Profits shows the absolute effect of the company without used with regard to resources, so
it should complement profitability. The degree of profitability and characterizes profitability.
Profitability – a quality, cost indicators characterizing the level of costs or impact the degree of utilization of resources available in the production and sales.
Enterprise cost-effective if the amount of revenue enough not only to pay production costs, but also for the formation of profit. So, profitability characterizes efficiency
company, provides insight into the company’s ability to increase its capital.
Profitability indicators characterizing financial results and profitability of different directions
activity (production, business, investment) cost recovery. They are better than
income, reflecting economic outcomes of business, because their value shows the ratio of effect to existing
or resources used. They are used for evaluation of the company and as a tool in
investment policy and pricing.
Growth of any rate of return depends on many processes, in particular by improving production management system, more efficient use of resources organizations and stability netting system settlement and payment relations with banks, suppliers and customers.
The most important factors for profit growth is growth in production and sales products, introduction of scientific and technological development, increase productivity, reduce
cost, improve product quality.
The main source of cash savings of enterprises and organizations – proceeds from sales, namely that part which remains behind except for material, labor and cash costs of production and realization of products.
Therefore, an important task of each of the business subject – to get maximum profit with minimum cost by adhering to a strict regimen savings and their most effective use. Achieving these goals will enable the company to provide increasing profitability domestic production, because estimation of impact factors
profitability is particularly relevant.
Profitability – enterprise profitability indicator of economic efficiency of enterprises, which reflects economic outcomes activity. It is calculated as the ratio of profit to the average value of the capital and normalized working capital.
Types of profitability and their purpose is in assessing the enterprise. This relative indicators by which one can see the profitability of the enterprise for all costs necessary for this income. Indicators are often expressed as a percentage.
There are two types of return:
– return calculated on the basis of the balance (total) profit,
– return is calculated based on the net profits.
Profitability is the relationship characteristics of financial results. They measure profitability of companies with different perspectives and grouped according to interests of participants in the economic process of market exchange. They allow you to evaluate the performance of embedded resources.
In financial practice distinguish such basic.
Group profitability indicators: return products, return on assets, return
equity, return on sales (gross, operating, net return on sales).
Profitability of products can be calculated by all sold products and for its individual species.
In the first case it is defined as the ratio of profit from sales to costs its production and sale.
Return all sales as:
– the ratio of profit from the sale of marketable products to revenue from sales;
– in respect of profit to revenue from sales;
Profitability index of all sales products give an idea of the effectiveness of current costs and profitability of the enterprise products, implemented.
In the second case determined the profitability certain products. It depends on the price, in which the products are sold to consumers, and its cost for this species.
Return on assets (economic profitability) describes – the level of income generated by all assets, which are in use according to its balance sheet.
Profitability indicators characterizing the level of costs or impact with use of available resources in the production and sale goods and services. Increase the profitability of the enterprise depends largely the growth of net profit, which is held by the company after taxes. For a pure market economy Income is the basis of economic and social
enterprise development. Therefore, to improve Profitability should be increased
The level of income and profitability can solve a range of tasks determine the stability and efficiency of their business. However, the possibility of an income problem difficult because affected by many factors. All factors affecting profitability, can be divided into two groups: factors environment (objective) factors internal environment (subjective).
Environmental factors include: economic situation, inflation, the nature and severity of competition, conditions
market or the ratio between supply for products and services business, tax and credit policy of the state and commercial banks prices for goods and services provided by other companies, the price of raw materials and product companies.
Some of these factors directly affect profit indirectly through other turnover (turnover) or the cost of production and circulation.
The internal factors are dependent on the activities of enterprises include: the type and category businesses, and therefore the size of the margin for raw materials, products and services are set businesses, the level of technical equipment, the degree of mechanization of labor, progressive machinery and equipment used for business, the nature of the process and progressive, labor productivity, the amount of and the composition of products, services and trade, the amount and level of costs of production and circulation, including
including the ratio between variable and fixed expenses, assets volume, structure, efficiency and other factors.
The main directions of improving profitability are: conduct serious market research and forecast market conditions, determine its niche in the market and consumers its products and services, increase revenue company that has a big impact on profits. Increasing Profitability facilitates the introduction of advanced technologies in the field
production and maintenance of consumer goods and services; improvement of production and quality of service; increase technical equipment and business productivity; the introduction of advanced information technologies; to implement austerity companies; production and sales promotion services; improvement of the organization and compensation of employees, increased motivation and others.