Types of Profitability Enterprises

The profitability of the enterprise is the main indicator of the effectiveness of its activities. Types of profitability and their purpose is to assess the effectiveness of the enterprise. These are relative indicators by which you can see the profitability of an enterprise with respect to all the costs that are necessary to obtain this income. Expressed the most often in percentage terms.

The main types of profitability are divided into two large groups: the profitability of sales and assets.

Profitability of sales - the ratio of the company's profit from sales to the revenue obtained without VAT. This calculation reflects the profitability of gross profit. This indicator expresses the share of profit attributable to each earned ruble. This indicator, in fact, is an indicator of the enterprise's pricing policy and reflects its ability to control costs.

The values of the indicator vary depending on competitive strategies, product lines. This indicator often assesses the operational efficiency of companies.

In addition to the profitability of gross sales, EBIT (profit on sales before taxes and interest on the ruble of revenue), net profit and profitability from sales per ruble, which was invested in the production and sale of goods, are highlighted.

Types of profitability of assets include a lot of indicators. All of them are calculated as the ratio of profit to the average value of certain assets of the enterprise. In other words, each indicator of the profit and loss account must be divided by the average value of the form factor No. 1 "Balance Sheet".

Types of profitability of an enterprise by assets are relative indicators characterizing the efficiency of the activity. They are calculated by dividing the net profit for a certain period by the value of assets for the same period. That is, these indicators show the ability of the enterprise's assets to generate profits.

Allocate such types of profitability of assets as profitability of products, production assets, capital investments, assets, borrowed capital, etc.

The profitability of products is calculated by dividing the profit from the sale of products by the cost of this product. The indicator of profitability of assets is calculated by dividing the profit by the average annual value of assets. Profitability of capital investments is the ratio of profit from sales to the amount of capital investments. The profitability of fixed assets is an indicator of the ratio of net profit to the value of fixed assets.

In order to estimate the profitability from the sale of products, it is necessary to calculate the indicator of balance profit per one ruble of sales. Profitability of sales is equal to the ratio of balance profit to sales.

Yield can be calculated without taxes. At the same time, the net profit will be equal to the profit of the balance sheet net of income tax. The income is equal to the net profit of the sales volume.

The profitability of types of products depends on such factors as price and cost.

The profitability of production equals the ratio of the price difference and the cost of production to the prices of sales. Analyze this indicator for a number of years, given the dynamics of changes in prices and production costs.

The profitability of production assets equals the ratio of profit balance sheet to the average for the annual period of the value of fixed assets of production in total with material costs. These types of profitability are analyzed and estimated by the balance sheet and net profit. Changes in these indicators are influenced by the turnover of circulating assets, the return on assets, the volume of sales.

There is an indicator of the profitability of staff - the so-called ratio of net profit to the number (average) staff.