International Journal of Management and Economics Fundamental
37
https://theusajournals.com/index.php/ijmef
VOLUME
Vol.05 Issue02 2025
PAGE NO.
37-41
10.37547/ijmef/Volume05Issue02-09
Analysing income, costs and profit of an enterprise
Mukhibova Guli Yarkinovna
Tashkent architecture and civil engeeniring University, Department "Economics and real estate", dots, Uzbekistan
Received:
23 December 2024;
Accepted:
25 January 2025;
Published:
27 February 2025
Abstract:
The modern
“income
- expense -
profit” analysis system is essential for making reliable management
decisions not only by small businesses, but also by managers of large enterprises. This system examines various
factors influencing the dependence of costs, production processes and financial results. This circumstance is
reflected in the need for enterprise managers to regularly make decisions regarding the selling price, variable and
fixed costs, acquisition and rational use of resources.
Keywords:
Revenue, costs, profit, enterprise, valuation, market, strategy, reporting, client, analysis.
Introduction:
For businesses, income, cost and profit
analysis plays an important role in assessing financial
status. We will consider the interaction of these three
financial indicators and how to assess the effectiveness
of a business.
Income is the total amount of money that the
enterprise receives from its products or services. This is
one of the most important indicators in measuring the
success of an enterprise. An increase in income usually
indicates an increase in the market share of the
enterprise or the demand for its products.
Enterprises cover various costs to continue their
activities. These costs include the production of goods,
employee salaries, advertising and marketing,
transportation, and other operating expenses. Effective
cost management increases the profit of the
enterprise.
The amount left over from the allocation of expenses
from the income of the enterprise is called profit . If
income is higher than expenses, the enterprise will
benefit. On the contrary, if the costs are higher than the
income, damage occurs. Profit growth indicates the
economic success of the enterprise.
In order to increase the income of enterprises in
Uzbekistan from 2025, President Shavkat Mirziyoyev
signed the law on the main directions of tax policy for
2025-2027 on December 24, 2024. According to him,
the current basic tax rates for 2025 were retained, and
by a presidential decision it was established that VAT
and income tax rates will not be increased until 2028.
[1].
Literature Review
The most important indicator in the activities of
business entities is self - sufficiency. This means that all
expenses of the organization must be covered by its
income. In this case, the amount of income must have
exceeded the amount of expenses that allow you to
make a profit.
The authors who considered the problem of analyzing
income and expenses as an economic basis in the
stability of the enterprise's activities are as follows:
Butkova O. V., Klochkova E. N., Kostyunin V. I., Levina E.
A., Ivanova V. T., Kudryavtseva T. Yu., Monezhov V. V.,
Jilkina A. N., Dmitrieva I. M., Barilenko V. I., Kazakova N.
A.
Klochkova E. N. the economic entity emphasizes that
profit occupies an important place in the self -
management system, since profit is the most important
economic category that the descriptor considers. [2].
Korneychuk B. V. says economic profit is the difference
between gross income and different economic costs in
the conduct of production activities.
According to Dmitrieva I. M. methodology, the analysis
of financial results should be carried out depending on
whether the analysis of external or internal users is
being carried out. [3].
In accordance with V. I. Barilenko's methodology,
income and expense analysis involves structural
analysis on their sources. [4].
METHODOLOGY
International Journal of Management and Economics Fundamental
38
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International Journal of Management and Economics Fundamental (ISSN: 2771-2257)
In the preparation of the article, abstract and analytical
observation, comparative and factor analysis,
indicative,
sampling
observation,
comparison,
economic-statistical and other methods were used.
RESULT
According to the fiscal strategy for 2025-2027, it is
defined in the strategy “Uzbekistan–2030” [5]. Based
on the tasks of doubling the size of the economy by
2030 and entering the ranks of “high
-income
countries”, Chapter II of the draft budget defines
“raising per capita income to US $ 4,000” as one of the
main goals.(Table 1).
Grouping of states by income (GDP per capita) according to the methodology
of the World Bank
Table 1.
Classification 01.07.2020 01.07.2021 01.07.2022 01.07.2023 02.07.2024
Low income
<= 1035
<= 1045
<= 1085
<= 1135
<= 1145
Income
below
average
1036 -
4045
1046 -
4095
1086 -
4255
1136 -
4465
1146 –
4515
Income
above
average
4046 -
12535
4096 -
12695
4256 -
13205
4466 -
13845
4516 -
14005
High income
>12535
>12695
>13205
>13845
>14005
Source: World Bank data.
The practice of grouping States by per capita income
has been established by the World Bank each year,
which is now included in a group where the income of
states with a gross national product per capita of $
4,516 - $ 14,005 is above average. Based on the above,
it is recommended to formulate target indicators
before 2030, taking into account the above grouping
boundaries, as well as annual changes.
Usually, financial analysis is an important tool in
assessing the activities of an enterprise and predicting
its future success. Income, cost and profit
—
these
indicators fully reflect the economic situation of the
business. Each enterprise should monitor these three
elements when evaluating its activities and correctly
understand the connection between them. We will
dwell in detail on the relationship between income,
cost and profit, the factors affecting them and making
strategic decisions based on these indicators.
Net income from the sale of products, which is
indicated in the form of the enterprise “report on
Financial Results” 2, is the total amount of money
received from the main activity. It is often formed from
the input received by selling products or services.
When analyzing income, it is necessary to pay attention
to the following aspects:
a) Market and customer analysis
The increase in income often depends on the change in
the market, the discovery of new markets and the
attraction of new customers. The release of new
products, the provision of new services or the increase
in demand for existing products will have a positive
effect on the income of the enterprise.
b) Diversification of services and products
Diversification is a way to create new sources of
income, ensuring that the enterprise adapts to the
changing conditions of the market. For example,
creating a new product line or entering a new service
sector can increase the total revenue volume of the
enterprise.
c) Expansion of sales channels
Internet sales, marketing and advertising through social
networks, sales through mobile applications
—
all
these are tools that help to increase the income of the
enterprise. Applying new sales channels adapted to
market requirements is one effective way to increase
revenue.
Costs are created at the expense of all the costs that
arise in the process of production, supply and sale of
products or services of the enterprise. Proper cost
management and effective management play an
important role in increasing the profitability of the
enterprise. Costs are divided into two main types:
International Journal of Management and Economics Fundamental
39
https://theusajournals.com/index.php/ijmef
International Journal of Management and Economics Fundamental (ISSN: 2771-2257)
a) Variable costs
Variable costs are related to the volume of production
or the amount of sales. For example, the costs of raw
materials, labor costs and the funds spent on marketing
go into variable costs. Efficient cost management of this
type helps to optimize the production process.
b) Fixed costs
Fixed costs vary regardless of the activity of the
enterprise. For example, rent payments, salary
payments to office employees, depreciation costs are
included in fixed costs. To reduce these costs, the
enterprise is often forced to optimize resources and
reevaluate costs.
c) Cost optimization:
The enterprise can use the following methods to
manage effective costs:
•
Resource
optimization:
Automation
of
production processes and the introduction of efficient
technologies reduce costs.
•
Supply chain reduction: Increasing internal
production or searching for other resources instead of
using external suppliers and resources can cut costs.
•
The use of efficient labor resources: It is
possible to reduce costs by optimizing the working
hours of workers and motivating them to higher
efficiency.
Profit constitutes the difference between income and
expenses. If income is higher than expenses, the
enterprise will receive profit, otherwise it may suffer
losses. Profit measures are one of the main indicators
of the financial condition of the enterprise. When
evaluating benefits, the following aspects should be
considered:
a) Brutto benefit
Brutto profit represents the amount left after the direct
production and sales costs of the enterprise are issued.
Brutto profit indicates the efficiency of the enterprise
in the production of products or services. The growth
of this indicator leads to an improvement in the
production process of the enterprise.
b) Operating profit
Operating profit is the profit from the main activity of
the enterprise. This indicator is calculated without tax
and interest deductions and indicates the effectiveness
of the enterprise in basic operations.
c) Net profit
Net profit is the final profit, taking into account all the
income and expenses of the enterprise, including
interest, taxes and other expenses. Net profit is the
final indicator of the financial condition of the
enterprise and fully reflects how the enterprise
conducted its activities.
For example, the failure to include project costs in the
budget of income and expenses in order to expand the
activities of the enterprise will lead to an increase in the
profit of the enterprise in the current period. There are
also cases when the amount of profit can increase
dramatically by selling the enterprise its main tool,
which is expensive. In order for the management of the
enterprise to focus on the reasons for a sharp increase
in profit, it is necessary to conduct an in-depth analysis
of the results of the budget of income and expenses.
The following table-2 provides an example of the
budget of income and expenses of a construction
enterprise.
An example of the budget of income and expenses of a construction enterprise in
a thousand rubles
Table-2
Budget
articles
1
month
2
month
3
month
4
month
5
month
6
month
7
month
8
month
9
month
10
month
11
month
12
month
year
Budget
articles
0
2325
6
2473
0
3143
4
2937
6
30104
30486
3086
2
3189
6
3545
2
3962
2
4512
4
3733
54
Prime
cost of
products
sold
1819
2
1779
2
1847
2
2300
6
2210
4
21766
22568
2068
2
2072
0
2334
2
2486
4
2773
8
2612
46
Sales
costs
2078
2542
2556
4386
3764
3262
2768
2396
2070
2198
2342
2660
3302
2
Adminis
trative
manage
3014
2752
3310
3498
3460
3882
3672
3510
2994
2654
2610
3344
3870
0
International Journal of Management and Economics Fundamental
40
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International Journal of Management and Economics Fundamental (ISSN: 2771-2257)
ment
costs
Benefits
of basic
activitie
s
-2272
170
392
544
48
1194
1478
4274
6112
7258
9806
1138
2
4038
6
Percenta
ge to be
paid
0
0
0
0
270
198
154
84
0
0
0
0
706
Profit
until tax
is paid
-2272
170
392
544
-222
996
1324
4190
6112
7258
9806
1138
2
3968
0
Profit
taxes
0
0
0
0
0
0
0
0
2782
0
0
6826
9608
Dividen
ds
0
0
0
0
0
0
0
0
0
0
0
0
0
Net
profit of
the
reportin
g period
-2272
170
392
544
-222
996
1324
4190
3330
7258
9806
4556
3007
2
Net
profit
sales
profitabi
lity from
the
beginnin
g of the
reportin
g period
-2272 -2102 -1710 -1166 -1388
-392
932
5122
8452
1571
0
2551
6
3007
2
3007
2
Profitabi
lity
of
sales
10,8
%
0,7%
1,6%
1,7% -0,8%
3,3%
4,3%
13,6
%
10,4
%
20,5
%
24,7
%
10,1
%
8,1%
Source: compiled by the author based on the research carried out.
This example of income and expenses, presented in
table-2, has an overview. That is, there is no detailed
example here on the types of products or types of
activities. For example, the indicators of net proceeds
from the sale of products, the cost of products sold and
the cost of sales can be cited by the type of product. In
this case, it is necessary to divide the costs of
production and sales into direct and indirect costs.
A correct understanding of the relationship between
income, cost and profit will help to correctly assess the
financial condition of the enterprise. The relationship
between these three indicators can be thought of as
follows:
•
Increased income increases the profit of the
enterprise, but it can also increase costs, if the
enterprise expands production or services. Therefore,
it is important to also manage expenses in increasing
income.
•
Reducing costs increases profits, but reducing costs
can also reduce the quality or level of service of the
enterprise, so a careful approach is required.
•
Increased profit indicates the economic success of the
enterprise and helps to ensure the stability of the
business. Profit increases are often achieved by
increasing productivity, optimally exploiting resources,
and discovering new markets.
The correct analysis of the financial condition of the
enterprise is important in predicting its future
development. Through the analysis of income, cost and
profit, the enterprise will be able to make the following
strategic decisions:
By optimizing the cost of products or services, it is
possible to increase the income of the enterprise and
improve its competitiveness in the market.
International Journal of Management and Economics Fundamental
41
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International Journal of Management and Economics Fundamental (ISSN: 2771-2257)
It is possible to reduce costs and increase profits by
developing new technologies or automating existing
processes.
The enterprise must analyze its financial situation,
identify potential risks and take measures against
them.
CONCLUSIONS
In conclusion, income, cost and profit are the main
indicators when measuring the economic condition of
an enterprise. Proper analysis and management of
them will lead to the success of the enterprise.
Optimization of costs, increasing income and
maximizing profit contributes to the stable
development of the enterprise. Each enterprise must
carefully monitor these indicators in order to
effectively manage its activities and ensure financial
stability.
REFERENCES
https://data.worldbank.org/indicator/is.air.good.mt.k
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