Accounting and economic profit. The economic essence of profit

In the case of competent implementation of entrepreneurial activity, any organization makes a profit. If there is no such effect, the enterprise is considered unprofitable and unprofitable. The movement of cash assets is accounted for using different methods. Any owner carefully monitors the progress of his business model and clearly monitors cash flow. For this, income and expense of assets are controlled. From a specific case, significant differences may be formed between economic and accounting profit. What is meant by these two types? What is the specific mechanism for calculating indicators? What role do material costs play in an organization?

The mechanism for determining economic profit

From the height of entrepreneurial activity, profit will be a consequence implementation processes. The level of such sales may concern both the product itself and the services. The measuring equivalent of profit is the generally accepted monetary unit in a particular state. Payments between counterparties can be made for other goods, semi-finished products, discounts and additional preferences in trade relations. Forms of such cooperation are divided into two types of profit

Fundamental differences between accounting and economic form of profit

Viewpoint Profit Type accounting is the simplest. The obtained value is the result of arithmetic calculations based on the general money supply and gross expenses. These actions are carried out throughout economic activity (warehouse procurement, production and sale of the final product). Accounting profit is total income minus expenses. The implementation of such calculations has certain disadvantages:

1. A variety of methods for calculating indicators can lead to the formation of a factor of incompatibility of results for further calculation.
2. Inflation has a significant impact on the final analysis of commercial activity. The profit of the organization is difficult to consider through the prism of a different period of time.
3. Gross output and the dynamics of changes in capital is quite difficult to display in the analysis of accounting profit.

Gross output is a reflection of all products and services in monetary terms, which the company receives as a result of economic activity. A clear example is the rental of special equipment / equipment, as well as the sale of finished products.

The costs of the company embody paid obligations. They consist of a wage fund, rental of facilities, utilization of utility units, treatment of staff, taxation and other unforeseen expenses. Thus, having made all the costly parts from the reduced amount of income, one can clearly determine the accounting type of profit. Many business directors practice reinvestment and dividend payments.

What is the basis of the economic profit of the company? This is a mathematical substance that covers all aspects of an organization’s activity. The principle of arithmetic is similar to accounting type. Gross revenues and expenses also appear here, but absolutely everything will need to be taken into account. financial operations. A whole system of indicators (profitability, cost of invested capital, return on investment) is designed to analyze business activities in detail and adjust management decisions in one or another segment of the relationship. The model of stable enterprise growth requires systematic monitoring of work efficiency and risk assessment, crisis situations. Dividing the indicators into calculated and analytical, allows the gradation of accounting in tax and accounting.

A distinctive feature of accounting and economic profit is calculation methodology. The mechanism does not allow for all forms of costs. In this case, the determination of accounting profit will occur according to the established algorithm of the received funds and all expenses. According to this principle, all executive branches and the judiciary function.

Economic profit gives clear answers to the realities of the economic activity of the subject. The information concerns not only the figures for the documents, but also takes into account the actual state of the business model. Simply put, the economic type of profit takes into account total revenue, external costs (payments for services to contractors) and internal. AND accounting form calculation takes into account only income and external costs (costs).

Understanding Profit in Commerce

The entrepreneur monitors this indicator every day. Essence economic concept consists of a large number of measures that prejudice employee negligence, fraud and non-compliance. This is the only way to achieve the desired saving of assets and funds. The composition of the costs may include information that is located outside the accounting area. Unofficial expenses are the realities of today's business building model. A vivid example is the lost profits that could have been obtained as a result of certain circumstances. Bonuses, travel deductions, attracting additional employees and much more.

The management of any enterprise seeks profit. However, it can be calculated in different ways. A wide range of approaches to determining and interpreting the profit of a commercial firm can be observed in a research environment. Among the most common are accounting and economic. The border between them in some cases is difficult to find - if we talk about the practical use of these methods. But at the level of conceptual understanding, accounting and economic approaches to understanding profits can be characterized by a tangible difference. What is it expressed in?

Definition of accounting profit

What is accounting profit? By this term, it is customary to denote financial results sales of certain products or services. Accounting profit is determined on the basis of the provisions of the legislation in the field of accounting and is recorded in reporting documents. As a rule, such sources should be provided to regulatory authorities - first of all, to the Federal Tax Service. Among the key documents about which in question - report about incomes and material losses. It fixes the difference between the firm’s income, which is defined as an increase in total assets, and expenses, which indicate a decrease in the company's capitalization.

The ratio of accounting and tax profit

Profit in accounting is adjacent to an indicator that correlates with taxes. The fact is that the payment of the corresponding fees to the treasury is not always carried out by the company synchronously with the dynamics of the change in the value of the base for calculating payments. This is mainly due to the application by the company of various deductions, as well as the peculiarities of the legislative criteria for their application. A company that has the right to use the corresponding privilege may not actually use it, as a result of which the net tax profit will be greater than the accounting one - which is recorded in the accounting documents. But in the next reporting period, accounting and tax profits, if there are no changes in the structure of revenue and costs, can already be leveled - as the company will take advantage of the deductions.

Modern economists record several basic varieties of accounting profit. We will study them in more detail.

Types of accounting profit

Accounting profit is of 5 main types:

• gross
• arising as a result of sales;
• profit before tax;
• profit from ordinary activities;
• net profit.

Regarding the gross indicator - it is defined as the difference between the value of sales proceeds - net of VAT and other statutory payments to the budget, and the cost of the corresponding goods, works or services. The profit from sales is determined on the basis of the difference between the revenue for specific commodity items and the costs associated with bringing the goods to the market. Profit before tax is defined as the difference between revenue and total amount expenses - all that may be provided for by the business model of the company. Profit from ordinary activities is determined by subtracting from the previous figures of tax payments and expenses for the main activities of the company. Net profit is also determined after subtracting the costs and fees to the budget, calculated in relation to other activities.

The essence of economic profit

Having studied what accounting profit is, and in what varieties it can be provided, we study another term common among researchers. What is its essence? Economic profit - an indicator that characterizes, first of all, an increase in the value of the company. It can be defined as the difference between the figure reflected by the profitability of capital and the result of the product of the weighted average of assets to the value of investments.

Differences between economic and accounting profits

What is the fundamental difference between economic and accounting profit? The first term involves the consideration in the "formula" of the calculation of not only the actual figures, but also those that reflect the ratio of potential assets of the company, as well as its obligations. Economic and accounting profits are pretty close concepts. However, the first term characterizes the enterprise rather in a strategic context, while the second - in a tactical one. The task of the accountant is to check whether certain production indicators are correctly calculated, whether the reporting is correct, whether everything is in order with taxes. The economist’s task is to identify how stable the enterprise is in the aspect of the business model, what growth prospects it has, and which areas of production require urgent modernization.

Economic profit and opportunity costs

One of the most important criteria for calculating economic profit is the calculation of opportunity costs. What are they? Opportunity costs - this is a shortfall in profit due to the refusal to choose a certain direction of investment. For example, if a company decides to start the production of washing machines, abandoning the production of televisions, then in the event of a sharp reduction in the price of offers from cable and satellite operators and an increase in the population’s demand for televisions, it will not receive significant revenue. As well as vice versa.

From the point of view of accounting, the structure of products manufactured by the company may not be taken into account. The accounting specialist doesn’t matter - at least if we talk about him job responsibilitieswhat is the demand potential, what are the technological trends in a particular market segment. The main thing for him is to calculate the correct tax on accounting profits, to track its timely payment, to fix the corresponding figures in the statements.

The economist, in turn, determining profit, can pay close attention to opportunity costs. Analyzing these or other figures, he may come to the conclusion that it might be useful for the management of the company to reconsider investment activity in favor of starting production of new types of products.

Profit factors and their analysis

There are a number of key factors that determine a company's profitability. They can be divided into internal and external.

The first include:

• company management quality;
• level of competence of company managers;
• competitiveness of manufactured goods or services that are provided by the company;
• level of organization of production, technological adaptability of infrastructure;
• performance of equipment used;
• labor productivity of employees.

External factors determining profitability:

• political situation;
• priorities in legislative regulation economic processes;
• supply and demand in the market segment in which the company operates.

Accounting profit is fixed on the basis of actual indicators out of correlation with any of the noted factors. In turn, economic indicators - first of all, opportunity costs, may well be determined on the basis of an analysis of relevant factors.

Significance of Economic and Accounting Profit

For what purpose can economic and accounting profits be calculated? The definition of the first indicator is mainly needed by the enterprise itself. The owner of any business, first of all, builds a business model, improves it, analyzes it for himself. In turn, the calculation of accounting profit is a necessity, which is largely due to the need to provide government bodies - First of all, the Federal Tax Service of various types of reporting.

Of course, the company can also pay great attention to this aspect. For example, if there is a need to determine the cause of the discrepancy in the planned and actual performance of the company. Economic profit is considered by many experts as one of the key criteria for evaluating the effectiveness of investing in a business. However, it is very important to determine the correct approach to its calculation. So, the main reporting document, in which accounting profit is recorded - on profit and loss, has a specific structure, which is set at the level of Russian legislation.

Sources in which is reflected economic profitare not defined in regulatory legal acts. Each enterprise develops appropriate forms independently. Of course, in certain industries there may be generally accepted standards for the preparation of documents in which economic profit is recorded. But this does not mean that such unified forms will be best suited for the business model of a particular organization. There may well be a situation in which the criteria for determining economic profit, the basis for its calculation, the company will have to develop completely on its own.

What is more important - economic or accounting profit

There are different points of view among Russian economists as to which type of profit is more important - economic or accounting. Some experts believe that due to the lack of criteria for calculating the first indicator, the second should be the key. The specific figures defined in documents such as the balance sheet, profit and loss statement of the company, can give the company management all the necessary information regarding the state of affairs in the business, experts say. There are a large number of approaches to the interpretation of these indicators, and if used correctly, the management of the company may not need to use any other methods of analysis of the business model.

There is another point of view. In accordance with it, the profit in the balance sheet can very superficially reflect the real state of affairs at the enterprise. The indicators that are included in the income statement may simply not affect the most important business processes. In this case, you can’t do without using economic methods research of commercial activities.

Economic profit as a criterion of enterprise sustainability

Another argument put forward by experts - accounting profit makes it difficult to determine what the nature of the sources of revenue. The accountant fixes the income in its pure form and does not analyze, in the general case, then, due to which decisions, resources they appeared, what factors predetermined their specific value. Consider a simple example.

2 factories operate, produce the same products - for example, building materials. Their revenue, as well as profitability, are generally the same. The main documents - the balance sheet, profit and loss speaking report, have a very similar structure at both enterprises, the indicators recorded in it are comparable when comparing firms. If you look at any account used by this or that enterprise, the profit of all types is fixed practically in the same values. However, the main customers of the first plant are large holdings, the second mainly sells building materials to small and medium enterprises. Due to the complication of the political situation, the activities of large holdings that purchase the bulk of the products at the first plant become impossible in Russia. Contracts are terminated and these customers leave the market. The plant for the production of building materials begins to experience very difficult times. The second company, meanwhile - is developing excellently. Demand for its products is steadily growing - in connection with the opening of new industries in the Russian Federation and the needs of companies in high-quality building materials.

We see completely different results of commercial activities of two entities operating in the same segment and with comparable accounting indicators. However, a similar state of affairs could be calculated to a certain extent if economic analysis were involved and the corresponding type of profit was determined. As we noted above, the accountant keeps track of the numbers, the economist calculates the development strategy of the company, taking into account opportunity costs. It is quite possible to refer to them the shortage of profit by the first plant of building materials upon the fact of cooperation with small and medium enterprises - as the second company does.

Of course, even a successful business enterprise is required to take accounting profit. At least in connection with the need to provide relevant information in tax service. The second plant will also maintain income tax accounting. However, the work of economists at this enterprise will also be conducted actively, since the study of opportunity costs for them is the most important factor in ensuring the competitiveness of the company and the sustainability of the business.

So, accounting profit is the actual figures that allow you to determine the level of profitability of the company, and in many ways - the effectiveness of its current business model. Economic profit is not only actual, but also calculated indicators that allow to characterize the stability of the business model. These include opportunity costs. Despite the fact that among economists there may be dissimilarity of points of view regarding the priority of engaging in one or another approach, it is recommended that both concepts be used at the same time if possible.

Chemistry teacher who received at the end of the year after all deductions (including income tax) 24 thousand p. a year, in the new year, he decided to open his own store. Its starting capital is 30 thousand rubles. He expects to receive revenue equal to 180 thousand rubles.

To implement this project, he needs:

1. pay from the proceeds at the end of the year the rent in the amount of 48 thousand p. for the premises of the store for the year;

2. at the beginning of the year, to carry out repair work in a rented building worth 30 thousand rubles;

3. to hire three workers with payment of 16 thousand rubles. each year, with 6 thousand rubles. pay at the beginning of the year as an advance, and the remaining 10 thousand rubles pay at the end of the year from the proceeds;

4. borrow from the bank the amount of money that is not enough to cover expenses for a period of one year;

5. Leave the teacher’s work and focus entirely on entrepreneurial activity.

He has no other costs. Bank interest on deposits is 40%, and on loans - 50%.

Define:

a) The value of accounting and economic profit for the year (in thousand rubles) excluding income tax.

b) At what rate of income tax will entrepreneurial activity be beneficial to the teacher (the rate is set as a percentage of profit).

Decision:

a) The amount of accounting profit (BP) is equal to the difference between the proceeds from the sale of products (B) and the apparent costs (NI).

BP \u003d B - NII

Explicit costs (accounting, direct, external costs) are those payments that the company makes to suppliers of resources (labor, land, capital) that do not belong to the number of owners of the company. These include the cost of wages to employees, payment for raw materials and supplies, rent, depreciation, interest on loans, electricity, heat, electricity, etc.

Economic profit (EP) is equal to the difference between the amount of accounting profit and implicit costs (NI).

EP \u003d BP - NI

Or the differences between revenue and economic costs (EI), which in turn consist of explicit and implicit costs.

EP \u003d B - EI \u003d B - (II + NI)

Implicit costs (imputed, internal costs) - these are costs associated with the operation of the company's own resources. For example, a small enterprise exploits its own labor, capital, premises. In other words, this is the cost of missed opportunity. For an entrepreneur, implicit costs will be wage, which he could receive if he worked for self-employed rather than in his own business. For the owner of capital, the implicit cost is the profit that he could get by investing his capital, for example, in a bank. But by investing this money in his own business, he incurs implicit costs equal to the lost bank interest. For property owners, the implicit cost is rent, which he could get by renting his property.

When determining explicit and implicit costs, it is convenient to use the following table, in which all costs are divided into explicit and implicit:

To start at the beginning of the year, the teacher will need 30 thousand for repairs + 18 thousand rubles. to pay at the beginning of the year, of which he has only 30 thousand rubles. So 18 thousand will have to borrow in the bank. The loan fee is a clear cost. These 30 thousand, which he will spend on repairs, he could put on a deposit in the bank and receive an income of 40% of 30 thousand rubles. Thus, the under-received bank interest the deposit is 12 thousand rubles.

Find accounting profit:

BP \u003d B - nuclear weapons \u003d 180 - 135 \u003d 45 thousand p.

Then the amount of economic profit will be equal to:

EP \u003d BP - NI \u003d 45 - 36 \u003d 9 thousand p.

b) Entrepreneurship is beneficial to the teacher as long as the economic profit is greater than or equal to zero. Consequently, income tax should be less than 9 thousand rubles, which is 20% of 45 thousand rubles.

See more

• Analysis of the market structure / Task No. 199. Monopoly damage calculation
• Analysis of economic activity / Task No. 5. The calculation of changes in the total cost of production due to the influence of factors and their share in the total change
• Key macroeconomic indicators / Task No. 26. GDP calculation by income
• Consumer Behavior / Task No. 145. Calculation of commodity and lump tax
• Market failures and government regulation / Task No. 194. Calculation of the socially optimal level of production of the company
• Production and costs of the company / Task No. 71. Cost calculation
• Production and costs of the company / Task No. 72. Cost calculation
• Production and costs of the company / Task No. 74. Calculation of accounting and economic profit
• Production and costs of the company / Task No. 75. Calculation of depreciation, accounting and economic costs, profit
• Production and costs of the company / Task No. 76. Calculation of annual accounting and economic costs, economic and accounting profits
• Production and costs of the company / Task No. 77. Calculation of accounting and economic profit and income tax rate
• Production and costs of the company / Task No. 78. Calculation of depreciation, accounting and economic costs and profits
• Production and costs of the company / Task No. 79. Definition of functions of fixed, variable, marginal and average costs
• Production and costs of the company / Task No. 80. Definition of total and marginal cost functions
• Production and costs of the company / Task No. 81. Calculation of the minimum function of the average total cost
• Production and costs of the company / Task No. 82. Function definition and calculation of total costs

"Finance", N 4, 2003

The issue of determining the financial result of an enterprise is one of the fundamental and most complex issues facing accounting. Numerous studies on the subject of studying the correspondence of profit calculated in accounting with its economic content led to the distinction between concepts such as "accounting" (formerly called balance sheet) and "economic" profit.

Accounting profit is usually understood to mean profit calculated in accordance with the current accounting rules and indicated in the income statement as the difference between income and expenses recognized in the reporting period. The concept of "accounting profit" in Russia was introduced on January 1, 1999. The Regulation on Accounting and Financial Reporting in Russian Federationapproved by the Order of the Ministry of Finance of Russia of July 29, 1998 N 34n (p. 79). According to this Regulation, accounting profit is the final financial result identified for reporting period based on the accounting of all business operations and valuation of balance sheet items. Despite the fact that in different countriesthe methodology for calculating the profit indicator may vary, all these methods are combined using the accrual method and (with rare exceptions) the principle of historical cost (cost of acquisition) in estimating expenses.

Definitions of accounting profit are traditionally based on two main concepts: the concept of maintaining wealth, or maintaining capital, the concept of efficiency, or building capital.

According to the first concept, the financial result (profit) is an increase during the reporting period of the equity (funds invested by the owners) of the enterprise and is the result of improving the well-being of the company. This concept goes back to the idea expressed by Adam Smith that profit is the amount that can be spent without infringing on capital, as well as to John Hicks's statement, which clarified this idea, according to which profit is the amount that can be spent for some period of time and at the end of this period have the same abundance as at the beginning.

This concept is sometimes also called the concept of profit based on changes in assets and liabilities (a static balance model where assets are represented in assets and sources in liabilities). This is due to the fact that with this approach, revenue or other income can be recognized only as a result of an increase in an asset or a decrease in a liability, and accordingly, an expense cannot be recognized unless it is caused by a decrease in an asset or an increase in a liability. In other words, profit is an increase economic resourcesat the disposal of the enterprise, and loss - their reduction.

According to the second concept, profit is the difference between the income and expenses of the enterprise and the measure of the effectiveness of the enterprise and its management. Profit, according to this concept, is the result of the correct allocation of revenue and expenses for the respective reporting periods, and most non-monetary assets and liabilities are the result of such diversity. Correct allocation of income and expenses implies the correlation in this reporting period of “efforts” (ie, expenses) and the corresponding “achievements” (ie, income). With this approach, income and expenses related to future periods will be recognized as an asset or liability, regardless of whether such an asset or liability represents a real future inflow or outflow of economic resources (dynamic balance sheet model, where the asset is treated as expenses that transfer to costs and liabilities as incomes that should become values). On this approach, in essence, the concept of double entry in accounting is based, through which a double financial result is revealed: as an increase in equity (statistical balance model) and as a difference between income and expenses ( financial model balance).

In world practice, the concept of maintaining wealth is currently recognized as the dominant one, and profit is determined through changes in assets and liabilities. However, the second concept is also used. This can be evidenced by the use of two types of accounting profit: “total” (comprehensive) profit, as a result of changes in the capital of an enterprise due to all operations except transactions with owners, and “operating” profit (ie profit from current, or operating, activities), reflecting the effectiveness of the main activities of the enterprise for the reporting period.

The accounting profit indicator is not without drawbacks. The following can be distinguished as the main ones:

• there is no unambiguous and clear formulation of the concept of accounting profit in both domestic and foreign literature;
• by assumption accounting standards different countries (and often within the same country for different enterprises) the possibility of using different approaches in determining certain incomes and expenses, profit indicators calculated by different enterprises may not be comparable;
• a change in the general price level (inflation component) limits the comparability of profit data calculated for different reporting periods.

The amount of profit reflected in the financial statements does not allow us to assess whether the company’s capital has been increased or wasted for the reporting period, since at the moment all the economic costs of attracting long-term resources are not fully reflected in the financial statements. The factor of "cost of capital", i.e. the fact that the use of long-term resources for an enterprise from an economic point of view is more expensive than the arithmetic amount of interest and dividends paid.

So, despite the fact that the cost of using long-term borrowed resources may be close to the amount of interest paid on them (taking into account the effect that interest payment has on tax liabilities company), the cost of using equity is not limited to the amount of dividends paid. for example, in order to attract equity capital into its business, the company must ensure that the return on investment is comparable to what the investor could receive from similar investments with similar risks. If the enterprise cannot provide such profitability, then it will not be able to attract investor funds. The minimum return on capital invested by shareholders noted above can be considered as the cost of attracting it.

From an economic point of view, the capital of an enterprise is multiplied when the economic benefits received by the enterprise from the use of long-term resources exceed the economic costs of attracting them (whether it be borrowed funds or shareholders' funds). The converse is also true: in the event that the economic benefits received are less than the estimated value of the “cost of capital”, the enterprise is actually wasting capital.

This position is actively used in investment analysis and most investors when making investment decisions, including decisions on the acquisition of shares in a particular enterprise. However, it should be noted that such information directly from the financial statements is currently impossible to obtain.

In other words, an enterprise can be profitable according to accounting data, but "eat up" its capital. The desire to assess the efficiency of capital use has led to the active use of the indicator of economic profit in foreign practice.

Economic profit is usually understood as an increase in the economic value of an enterprise. Moreover, the concept of "economic profit" in recent years in Western practice in the conditions of market development valuable papers significantly transformed compared with the first half of the twentieth century. There are many differences in determining how to calculate such an economic value, but they all share a fundamental difference compared to the accounting interpretation in understanding what value after the reporting period is considered to correspond to the "level of wealth" at the beginning of the period.

Economic profit is usually defined as the difference between the return on invested capital (the material expression of which is net operating assets) and the weighted average cost of capital multiplied by the amount of invested capital:

EP \u003d Invested capital H (ROIC - WACC),

where: EP - economic profit;

R - return on invested (invested) capital, which is calculated as the ratio of net operating profit after tax to the amount of invested capital;

W - weighted average cost of capital calculated by the formula:

W \u003d (Rf + b "Rem) H E + (Rf + Rdm)" (1 - T) H D

where: Rf - risk-free rate of return;

Rem - market risk premium for equity investments;

b - the degree of riskiness of the asset;

Rdm - market risk premium for borrowed obligations;

T - effective rate taxation;

E - percentage of own (joint stock) capital in the total capital of the company as a percentage;

D is the percentage of borrowed capital in the total capital of the company.

Given the fact that under Russian conditions, due to the underdevelopment of the information base, it is quite difficult to determine many of the indicators necessary for calculating the weighted average cost of capital, in practice the following algorithm is often found that uses basic indicators for a developed economy, but introduces certain adjustments to the Russian specifics:

• a risk-free rate at the beginning of the reporting period is determined on the basis of data on the yield to maturity of long-term Eurobonds of the Russian government;
• the market risk premium is assumed to be 8.5% (a value commonly accepted for countries with " in transition", including the countries of Eastern Europe and Russia) and is adjusted by the coefficient b established for a similar industry (i.e. for companies - analogues in the USA);
• the premium on ruble obligations is determined in comparison with dollar ones on the basis of data on three-month deposits in the respective currencies;
• the results obtained are summarized.

In addition, the calculation of the weighted average cost of capital in Russia is characterized by a certain degree of conditionality, including due to the instability of the economic situation, which is expressed in strong fluctuations in interest rates. This can be judged by the dynamics of the indicator W for the example below, which in 1999 was 74%, in 2000 - 44%, and in 2001 - already 30%.

It should be distinguished indicator "net operating assets", which characterizes the amount of invested capital, from the concept of "net assets", as they are indicated by Order of the Ministry of Finance of Russia of August 5, 1996 N 71 "On the procedure for assessing value net assets joint stock companies". Compared to the indicator of" net assets "used in domestic practice, the concept of" net operating assets "also includes assets whose source of financing are short-term and long-term interest obligations.

So, economic profit allows you to compare the return on invested capital of the company with the minimum necessary to meet the expectations of investors and express the difference in monetary units. Using the above formula, economic profit can also be defined as the difference between the net operating profit after tax and the amount of invested capital multiplied by the weighted average cost of capital. Such a calculation of economic profit will be more suitable for its interpretation as the difference between what the company earns for a specific period of time and the minimum that it must earn in order to satisfy its investors.

We can say that economic profit differs from the accounting profit indicator in that when it is calculated, the cost of using all long-term and other interest liabilities (sources) is taken into account, and not just the interest expense on borrowed fundsas it takes place when calculating accounting profit. In other words, accounting profit exceeds economic by the amount of opportunity costs or costs of rejected opportunities. It is economic profit that serves as a criterion for the efficiency of resource use. Its positive value means that the company earned more than is required to cover the cost of the resources used, which means that the company created additional value for those who provided it with their capital.

If the situation is the opposite, then this indicates that the organization was unable to cover the cost of using the attracted resources, or, in other words, that it was consuming the capital provided to it. Thus, the lack of economic profit can cause the flow of capital to other areas of use.

The existence of the concepts of "accounting" and "economic" profit does not mean the possibility of a direct comparison of their values. Each indicator can have its own scope. Their characterization as complementary ways of analyzing the activities of business entities seems more correct. Using the indicator of economic profit can both confirm and refute the conclusions made on the basis of the indicator of accounting profit, and become the reason for further analytical work. From the point of view of evaluating the effectiveness, the indicator of economic profit gives a more complete idea of \u200b\u200bthe efficiency of using existing assets by the enterprise compared to the indicator of accounting profit, because it compares the financial result obtained by a particular enterprise with the result that will provide it with real, and not only nominal, preservation invested funds. In this regard, it is the indicator of economic profit that seems more capacious and useful in making decisions by the investor about their actions in relation to the securities of the company.

Consider the method of calculating the indicator of economic profit and demonstrate its additional features on the example of a large domestic confectionery enterprise.

To more clearly illustrate the following conclusions, some of the results of the calculations were combined in table 1.

Table 1

Accounting profit and economic profit of Confectionery factory OJSC (million rubles)

Tables 2 and 3 show the balance sheet and profit and loss statement of this company for 1999 and 2000. It is easy to see that the company's revenue in 2000 compared with 1999 increased slightly (+ 3%), while net profit fell completely (-5%). Nevertheless, the net profit of the enterprise in 2000 according to the Profit and Loss Statement amounted to a significant amount of 190 million rubles. against 201 million rubles. in 1999, if we confine ourselves to this information, we could conclude that, despite a slight deterioration in the situation in 2000 compared with 1999, 2000 was quite successful for the enterprise and the shareholders, apparently must be satisfied (the situation is unfavorable, but not critical). Considering the above data, it could be assumed that a decrease in net profit (and, in addition, profitability of sales) should lead to a decrease in the company's stock quotes in 2000 compared to 1999.

table 2

Balance sheet of OJSC Confectionery factory (million rubles)

	31.12.2000	31.12.1999	31.12.1998
Assets Fixed assets
Intangible assets	1,2	0,9	1,0
Fixed assets	929,5	505,9	362,0
Construction in progress	23,2	375,5	358,2
Long term financial investments	66,2	100,5	66,9
Total non-current assets	1020,1	982,8	788,1
Current assets
Stocks	312,8	352,9	257,6
Receivables	220,3	180,3	154,4
Short-term investments and cash	29,8	29,8	50,0
Other current assets	0,3	0,5	0,9
Total current assets	563,2	563,5	462,9
Total Asset	1583,3	1546,3	1251,0
Passive Capital and reserves
Authorized capital	10,2	10,2	9,8
Extra capital	725,2	679,4	558,8
Reserves from profit	10,4	10,3	10,5
retained earnings	251,9	244,8	178,7
Total equity and reserves	997,7	944,7	757,8
Short-term liabilities
Loans and loans	375,0	346,8	261,5
Accounts payable	210,5	254,5	231,3
Other short-term obligations	0,1	0,3	0,4
Total short-term obligations	585,6	601,6	493,1
Total Liability	1583,3	1546,3	1251,0

Table 3

Profit and loss statement of OJSC Confectionery factory (mln rubles)

	2000 year	1999 year
	2259,0	2198,7
	(1578,0)	(1534,6)
Depreciation	(36,0)	(15,0)
Gross profit	645,0	649,1
Selling expenses	(59,3)	(41,8)
Management expenses	(234,0)	(171,9)
Sales profit	351,7	435,4
Interest receivable	0,4	0,3
Interest payable	(86,9)	(108,0)
non-operating expenses	(43,2)	(91,4)
Profit before tax	222,0	236,3
	(32,0)	(35,6)
Net profit	190,0	200,7

However, if we analyze the activities of the enterprise in 2000 and 1999. from the point of view of the economic profit received by him (the calculation of the economic profit indicator is given in table 4), then the assessment will change to the exact opposite.

Table 4

Calculation of the economic profit of the Confectionery Factory OJSC (million rubles)

	2000 year	1999 year
Proceeds from the sale of goods, works, services	2259,0	2198,7
The cost of goods sold, works, services (excluding depreciation)	(1578,0)	(1534,6)
Selling expenses	(59,3)	(41,8)
Management expenses	(234,0)	(171,9)
Other operating and non-operating income net of other operating and non-operating expenses (excluding interest income and expenses)	(43,2)	(91,4)
Profit excluding interest, tax on profit and depreciation (EBITDA)	344,5	359,0
Depreciation	(36,0)	(15,0)
Income tax and other mandatory payments	(32,0)	(35,6)
Adjustment of tax on interest income and expenses	12,5	16,2
Net operating profit after taxation (NOPAT)	289,0	324,6
capital<1>	(567,5)	(755,2)
Economic profit	(278,5)	(430,6)

<1> Tab. five.

You can see that in order to justify the use of the loan and equity capital provided to him in 1999 in the total amount (according to the balance sheet) of 1019 million rubles, the confectionery factory should have received a net operating profit after tax (i.e. profit without accounting for interest and extraordinary income and expenses) in the amount of 755.2 million rubles, or 74% of the invested capital. The factory was able to provide only 324.6 million rubles. net operating profit (or 31.9% of invested capital), thereby not receiving 430.6 million rubles. An equally bleak picture develops with respect to the year 2000, in which, in order to justify the use of available capital, the enterprise had to receive a net operating profit of 567.5 million rubles. (43.9% of invested capital), and was able to provide only 289 million rubles. (or 22.4% of invested capital), having actually received less than 278 million rubles. However, in terms of approaching the minimum required level of profitability, 2000 turned out to be more successful than 1999, since in 2000 the company was able to provide 51% of the minimum required level of net operating profit (against 43% in 1999). Based on the calculations made, it could be assumed that improving the situation in terms of economic profit should be one of the factors contributing to an increase in the company's stock quotes in 2000 compared to 1999.

We can say that from the point of view of economic profit, the situation has improved somewhat, since the volume of economic losses for shareholders has decreased. However, it can be assumed that the improvement was not due to the activities of the enterprise (which, on the contrary, decreased return on invested capital from 31.9% to 22.4%), but due to a general improvement in the economic situation and a corresponding drop in the general level of interest rates and required return. Nevertheless, from the point of view of improving the well-being of its shareholders and investors, it can be concluded that the Confectionery Factory OJSC is not coping with its task.

Let us analyze now the dynamics of stock quotes of the enterprise. So, as of January 1, 1999, the stock price of the enterprise was 128.4 rubles. per share, while as of January 1, 2000, it fell to 100.1 rubles. per share, although subsequently rose to 123.1 rubles. per share (as of January 1, 2001). If we take into account only the data on the accounting profit earned by the enterprise in 1999 and 2000, this dynamics may seem unjustified, because although the company received significant accounting profit for both of these years, the profit decreased slightly in 2000 (therefore, the change in quotations if it were, it would have to have the opposite direction). However, if we take into account the unfavorable situation with obtaining economic profit, the situation becomes more understandable and the drop in quotations in 1999 (especially against the background of the general growth of the Russian stock market) can be partially explained by the significant amount of lost economic profit. The subsequent increase in quotations at the end of 2000 to 123.1 rubles. per share can also be partially explained by the reduction in lost economic profit compared to 1999, as well as the expected further fall in interest rates, as a result of which it will become easier for the company to provide the minimum required level of profitability even without a significant increase in operating efficiency.

Table 5

Calculation of the minimum required return on invested capital

	31.12.1999	31.12.1998
Fixed assets and work in progress building	881,4	720,2
Other non-current operating assets	101,4	67,9
Short-term receivables investments and cash	210,1	204,4
Inventories and other current assets	353,4	258,5
Current assets	563,5	462,9
Accounts payable and other interest-free current liabilities	(254,8)	(231,7)
Working capital	308,7	231,2
Total net operating assets	1291,5	1019,3
Weighted average cost of capital<2>	43,94%	74,09%
The minimum required return on invested capital	567,5	755,2

<2> Tab. 6.

Table 6

Weighted average cost of capital calculation

Price of equity
Risk-free interest rate (rate on russian Eurobonds Series Euro USD 2028)	17,3%	44,3%
Market risk premium	8,5%	8,5%
Beta coefficient for food industry	0,75	0,75
Dollar equity price obligations	23,68%	50,68%
Premium on ruble obligations<3>	22,1%	28,0%
The price of equity in rubles obligations	45,78%	78,68%
Borrowing Price
Market interest rate<4>	45,0%	60,0%
Deduction for tax purposes<5>	(6,5%)	(9,0%)
Tax leveraged price	38,5%	51,0%
Market value of capital
Number of shares (thousand)	10 248,0	10 248,0
Share price (rub.)	100,1	128,4
Market value of equity (million rubles)	1 025,8	1 315,8
Market value of borrowed capital (million rubles)	346,8	261,5
Percentage of equity	74,7%	83,4%
Percentage of borrowed capital	25,3%	16,6%
Part of your own bet capital	34,20%	65,62%
Part of the loan rate capital	9,74%	8,47%
Weighted average cost of capital	43,94%	74,09%

<3> The premium on ruble obligations is calculated as the difference in interest rates on ruble and dollar deposits with a term of 3 months.
<4> Refinancing rate of the Central Bank of the Russian Federation.
<5> Based on the actual tax rate calculated as the ratio of income tax to profit before tax according to the income statement.

V.D.Novodvorsky

D. e. professor

moscow city

Probably, everyone understands the term "profit" - this is the benefit that the company receives or individual entrepreneur after carrying out their activities. But not everyone knows that profit can be both accounting and economic. What are the differences between these two concepts? Let's try to find the distinctive features of these economic terms.

Accounting profit represents the benefit that the company received, and it is calculated by subtracting all official costs from the total revenue. In other words, this is the difference between legal and expenses. Revenues can be obtained from the sale of manufactured products, the performance of various kinds of work or the provision of their counterparties. As for expenses, there can be quite a lot of them, since this includes employees' salaries, rents, utility bills, taxes, and the purchase of office equipment, as well as research and development costs. The difference between the revenue and expenditure parts of the enterprise’s budget is just accounting profit, which subsequently can be spent on paying dividends or made as an investment in production.

Economic profit is the result of subtraction between all income and expenses, therefore, it reflects the real state of affairs at the enterprise, that is, whether it is functioning successfully or is in a crisis situation. As revenues, not only the official revenue of the company is used here, but also other sources of revenue moneythat are not reflected officially in accounting. In this case, expenses should include not only those expenses that were officially made with documentary evidence, but also those that are not official, but can nevertheless be present at the enterprise. In addition, economists rank lost profits as well, that is, income that could have been received under certain circumstances, but were not acquired for one reason or another. Also, expenses may be recognized as additional bonus payments to employees or any hospitality expenses not accounted for in accounting.

The difference between accounting and economic profit lies in the method of calculating them, in which certain income and expenses can be taken into account or not. So, accounting profit is determined only on the basis of documentary evidence of income and expenses, since only in this way can they be officially certified by regulatory authorities. Economic profit does not focus on securities, but takes into account the peculiarities of doing business, considers the issue of losing any profit or spending without official registration.

Website conclusions

1. Accounting profit is based on income and expenses, officially registered and confirmed by various documents, and economic profit, on the contrary, is not always based on documents;
2. Accountants calculate profits based solely on fait accompli, while economists determine profits based on all transactions — whether they occurred or not.