Lessons 20 · 1 lessons · U. G‘afurov, Q. Sharipov. Basics of Entrepreneurship: textbook for Grade 11 of general secondary schools and for secondary specialised and vocational institutions. 1st edition. “O‘zbekiston” publishing house, Tashkent, 2018
20
Financial results of an enterprise
Textbook: pp. 93–98
GoalCalculate revenue, profit, loss, profitability and the break-even point; explain how profit is distributed and what the signs of bankruptcy are.
New words
revenue: money received from selling goods or services (price × quantity) · Tushumprofitability: profit as a percentage of costs, showing how efficiently money is used · Rentabellikbreak-even point: the sales volume at which revenue equals total costs · Zararsizlik nuqtasibankruptcy: inability of a business to pay its debts on time · Bankrotlik
Explanation
The result of a business shows in three indicators. Revenue is the number of units sold multiplied by the price: TR = P × Q. Profit is the difference between revenue and total costs: Pr = TR − TC; if the difference is negative, it is a loss. Profitability is the ratio of profit to costs: R = Pr / TC × 100 %, showing how much profit each spent so‘m brought. After taxes are paid, profit is distributed by the owners’ decision: part stays for development and part goes to the owners. The break-even point is fixed costs divided by what each unit contributes: BEPu = FC / (P − AVC); every unit sold above this quantity brings profit. Being unable to pay overdue debts, continuing losses and a shortage of working capital are signs of bankruptcy risk; if the risk grows, the matter goes to court.
Worked examples
An imaginary nut-cookie workshop: 500 units a month at 12 000 so‘m. TR = 12 000 × 500 = 6 000 000. If total costs are 4 800 000, profit = 6 000 000 − 4 800 000 = 1 200 000 so‘m; profitability = 1 200 000 / 4 800 000 × 100 = 25 %.
An imaginary bicycle repair stand: fixed costs 900 000 a month, variable cost 9 000 per job, price 15 000 so‘m. BEPu = 900 000 / (15 000 − 9 000) = 150 jobs. Jobs beyond 150 bring profit.
Class activity
Mini-report: pairs invent price, monthly volume, fixed and variable costs for an imaginary service (for example yard cleaning), calculate revenue, profit, profitability and break-even point, and write a 3-sentence conclusion.
Practice
1
What does a unit sold above the break-even point give?
Profit: the contribution leaves a net surplus from every extra unit.
2
The price is 25 000 so‘m and 40 units were sold. What is the revenue in so‘m?
1000000
3
Revenue is 7 500 000 and total costs 6 000 000 so‘m. What is the profitability in per cent?
25
4
Fixed costs 1 200 000, price 20 000, variable cost 14 000 so‘m. What is the break-even point in units?