How to increase profits. How is growth percentage calculated? Sales revenue growth rate formula

Every enterprise that produces any product needs a thoughtful approach to its marketing. Only specialists should deal with such issues, because improper sales planning can lead to a decrease in profits and even bankruptcy of the enterprise. Knowing how to increase sales revenue, any start-up company will be able to quickly recoup its expenses and begin to make its first profit.

Process-oriented ways to increase profits

Profit is the difference between the income received and the amount spent on producing the product. That is, only net revenue, without any material costs. These include not only the purchase of products and materials necessary for production, but also the purchase of machines, their maintenance, payment of wages to workers, advertising expenses, etc. Therefore, to increase revenue, it is necessary to take a number of measures regarding equipment, labor and technological processes:

These are the main ways to increase sales profits by regulating the production process.

Increasing profits outside of production

Equipment, personnel and procurement of resources are the basis for obtaining products in cheaper ways. However, to increase revenue, sales are needed. Without selling goods there will be no profit. Therefore, it is necessary to increase sales, and they depend on:

1. Product quality. The higher, the more people will want to purchase such a product;
2. Market expansion. This point is the most important, thanks to it the manufacturing company gets many new customers, which means sales increase. There are several ways to expand your sales market, but it is advisable to combine them to achieve results. For example, you need to organize advertising campaign, which will attract the attention of potential buyers, and at the same time establish connections with wholesale clients - owners of their own trading platforms.

A well-thought-out advertising campaign can attract the attention of many buyers, and as a result, increase revenue. But, if the first point (quality) is not met, people will very soon become disappointed in the product and stop buying it. To obtain regular customers

, you need to take care of your reputation and not offer them low-quality goods.

Not all entrepreneurs have their own production facilities and trade their own goods. Some prefer to limit themselves only to supplies ( network marketing, distributors of some brands, etc.). In this case, only advertising can increase profits. Typically, at this level of business, its owners create their own website and conduct an advertising campaign on the Internet.

By investing money in business development, buying shares, real estate or bonds, an entrepreneur expects to increase investments, that is, to receive growth. To figure out how to calculate growth, you will need to understand what it is. Gain is an increase in the value of fixed capital, ensuring the receipt of more funds (profit) upon its sale. Until the asset is sold, it is considered that no income has been received.

To calculate, you will need the values ​​of the current price and the previous one. The calculation results are used to manage financial and economic activity, as well as for maintaining statistics. The growth value allows you to determine whether income, the number of clients, or any other indicator has increased or decreased during the period under review.

Types of growth

• Realized– it is received if the investment objects were sold and a profit was made on them.
• Unrealized– occurs when there are investments that are not realized, but can bring profit after sale.

Management

To calculate, you will need to set a time interval and decide on the starting (base) point. It could be the beginning of a year, a month, or another time period.

The increase can be absolute. Its value is equal to the difference between the indicators of the current and base (or previous) periods. For example, the cost of producing a unit of output at the beginning of the year was 150 rubles, and at the end - 175 rubles. The absolute increase in value was 175-150 = 25 rubles.

Growth is often considered in relative values(growth rate). To do this, the value of the current indicator is divided by the base or previous value. For example, 175/150=1.16. This suggests that the cost of production has increased by 1.16 times. To get the percentage value, you need to multiply the result by 100%. In the example under consideration this will be 16%.

To analyze the effectiveness of activities or investments, it is necessary to determine the growth rate. To do this, determine the indicators corresponding to the starting and ending points. For example, the price of shares at the beginning of 2014 was 250 thousand rubles, and by the end of the year - 420 thousand rubles. Then the initial value is subtracted from the final indicator value (420000-250000=170000). The result must be divided by the initial value and multiplied by 100%. (170000/420000*100=40%). In the example considered, the rate of increase in the value of shares over the year was 40%.

To summarize the results over a long period (for example, several years), the average absolute growth rate is calculated. To do this, find the difference between the final and initial indicators, then it must be divided by the number of periods.

The increase may turn out to be negative. For example, if the value of shares by the end of the year was 210 thousand rubles, then the increase will be equal to:
(210000-250000)/210000*100=-19%.

Depending on the purpose of calculating absolute growth, the basic or chain methods are used. The basis of the basic method is the comparison of indicators of any period with the base one. In the chain method, current indicators are compared with previous ones.

Question: How to calculate profit growth?
Answer: Absolute indicator is the difference between the current and base (or previous) indicators. Relative – the result of dividing the current indicator by the base (or previous) one.

Question: How to get the average monthly increase if you take into account several different periods?
Answer: For this purpose, indicators for each month are calculated separately. Then they need to be added up and divided by their number.

Question: When calculating, I received a negative value. What does it mean?
Answer: This means that the investment did not bring profit, but became unprofitable.

The fundamental principle of any commercial organization is to generate the greatest income.

Profit is direct evidence of the effectiveness (efficiency) of a business and its profitability. The most significant indicator in this environment is sales profit. Any commercial organization constantly looking for ways to increase profits. First you need to find out what profit affects, how it is formed, how it is calculated, and what factors affect the amount of profit.

Why is it necessary to calculate profit from sales?

The productivity of an enterprise can be assessed by comparing the profit of a given period with data from previous periods. If an increase in profit is visible, it means that the business has worked effectively.

A successful analysis of sales profit makes it possible to develop measures to increase it, as well as find ways to reduce the cost of goods and develop the sales market. All this will provide an opportunity to increase profits and net income.

To analyze sales, the information used is:

• profit and loss report;
• balance sheet;
• financial plan.

Profitability- the amount of profit in percentage terms that the organization makes in relation to costs.

Profitability is calculated by dividing net profit by total revenue and multiplying by 100%. An indicator of 8–10% is considered normal.

If profitability is lower, the organization needs to think about measures to increase it.

Formula

Profit from sales is calculated using the formula. It is defined as the difference between expenses and gross profit.

Gross profit is determined by subtracting selling expenses from sales revenue.

Selling expenses(cost of sales) - only those expenses that directly go to sales.

So, the formula:

Prpr = Vpr – UR – KR

Where, KR, UR – commercial/administrative expenses;

Vpr – gross profit;

Prpr – income from the activities of the company.

Calculation of gross profit:

Vpr = VO – Sbst
Where, Cbst is the cost of selling products;
In – volume of revenue.

If you subtract all other expenses and taxes from the profit value, you will get net profit.

An example of using the formula for calculating sales profit.

Determination of net profit using an example

Entrepreneur Kuznetsov trades stationery retail. Within a month, he purchased goods worth 500,000 rubles from a wholesale warehouse. Arranging delivery cost him 5,000 rubles. For rent commercial premises Kuznetsov paid 5,000 rubles. Taxes and fees - 7,000 rub. Another 10,000 rubles were spent on other expenses.
Within a month, Kuznetsov sold all the goods.
With a 30% markup, gross sales revenue will be RUB 650,000.

Profit calculation:

• All expenses of an entrepreneur are summed up.

500,000 rubles - for goods;
27,000 rubles - all costs to sell the goods;

• Gross revenue (Vo) is 650,000 rubles.

• The difference between gross income and the cost of selling a product forms the sales profit.

Prpr = Vpr – UR – KR
Ur, Kr = 5,000 (delivery of goods) +5,000 (rent of premises) = 10,000
Prpr=150,000-10,000=140,000 (profit from sales)

• To calculate net profit, you need to subtract taxes and other expenses from the profit figure.

Net Prp=140,000 - (7000+10,000)=123,000 rub.

Thus, Kuznetsov will receive 123,000 rubles of net profit. As a result, this amount will be the result of his trading activities stationery supplies per month.

This is the most basic example of calculating profit. In practice, a number of other indicators are used that help more accurately determine profit. These include exchange rates, seasonality, inflation and others. All this can significantly affect the profitability of the organization.

What affects sales profit?

To develop options for increasing profits, you need to find out what it depends on. Profit is subject to internal and external factors.

Key internal factors are:

• trading revenue;
• volume of sales;
• cost of goods;
• cost of goods;
• costs of selling goods;
• management expenses.

Entrepreneurs can influence these factors and change them if necessary.

On external factors, which depend on the state of the market, businessmen cannot influence.

These include:

1. depreciation expenses;
2. market conditions;
3. natural and climatic factors (force majeure);
4. state tax policy.

These factors do not have a direct impact on profit, but can fluctuate the cost of goods and the volume of their sales.

Let's look at some options for increasing profits:

How to calculate the profit indicator from the sale of products in the planning period?

When organizing his work, an entrepreneur needs to take into account the size of the projected profit. To determine it, you need to have data on the type of product, price and sales volume (planned).

Most affordable way calculation - using the profitability indicator.

Eg, V next month A trading organization plans to sell 8,000 goods, the price of which is 700 rubles per unit. The profitability of sales of these goods is 11% (according to calculations of previous periods).

Thus, the planned profit will be:

Prpr (plan) = 8000 * 700 * 11% = 616,000 rubles.

Calculation and analysis of planned trading profitability is an important component of business management. The result of this event will be an increase in the efficiency of the organization.

Ways to increase profit ratio

To figure out how to increase profit, you need to understand what parts it is formed from.
The main indicators of the sales system are the coefficients of the formula that determines the amount of income of the organization from entrepreneurial activity.

In retail, profit mainly depends on sales volume.

To determine the moments of projected sales growth (and profits, respectively), sales volume must be broken down into key units.

Sales volume = (Incoming flow) x (Conversion rate) x ( Average bill)

1. 1) The conversion rate determines what part of total flow buyers has become real.
   This indicator depends on the range of goods, the professionalism of employees, and the visual component of the store design.
2. The incoming flow is practically not affected by these factors, but it is influenced by advertising, location trade organization, design and brightness of shop windows.
3. The size of the average check depends on the quality of work sales staff, from ongoing promotions, discounts, special offers and other “propaganda” events.

We measure key indicators:

1. In practice, only the incoming flow needs to be measured (special sensors at the inlet or manually for a small amount).
2. Conversion rate formula:
   Conversion rate = (Number of sales) / (Incoming flow).
3. The average check is calculated by dividing daily revenue by the number of sales.
   Data from sales performance indicators must be recorded and statistics must be kept on them. This needs to be done for the further development and implementation of strategic measures to increase each of them.

To increase the incoming flow, you need a clear plan for the months ahead, in which activities aimed at attracting buyers are developed.

The conversion rate can be increased by analyzing the work of sellers, demand, the trading floor. Customers may not find or see a certain product, or such product may not be in circulation at all in your trading organization.
The average check can be increased by developing various promotions that will motivate you to buy more.

The growth rate is used when analyzing any series of dynamics. The growth rate formula is often used in statistics and economics in conjunction with an indicator such as the growth rate (as a percentage).

DEFINITION

Growth rate shows how many times the indicator has changed in comparison with the base one, and rate of increase reflects how much the studied value has changed.

If the result of the calculation is a positive value, then we can talk about an increasing growth rate, but with a negative value, the rate of the value under study decreases when compared with the previous (base) period.

The growth rate formula is often used in the analysis of investment projects. This indicator is also often used municipal organizations in calculations:

• calculation of population growth;
• future building needs;
• volumes of service provision, etc.

Growth rate formula

To calculate the growth rate, you need to find the ratio of the indicator being studied to the previous (basic) one, then subtract one from the result obtained. The final result is multiplied by 100 to express the result as a percentage. The growth rate formula using the first method looks like this:

Tp=((Pip/Pbp)-1)*100%

Here Tp is the growth rate,

In the case when instead actual value of the analyzed indicators, only the value of the absolute increase is known, apply alternative formula. In this case, the percentage ratio of the absolute increase to the level in comparison with which it was calculated is found.

Тп=((Pip-Pbp)/Pbp)*100%

Here Tp is the growth rate,

Pbp – indicator of the base period,

Pip is an indicator of the period under study.

A big challenge for students is the difference between the rate of growth and the rate of increase. Let us highlight several provisions in which the difference between these values ​​lies:

1. The growth rate formula and the growth rate formula are calculated using different methods.
2. The growth rate reflects the percentage of one indicator relative to another, and the growth rate shows how much it has grown.
3. Based on calculations using the growth rate formula, the growth rate can be calculated, while the growth rate is not calculated using the growth rate formula.
4. The growth rate does not take a negative value, while the growth rate can be either positive or negative.

Examples of problem solving

EXAMPLE 1