Gross Profit
Management of an enterprise has to deal with a whole multitude of factor - awareness of the technical, financial, legal and social processes and phenomena, entrepreneurial intuition, as well as having the experience of doing business in a modern market economy. At the heart of any commercial activity is the desire to obtain the greatest possible profit without the loss of product quality and with minimal risk to the enterprise. The profit is the final indicator determining the effectiveness of the enterprise. This profit allows the company to develop and optimize its business potential. In order to properly and purposefully direct and regulate financial flows inbound and outbound, the manager must have a certain expertise in the kinds of profits, its sources, classification and optimal ways of its further use.
Gross Profit Description
If the concept of profit includes the difference between expenses and income from the sale of goods or services, then gross profit is the characteristic of the effectiveness of operating and financial policy of the enterprise. Thus, the gross margin is the difference between revenue from sales of goods or services and their cost. It is important to note that in contrast to the net profit, the gross profit does not rule out variables and transaction costs and income taxes (Anari and Kolari 7). Gross profit is obtained in the following way: GP = B - C where B is the profit for sold goods, and C is the cost of manufactured goods or services. This bring us to the definition where gross profit is the profit the company receives from the sale of goods (services) without considering its direct cost (Minster 14).
In order to properly and objectively obtain gross profit, the enterprise must first identify all items of expenditure, which includes the cost of goods, including variables that were not pre-conditioned and calculated (Minster 19). According to the most widespread definition, gross profit can be explained as the total amount of resources, expressed in monetary terms, which the company allocated for the production and marketing of its goods (services) or other deliverables. Thus, only having a complete picture of all the costs that are incurred in the production of goods production and sale or service, can the financial department calculate the gross profit for a certain period of time (Anari and Kolari 13).
Factors Affecting the Gross Profit
Like any other financial category, the gross profit is exposed to a number of factors. Conventionally, they can be divided into factors that depend on the enterprise activity, and independent factors. The first category includes the dynamics of growth of volumes of production and sales, product diversification, working to improve the quality and competitiveness of products, cost reduction, optimization of productivity and efficiency of each unit of human resource capacity, maximum utilization of production facilities and capacities, regular analysis and if necessary, revision of the company's marketing strategy (Chaet and Lundin 39). The second category includes factors …
