In the modern world, many enterprises work and every year their number is growing rapidly. The main goal of any legal entity (or private entrepreneur) is to receive as much profit as possible, and the costs should be minimal. Such a postulate is the basis for the development or further expansion of the production activities of any enterprise, without exception.
For the proper organization of your business, you need to study economic indicators, carefully monitor the financial situation, and also carefully and correctly plan the production activities of your company, only this can maximize profits. The level of profitability is a general indicator of the effective work of the enterprise, reflecting profitability relative to certain basic foundations. If the amount of revenue can cover not only the costs of sales and production, but also forms a profit, the company is considered profitable.
Based on the indicators of profitability of the structure, it is possible to evaluate its financial results, and ultimately its effectiveness. They measure the profitability of an enterprise from various positions, and are grouped according to the interests of market exchange participants. The level of profitability just refers to such indicators and reflects the work of all aspects of the enterprise. In total, there are four main groups of types of indicators of success - return on assets and production assets, profitability of the enterprise and products.
Analyzing the level of profitability, it is easy to determine which type of activity provides the greatest income, and, conversely, which provokes losses. In the modern world, such a definition is extremely important, because the financial stability of a legal entity depends on the concentration and specialization of production.
The most high-quality and generalizing indicator of enterprise efficiency is considered the profitability of production. This indicator compares the size of fixed and current assets with the amount of profit obtained with their help. These funds are called its price, the lower such a price, the greater the effect of the functioning of the enterprise. You can calculate the level of profitability of production using a simple formula - divide PC profit by the total total cost of fixed assets and fixed assets.
Urp = FC / (OS + OF)
Where PC - the amount of profit, OS - the amount of working capital, and PF - the amount of fixed assets.
From this formula it becomes clear what is the factor of its growth. High profits are supported by the low cost of fixed assets and working capital, and the efficiency of their work. As a result, at the maximum level, the profitability of production, and, accordingly, the economic efficiency of the enterprise.
How profitable and efficient the company's operations are, shows the profitability of sales. The level of sales profitability is calculated according to the following formula - the ratio of the operating profit of the firm PC with the proceeds from the sale of products
RF = FC / V * 100%
Where RF is net profit margin, and PC is net profit.
Profitability level is one of the best mechanisms for determining financial, investment and operational efficiency of production. It helps to find out the profit of the company from each ruble invested in assets. During its implementation, it is easy to find answers to all questions about the main activities of the company, whether it is production, or the sale of goods, or services and works.
In the modern world, without clarification of this most important coefficient, it is impossible to identify the real financial condition of any enterprise and the efficiency of use of its main parts of production. Therefore, you need to know how to determine all economic indicators in order to form a true opinion about its work.