The income of the company should be equated to gross value added (GVA). It is this indicator that reflects the efficiency of the enterprise, since it implements all factors of production (land, labor, capital, income of the enterprise), as well as the economic interests of all participants in production: owners of capital, employees of the enterprise and the interests of the state. According to these principles, income should also be formed as an indicator of GVA in the sold products.
At present, when assessing the effectiveness of an enterprise, the income indicator, equated to GVA, is not used as a generalizing indicator, but is used at the level of branches and the entire national economy. However, in the calculation of GVA in sales, it characterizes the organization’s income and the flow of funds through the sales indicator. In the current practice of assessing the effectiveness of enterprises by indicators of production volume (namely, production indicators are communicated to enterprises as government tasks), the products sold are not used as a general indicator. At the same time, the gross value added is precisely the general indicator of the effectiveness of the entire national economy and sectors. In this regard, there is a practical need to generate objective information about the performance of enterprises, joint-stock companies, corporations, holdings according to unified methodological principles with the formation of industry performance indicators that adequately reflects all the organization's income and expenses. One of these principles is the harmonization of criteria for evaluating efficiency at the enterprise level with indicators of the performance of industries, with indicators of evaluating the effectiveness of enterprises in assessing value.
Cash flows in the evaluation of enterprises and industries are not currently used. Only a comparative description of their inflow and outflow, that is, the sources and main directions of their use, are given. But in assessing the value of the company by the income method, gross cash flow indicators , net cash flow, income and expenses of the organization are used.
Based on the definition of value added, the latter is formed at the production stage and is implemented at the final stage of the circulation of funds as part of the indicator of product sales. Its components include the costs of wages, social insurance, depreciation, net profit. Therefore, it is value added that should be equated with income that can generate cash. Therefore, based on the economic nature of the concept of “value added”, it is legitimate to equate it with the concept of “income”.
In this case, it is necessary to resolve the issue of forming the terms of income. In most models for assessing the revenue approach , the value added component is net profit (EVA model, SVA). But net profit is only an insignificant part of the income, since for employees of the enterprise the income is salaries and contributions to social funds, for owners of capital - dividends paid from net profit and depreciation deductions for updating production potential, for the state - taxes and fees from proceeds and arrived.
Such an approach to revenue generation in valuation has the following advantages:
- the salary and deductions from it, taxes and payments to the fiscal system from revenue, net profit, etc. are provided with real cash.
- through this indicator of income, the economic interests of workers, owners of capital and the state are comprehensively taken into account;
- the recommended income indicator allows you to ensure the relationship of performance indicators that really reflect the income and expenses of the organization, with performance indicators at the level of industries and the entire economy of the country as a whole;
- it is this approach to the formation of an income indicator that allows you to establish the market value of an enterprise from the point of view of filling it with real money by generating value added in cash flow.
Therefore, the recommended income indicator is characterized by the ability to actually generate cash flows and increase capital, taken into account in the formation of the market value of the company. This is consistent with the economic nature of the basic models of market value formation. If we define income as gross value added by the volume of production, then the value added in the produced but not sold products, by its economic nature, represents expenses, and not the newly created value that ensures cash inflow. At the same time, salary and depreciation expenses represent income in the form of cash inflows used in the interests of employees, owners of capital and the state. Gross value added in cash inflows will characterize all income and expenses of the organization, income at the level of the enterprise, industry and the entire national economy.
This will ensure not only the relationship of performance indicators with indicators of cost estimation, but also a new performance indicator will be formed - the market value of the enterprise.