definition of "profitability" is a measure of economic efficiency or utility.Simply put, this concept characterizes the level of profitability and efficiency of different resources, such as labor, material and money.In addition, the definition of profitability is expressed by the degree of rational use of land resources.Thus, the calculation is carried out as a factor represented by the ratio of earnings to existing assets, flows or resources.This ratio may be expressed in the profit per unit or profit, which is contained in each of the resultant unit.
definition of "profitability" is the percentage of.It should also be noted that the concept of the least dependent on the coefficient of inflation but has a sufficiently tight engagement with the profit margin.
Determination of profit and profitability of each individual enterprise can be carried out by analyzing the calculated metrics such as return on assets, current assets, fixed assets, return on investment and equity and return on total investments.Consider some of these indicators in detail.
ROE
This indicator plays a special role in the financial analysis.This characteristic is expressed as follows: profit received after various deductions to social funds and taxes, divided by the available equity.This definition of "return on equity" shows the amount of profits in relation to the investments of shareholders funds.
ROA
It shows the ratio of profit after deductions to the average value of assets.Profitability is a characteristic of this type of income received by an organization from one ruble invested in the process of formation of assets.In other words, this indicator expresses the degree of profitability of the enterprise for one period.
Yield of basic production assets (BPA)
This indicator expresses the ratio of net profit to the amount of the average cost of OPF.Like the other indicators presented, the value obtained should be multiplied by 100%, because, as mentioned earlier, each of the indicators of profitability is relative.
Yield current assets
As in all the previous factors, this index is the ratio of net income to the value of current assets.
definition of "return on investment"
Includes effective and efficient use made of funds aimed at the development and advancement of the organization.This indicator can be found as follows: the total amount of profit divided by the total of the balance of which was previously deducted the sum directed to repay short-term obligations.
