The profit and loss of foreign trade enterprises is an important indicator for assessing the management level of foreign trade enterprises. In order to control losses and increase profits, my country’s foreign trade enterprises must do cost accounting for the goods to be exported before trading. The so-called cost accounting is to compare the investment made for export goods with the FOB net income created by exporting the goods, or with the RMB income converted from the net foreign exchange income according to the bank’s foreign exchange purchase price at the RMB market exchange rate.
In each export trade, foreign trade enterprises should ensure that the exchange cost of their export goods is not higher than the exchange rate of unit foreign exchange income (bank foreign exchange purchase price) to make a profit.
The cost accounting of export goods mainly has the following two economic efficiency indicators.
1. Export goods profit and loss rate
The export goods profit and loss rate is equal to the export goods profit and loss divided by the total export cost. The export goods profit and loss refers to the difference between the net RMB income from export sales and the total export cost. If the former is greater than the latter, it is a profit; otherwise, it is a loss. The calculation formula is as follows:
Export profit and loss rate = [(net income in RMB from export sales – total export cost) / total export cost] x 100%
Net income in RMB from export sales = net foreign exchange income x exchange rate② Foreign exchange cost of export goods
2. Foreign exchange cost of export goods refers to the ratio of total export cost calculated in local currency (such as RMB) to net income from export sales calculated in foreign currency (such as US dollars). In this way, it can be obtained how many units of local currency are exchanged for how many units of foreign exchange, for example, how many RMB are exchanged for how many US dollars. If the exchange cost is higher than the foreign exchange rate in the foreign exchange market at the time of settlement, the export is a loss; otherwise, it is a profit. The calculation formula is as follows:
Export commodity exchange cost = total export cost (RMB) / net income from export sales (US dollars or other foreign currencies)
Total export cost = purchase (or ex-factory) price (including value-added tax) + all fees paid before delivery – taxes
For example: A certain merchant of mine reached an export transaction contract with a foreign customer. The merchant estimated that the purchase cost was 1.27 million yuan (including 180,000 yuan of value-added tax). The total cost paid before delivery was 110,000 yuan, and the net export income was 200,000 US dollars. The exchange cost of this transaction is 6.00 yuan/US dollar. That is:
Export exchange cost = (1.27 million yuan + 110,000 yuan – 180,000 yuan) ÷ 200,000 US dollars = 6.00 yuan/US dollar
Because the tax is refunded after export, the total export cost does not include tax, so the tax of 180,000 yuan should be deducted.
For this transaction, the RMB spent for every 1 US dollar earned is 6.00 yuan. Comparing with the exchange rate, it can be predicted whether it is a loss or a profit.
The export merchant estimated the exchange rate to be: 1 US dollar: 6.66 RMB. Then for every 1 US dollar of net income obtained from this transaction, 0.66 RMB can be earned.
Another important indicator closely related to the exchange cost is the export exchange rate, which is the reciprocal of the exchange cost. That is
Export exchange rate = 1/exchange cost