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How to calculate profitability of activities

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How to calculate profitability of activities

One of the key indicators of the success of an enterprise is the profitability of its activities.

This concept implies a relative measure of economic efficiency. Comprehensively, it reflects the degree of efficiency of the use of money, labor and material resources.

The coefficient of profitability is calculated as the ratio of income to assets and the resources that form it.

You will need

  • -relations of income and expenses.

Instructions

    1

Profitability of production activityIs determined by the ratio of profit from sales, deducting depreciation for the reporting period and costs for the sale of products, and also shows how much the company receives profit from each spent for the production and sale of the ruble's products.

    2

It can be calculated as a whole for the enterprise,And for certain segments of its products. The profitability of the products more accurately reflects the results of the firm's activities, since it takes into account not only the net profit, but also the entire amount of earned funds that came from turnover.

    3

The equation for calculating the profitability of productsLooks like this: the profit indicators are divided into sales figures and multiplied by 100. Thus, you get its level. The parameters are defined as a percentage.

    4

For a deeper study of the level of profitability, it is necessary to study in detail the causes of price changes, the unit cost of production and their impact on the profitability. Such calculations are customary for each type of product.

    5

Since the financial result of the activityOf the enterprise is the difference between the amounts of its incomes and expenses, hence its definition must be related to income and expenses for a certain reporting period. But since all revenues and expenses can relate to different reporting periods, it makes sense to separate them according to the time component. This is ensured by the right of capitalization.

    6

In this case, the financial result reducesOr increase the costs that are relevant to this period. That is, the company's expenses are written off in the period when they bring the company revenue. If they bring a loss, it becomes obvious thatprofitability Enterprise. All these expenses and incomes are shown in the balance sheet.

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