The main activity of an enterprise in the general case is the labor process, which consists in a certain impact on the subject of labor using the means of labor. In the entire enterprise, this property forms production assets. It is clear that the use of this property is necessary as efficiently as possible. You can evaluate the level of this efficiency using indicators characterizing the profitability of funds.
As already noted, production assets are heterogeneous in composition. In this regard, they are divided into main and negotiable. Let us dwell on how to determine the profitability of fixed assets. This is not complicated, since the principle of calculating all profitability indicators is one and the same: the ratio of profit to the value of the profitability of which is to be determined is determined. Accordingly, in this particular case, the value of fixed assets should be used in the calculations. It is pretty obvious that it can change over time. To better account for these changes, it is necessary to use the average cost for the period for which the profitability of fixed assets is calculated.
With regard to profit, it should be said that usually the profit from sales is involved in the calculation. This choice is based on the fact that this type of profit characterizes the result only from the main activity, without experiencing the impact of other expenses and income.
The profitability of fixed assets shows how effectively they are used. The specific numerical value of the indicator reflects how many units of profit each unit of value of property attributable to fixed assets brings. Obviously, the larger this indicator, the better for the enterprise. This leads to the lack of profitability indicators of normative values.
For the second part of production assets - working capital - you can also calculate profitability. The calculation principle is completely identical; profit from sales and the average cost for the period of a given property are also used. The economic sense is also similar and consists in how much profit the funds invested in working capital can bring.
The total value of production assets can also be estimated from the point of view of liquidity, but it makes no sense to dwell on this in detail, since the calculation is similar to previous indicators. More attention should be paid to determining the profitability of all property, that is, assets. The difference is that the net profit is usually used. This is due to the fact that the amount of assets includes all property, including one that determines other income and expenses. In some cases, you may come across a calculation based on profit before tax, which allows you to somewhat increase profitability.
As for the analysis following the calculation, the profitability of fixed assets and all other similar indicators must be considered in dynamics. This allows you to judge whether the efficiency of use of enterprise resources is growing, decreasing or remains at the same level. Of course, to conduct such an analysis, it is necessary to calculate the coefficients for several years, and then determine the relative and absolute changes. If there is an opportunity and access to information, then it can be compared with similar indicators of similar enterprises. A more complex method of analysis, but also more effective, is the conduct of factor analysis. With its help, you can identify what has a greater effect on the growth or decrease in profitability. In the future, based on the results of this analysis, certain managerial decisions may be made.