In a market economy, the goal of an enterprise is to increase its market value. The main factors of value creation are cash flow, which takes into account the variability of external and internal factors and interaction with competitors.
To the state, the problem of efficiency is represented by such problems as gross income and profit, intensification of production and productivity growth, maximization of profit in terms of fulfilling the approved tasks. Profit at the enterprise level is standardized and its maximization is based on an increase in the volume of output or minimization of total costs at stable prices. Under these conditions, profit maximization does not occur in order to increase the competitiveness of products relative to other enterprises, but in order to meet the planned production volume and ensure gross income of the enterprise under stable prices and standards.
The problem of choosing criteria for evaluating the enterprise becomes acute due to the large gap between supply and demand. Therefore, profit cannot fully express the real result of the enterprise and its production structures. Profit also cannot fully take into account the real needs of the intensive development of the enterprise. The increase in profits, possibly with a large deterioration of fixed assets and with the release of obsolete, but cheap products. A situation arises when the profit indicator is not generalizing at the micro and macro levels. This invariably leads to such an integral indicator as gross income, gross value added in sales, which is currently being formed at the level of industries and the entire national economy.
Gross value added should be formed as the difference between the sale of goods and consumed material costs. In the main assessment models, the concepts of “income” and income as an indicator of efficiency are rarely used, the use of the “gross income” indicator reflecting the extensive nature of the economy is predominant.
The concept of “income” is vague due to the use of indicators such as cash flow, gross cash flow, profit, gross income, value added, cash value added and others.
The study of various points of view of scientists-economists on the disclosure of the economic essence of the concept of "income" showed that most of them can be grouped according to several indicators:
- in terms of the newly created value;
- in terms of “cash inflows or the receipt of tangible assets with a monetary value”;
- according to the indicator “an increase in economic benefits resulting from an increase in assets or repayment of obligations providing an increase in equity”.
Gross income is basically equated to profit from sales, the definition of which is based on the proceeds from the sale of goods. The use of the revenue indicator from the sale of products as the initial indicator for calculating profit in most models of estimating the income method is hardly justified, since the full amount of revenue depends on:
- firstly, from the chosen method of accounting (“for payment” or “for shipment”);
- secondly, as part of the proceeds from the sale also included material costs acquired from the outside. With their share in the cost of industrial enterprises of 60-90%, these expenses cannot be recognized as cash inflows and considered income. On the contrary, it is an outflow of funds. As a result, 50-90% of the cost of materials, fuel, energy, components as part of the cost is hardly legitimate to consider income. The latter, in essence, should provide income to all participants in production: employees of the enterprise, owners of capital, the state.