Operating profit

Quite often when analyzing the efficiency of any enterprise using an indicator such as "operating profit".In this article, we consider in more detail the figure, as well as the procedure of calculation.Operating profit - it is an important economic indicator, equal to the volume now earned profits before tax and possible interest on loans.Operating profit is calculated on the basis of the data, which are reflected in the financial statements of the company and serves as an indicator of investment attractiveness of any company, as it allows us to assess the profitability of the main activities of the company, that is, profits from manufacturing (execution of any works or services).The formula for the calculation of this indicator can be presented in this form:

OP = SP + HSD - GNP + CR - BH + UP - PP where

OP - the size of the operating profits;

state of emergency - the net profit;

RNP - various expenses related to the income tax;

GNP - Recovery of income taxes;

CR - extraordinary expenses;

BH - extraordinary income;

UP - interest paid;

Mon - interest received.

size of the profit or loss from operating activities is calculated in several stages.

The first stage is calculated net operating income from the sale of goods through the adjustment of revenues to the size of the indirect taxes and other deductions from income.

In the second phase of the earlier results deduct the cost of goods sold.At the end, the gross gain or loss from the sale of goods.

The third phase is adjusted gross profit (increase or decrease) in the value of other operating income or loss, which are obtained from the sale of other current assets (excluding financial investments), exchange rate differences, lease assets received fines, penalties, etc.

The fourth step is calculated operating profit (or loss) as the difference between the proceeds received in the third stage result and the amount of administrative costs and the cost of sales.

Formation of operating income is affected by various external and internal factors.External factors do not depend on the work of the company, but, nevertheless, have a significant impact on the amount of income, and therefore must always be taken into account.These include:

  • current situation;
  • price level now used raw materials;
  • depreciation rates;
  • natural conditions;
  • state regulation of tariffs, prices, interest rates, penalties, taxes and fees, and others;
  • political situation in the country, etc.

But on the internal factors the company can and should have an impact if it wants to increase their income.The most important are:

  • level of management;
  • level of competence of managers and management;
  • competitive products;
  • organization of production, labor, etc;
  • efficiency of compilation and analysis of operational and financial plans;
  • productivity.

Internal factors are the production, which directly affect the production of goods and Non-manufacturing associated with the supply, marketing, social conditions of life and work, protection of the environment, etc.

factors of production, in turn, are divided into extensive (quantitative) and intensive (qualitative).You must use these two species, but focus better on intensive factors, because they have much smaller limits and brings a great and lasting effect in the long term.

main way to increase operating income, are increasing production, reducing the cost of goods, reasonable assortment policy, improving the quality of products.