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What should be the profitability

What should be the profitability

This figure is the net profit obtainednow from the sale of their manufactured goods or services rendered by itself has little to say about the success of this enterprise. After all, one and the same income in the production of the same product can be like a large company and a small.

Therefore, in this case, the evaluation index, which allows an objective assessment of performance of the company, used margin.

What is the profitability

Profitability - an objective measure,reflecting in general, how the enterprise leverages labor, material and financial resources, carrying out production and sale of goods or services to end users. This indicator is the relative economic efficiency of enterprises, it is expressed as a percentage. Defined as a result of the profitability ratio of gross or net profit to the amount of all goods sold or services costs.
According to how high profitability ofbusinesses can judge how recouped its production costs, how effective its pricing policy and how it is able to control these costs. If simplify its calculation, profitability can be represented as the ratio of net profit to the cost price. The lower the cost of all else being equal, the higher the profitability.
This figure is much greater thanprofit characterizes the economic activity of the company, as is a clear economic benefit ratio resulting from use of resources. Ultimately, profitability depends on how the enterprise operates in a field of production, because different types of economic activity, it will be different due to objective reasons.

What are the margins

This issue is of concern not only entrepreneurs,and the tax authorities, whose task is to control that the enterprise does not understate the report shows income and thus, did not reduce the tax burden. Therefore, for several years, the Federal Tax Service makes calculations "normative" profitability for enterprises of all sectors of the economy.
The tables presented on the site FNS,specified return on sales and return on assets. The first indicator - the ratio of net profit (profit minus losses) and the cost. The second - the ratio of net profit enterprises and assets. Recent estimates are given as of 2012. According to him, the profitability of sales srednestaticheskogo Russian enterprises was 9.7%, and its assets - 6.8%. With regard to economic activities, one of the most profitable is mining, where the profitability is 50%, and assets - 16%. The profitability of fishing, for example, is 21.4% - production of food products, beverages and tobacco - 11.1% - of textile and clothing industry - 12.3%.

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