Product profitability shows the result of current expenses

profitability comes from the word "rent", and rent, literally, means income.On this basis, profitability - is a profitable yield.In simple terms, this is a situation where revenues exceed expenses.In this case, from an economic point of view, it can be considered cost-effective any company that makes a profit.

Profitability indicators give a characterization of the enterprise, show how profitable different directions of its activity.They are better than the profit of the final results give the characteristic management, as their value shows the ratio of the result (effect) with the availability and consumption in the production process management.They are less than the earnings depend on inflation.Profitability indicators used to assess the activity of the enterprise, as a tool in the investment policy and pricing.

There are several groups of indicators of profitability:

  1. indicators that give the main characteristic of profitability and investment.
  2. Indicators of profitability and return on sal
    es turnover.
  3. indicators showing how revenues capital or parts of it.

profitability of products and businesses

Calculated as the whole company and for each product.The size of this figure depends on the amount and structure of the products manufactured by the enterprise.

Profitability of production is determined by the ratio of profit to the cost.

P = F / N * 100 , (%).

Product profitability shows which products are more profitable for the production, that is, what products should produce, and what not.Production costs must comply with cost.

Product profitability shows the amount of profit per ruble of current costs.It is the ratio of profit to the cost of production and sale of products.She - the rate of return.

product P = (Price - Cost) / Cost of * 100 (%).

Product profitability indicates whether the effective production and how, and in general, the performance of the enterprise.

Product profitability shows what the result of current expenses.

Production margin is calculated as follows:

P total = Profit / (fixed assets + current assets) * 100 (%).

level of profitability is calculated as follows: UR = P / S , where

P- net profit;

C- cost of goods sold.

To increase this figure must be increased profits and a decrease in cost of goods manufactured.

on investment projects profitability index is calculated:

IR = Profit / amount of investment.

Return on sales = Profit / amount of revenue.

Return on equity is estimated using the return on equity.It represents the ratio of profit to the cost of the (average) of the invested capital.

During the operation of the business is the process of circulation of capital, which is continuous.Patterns of funds, the sources of their formation, changing the resources available and the need for financial resources of the enterprise, affect the financial condition of the company.The external manifestation of his serves solvency of the company.The inner side is characterized by financial stability, reflecting the balance of income and expenses, assets and, accordingly, the sources of their formation.

In order to improve profitability, the company must necessarily pursue a flexible policy on production and sales, focusing on market volatility.