Perhaps it will be difficult to find a company that was not organized in order to obtain the greatest profit. Nevertheless, not all of them actually bring this profit. If the company is unprofitable, then we can clearly judge that it is inefficient. But what if the organization is profitable? Does it bring enough profit, or is it possible more? Or maybe it is several times more profitable than other enterprises in the industry? To assess the level of profit, it is customary to calculate profitability ratios. The company's activities are multifaceted, described by a huge number of different indicators. In this regard, the profitability of the activity can be determined using different factors, but we will consider only some of them.
As a rule, each company, producing certain products or providing services, is within the framework of a certain type of activity. This type is the main one, since it not only brings the greatest income, but also involves the largest number of personnel. In order to assess the profitability of the core business, it is necessary to determine the coefficient by attributing the profit to the costs that were generated in the course of this activity. Profit indicators can be used different, for example, profit from sales or before tax. The profitability of the main activity allows you to determine how much profit each unit invested in costs, that is, in the cost of production or services, allows you to get.
On the other hand, an enterprise does not just produce products or services, but sells them. Implementation is an integral part of the business. For this reason, you may encounter a situation where the profitability of the main activity will be determined by the ratio of profit from sales to revenue received. This situation is not entirely correct, since this indicator is still called profitability of sales (sales). Its economic meaning is also somewhat different, since it allows you to judge the share in the revenue of such an indicator as profit.
To carry out any activity, it is necessary to have certain property, that is, assets. Moreover, they need not only to be possessed, but also to be used most effectively. To determine the effectiveness of the calculation of return on assets. The calculation method is also extremely simple and similar to the previous indicators: it is necessary to divide one or another type of profit into the balance sheet, which shows the total value of assets. As a numerator, net profit or profit before tax is most often used. Assets are traditionally divided into non-current and current components. Determine the profitability of each of them will also not be superfluous.
If we proceed to the study of profitability from the point of view of liabilities, then the main sense is the calculation of the profitability of equity, that is, money invested by the owner. This indicator characterizes the degree of effectiveness of the company from the point of view of its owner. Most often, the calculation of this indicator is used when choosing one or another enterprise for the purpose of investing funds.
Profitability of the main activity and all other profitability indicators cannot be evaluated from the point of view of normative values; therefore, they must be compared either in dynamics, or with the levels of similar enterprises, or with industry average values. Of particular interest is the study of profitability in dynamics, since some features of these indicators through simple transformations can lead them to a form that will help determine the isolated effect of various factors. This type of analysis is obviously called factorial and is mainly carried out on the basis of DuPont formulas.