What is margin and how is it calculated?

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The system of economic indicators to determine the effectiveness of entrepreneurship, plays an important role indicator of profitability.

Profitability - is the yield business or enterprise.

In that case, if the profit is expressed as an absolute amount, then answer the question, what is the profitability will be quite simple.It is defined as the intensity of production, as it shows the level of profitability of the company in relation to a specific database.The company will then be considered cost-effective if the sales proceeds will be sufficient not only to cover production costs and realizable, but will form a profit.

Return on assets

This ratio can be calculated in different ways.Before perestroika in Russia, it was calculated as a ratio to the total profits of the enterprise material circulating assets and fixed production assets.In previous economic conditions factor was planned and it was assumed that it will encourage better use of production assets.But, as time has shown, this goal was not achieved.However, until now, answering the question, what is the profitability, and how it is measured to reflect a generalized assessment of profitability, it is calculated in this way.This indicator is transformed into a return on assets.It reflects the ability to be profitable assets.

Profitability of

This indicator is calculated as the profit from the sale, divided by the sum of the cost of production of goods and their implementation.The coefficient reflects how many rubles of profit the company obtained a ruble spent on the marketing and production of goods.It can be calculated, and for certain types of products and divisions of the enterprise, and across the enterprise as a whole.

ROE

This ratio is calculated by dividing net income by shareholders' equity of the enterprise.It reflects the return on investment in terms of net profit.

Product profitability

also in the analysis of the profitability of business use products, which is the ratio of profit from the sale of goods to its full cost.Using this factor is rational in the implementation of intra-analytical calculations, the introduction of new species or discontinuation of old inefficient products, under the control of the loss ratio and profitability of certain goods

Return on sales

Given that the profit can be associated with costand the price, to answer the question, what is the profitability of the enterprise, as follows: the ratio of profit to revenue from sales, ie the cost of products sold.This ratio is called the return on sales.It shows the company's ability to keep costs under control.Due to differences in the product line and competitive strategies celebrated the diversity of values ​​profitability of different companies.

last two factors are interrelated.They characterize the change in the cost of production of goods and their implementation both for individual species and for all products in general.Therefore, in the process of planning the range is taken into account, as an indicator of the profitability of one species will affect the rate of all products.

Asked what the margin should also note the importance of this indicator.Its growth has always caused by positive economic processes and phenomena.This improvement of the control system, more efficient use of resources, which lead to cost savings and, consequently, higher profits.