Determine the costs for assessing the profitability of production efficiency

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Every company that exists in the market is unique.One indication of this is the fact that all organizations are effective to varying degrees, and even if they get the same profit, it does not mean that they are equally effective and profitable.More objectively judge this may be based on an analysis of profitability, that is, the relative level of profitability.Agree with the same amount of profit margin cargo, likely to be different from the margins of a commercial or industrial enterprise.

profitability of the enterprise can not be determined by means of a single indicator.The organization is very diverse, and therefore indicators to measure its effectiveness quite a lot.However, the activities of any company associated with the implementation of the cost of production of the product (or the provision of services, execution of work, but essentially it does not change).In this regard, it would be logical to elaborate on the indicators characterizing profitability costs.

In general, the margins calculated by the ratio of the value of the profits to the value of which is determined by profitability.Thus, the profitability of the cost is determined by dividing the revenue costs that will be presented to production costs.Despite this simple description, the calculation of this indicator may cause some difficulties.The fact that gains and cost may be defined in different ways, and is necessary for accurate calculation to make the right choice.

Let's look at some figures are included in the profitability of the costs incurred in the production, as well as its subsequent implementation.In most margin evaluated in terms of net profits, but in this case the use will likely fail.This is due to the fact that net income is subject to change under the influence of the activities of the company, which is not linked to production and sales.Thus more suitable indicator of the profit from sales.

As for cost, it is also not so simple.If we want to determine the cost-effectiveness as the cost of production, and the realization that we need to include in the calculation of this cost, which takes into account not only production costs but also other matters related to the implementation of it.In this regard, the production index of the cost of use will not work, but the total cost figure fits perfectly.

So, gathering together the index, we find that the return on the cost of products sold is determined by the ratio of the profit from sales to the terms of the full cost of production, which has been implemented.And what is the economic sense of the calculated value?It is obvious and is, how much profit can be obtained from each of the ruble, which generates cost of production and sale of products, services or works.Remarkably, this figure describes not only the efficiency, but also the effectiveness of marketing activities.Therein lies its value.

None of profitability is not restricted by any normative values.The reasons for this are clear, as all companies are different, and very high profitability for one of them can be critical level for another.Accordingly, the cost-benefit analysis is most often carried out by examining the changes in indicators over time, that is, determine their dynamics and trends.Also often used the comparison with enterprises peers and indices for the industry as a whole.