Calculation of profit and profitability by example. What is profitability in simple terms

In general, it is worth noting that, being engaged in a certain economic activity, you should always analyze its results, the effectiveness of the efforts expended (just like in) and draw appropriate conclusions about the prospects for development, and that is why, to know what profitability is necessary if you are so or otherwise related to the analysis of the enterprise. This article will present types of profitability, we'll talk about her indicators, let's do necessary calculations and understand how to use the results formulas when analyzing the activities of an economic entity.

The concept of "profitability"

The profitability of an enterprise (business) is an indicator characterizing the profitability of its activities, or, in other words, an indicator of economic efficiency. To a certain extent, this parameter shows how effectively the company uses the economic, natural, monetary and labor resources at its disposal. If this is a non-profit structure, then we can say that profitability is the efficiency of its work, while for commercial divisions, exact quantitative characteristics are more important. You can compare the profitability with the efficiency indicator, that is, the ratio of the costs incurred and the resulting profit(that is, simplified, the ratio of expenses and income). If a business at the end of the reporting period makes a profit, then such a business can be called profitable.

Views

Since performance indicators traditionally differ depending on the type of business, it is worth talking about different types of profitability. It is also worth noting that when calculating different types profitability different odds and therefore the formulas will be quite different. We can talk about the following types of profitability:

Overall profitability assets (current and non-current) - a characteristic showing what funds were attracted by the company to make a profit of 1 ruble. Its assessment can be carried out based on the ratio of profit before taxes and the average value of all assets of the company for a specific period of time (take, for example, a year). In other words, this is the ability of the company's assets (more about liabilities and assets here) to create profit. If we are talking about the profitability of the formation of the company's assets themselves, then in this case we need to calculate it by dividing the company's profit (again before taxes) by the average cost of the attracted assets, again for a specific period of time (for example, a year).
Profitability products(goods) - the ratio between the profit from the sale of goods and the funds spent on its manufacture (production). The indicator characterizes how profitable the production of a particular product or service is.
Profitability production- an economic indicator that characterizes the feasibility of a particular type of business. In this case, we are talking about the ratio between production costs and the resulting net profit. As mentioned above, production with a positive balance of profits and costs is profitable. Measures to increase the profitability of production include reducing the cost of the product and improving the quality of production.

Calculation and coefficients, other types

It would be incomplete to talk about what profitability is and talk about its types without providing visual formulas and calculations. The following profitability indicators are distinguished:

Return on Assets (ROA) = Profit / Asset Value * 100%. In this case, it is appropriate to talk not only about the company's own assets, but also attracted ones (for example, loans or receivables).
Profitability fixed assets (ROFA)- an indicator similar to the previous one that assesses the performance of fixed assets, not assets. Accordingly, it is their cost that is taken into account in the formula.
Profitability capital (ROE)- a parameter showing how effectively own funds are used enterprise (or bank)... In this case, it is calculated as the ratio between net profit and the amount authorized capital(and sometimes additional). ROE = profit / capital * 100%. The difference in the return on assets and capital shows the value financial leverage(that is, the amount of borrowed funds) used in the conduct of business. It should be noted that the ROE ratio is recognized as one of the main indicators when analyzing the activities of an enterprise in developed countries.
Profitability investment (ROI)- an indicator that assesses what profit was obtained from the initial investment, that is, this is the ratio between the resulting profit and the amount of the initial investment. The efficiency of investments (what is an investment?) Is easy to show using the example of stocks (read what is a company stock here). For example, an investor (how to become an investor yourself?) First bought Gazprom shares at a price of 149.5 rubles, and then, noticing a downtrend in the stock market, decided to liquidate an open position and sold securities (you can read about types of securities here) at the price of 135.2 rubles apiece (loss of 14.3 rubles). As a result, he received a negative investment efficiency in the amount of: -14.3 / 149.5 * 100% = -9.56%. ROI and its level are not the main indicators successful activities companies, since it does not reflect the situation with some operational flows (for example, financial investments of borrowed capital, etc.), but, nevertheless, the efficiency of the main operational turnover is reflected quite clearly.

The calculation of the efficiency of economic activity can be made taking into account both one-time and current costs. Distinguish between profitability production and products... Let's explain the differences. The coefficient of profitability of production assesses the degree of efficiency with which the property of the organization is used (that is, fixed assets and working capital).

The formula for this coefficient is as follows:

Pp = (Pb / (Phos. Fund. + Fobor. Funds)) * 100%

Wherein,

Rp is the rent of production (measured as a percentage)
PB - balance sheet profit (measured in thousand rubles)
Phos. Fund. - the cost of fixed assets (on average per year, thousand rubles)
Turnover assets - the amount of working capital (thousand rubles)

The profitability of the product (ROM) shows how effective the costs were. In this case, the ratio between the profit from the sale of products to its cost is calculated. This indicator can be calculated as a whole, for all marketed products, and for individual items of goods. The formula will look like this:

Pp = (P / Cn) * 100%, where

Рп - rent of products sold,
P - profit from sales
Cn - the cost of products sold.

Well, in addition to these coefficients, there is also the so-called profitability coefficient. sales, denoted as ROS (return on sale). Its value is calculated by the ratio between the sales profit (operating profit) and the company's revenue. In other words, it is the ratio between net profit after tax and sales. And to put it even more simply, then this parameter reflects how many percent of profit is contained in each ruble received (earned) by the company. Undoubtedly, this is one of the indicators, on the basis of which prices for goods and services sold by the company are formed and showing how significant the costs of the company are.
Profitability of personnel (ROL) - the ratio between net profit and the average headcount (that is, the average headcount over a certain period of time). In other words, it is always necessary to adhere to a certain headcount threshold in order to maximize profits.
The profitability of contracting services is calculated by dividing the difference between the costs if the contractor is provided with work and the costs if they are not provided to the costs, if the customer performs the services. In the form of a formula, this can be represented as follows: Psub.services = (Znepred. - Zpresent.) / Zpresent. At the same time, in case of non-fulfillment, the contractor will incur greater losses associated with fines than if all work is completed on time.

There is a special offer for visitors to our site - you can get advice from a professional lawyer completely free of charge by simply leaving your question in the form below.

Indeed, to understand what is profitability in all the variety of forms - a difficult task, but, nevertheless, solvable. These indicators are used in a qualitative comprehensive assessment of the activities of an economic entity (for example, in the form joint stock company) and are able to say a lot and potential further development... Further articles on financial analysis, microeconomics, investments (for example, pro), personal finance management and earnings on the stock exchange will be presented on the site in the near future.

Performance indicators can be divided into forward and backward. Direct indicators of efficiency are the coefficients of return, which show what conditional unit of the result is obtained from the conditional unit of costs for its receipt. Inverse performance indicators are capacity ratios that illustrate how many conventional cost units are needed to obtain a conventional output unit.

One of the main indicators of the efficiency of the economic activity of the enterprise is profitability. Profitability indicators are less influenced by inflation and are expressed in different ratios of profit and costs. Profitability indicators are mainly measured in the form of ratios.

Profitability

Profitability can be defined as an indicator of economic efficiency, reflecting the degree of efficiency in the use of material, monetary, production, labor and other resources.

Profitability indicators are divided into different groups and are calculated as the ratio of the selected meters.

The main types of profitability are the following indicators:

Return on assets.
The profitability of fixed assets.
Return on sales.

Return on assets

Return on assets is a financial ratio showing the profitability and efficiency of an enterprise. Return on assets shows how much profit is received by the organization from each ruble spent. Return on assets is calculated as the quotient of dividing net profit by average assets multiplied by 100%.

Return on assets = (Net income / Average annual assets) x 100%

The values for calculating the return on assets can be taken from the financial statements. Net profit is indicated in form No. 2 "Profit and Loss Statement" (new name "Statement of Financial Results), and the average value of assets can be obtained from Form No. 1" Balance Sheet ". For accurate calculations, the arithmetic mean of assets is calculated as the sum of assets at the beginning of the year and the end of the year, divided by two.

Using the return on assets indicator, you can identify what are the discrepancies between the predicted level of profitability and the real indicator, as well as understand what factors influenced the deviations.

Return on assets can be used to compare the performance of companies in the same industry.

For example, the value of the company's assets in 2011 was 2,698,000 rubles, in 2012 - 3,986,000 rubles. The net profit for 2012 is 1,983,000 rubles.

The average annual value of assets is 3,342,000 rubles (the arithmetic mean between the indicators of the value of assets for 2011 and 2012).

The return on assets in 2012 was 49.7%.

Analyzing the resulting indicator, we can conclude that for each ruble spent, the organization received a profit of 49.7%. Thus, the profitability of the enterprise is 49.7%.

Profitability of fixed assets

The profitability of fixed assets or the profitability of fixed assets is the quotient of dividing net profit by the cost of fixed assets, multiplied by 100%.

Profitability of OPF = (Net profit / Average annual cost of fixed assets) х 100%

The indicator shows the real profitability from the use of fixed assets in the production process. Indicators for calculating the profitability of fixed assets are taken from the financial statements. Net profit is indicated in form No. 2 "Profit and Loss Statement" (new name is "Statement of Financial Results), and the average value of fixed assets can be obtained from Form No. 1" Balance Sheet ".

For example, the amount of fixed assets of the enterprise in 2011 was 1,056,000 rubles, in 2012 - 1,632,000 rubles. Net profit for 2012 is 1,983,000 rubles.

The average annual cost of fixed assets is 1,344,000 rubles (the arithmetic average of the indicators of the cost of fixed assets for 2011 and 2012)

The profitability of fixed assets is 147.5%.

Thus, the real profitability from the use of fixed assets in 2012 amounted to 147.5%.

Return on sales

Return on sales shows how much of an organization's revenue is profit. In other words, the profitability of sales is a coefficient that illustrates how much of the profit is contained in each ruble earned. The return on sales is calculated over a given period of time and expressed as a percentage. With the help of profitability of sales, the company can optimize as well the costs associated with commercial activities.

Return on sales = (Profit / Revenue) x 100%

The values of the return on sales are specific to each organization, which can be explained by the difference competitive strategies companies and their assortment.

To calculate the profitability of sales, different types of profit can be used, which leads to the existence of different variations of this coefficient. The most commonly used are return on sales based on gross profit, operating profit on sales, and return on sales based on net profit.

Return on Sales by Gross Profit = (Gross Profit / Revenue) x 100%

The gross margin on sales is calculated as the quotient obtained by dividing the gross margin by the revenue multiplied by 100%.

Gross profit is determined by subtracting cost of sales from revenue. These indicators are contained in the form No. 2 "Profit and loss statement" (new name "Statement of financial results).

For example, the gross profit of the enterprise in 2012 was 2,112,000 rubles. The revenue in 2012 is 4,019,000 rubles.

The return on sales in terms of gross profit is 52.6%.

Thus, we can conclude that each ruble earned contains 52.6% of gross profit.

Operating profitability of sales = (Profit before tax / Revenue) x 100%

The operating profitability of sales is the ratio of profit before tax to revenue, expressed as a percentage.

The indicators for calculating the operating profitability are also taken from Form No. 2 “Profit and Loss Statement”.

The operating profitability of sales shows how much of the profit is contained in each ruble of the proceeds received after deducting interest and taxes paid.

For example, profit before tax in 2012 is RUB 2,001,000. The proceeds in the same period amounted to 4,019,000 rubles.

The operating return on sales is 49.8%.

This means that after deducting taxes and interest paid, each ruble of the proceeds contains 49.8% of the profit.

Return on sales by net profit = (Net profit / Revenue) x 100%

Net profit margin on sales is calculated as the quotient of net profit divided by revenue, multiplied by 100%.

The indicators for calculating the profitability of sales based on net profit are contained in Form No. 2 “Profit and Loss Statement” (new name “Statement of Financial Results).

For example, Net profit in 2012 is 1 983 000 rubles. The proceeds in the same period amounted to 4,019,000 rubles.

The return on sales in terms of net profit is 49.3%. This means that in the end, after all taxes and interest have been paid, 49.3% of the profit remains in each ruble earned.

Profitability analysis

Return on sales is sometimes referred to as the rate of return because the return on sales shows specific gravity profit in proceeds from the sale of goods, works, services.

To analyze the coefficient characterizing the profitability of sales, you need to understand that if the profitability of sales decreases, then this indicates a decrease in the competitiveness of products and a drop in demand for it. In this case, the company should think about holding events that stimulate demand, improve the quality of the proposed product or conquer a new market niche.

Within the framework of the factor analysis of the profitability of sales, the influence of profitability on the change in the price of goods, works, services and the change in their cost is considered.

To identify trends in the change in profitability of sales in dynamics, it is necessary to distinguish the base and reporting period. As the base period, you can use the indicators of the previous year or the period in which the company received the greatest profit. The base period is needed to compare the obtained rate of return on sales for the reporting period with the rate taken as the basis.

The profitability of sales can be increased by increasing the prices of the offered assortment or reducing the cost price. For adoption correct decision the organization should be guided by such factors as: the dynamics of the market situation, fluctuations in consumer demand, the possibility of saving internal resources, assessing the activities of competitors and others. For these purposes, the instruments of commodity, price, sales and communication policy are used.

The following main directions of increasing profits can be distinguished:

Increase in production capacity.

The use of the achievements of scientific progress requires capital investment, but it allows you to reduce the cost of the production process. Existing equipment can be upgraded, which will save resources and increase operational efficiency.

Product quality management.

High-quality products are always in demand, therefore, if the level of return on sales is insufficient, the company should take measures to improve the quality of the products offered.

Marketing policy development.

Marketing strategies focus on product promotion based on market research and consumer preferences. Large companies create entire marketing departments. Some enterprises have a separate specialist who is engaged in the development and implementation of marketing activities. In small organizations, the responsibilities of a marketer are assigned to managers and other specialists in management departments. requires significant costs, but its successful implementation leads to excellent financial results.

Reduced cost.

The cost of the offered assortment can be reduced by finding suppliers who offer products and services cheaper than others. Also, saving on the cost of materials, you need to ensure that the quality of the final product offered for sale remains at the proper level.

Staff motivation.

Personnel management is a separate sector of management activity. The production of quality products, the reduction of defective products, the sale of the final product to a certain extent depends on the responsibility of the employees. In order for employees to perform efficiently and promptly their work duties, there are various motivational and stimulating strategies. For example, awarding bonuses to the best employees, holding corporate events, organizing company press, etc.

Summarizing the above, the readers of MirSovetov can conclude that the indicators of profit and profitability are the main criteria for determining the effectiveness of the financial and economic activities of an enterprise. In order to improve the financial result, it is necessary to evaluate it, and on the basis of the information obtained, analyze what factors are holding back the development of the organization as a whole. After existing problems identified, you can proceed to the formulation of the main directions and activities in order to increase the company's profits.

For an enterprise to function successfully, regular monitoring of the effectiveness of its activities is necessary. For this, there are a number of economic and financial indicators that are constantly used in the analysis.

One of the important and demanded indicators is profitability: it is not difficult to calculate it based on the available data, and the benefits for assessing quality characteristics the company's activity is enormous.

The importance of profitability indicators of an enterprise

Speaking about the exponentialness of different estimated figures, it is often compared, what is the difference between the profit and the profitability of the enterprise.

Profit, like sales volume, and revenue are absolute indicators, according to these data it is difficult, if not impossible, to give a real assessment of the company's efficiency.

Sometimes an enterprise with less sales is actually more efficient than another, producing and selling more goods. Since the former can achieve its results with fewer employees and with more modest production costs.

Therefore, relative indicators such as profitability are much more important, more objective. It is sometimes figuratively called the coefficient useful action enterprises, by analogy with the efficiency of mechanisms.

Profitability is denoted in the calculations as RO - return on, it gives an idea of how many kopecks (or rubles) of profit one ruble invested in resources or assets gives. For trade enterprises, this will be the number of kopecks in profit per one ruble of revenue.

This indicator is measured as a percentage, which makes it possible to compare it with a similar success rate of another company. This will be the optimal assessment of how efficiently the enterprise uses material, financial and human resources.

The main types of profitability

The profitability indicators of the enterprise are divided into several types:

ROA - assets - return on assets;
ROI - invested capital - return on investment;
ROTR / ROS - total revenue / sale - product / sales profitability;
ROL - labor - labor efficiency;
ROTC - total cost - return on cost.

To calculate the profitability of an enterprise, a universal formula is most often used:

RO = (Type of profit / Indicator, the profitability of which needs to be calculated) * 100%

The numerator of this formula is the type of profit. As a rule, the figures of profit from sales and net profit appear here, but sometimes they resort to the calculation on the basis of gross, operating or balance sheet profit. The values of any of these types of profit are not difficult to find in the statement of financial results of the company (profit and loss).

The denominator contains an indicator for which the profitability is calculated. It is always expressed in terms of value. Let's say you want to calculate ROTR - profitability of sales, then the denominator will be the cost indicator of sales volume, that is, revenue (TR - totalrevenue). How do we find the revenue figure? Multiplying the price (P - price) by the sales volume (Q - quantity):

TR = P * Q

The formula for calculating the profitability of the cost price

Analysis of profitability indicators of an enterprise is impossible without knowledge of aspects of the cost of products or services, works performed by the enterprise.

ROTC - return on total cost - profitability is considered one of the most important indicators of efficiency for a reason. Otherwise, the profitability of the cost is called the profitability of production, since it most fully reflects the efficiency of the production process.

The calculation of the profitability of production (cost price) is based on this equation:

ROTC = (PR / TC) * 100%

The designation of PR in the numerator of the formula is the profit from sales / sales, that is, the difference between income and expenses, revenue (TR - total revenue) and total cost (TC - total cost). PR = TR - TC.

The TC in the denominator is the indicator whose profitability you want to calculate, in our case it is the total cost. The total cost price includes all the costs of the enterprise: for the wages of workers and management personnel, rental of premises, materials, semi-finished products, housing and communal services, advertising costs, security, etc. The main production is often called material-intensive, since a substantial share in the cost of their products is materials.

The profitability of the cost price can be calculated not only for the enterprise as a whole, but also for workshops, for certain types products. These figures will clearly show how much one ruble invested in the cost of production will bring profit when selling products. Measured as a percentage, this indicator will give a figure for the efficiency of the use of production resources.

Calculation of profitability by balance

The formula for calculating profitability is often "run" based on the data contained in the balance sheet. It is compiled twice a year and makes it possible to track the dynamics of production development, its state at the beginning and end of the reporting period. The document accumulates information about the assets, equity and liabilities of the company.

From the balance sheet, you will need to take for the calculation such indicators as the value of assets (current and non-current), the size equity capital, the amount of investment and a number of others. The nuance is that we need not just these well-known numbers, but the arithmetic average of the sum of the indicator at the beginning and end of the current period. Instead of the first calculated digit, you can use the value at the end of the previous period.

Let's say we are interested in the profitability of non-current assets. This indicator reflects how many kopecks of profit from sales will bring the ruble invested in non-current assets.

In the balance sheet of small enterprises, the amount of non-current assets becomes the sum of lines 1150 and 1170. And for medium-sized enterprises, this indicator fits into line 190 (Total for Section I). We find the values of non-current assets at the beginning and end of the period, add them up, and divide the result in half.

The formula for calculating the profitability of non-current assets:

ROA (ext) = (PR / (VnAnp + VnAkp) / 2) * 100%

VnAnp here expresses the value of non-current assets at the beginning of the current period, or the end of the previous one. VnAkp is the value of the value of non-current assets at the end of the current period.

An example of calculating the profitability of an enterprise

The calculation of the profitability of the enterprise (production) will be shown on specific example... To make the necessary calculations, you will need data on the total cost (TS) t profit from sales (PR). For clarity and simplicity of comparison, let us take conditional figures for two enterprises of the same direction of activity.

The revenue (TR) of the first and second enterprise will be, respectively, 1,500,000 and 2,400,000 rubles. Total cost (TC) - 500,000 and 1,200,000 rubles. The profit from the sale of both objects is calculated as the difference between the proceeds and the full cost.

PR1 = TR - TC = 1,500,000 - 500,000 = 1,000,000 rubles

PR2 = TR - TC = 2,400,000 - 1,200,000 = 1,200,000 rubles

The revenue and profit from sales of the second company were higher. But, as we said, this absolute indicators... It is not a fact that the second company works more efficiently. To find out reliably, let's calculate the level of production profitability.

ROTC1 = (PR / TC) * 100% = (1,000,000/500,000) * 100% = 200%

ROTC2 = (PR / TC) * 100% = (1200000/1200000) * 100% = 100%

These indicators just show who is actually working more efficiently, more successfully. In the first enterprise, with a slightly lower level of profit, the profitability of production turns out to be twice as high as that of a competing enterprise.

We can conclude that profitability is the optimal, most accurate and objective indicator that characterizes the efficiency of the enterprise. With its help, it is easier to adjust economic activities, to achieve greater labor productivity.

Profitability- a characteristic of the financial condition of the company, which makes it possible to assess the ability to make a profit on the invested funds. Profitability is calculated as profit per unit of investment.

Profitability is a generalized indicator of an enterprise's performance in terms of cost-benefit ratios. The final result is influenced by two components: internal organizational and economic factors and external market conditions. The first component includes changes in labor productivity, technical characteristics production, the way it is organized, that is, everything that depends on the enterprise itself. The second component includes, on the one hand, prices for resources (labor, raw materials, materials, fuel, energy, etc.) that the company uses to produce / sell a product, and on the other hand, prices for a manufactured / purchased product. , which can vary from the ratio of supply and demand in the market.

When analyzing the cost of the produced / products sold v this year it is necessary to take into account both the change in the volume of increase in manufactured / sold products, and the change in prices for it, as well as the change in the range of products. In costs (production costs), one should take into account: a change in production volumes, a change in resource prices, a change in the rates of resource consumption for the production of a unit of a product and a change in the assortment of products. As the main indicator of the economic efficiency of current costs (resource consumption), you can use the cost indicator per 1 ruble. manufactured or sold products.

As factors influencing the level and dynamics of the cost indicator, private indicators of the use (application) of the resources of living labor and means of labor can be singled out. The growth and development of the enterprise is closely related to the formulation and implementation of strategies and tactics for managing the process of forming, increasing and distributing profitability.

The increase in the profitability of the enterprise is facilitated by the manipulation of three most important indicators: the acceleration of turnover, the decrease in the mass of costs, and the increase in the rate of return by raising prices. In the Western market, it is believed that the long-term profitability of companies depends on a significant more factors (more than 30) characterizing the state of the competitive situation, the situation in the manufacturer's market, the current economic situation, etc. Therefore, it is important in the process of analyzing profitability not to lose sight of a number of other important factors: capital intensity, the relative quality of products (services), the company's market share, labor productivity.

There is a close relationship between the development goals of the enterprise and the factors that determine them. If the goal is to meet the need for savings for production development, then critical factors are the structure of the sale of goods and services, the level of trade markups, sales prices, volume, structure and efficiency of use resource potential, the size of the profitability. If the goal is to ensure a stable position of the enterprise, then it is achieved on the basis of ensuring stable relations with suppliers, banks and other counterparties (quantity of goods sold, unit price) and a sufficient amount of profitability. If the goal is to satisfy the interests of the owner of the property, then the most important factors ensuring its achievement are the volume of own and borrowed working capital and the efficiency of their use, as well as the size of profitability.

If the enterprise determines the provision of social consumption as a primary goal and social development collective, then the main factors that should be used to achieve it are distribution costs, the number and composition of labor resources used, measures of state regulation (norms and standards of contributions to various funds social protection population, minimum wage, minimum subsistence level, etc.), the level of profitability.

All of the above goals and factors are themselves closely related. It is important that all measures taken by the enterprise to increase profitability (using all the possibilities) contribute to the achievement of the most important development goals of the enterprise. When analyzing profitability, the following coefficients are calculated:

... Profitability of implementation- this is the ratio of profit from sales to the amount of proceeds from sales for the period.

profit from sales for the period = line 050 of Form No. 2,
the amount of proceeds from sales for the period = line 010 of Form No. 2,
cost amount for the period = line 020 of Form No. 2.

Trading ratio: - 0 - 0.3
Industry standard: - 0 - 0.4

When analyzing profitability ratios, it is necessary to analyze the structure proceeds organizations and cost her products. The amount of revenue is influenced by objective and subjective factors.

Objective ones are divided into internal and external. Internal - this is the volume of production, the level of costs, product quality, rhythm of production, assortment (in production), rhythm of shipment, timely execution of documents, optimal forms of payments (in circulation). External - the situation on the market of raw materials, materials, semi-finished products, the volume of production in its competence, quality compared to analogues of other enterprises, the rhythm of supplies (in production), the timing of document circulation, compliance with the terms of contracts, the optimal form of payments (in the field of circulation). In addition, there may be additional expenses caused by: violations of the delivery time of materials and other resources, errors in transportation, late payment.

Subjective factors include: moral factors, the political situation in the market, the field of activity and advertising ordered in the right agency - advertising-code.rf. As a rule, proceeds from product sales are based on the volume of product sales based on prices excluding VAT, excise taxes, trade and sales discounts, excluding customs duties and tariffs.

The costs of production and sale of products consist of the cost of raw materials, materials, energy, fixed assets, labor resources, other operating costs, and non-production costs used in the production of products. The costs of production and sales of products are grouped into five groups: material costs, labor costs, deductions for social needs, depreciation of fixed assets and other costs.

... Return on assets is the ratio of net profit for the period to the value of assets for the period.

For the calculation, indicators are used:

net profit for the period = line 190 of Form No. 2,
assets for the period (balance sheet) = line 300 of Form No. 2.

Return on assets measures the ability of a company's assets to generate profit. In other words, it is an indicator of the profitability and efficiency of the company, cleared of the influence of the amount of borrowed funds. In addition, the return on assets (capital) shows the efficiency of using all the property of the enterprise. The decline indicates a falling demand for the firm's products and an overaccumulation of assets.

Trading ratio - 0 - 0.05
Industry standard - 0 - 0.1

... Profitability of current assets is the ratio of net profit for the period to current assets for the period.

This indicator reflects the efficiency of using the company's current assets and shows what profit the company receives from each ruble invested in the company's current assets. Demonstrates the ability of the enterprise to provide a sufficient amount of profit in relation to the used working capital companies. The higher the value of this coefficient, the more efficiently the circulating assets are used.

Trading ratio - 0 - 0.08

... Return on investment is the ratio of net profit for the period to equity and long-term liabilities for the period.

The calculation uses:

the average value of equity and long-term liabilities according to the data for the period = Equity (p. 490 of Form No. 1) + Long-term liabilities (p. 590 of Form No. 1) for the period.

Trading ratio - 0 - 0.07
Industry standard - 0 - 0.16

... Return on equity(equity) is the ratio of net profit for a period to equity for a given period. Shows the return on shareholders' investment in terms of accounting profit.

Trading ratio - 0 - 0.06
Industry standard - 0 - 0.2

Comments (1)

Currently, it remains controversial which indicators to take into account the profitability from sales - revenue or cost, net profit or revenue. If we proceed from the fact that the profitability threshold (Bgeak-even Point) is the volume of transactions at which the total income is equal to the total costs, i.e. this is the point of zero profit or zero losses, and the profit is already included in the proceeds from sales, then it is advisable to consider the profitability from sales as the ratio of profit from sales not to revenue, but to cost, in order to avoid underestimating profitability indicators. In addition, it is advisable to include in the calculation not net profit, but profit after tax, since net profit can include profit not only from core activities, but also from non-operating and operating.

Example

Initial data:
Revenue = 100 million rubles.
Cost = 70 million rubles.
Selling expenses = 1.2 million rubles.

Payment:
Profit from sales = 100-70-1.2 = 28.8 million rubles.
Return on sales = Profit / Revenue = 28.8 / 100 = 0.288 = 28.8%.
Return on sales = Profit / Cost = 28,8/70 = 0,41 = 41%.

As can be seen from the example, in the first case, the profitability is lower than in the second, since the sales profit is already included in the revenue.

The profitability calculation deserves special attention in Russian conditions. Due to the high rate of income tax (as of 01.09.2009, the income tax is 20%), taxpayers are engaged in tax optimization. In addition, in some cases, profits increase due to unreasonable price increases. As a result, it is impossible to assess the performance of a borrower based solely on what profitability shows. Additional indicators of the organization's performance are discussed below.

To assess the profitability of a company, it is advisable:

trace the dynamics of the cost / revenue ratio;
analyze how the net profit was obtained (due to core activities or due to other income);
analyze the structure of management, commercial, operational, non-operating and other expenses;
to compare the proceeds with credit turnovers on account 62 "Settlements with buyers and customers" and receipts on 51 accounts;
to clear the proceeds from the share of offsetting when calculating the profitability from sales;
analyze, due to what there is a decrease / increase in profitability from sales. Too high profitability of sales may arise in connection with a large mark-up for a product / service or the establishment of an unreasonably high price of a product, which is a negative factor in assessing payment risk. The increase in profitability of sales is a consequence of rising prices at constant production costs of sold products or a decrease in production costs at constant prices.

A decrease indicates a decrease in prices at constant production costs or an increase in production costs at constant prices, i.e., a decrease in demand for the company's products.

Example of calculating profitability

How to determine how much profitable business? First, you need to understand that if the company does not work in such industries as gas, oil, gems or the construction of business centers, the profitability will be in the range of 15 to 35% per annum.

An industry such as cargo transportation, in principle, is subject to "losses". Trading companies receive a margin of 10-15%. The production also does not skim a big cream - up to 25% per annum.

Let's give an example of calculating the profitability of a company that is engaged in timber processing, namely, the production of boards.

Let's start by dividing the costs into fixed and variable costs. Next, we will determine the maximum capacity of the equipment, the number of shifts and workers. We consider the costs of production capacity:

One shift - 8 hours - 15 people.
The cost of 1 cubic meter raw materials - 6 thousand rubles.
The capacity of the sawing machine is 3000 cubic meters / month, of which 50% is waste. From 3000 cubic meters. it turns out 1500 cubic meters / month. finished raw materials.
Drying capacity - 750 cubic meters / month. Drying cycle 14 days. Total 1500 cubic meters / month
Selling price - for 1 cubic meter. dried boards 15 thousand rubles.

Expenses:

Purchase of raw materials	variables	6 000 * 3 000 = 18 000 000	Based on the maximum load
Office rent	permanent
Base rental	permanent
Wage	permanent		With a piece-rate system, remuneration is calculated based on the workload. Including "gray" salary.
Taxes from the minimum wage fund (RUB 10 per month)	permanent	10 00043%15=64 500	13% - income tax 30% - FSS, PF, etc.
Communications	variables		Based on the maximum load
	permanent		Settlement and cash services
Sharpening cutters	variables
Spare cutters	permanent
	variables		1500 cubic meters
	permanent
TOTAL		18 754 500

Income:

1,500 * 15,000 = 22,500,000.00 rubles.

Net profit:

22,500,000 - 18,754,500 = 3,745,500 rubles. - 749,100 (income tax 20%) = 2,996,400 rubles.

Profitability:

2 996 400/18 754 500 = 16%

When calculating profitability, one should not forget about the influence of seasonality factors, reduced demand, equipment downtime, and rejects.

Profitability is the most important characteristic of an enterprise's efficiency. It shows how correctly and effectively an economic entity uses various resources: monetary, material, intangible, labor, etc. In a general sense, this is the ratio of the profit of a commercial organization to the flows that form it.

Why is the profitability level calculated?

The most important indicator of the financial success of any company is profit. Its absence is an important signal to the owners that something is going wrong, that it is necessary to take some action. But how to evaluate the effectiveness if the financial result is greater than zero? How to understand how big it is for a given field of activity?

Absolute profit margins cannot cope with this task for two main reasons:

First, they are affected by inflation, so their growth may not reflect the real picture;
Second, they depend on the size of the company and its chosen production and distribution policies.

Relative values, one of which is the level of profitability, cope much better with the problem of assessing performance. They exclude the influence of inflation and other extraneous factors and allow an objective and impartial assessment of activities.

Such coefficients make it possible to determine the effectiveness of many points:

Selected pricing policy;
Manufacturing process;
Investments made;
Use of equity capital;
The work of the company as a whole, etc.

Competent determination of profit indicators and profitability values is the basis for constructing analytical calculations. This is the basis that enables the management of a commercial organization to draw conclusions about its current state and make plans for the future.

Different profitability indicators can be determined for different analytical purposes. Each of them has its own formula and its own calculation procedure. Let's consider them in more detail.

What is ROI?

In order to determine the effectiveness of the organization's pricing policy and to check to what extent it can control the costs associated with the sale of products, the profitability of sales is calculated. This ratio shows the amount of net profit for each ruble of earned revenue.

The following formula is used to calculate the indicator:

P = Net profit / Revenue

The sizes of profit and revenue are taken in monetary terms for the same period of time. The source of information for calculations can be the "Profit and Loss Statement".

This ratio can vary greatly from company to company. He is influenced by price policy, general sales strategy, product line features and other factors.

The return on sales can be calculated based on different types of profit:

Clean;
Before tax;
EBIT - profit before taxes and interest on loans.

ROI is very important for financial analytics purposes. It demonstrates how much money remains at the disposal of the enterprise after deducting from the profit the size of the cost price, the amount of taxes and interest on loans. This ratio is often used to assess the operational performance of an organization.

Recommended values for the indicator can vary significantly depending on the industry. It reflects the performance of the company in the reporting period, but at the same time it is not able to describe the effect of long-term investments. For example, if a firm has made a large investment in the purchase of production facilities or in the improvement of manufactured goods, then the profitability of sales may temporarily decrease.

However, if the investors' calculation was correct, then soon it will not only reach the previous level, but also exceed it.

What is the level of profitability of an enterprise?

An indicator of the profitability of an enterprise is often used to evaluate a business. It means the ratio of profit and the average market value of fixed and current assets of the organization. This ratio shows how efficiently the firm as a whole is performing. To determine it, the formula is used:

R = P / F, where:

P - balance sheet profit;

F - average cost main and current assets of the company.

This ratio is especially important for the owners of the company. It reflects how effectively the property and current assets at its disposal are used, as well as what are the company's prospects for the future.

For a more detailed analysis, separate indicators can be used:

The level of profitability of fixed assets is a coefficient that demonstrates what part of the profit is obtained per unit of the cost of fixed capital. It is obtained by dividing profit by the valuation of fixed assets;
The value of the profitability of current assets - shows how much profit can be obtained from one ruble of working capital. For the calculation, the formula is used: P = Net profit / value of current assets.

What is the Product Profitability Level?

To determine the return on operating costs, analysts calculate the profitability of the product. This is the ratio of the profit earned to the costs of production and sale of goods (or their cost). It demonstrates the extent to which an enterprise can cover its costs with profits.

To determine the value of profitability, the formula is used:

P = P / Z, where

P - profit from the sale of goods and services;

З - the amount of production and sales costs (prime cost).

As a rule, the following main points are included in the amount of costs:

The amount of selling expenses;
The amount of management costs;
Cost of goods sold.

The calculation of profitability can be made both for the company as a whole and for individual types of products.

This ratio is of great importance for analytics, it allows you to evaluate:

The work of the company as a whole;
Correctness of the chosen pricing strategy;
Investment policy;
Production efficiency.

If a company invests in production assets or product development, then the indicator may fall for some period, but subsequently it will not only reach its former level, but also exceed it (if the investors have planned everything correctly).

What other indicators of profitability are there?

In addition to the main ones (profitability of sales, enterprise and products), in economic analysis additional indicators of profitability are used, which allow assessing the company's activities in more detail in a particular context. These include:

The level of return on equity - shows the amount of profit per unit of the value of the authorized capital. This ratio is actively used by financiers in developed countries;
The value of the return on investment - shows what profit, in terms of 1 ruble, investments in the company's capital can bring. The resulting value clearly demonstrates whether the investment was successful;
Staff profitability is the ratio between profit margins and average headcount. An analysis of this ratio shows how many employees an organization needs to support in order to maximize income.

What should be considered when analyzing profitability?

In order for an economist to draw correct conclusions when analyzing various indicators of profitability, he must take into account three important features such coefficients:

The temporary aspect of the company's work. Profitability is a ratio that is relevant only for the present moment, it does not reflect future results or goals of financial planning. It is possible, for example, that the return on sales will decline as a result of investments in the development of a product line. It would be wrong to regard this state of affairs as negative, because if the landmarks were chosen correctly, then this "subsidence" will be only temporary;
The problem of risk. Very often, the company's management is faced with a choice of which is better: high level profitability in case of serious risk of the conducted operations or lower profitability in case of risk-free activities. This problem is very well illustrated by the ratio of financial dependence: if it is large, then the company balances "on the edge of a knife";
Evaluation problem. The indicator formula consists of a numerator and a denominator, which are expressed in monetary units with different purchasing power. The amount of profit is the result of the reporting period, while, for example, the cost of equity was formed over the previous several years. In addition, the indicator fixed in the balance sheet may not take into account the prestige of the brand, modern technologies in production and management, etc.

Profitability is a very important indicator that can help to conduct an objective and impartial assessment of the activities of any enterprise. In this regard, it provides much greater analytical capabilities than, for example, the values of different types of profit. Drawing conclusions based on the values of certain coefficients, you can take competent management decisions and lead the firm towards development and prosperity.