Profit Factors

Profit is the amount of growth of own capital of a commercial enterprise, which takes place as a result of the activities of this company, expressed in cash equivalent to the part of the additional value. Profit is one of the main sources of creation of the enterprise�s monetary fund and its financial resource. The concept of "profit" is defined by modern economics as income derived from the exploitation of such factors of production as capital, land, and labor. Not accepting profit as exploitation or appropriation of hired unpaid labor, the following definitions of profit are distinguished:

  • Payment for business services.
  • Payment of talent, innovation in business management.
  • Payment of risk, uncertainty of the results of commercial activities. The presence of risk is determined by the choice of any of the variants of climatic conditions, social, scientific, technical or managerial decisions.
  • The phenomenon of monopoly profits. Such profits are often unstable.

When forming a market economy, profitability and profit are considered as one of the most important indicators of the economic activities of enterprises and trading organizations. These indicators reflect all areas of activity of trade structures: the availability of measures to improve the technology and organization of the trading process, the efficiency of resource use, the structure and volume of retail turnover.

Analysis of factors affecting profit

The level and amount of profit are influenced by many factors that affect it both negatively and positively. Factors affecting profits are many and varied. To limit them is quite difficult. All factors affecting the profits of an enterprise are divided into major ones, which have a decisive influence on the level and amount of profits, and secondary ones - in most cases they are neglected. In addition, the entire set of factors is divided into external and internal. Between themselves, they are closely related. Internal factors affecting profit as well as profitability are the factors caused by the growth of retail turnover and the resource factors (the state and conditions of exploitation of resources, their composition and size).

Internal factors are caused by the following parameters:

  • Retail volume. If the share of profits in the prices of goods is unchanged, the amount of profit increases due to an increase in their sales.
  • The structure of retail goods. Trade is growing due to the expansion of the range. By raising a segment of prestigious, high-quality goods in commodity turnover, it is possible to achieve an increase in the share of profits in prices, since the buyer purchases goods of this group more often because of their prestige, and also relying on the increased convenience of their operation.
  • Organization of the movement of goods. The consequence of the accelerated movement of goods to retail outlets is a decrease in current expenditures and an increase in commodity turnover. As a result, there is an increase in the level and mass of profits.
  • The organization of trade and technological processes for the sale of goods. In an effort to increase profits, resorted to the introduction of progressive methods of trade: the sale of goods by catalogs and samples, self-service. Such methods reduce costs and increase the volume of trade.
  • The composition and number of employees.With a sufficient level of technical support for labor, the required number of employees ensures that the company fully implements the program for obtaining the planned profit. The factor of qualification of the employee, his ability to clearly and quickly serve the buyer, make the correct purchase of goods, etc.
  • Systems and forms of economic incentives for employees. These factors affecting the amount of profit are manifested through indicators of wage costs and the profitability of such costs. Today, there is an increase in the moral factor in encouraging employees when they get satisfaction from their work.
  • The productivity of employees. In the presence of other equal conditions, the result of increased labor productivity is the increased profitability of the business structure, and the increase in profit.
  • Technical equipment and the capital-labor ratio of workers. Labor productivity is directly dependent on the equipment of workplaces with samples of modern commercial equipment.
  • The material and technical base of commercial enterprise.A structure that has a more developed and modern material and technical base can count on a constant increase in retail turnover with a perspective for a long period. Following this, profitability rises and profit margins increase.
  • Territorial location, condition and development of the trading network. The location of retail chains directly affects the profitability and the amount of profit. Along with the stationary store network, the profit indicator is significantly influenced by the development of a mobile, mail-based and small retail network.
  • The level of physical and moral depreciation of fixed assets. This factor is very important in terms of growth of enterprise profitability. Reliance on worn-out, outdated equipment and fixed assets deprives them of the hope that profit will grow in the future.
  • Capital productivity. The direct result of its increase is the growth of retail turnover per 1 ruble of funds invested in fixed assets.
  • Working capital. These are factors affecting the change in profits directly. Since the mass of the profit obtained from one turnover directly depends on the size of working capital.
  • Pricing order.The size of the profit depends on the amount of profit included in the price of goods. A continuous increase in the profitable share in the price is able to produce the opposite of the desired result.
  • Work on the collection of receivables. The absence of delays in the collection of receivables accelerates the turnover of working capital, which in turn leads to an increase in profits.
  • Claim work. This factor has a direct impact on the profitability of non-operating operations.
  • Saving mode. There is a relative decrease in current expenses of a commercial enterprise and an increase in the amount of the expected profit. In this case, it is not an absolute reduction in available costs, but a relative one.
  • Business reputation of the company. We are talking about the consumer�s view of the potential possibilities of a commercial structure. Having a high business reputation allows you to increase the profitability of the enterprise and rely on additional profits. A business enterprise cannot operate in isolation. It continuously interacts with the external environment: sellers and producers of goods, buyers (mainly this population), government agencies and public organizations.

Date: 08.10.2018, 16:34 / Views: 92531

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