Financial result – the difference between revenues
Financial result (in accounting also: accounting result, result of operations) this is the difference between revenues and costs of obtaining them calculated for a specific enterprise (accounting entity) in the selected reporting period. The concept of the financial result was for the first time entirely developed by the Financial Accounting Standards Board. A positive financial result is called a profit and a negative loss is called a profit. Financial result. Divided by the value of income, assets or capital employed is called profitability.
The financial result is a measure of the economic situation of the company and as such can be used to forecast future cash flows.
The financial result is a gross profit. If, however, it is reduced by income tax, we are dealing with a net profit, a net financial result or a profit to be shared by the owners of capital.
The company’s financial result consists of:
- Profit and loss account (Data),
- Gross income tax,
- Dividends (companies registered in the National Court Register).
Levels of financial result in Data:
- financial result from sales,
- financial result from operating activity,
- financial result in the net amount.
- gross financial result,
- Zs account,
What is the financial result:
- informs in a synthetic way about the financial result of the business activity of the enterprise,
- it is the effect of economic decisions made on its own, at its own cost and risk by the company,
- serves as a base when making optimal decisions in the area of current management,
- is a widely recognized and applied measure of business performance assessment,
- subject to verification verifying the reliability and truthfulness of the numerical findings made
- shows in what total amount revenues and costs were shaped in the past period
- shows what results were achieved during normal business operations and which results as a result of extraordinary operations,
- (profit) is a component of formulas used to calculate the effectiveness of management,
- is the amount determined in the profit and loss account,
- informs about the realization of the direct purpose of the company’s activity, i.e. about the quantity and quality of products and services provided, about whether there is a proper demand for products and services and whether the means of production at the disposal of the enterprise are used rationally and effectively,
- (profit) is the main source of financing the development and modernization of the enterprise,
- (profit) is the source of creating special funds for the company and crew,
- (profit) is a source of financing of general social tasks (education, health care, environmental protection),
- (profit) is treated as a monetary equivalent of the value of the pure and produced product,
- (profit) is the stimulus of material interest,
- (profit) reflects the effects in the sphere of production, as well as in the sphere of trading,
- is of a resultant nature.
There are two ways to determine the financial result: a comparative variant and a calculation variant. They differ from each other by the calculation of the result on sales.