The return for any kind of production is summarized and shows its economic efficiency.After a sufficient level of profitability shows the level of profitability of the enterprise, its profitability.In this regard, increasing the profitability of the enterprise is a key activity to optimize costs and increase revenue.
How is the profitability?Calculation of profitability is performed by comparing the gross income or profits of the enterprise to the costs incurred for the production or the amount of resources used.After analyzing the average level of profitability can determine which products and which units the company produce the desired rate of return, and what loss.This information is in a competitive market economy is very important, because financial performance is directly dependent on the concentration and specialization of production.
Improving profitability in a situation of increased competition is a priority.
As is known, the main source of free cash flow of the company is the proceeds from the sale of manufactured products.In this regard, the key focus of the subject is to improve the profitability of production, by reducing costs and compliance saving mode, as well as the effective application of resources available to the company.
Because these costs are determined by income levels and cost structure.The costs of raw materials has a significant presence, and therefore, increase profitability and reduce the cost of production significantly affect the increase in profits.Because of this it is possible to obtain an increase in profits, which will affect the index break even organization.In addition to reducing the cost of production of goods, an increase of return on sales and a significant impact on increasing the number of products sold.To increase sales, in addition to marketing activities should be carried out such products, which meet the requirements of customers, and will enjoy stable demand.
Each company on a permanent basis should be responsible units, which carry out an analysis of cost of goods manufactured, and implemented a full-scale program of its reduction.It must be comprehensive, to take into account all the possible factors that influence the formation of the cost of production and sales.
positive impact on improving the profitability of the company have measures aimed at optimizing the use of working time.
These include:
- maintaining the optimal number of working staff;
- reducing the cost of the units that are associated and involved in the production;
- constantly working on improving the skills of workers, thereby, will improve productivity, ahead of the average wage;
- use of advanced payment systems, increasing interest in improving the productivity of workers;
- automation of production processes, which reduces the cost of the payroll;
- increase motivation.
also is significant reduction in the size of overhead costs for operation and management of the production process.This promotes the growth of production volumes due to the implementation of reconstruction and technical renovation of the enterprise, reduce the size of the administrative and managerial staff and support services, as well as by improving the process of production management.
