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How should profitability be?

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What should profitability be</a>

Such indicator, as the net profit receivedEnterprise from the sale of goods produced by it or services provided, in itself little can say about the success of this enterprise. After all, the same profit in the production of the same goods can be either from a large enterprise or from a small one.

Therefore, in this case, profitability is used as an evaluation indicator, which allows obtaining an objective evaluation of the company's performance.

What is profitability?

Profitability is an objective indicator,Reflecting in general, to what extent this enterprise effectively uses labor, material and monetary resources, carrying out the production and sale of goods or services to end users. This indicator of the company's economic efficiency is relative, it is expressed as a percentage. The profitability is determined as a result of the ratio of gross or net profit to the sum of all costs for goods or services sold.
By how profitable the work isEnterprises, you can judge how much its production costs pay off, how effective its pricing policy is and how much it is able to control these costs. If you simplify its calculation as much as possible, profitability can be represented as the ratio of net profit to cost. The lower the cost price, other things being equal, the higher the profitability.
This indicator is much more thanProfit, characterizes the economic activity of the company, since it represents a clear correlation of the received economic effect with the resources used. Ultimately, profitability depends on the area of ​​production in which the enterprise operates, since for different types of economic activity it will be different for objective reasons.

What should be the profitability indicators

This issue worries not only entrepreneurs,But also the tax authorities, whose tasks are to control, so that enterprises do not understate the profit shown for the report and, thus, do not reduce the tax burden. Therefore, for several years the Federal Tax Service has been making calculations of the "normative" profitability for enterprises in all sectors of the economy.
In the tables presented on the FTS website,Indicates the profitability of sales and return on assets. The first indicator is the ratio of net profit (profit minus loss) and cost price. The second is the ratio of net profit and assets of enterprises. The latest calculations are based on data for 2012. According to them, the profitability of sales of the average Russian enterprise was 9.7%, and its assets - 6.8%. As for the types of economic activity, mining is one of the most profitable, where the profitability of production reaches 50%, and the assets - 16%. The profitability of fishing, for example, is 21.4% - food production, including beverages and tobacco, 11.1% - textile and clothing production - 12.3%.

How should profitability be? Was last modified: June 21st, 2017 By Jeopuoqr
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