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How to calculate the profit


Even if there is no profit, this is not a reason to despair and stop working</a>

However strange it might sound, but in order to calculate the profit, you must first calculate all the expenses. After all, the profits may not at all turn out to be the result of a full cycle of business.

However, even if there is no profit, this is not a reason to despair and stop working.

As many entrepreneurs say, at first you feed your business, and then the business starts to feed you.



To count profit And then be able to translate intoLife the right financial and management decisions, first of all, from the very beginning of the activity, it is necessary to organize a full financial accounting. It should reflect all the amounts that you invest in the business (personal or credit funds), the amount of revenue and shipping (if they do not coincide), as well as all the costs that you make, item by item (purchase of goods, lease of commercial space, delivery , Utility bills, etc.).


After a certain period, for example,One month of work, make all the calculations in one table. First line, select the revenue received for the month, in the following lines, indicate all expenses incurred. Summing up the total cost, you can find the difference between revenue and costs and, thus, to calculate profit. However, this report should take into account that inBusiness practice often there are moments of mismatch in the time of occurrence of certain obligations and payment for them. For example, you took the product for sale, or, conversely, shipped the goods, and you will receive payment for it later. In addition, a similar situation can be for other counterparts, for example, advance payments for rent or electricity. All these moments should be taken into account and make up this shipping report, that is, by the time when the obligations arose, and not when they were paid in order to have a clear financial picture of the month before your eyes.


You can also count profit As a percentage of revenue. This indicator is called profitability, and an analysis of its change over time helps to make better management decisions. In order to determine profitability, divide the amount of your profit for the month by the amount of revenue received and multiply the result by 100%. For different types of activity, its level of profitability is typical, but in this indicator it is possible to compare your business with other similar ones.

How to calculate the profit Was last modified: May 21st, 2017 By Huodaibb
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