summarized on account 99 “Profit and Loss”.

How to correctly reflect the indicator in official reporting? Biznes.ru prepared to help the entrepreneur.

Revenue and profit of the company: the use of terms

Let's compare economic parameters: profit and revenue, what is the difference?

Even if you are not going to deal with accounting and tax calculation on your own, understanding the essence of these criteria is necessary for competent communication with tax authorities, partners, as well as for assessing the profitability and success of a business. So, as was said, a large amount of funds received from sales is not tantamount to commercial success. At the same time, entrepreneurs usually seek to reduce the profit rate in order to reduce the tax burden, and increase revenue as a positive characteristic of the image, the significance of the company in the eyes of partners.

Many people think that "profit" and "revenue" is the same thing. However, there are many differences between these two financial concepts. Both "profit" and "revenue" are financial and business terms. Their meanings are close to each other because they are often used in the same context. Both of these terms are used in accounting and economic disciplines.

Revenue is the total amount of money that a business receives as a result of its activities, such as the sale of a product or service, but can also be received indirectly. A business can receive indirect income by investing money in something.

Profit

On the other hand, profit or net income is the money that remains in the business after deducting all costs and expenses from the revenue. Litigation and expenses include operating costs (salary, maintenance of equipment, safety, raw materials costs and many others), depreciation and capital. Costs can be divided into different types (usually in tandem) and include fixed and variable costs, direct and indirect costs, etc. Profits can be classified as positive or negative (plus or minus).

The difference between revenue and profit

For an ordinary employee, profit and revenue are one and the same. If an employee received a salary, this is his profit and revenue, because all taxes and pension payments are automatically deducted from wages employees, so what the employee receives in his hands is the balance after all deductions.

They are also calculated differently. Profit is calculated by subtracting costs and expenses from total revenue. Revenue is calculated by multiplying the price by the number of units sold.

In economics, profit and revenue have a broader meaning. Economics looks at the profits and income of an entire industry or an entire country. This perspective allows a country or industry to evaluate growth or decline.

basic information

1. “Profit” and “revenue” are concepts used in business, finance and economics, it is money or its equivalent received by an economic entity (business, companies or governments) or an individual (employees).
2. Both terms are used for different levels: personal, business and national. Accounting generally uses the personal and business levels to calculate profits and revenues. The economy counts nationally or globally.
3. “Revenue” is generated after a business produces and sells goods and services. Revenue is calculated by multiplying the price by the number of units sold. Profit is calculated after all deductions and expenses are calculated.
4. Profit and revenue are constantly involved in the production cycle. "Revenue" is the starting point for profit, and profit provides cash for the next cycle of production and increase in revenue.

Income – cash or material values ​​received by the company as a result of economic activity (production and sale of goods and services) for a certain period of time.

Firm income- an increase in economic benefits as a result of the receipt of assets (cash, other property) and (or) the repayment of obligations, leading to an increase in the capital of this organization, with the exception of contributions from participants (property owners). Income from ordinary activities is revenue from the sale of goods and services.

There are 3 forms of cash income of the enterprise:

wages as the income of an employee;

profit- as an entrepreneur's income;

percent as income on money capital (borrowed or granted credit).

Each of these forms of income rewards the productive efforts of the corresponding economic entity, ensures the reproduction of the system of economic needs and interests, and together they act in market economy a material source, an incentive economic motive for the effective use of abilities for work, means of production (fixed capital), money capital.

Income is a monetary value of the performance of a firm (or an individual individual) in the form of a sum of money coming into its direct disposal. Income reflects the economic performance of the company's economic activities and is the main source of financial resources. The income of the company consists of two parts:

from proceeds from the sale of products (goods or services). It represents a certain amount of cash from the main activities of the company, the end result of which is manufactured and sold products or services rendered (work performed), paid by the buyer or customer;

from non-operating income , which are side financial receipts of the firm. They are not directly related to the main production activity. Their sources are: dividends on invested shares or acquired shares and other securities; fines received from counterparties; penalties, forfeits, interest for keeping money in a bank and other income.

Distinguish general,average and ultimate income.

Total (cumulative, or gross) income - is the total amount of money received from the sale of a certain amount of goods. It is determined by multiplying the price of a product by the number of units sold.

Average income - this is the proceeds from the sale of a unit of production, i.e., the gross income per unit of products sold. It acts as the price per unit for the buyer and as income per unit for the seller. Average income is the quotient of total income divided by the number of products sold. At a constant price, the average income is equal to the selling price.

Marginal (additional) income is the additional income to the total income of the firm, received from the production and sale of an additional unit of goods. Marginal revenue is defined as the difference between the total revenue from the sale of n+1 units of a product and the total revenue from the sale of n products.

Marginal revenue makes it possible to judge the efficiency of production, as it shows the change in income as a result of an increase in output and sales of products by an additional unit. It also allows you to assess the possibility of payback for each additional unit of output. In combination with the indicator of marginal cost, it serves as a cost guide for the possibility and expediency of expanding the volume of production of a given firm.

Looking at the total, average, and marginal revenues of a firm tells us nothing about the profits the firm is hoping for. Meanwhile, any firm not only expects to make a profit, but also seeks it. maximize. But profit maximization is not based on the principle "the greater the output, the greater the profit." To maximize profits, a firm must produce and sell optimum production volume.

Profit - a positive difference between total income (which includes proceeds from the sale of goods and services, received fines and compensation, interest income, etc.) and the costs of production or acquisition, storage, transportation, marketing of goods and services.

The profit of any firm can be calculated on the basis of two indicators:

1) total income (total revenue) received by the firm from the sale of its products;

2) total costs , which the company bears in the process of production of these products.

Profit = Revenue − Costs (in monetary terms).

According to the volume of distribution costs, there are:

accounting profit - the difference between the amount of income taken into account and what is considered expenses (current costs); then. it is equal to the total revenue minus external (explicit, actual) costs;

economic profit - a more informal indicator - is the remainder of total income after deducting all (including opportunity) costs (external, internal and entrepreneur's normal profit– a minimum wage for remuneration of entrepreneurial functions as an element of internal costs along with internal rent and internal wages); the difference between accounting profit and additional costs, such as: uncompensated own costs of the entrepreneur, not included in the cost, sometimes even “lost profits”, the cost of “stimulating” officials in corruption conditions, additional bonuses to employees, etc.

They also count gross (balance sheet, total) profit and clean profit - remaining after payment of taxes and deductions from gross profit. Economic profit is also sometimes referred to as clean , meaning by this income minus absolutely all costs.

Economic profit differs from accounting profit in that its calculation takes into account the cost of using all long-term and other interest-bearing liabilities, and not just the cost of paying interest on borrowed funds, as is the case when calculating accounting profit. That is, accounting profit exceeds economic profit by the value of opportunity costs or the costs of rejected opportunities.

Economic profit makes it possible to compare the profitability of the invested capital of an enterprise with the minimum return required to justify the expectations of investors, and also to express the resulting difference in monetary units.

Economic profit serves as a criterion for the efficiency of resource use. Its positive value shows that the company has earned more than is required to cover the cost of the resources used, therefore, additional value has been created for investors, founders. In the case of the opposite situation, this indicates that the organization was unable to cover the cost of using the attracted resources. The lack of economic profit can cause capital outflow from the enterprise, and the option of leaving the enterprise from the market is also being considered.

The essence of profit is most fully manifested in its functions .

Profit accounting function comp. that profit is the most important criterion for the effectiveness of a firm's entrepreneurial activity.

Incentive profit function is that profit is a powerful generator of the economy, because the increase in profit depends on the number of products produced, the technical organization of production, sales volume, and the rate of capital turnover.

essence distribution function of profit consists in the fact that it serves as a source of accumulation and development of production, a source of material incentives for workers. In a market economy, profit is the basis for the development of an entrepreneurial firm.

The amount of profit characterizes the success of the entrepreneurial activity, making a profit is usually the main goal and driving motive of all types of entrepreneurship.

Profit is a source of financing for an enterprise, as well as a source of formation of budgets of different levels and a condition for the company to engage in charity work.

Profit is calculated as the difference between income and production costs, where income is the indicator financial activities enterprise, which reflects all financial receipts of the company, including manufactured and sold products paid for by the customer.

Costs are the costs of producing and selling products.

The profit indicator consists of three components:

• profit from the sale of products is calculated as the difference between the funds received from the sale of goods (revenue) and the full cost of production;
• profit from the sale of various property and material assets;
• profit from non-realization of operations - funds received from the non-core activities of the company (securities, dividends, proceeds from the lease of property and other activities).

If the profit of the enterprise is reduced to zero, then the result of economic activity are costs.

Marginal profit is obtained by selling an additional copy of the product.

A high rate of such profit may not always show a really high profit.

Profit can be effectively managed only when not only accounting for funds by increasing the total cost of sales with a stable level of costs, but the maximum amount of profit that can be achieved under the prevailing conditions.

It should be remembered that setting a low price can undermine the profitability of a product or service. It is recommended to practice lowering the price policy for a short time and in a small amount of goods, otherwise in great demand the profitability of the enterprise as a whole will fall on such a product.

In order for a product or service not to fall in price, it is recommended to offer customers simpler analogues. Such a step helps to maintain the price distance and the attractiveness of products.

Types of profit

Profit is classified depending on the conditions of its formation. There are several types of profit.

Depending on the distribution costs:

• accounting- profit received as the difference between the income from the sale and expenses (costs);
• economic- profit received as the difference between accounting profit and additional costs (including costs that are not taken into account in the cost of production).

According to the final result of the company's economic activity:

• normative(provided) - the minimum profit that allows you to ensure financial stability enterprises;
• maximum possible(or the minimum allowable) - the profit received when minimal cost and maximum revenue
• unreceived(lost profit) or loss - income that is not received due to violations of an obligation by the other party.

By the nature of taxation:

taxable- profit, which is subject to taxation in accordance with the law, is the difference between the total income from the sale of goods and non-sales operations, excluding losses of the previous period.

Tax free income- income received as a result of operations regulated by Article 251 of the Tax Code of the Russian Federation.

What is income?

Income represents the revenue received for a certain period as a result of the sale of goods and services, excluding material costs. Taxes are also deducted from this amount in accordance with the law.

Under the material costs refers to the amount spent on the production of products. Depreciation of fixed assets, social contributions and other costs, with the exception of wages, are also equated to such costs.

The constituent elements of income are profits and labor costs. The amount of income directly depends on market value product and market conditions.

Income does not include receipts from individuals and legal entities. If the income is taxable, then the amount that remains after paying the tax is divided into the following components:

• consumption funds - costs for the social sphere (remuneration of employees);
• investment income - the amount received as a result of investment activities;
• insurance income - the cost of insurance premiums.

Income is classified according to costs.

Marginal revenue is calculated as the amount by which the total income enterprises after the sale of one unit of goods or services.

The resulting figure reflects the payback of the enterprise.

On its basis, in combination with marginal cost, management decides whether it is rational to expand the firm.

Average revenue shows the level of income received from the sale of one unit of goods. As a rule, this amount is equal to the price of the product. By controlling pricing, a company can regulate its own revenues.

Gross income is the result of a firm's economic activities, calculated as the difference between the cost of goods or services sold and the total cost of production.

What is revenue?

Revenue is the total amount of money received as a result of the sale of goods and services for a certain period of time.

The total revenue consists of the amounts received by the enterprise as a result of its core activities (sales of goods or services), investment activities (sales of non-current assets and securities) and financial activities of the enterprise.

Sales revenue is cash received from the sale of goods and services. It is divided into two types:

• gross proceeds- represents the total amount of proceeds from the sale of goods, services, income from non-sales operations and property;
• net proceeds- cash received after deducting VAT, taxes, discounts and the cost of returned products from gross revenue. It is from these funds that the calculation of dividends and amounts for the development of the enterprise is then carried out.

EBIT profit

Earnings Before Interest and Taxes (EBIT) is an intermediate value between gross and net income, it is income from which interest and taxes have not yet been deducted.

This is also referred to as operating income.

But it's not right. Unlike operating income, EBIT also includes non-operating income. If there are no non-operating income and expenses in EBIT, the indicator will be equal to operating profit.

EBIT is calculated from the income statement and is the sum of profit or loss before taxes and interest payable. A positive EBIT is considered normal.

EBITDA profit

Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) depends on the depreciation method. This is the amount of earnings before interest, taxes and depreciation, which shows cash inflows.

Based on EBITDA, the company's debt burden is calculated. To do this, the total liabilities (long-term and short-term debt) are divided by the nominal value of EBITDA.

The value of total liabilities is available for calculations from the Liabilities section of the balance sheet. The normal value of the indicator should not exceed 3. If the value is 4 or more, then the company has a strong debt burden.

When calculating the debt burden indicator, it is necessary to take into account the degree of repayment of receivables. If the receivables are not repaid by buyers, the company loses its solvency, but this fact is not reflected in the indicator itself.

Video on the topic: “Profit and gross income, what is the difference?”

Revenue, income and profit: what is what

It is difficult to assess the effectiveness of an enterprise, the criteria are chosen differently in each case. But always, both in planning and in the analysis of current activities, financial indicators are used. Among the mandatory - revenue, income and net profit. These concepts are often confused.

Revenue

Revenue refers to the funds received for the sale of products or services rendered. There are 2 ways to report revenue:

• cash method;
• revenue accounting.

The cash method assumes that only the money actually received is included in revenue. It shows how much the company already manages. But revenue also includes advances for which the company has not yet fulfilled its obligations.

In accrual accounting, revenue is recorded at the time the goods are shipped or the service is provided. In this case, the indicator shows the volume of sales, but does not take into account the fact that the buyer may be dishonest and will not pay for the purchase.

From the point of view of accounting, the company's revenue is divided into 2 types:

• gross;
• clean.

Gross revenue - payment received for goods sold or a service. Net revenue is gross revenue minus excises, taxes, fees and duties directly included in the cost of goods. It is reflected in a mandatory document - a profit and loss statement.

The revenue indicator does not reflect the efficiency of the company's work, because revenue can also be found in unprofitable enterprises, but it characterizes the company's market share. To calculate this share, you need to know the sales volumes in the industry for the reporting period.

Income

Income includes all receipts, not just those related to the main activities of the company. This includes interest on deposits or fines and penalties charged.

If the revenue is strictly planned, then the income is unplanned, for example, if the partner violated the terms of the contract and paid a penalty.

Profit

Profit is a basic indicator for assessing the performance of an enterprise. It is she who is primarily interested in shareholders, because dividends are paid out of profits.

Gross and net

Allocate gross and net profit.

Gross profit shows the overall performance of the enterprise. To calculate it, you need to subtract expenses from income for a certain period. From this "pie" the banks and the state will also want their share. Therefore, shareholders of the company pay attention to net profit.

Net profit is what the company works for. It is not necessarily paid in full to shareholders. To calculate net profit, mandatory payments are subtracted from gross profit:

• taxes, fees and fines (that part of the “total” profit that is due to the state);
• interest payments (goes to financial institutions that issued a loan to the company).

The remaining money is called retained earnings. They are reinvested, that is, directed to the benefit of the company. This is an alternative to a bank loan or other external financing. How much money to give in the form of dividends, and how much to spend on development, is decided by the meeting of shareholders.

If the value of net profit is negative, it is called uncovered loss. Until the profit covers the losses, the company does not pay income tax.

EBITDA and EBIT

2 more profit indicators that are not indicated in the financial statements, but are used in financial modeling, when evaluating projects, and are of interest to investors: EBIT - earnings before interest and taxes, and EBITDA - earnings before interest, taxes and depreciation.

The EBITDA parameter was originally devised to calculate whether a firm can repay debts. This parameter, together with the net income indicator, reflects the amount of payments that the firm will make in the term period.

It illustrates the income that the company receives in the current period. It is easy to carry over to future periods, so it is used to assess the return on investment and the possibility of self-financing.

EBITDA allows companies to be compared regardless of type and accounting policy. The comparison is not affected by the size of the investment, the credit burden and the taxation regime.

The main disadvantage of the EBITDA parameter is that it does not take into account that the company will need money to replace equipment due to depreciation. Enterprises that have a large share of costs spent on depreciation (heavy industry, extraction of natural raw materials, construction) try to demonstrate this parameter more often, because their predicted profit is more attractive to investors. Therefore, investors consider EBITDA together with EBIT.

Another disadvantage of EBITDA and EBIT is that the calculation takes into account not only the results of core activities, but also one-time receipts. This makes it difficult to analyze the company. To get rid of such “information noise”, other income is deducted in the calculations or operating profit is used. This is how the firm's ability to generate cash flow is predicted. But the problem is that these additional transactions can cause financial manipulation, and the figures will eventually turn out to be too high or too low.

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 revenue of the enterprise;
2. What is the income and profit of the company formed 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 performance 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 real money received by the seller for the provision of services or the sale of goods. That is, when providing installments, the entrepreneur will receive proceeds only after the actual payment.
2. Another way of accounting is accrual. Revenue from it is recognized at the time the contract is signed or the buyer receives the goods, even if the actual payment occurs later. However, advance payments are not included in such revenue.

Types of revenue

Revenue in an organization is:

1. Gross- the total payment received for the work (or product).
2. Pure- applied in From gross revenue, indirect taxes (), duties, and so on are deducted.

The company's total revenue is made up of:

• Proceeds from core activities;
• Investment proceeds (sales of securities);
• Financial earnings.

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 the enterprise by increasing the capital of the company by the inflow of assets.

A detailed interpretation of the ways of generating income and their classification are contained in the Accounting Regulation "Income of organizations".

If cash proceeds are 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, receiving interest on a deposit, and so on).

In practice, enterprises often carry out diverse activities and, accordingly, have various channels for generating income.

Income - the overall benefit of the company, the result of its work. This is the amount that increases the capital of the organization.

Sometimes income is equal in size net proceeds organizations, 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 who is not engaged in business. For example: scholarship, pension, salary.

Receipt of funds outside the scope of doing business will be referred to as income.

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

Revenue	Income
The result of the main activity	The result of both main and auxiliary activities (sale of shares, interest on a bank deposit)
Occurs only as a result of commercial activities	Allowed even for unemployed citizens (allowances, scholarships)
Calculated from the funds received as a result of the work of the company	Equal to revenue minus expenses
Cannot be less than zero	Let's go 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 be safely put in 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.

Science economics identifies several main sources of profit:

• Innovative work of the company;
• Entrepreneur's skills to orient in the economic situation;
• Application and capital in production;
• The company's monopoly in the market.

Types of profit

Profit is divided into categories:

1. Accounting. Used in bookkeeping. On its basis, accounting reports are formed, taxes are calculated. Explicit, reasonable costs are subtracted from total revenue to determine accounting profit.
2. Economic (surplus profit). A more objective indicator of profit, since when calculating it, all economic costs incurred in the work process are taken into account.
3. Arithmetic. Gross income minus miscellaneous costs.
4. Normal. Necessary income in the work of the company. Its value depends on the lost profit.
5. Household. Equal to the sum of normal and economic profits. 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 the costs associated with the workflow are taken into account, in the second, all possible costs are taken into account.

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 enterprise operates in several directions.

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

Gross profit, from which all costs (credit interest, and so on) have been subtracted, forms net profit. From it are accrued to shareholders and owners of the enterprise. And it is the net profit that is reflected in and is the main indicator of the business.

EBIT and EBITDA

Sometimes, instead of the understandable word "profit", entrepreneurs meet such mysterious reductions as EBIT or EBITDA. They are used to evaluate the performance of a business when the compared objects operate in different countries or are subject to different taxes. Otherwise, these indicators are also called cleared profit.

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

EBITDA is nothing more than profit before taxes, interest and depreciation. It is used exclusively to evaluate the business, its characteristics. It is not used in domestic accounting. for commercial equipment.

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

Both income and profit can be predicted if you take into account revenue for past periods of work, fixed and variable costs.

The differences between profit and revenue are as follows:

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

Activity commercial organization can characterize its revenue and sales. What is their specificity?

What is business revenue?

Under the revenue of a commercial enterprise, it is customary to understand the amount (or a list of property in value terms) that it received as a result of sales or the provision of services within a certain period of time. Based on the difference between revenue and expenses (and sometimes only on the basis of the value of the first indicator), the amount of taxes that the company must pay to the state is determined. An exception is the taxation mechanism, in which the corresponding cash receipts to the company's account are not taken into account: such schemes should include, for example, the UTII system provided for by Russian legislation.

It should be noted that according to some methods financial analysis revenue as an economically significant indicator may be reduced by taxes (in this case it is referred to as "net revenue").

A common approach is to classify revenue as:

• on cash receipts from the main type of commercial activity of the firm;
• on proceeds from investments (for example, in the form of proceeds from the sale of securities);
• on revenue generated as a result of changes in exchange rates (for example, when exporting goods).

All three types of financial receipts are combined into total revenue. But, as a rule, the effectiveness of a business is assessed on the basis of those incomes that are associated with the main activities of the enterprise.

The company's revenue can be calculated in two ways: cash and accruals. In the first case, it is fixed upon the fact that the enterprise accepts funds to the current account or to the cashier. In the second, it is calculated when the buyer of the goods or the consumer of services has obligations confirmed by the contract or law related to payment for the supplied products or services.

The main condition for obtaining revenue from the main activity, regardless of the specific method of its calculation, is the sale of goods or services. Let's consider its specifics in more detail.

What is an implementation?

This term corresponds to the direction of activity of a commercial enterprise, which is associated with the supply of goods or services produced or resold by it to the market. In fact, we are talking about meeting the demand formed by consumers. At the same time, the interaction between them and suppliers within the framework of the implementation may involve not only the actual purchase and sale of goods or services, but also, for example, the organization of their delivery (providing conditions for the provision, if we are talking about services), storage, promotion through available channels sales, etc.

The end result of the sale of goods or services is the receipt by the authorized person of payment for the deliveries made, which, in fact, generates revenue for the main type of activity (or, if we are talking about the cash method of fixing income, this will be the acceptance by the buyer of obligations to pay for the goods or services) .


It may be noted that, in accordance with the legislation of the Russian Federation, they cannot be recognized as a sale, in particular:

• transactions related to currency circulation;
• transfer of the company's resources to its legal successors as part of the reorganization of an economic entity;
• transfer of the company's resources in favor of the NPO for the implementation of non-commercial activities;
• transfer of investment property under a partnership agreement, as well as to mutual funds established in cooperatives;
• transfer of property within the framework of concession legal relations;
• transfer of resources economic society to one of the participants upon his exit from the business;
• transfer of apartments to citizens in the framework of privatization;
• operations of seizure of property, handling of ownerless things.

Comparison

There is more than one difference between revenue and sales. This is due to the fact that these terms, although they are used, as a rule, in the same context, nevertheless mean different things.

Revenue- is the cash flow received by the organization as a result of the implementation of commercial activities. At the same time, it is not always related to sales. Revenue, as we noted at the beginning of the article, can be, in particular, investment.

Implementation- this is the part of commercial activity that is most significant in terms of the company's acquisition of revenue from the main type of business. It is almost always associated with the sale of goods and services.

Having determined what the difference between revenue and sales is in principle, we will reflect the conclusions in a small table.

Financial relations permeate the life of society, and become successful person today is impossible without understanding the essence of the most important economic categories. The concepts of "revenue" and "income" are often confused even by novice businessmen, since in the mass consciousness they are synonymous. In fact, it is very important to understand the difference between them, which will allow you to analyze any economic information more deeply.

Revenue- the amount of money received in the sale of goods or services. It can also be called "dirty" money, since costs are not taken into account when calculating the value. Revenue is always either positive or at zero, but can never be negative. It is determined either on a cash basis (with actual receipt of funds), or on an accrual basis (at the time of shipment of goods or provision of services, including with deferred payment).

Income- funds received by the subject of economic legal relations for a certain period of time. They are formed at the expense of the main activity of a legal or natural person, as well as with the help of attracted investments. The concept of "income" largely intersects with the concept of "profit" and is defined by "pure money": revenue minus expenses. This is a purely economic category that reflects the current financial condition of a legal entity or individual.

Comparison

So, revenue is a positive value, which can be equal to zero only in rare cases. Receipts are added together, forming a certain amount. Income can be negative when the revenue received does not cover the cost of obtaining it. Revenue is generated from the main activity of the enterprise: the production (sale) of products or the provision of services. Income can be received at the expense of the company's assets (renting out space, deposit, attraction of investments), as well as at the expense of the main activity (sale of goods and services).

At the same time, revenue is an attribute of the subject leading active work in the economic sector. A person who, for one reason or another, is not engaged in socially useful activities (student, disabled person, pensioner, unemployed) can have income. These funds are generally not subject to income tax. In rare cases, revenue may equal profit. This happens in cases where, upon receipt of it, there is no expenditure part (provision of a certain list of services). However, most often it is revenue that exceeds income in terms of volume.

Findings site

1. Formation. The organization's revenue appears as a result of the sale of goods and services, and income also comes from the sale of shares, attracting investments, receiving interest on funds placed on a deposit account.
2. Way of origin. Revenue can only be held by an individual or legal entity conducting economic activity. Income can be from the unemployed and the student in the form of scholarships, financial assistance, benefits.
3. Calculus. Revenue is cash received from the sale of goods and services. Expenses are subtracted from revenue to calculate income.
4. Meaning. Revenue is either zero or positive. Income can be negative if the cost of obtaining revenue exceeds the profit received.
5. Ratio. Revenue is always greater than income, and only in rare cases can they be equal.