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Budget is a quantified operational plan for the upcoming accounting period/s. It is financial plan which works as a kind of target.   The difference between budget and forecast is: budget shows what the entity aims to achieve (target) forecast shows prediction what is likely to be achieve

Indicators of indebtedness and financial structure

The company may be financed by equity (share capital, share premium, retained earnings) and debts (loans, outstanding liabilities etc.). Indebtedness is the term used to evaluate the extent to which is the entity financed by debts (or generally liabilities).   Indicators of indebtedness and


Profit is generally defined as a difference between income and expenses. It is one of the most common business objectives, a kind of reward for risk and the key measure of success in corporate life. However, there are many different forms of profit which greatly limits its comparability. Above

Tax profit

Tax profit is profit serving as the basis for calculating income tax under the provisions applicable tax law. Tax profit calculation is usually based on the accounting profit that is transformed to tax base.

Forms of accounting profit used in practice

Above in other articles were mentioned forms of profit that are somehow clearly defined. Nevertheless, the economic world is fond of other indicators and some of them can be usually found in the reporting system of nearly any company. They are often not based on any GAAP (not mentioned even in IFRS)


EBITDA (PBITDA) is the total profit/loss without: interest expense (i.e. cost of debt) income tax depreciation and amortization (i.e. write-downs of intangible assets) possibly also profit/loss from discontinued operations (defined in IFRS, other GAAPs may not use this concept) EBITDA usuall

Market value added (MVA)

Market value added (MVA) shows how much value the company delivers to its shareholders. Unlike EVA, MVA evaluates the long-term development and the contribution is evaluated over the entire life of the company (not per year). MVA is used to assess the quality of management work.   Calcul

Marginal (variable) costing

Marginal costing is a type of costing method under which only variable costs are included to the value of the product (or job, contract, batch, process, etc.). Therefore, fixed costs are not allocated to the product and are expensed.   It is also known as variable costing method.   Th

Accounting profit

Accounting profit = income - explicit costs It is a term defined by accounting standards, rules or national legislation used for the purpose of preparing financial statements or possibly tax returns. The difference between economic and accounting profit is described in this article. Accounting pr

Categories of profit in IFRS / IAS

Profit (or loss) income   minus expenses →  excluding other comprehensive income and expenses (i.e. Other comprehensive income) (20)   Other comprehensive income incomes not included in the profit and loss   minus expenses not included in the profit an

Operating income / Operating profit

Operating income is the profit/loss from ordinary operations of the company without: interest expense (i.e. cost of debt) income tax incomes and expenses from non-operational activity (i.e. Non-operating result), which is the result of other than ordinary activities. possibly also profit/loss


EBT (PBT) is the total profit/loss without: income tax possibly also profit/loss from discontinued operations (defined in IFRS, other GAAPs may not use this concept)   EBT thus equals indicators: EBIT after including interest expense (i.e. cost of debt) EAT (PAT) after removing the i

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