The rate of profit is an indicator defined as the percentage of profit for any period of the company's activity to the capital advanced into it. Economic profit is called, in turn, the difference between accounting or economic costs and the proceeds received as a result of activities. Profit concepts - Different concepts of costs of any production lead to different concepts of profit. Allocate economic, accounting, balance sheet and normal profit.
Accounting profit is the difference between the total revenue from the sale of goods and external costs, that is, payment of production resources to suppliers. This type of profit differs from economic profit by the amount of internal costs. Economic profit is the total revenue minus all internal and external costs, i.e. economic profit is net profit, which is expressed as a measure of the difference between revenue and costs. Economic profit can be an indicator that production resources in the enterprise are used efficiently. If the economic costs are higher than the income received, the enterprise incurs losses.
Normal profit is the reward for
product / work / service of the enterprise, taking into account internal costs, for example, salaries or the cost of consumables. Normal profit is an indicator for management whether it is worth retaining resources in this area of the company. So, if normal profit is not ensured, the entrepreneur needs to reorient efforts from this type of activity to another, more profitable, or abandon it.
The balance sheet profit is the difference between material
costs, salaries, depreciation and proceeds from the sale of product sales. Balance sheet profit is also called gross profit and is the main source of use and distribution of the means of production.
More here - https://en.wikipedia.org/wiki/Rate_of_return
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