Perhaps if you ask any person about any rate, he could be called as the main indicator of the efficiency of a particular company, this indicator would have been a profit.This is understandable, because the profitability is largely determines whether a company will generally exist in the future.However, different organizations can be profitable in many ways, but they still need some way to compare.To this end, make the calculation of profitability.In other words, profitability - a certain level of profitability.
method of calculating levels of profitability is extremely simple, therefore, remembering one ratio, you can calculate any rate.The point is in relation to the calculation of the profit to the value of return on what you want to install.For example, it is clear how to calculate the return on assets: it is enough to divide the net profit or earnings before taxes on the result sheet.Typically, margin is expressed as a percentage.In this case, it allows you to judge the effectiveness of the use of property, which is owned by the organization.As you can see, the numerator may be different profit, which is a feature of this group of indicators.Depending on your choice of parameters can be changed, allowing you to consider them as sufficiently subjective.
addition profitability of the whole property can determine the profitability of current assets and non-current.Obviously, for this it is necessary to divide up the profits on the relevant section of the balance, and then expressed as a percentage.The profitability of current assets shows their ability to make profit, and efficiency of their use.The meaning is similar to the profitability of non-current assets.Compare
profit can not only assets, but also liabilities.The greatest interest is the return on equity of the organization, that is, the profit per unit of capital ownership.Using this criterion, you can make a comparison of different companies in terms of ownership, for example, to select the most attractive investment object.
When we calculate the profitability of current assets, the denominator is the sum of these assets.One of the terms of a finished product, that is its cost.Calculate profitability of production can also be very helpful.This indicator will characterize how much money bring profit, formed the costs.For it is traditionally used for calculating earnings from sales.
profit on sales is also used in determining the profitability of sales, which is logical.The significance of this lies in the profitability of the kind of share in the revenue of the company is profit.
definition of all of the above parameters for one period may not be sufficient.The fact that the standard values have not, so they can be compared only among themselves.For such a comparison, you can use any industry averages or indices enterprises peers.Much greater practical interest is the comparison of the dynamics, ie the comparison with the previous period and the subsequent determination of certain trends.Obviously, the decline in profitability requires the identification of the causes of deterioration, and its growth - determining factors that can be used in the future.
Considerable interest is the factor analysis for assessing the isolated and the cumulative impact of various factors on each of the indicators of profitability.For example, the profitability of current assets depends on the profitability of sales and turnover from this part of the assets.By using the method of chain substitutions or absolute differences easily possible to identify the factors which influence most strongly, and then use the results in order to adopt the most effective and informed management decisions.
