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How to calculate the profitability of core business

How to calculate the profitability of core business

With the calculation of several financial indicators based on the analysis of balance sheet data you can partly assess the financial condition of the enterprise.

On the other hand, using the calculations shown below, any enterprise can assess the financial condition of partial own counterparties, which made delivery of products.



One of the key business indicators, whichIt shows the success and effectiveness of any company - a measure of the profitability of its core business. Profitability ratios characterize the profitability of the company. Along with other factors of financial analysis, profitability indicators are calculated on the basis of balance sheet data. These include the balance sheet (form №1), the profit and loss statement (Form №2) and a number of other documents. But enough of these to calculate the profitability of the main activities of the two.


main profitability ratioActivities & nbsp- (OD) shows the amount of net income received by & nbsp-company of 1 ruble spent on production. When effectively organized business process to this figure should grow over time. To calculate it, divide the earnings from the sale of the profit or loss on the value of production costs. For convenience, use a formula tied to the form №2:

Profitability ratio OD = profit from sales / production costs.
Profitability ratio OD = str.050 / (line 020 + str.030 + str.040).


Another important indicator of the financial condition ofthe company is the coefficient of profitability of sales. In contrast to the OD ratio it shows the amount of net profit, which brings the company every 1 ruble of revenue. The growth of this ratio reflects the increase in profitability of core business means improving the financial condition of the company. To calculate the rate of return on sales, use formula (based on a form number 2):

Return on sales = profit from sales / revenue from sales.
Return on sales = str.050 / p. 010.


Along with the indicators of profitability of operationsused in the financial analysis, and other factors. For example, business activity ratios, which reflect the efficiency of the company's own funds. These include & nbsp- turnover ratio (a measure of the efficiency of the use of all available means of the enterprise), inventory turnover (rate of implementation of inventory in days) and other indicators.

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