The main goal that any company sets in its work is to make a profit. However, based on the availability of this indicator, it is impossible to determine the effectiveness of the business entity. To conduct a financial analysis of the enterprise, in addition to the profit margin, they also use a profitability indicator that shows the income received per ruble of the money spent. This value gives an answer to the question of how profitable the business entity sells manufactured products, distributes current assets and uses investments made in production. Various guidelines provide guidance on how to calculate return on sales, assets, and equity. Together, these indicators make it possible to fully assess the activities of the economy, characterize the use of its assets and liabilities, and outline ways to increase profitability.
Before calculating the profitability of the enterprise, it is necessary to find out the amount of profit received for the reporting period, and the cost of sales. After processing the reports, compiling the balance sheet and statistical reporting, you can begin to find out the value of this indicator. Profitability is calculated as the ratio of profit received by the enterprise to the costs incurred. Moreover, income indicators can have different meanings. Profit can be net, from the sale of products and from various activities. When deciding how to calculate profitability, the denominator of the formula can use the cost expressions of non-current and current assets, borrowed and own capital, revenue and cost of goods sold. If, after the reporting period, the business entity has covered all the costs incurred and the income has been received, then its work is profitable. The enterprise itself is considered profitable. The value of this indicator characterizes the performance of management personnel. The necessary values when deciding on how to calculate the profitability of an organization can be taken from the forms of the balance sheet (No. 1 and No. 2), as well as its annexes (No. 5).
The planning process at the enterprise is impossible without determining the effectiveness of product sales. To do this, you need to know how to calculate your return on sales. Depending on the goal that is set in the analysis of the enterprise, various indicators can be used. The value of profit in the numerator of the formula can be taken as gross and balance sheet, and net. The denominator may be in the form of the cost of all manufactured or only sold products.
Profitability analysis is carried out with the aim of making timely management decisions to increase or decrease prices or costs incurred in the production of products. By changing these indicators, you can increase the efficiency of the business entity. In order to determine how to calculate the profitability of a single unit of production, it is necessary to organize accounting for each item of goods. If the rate of return is unsatisfactory, then urgent measures must be taken to reduce production costs. At the same time, technologies should be developed for using more economical materials, methods for their processing, as well as reducing the number of working personnel. It is also necessary to find new suppliers that sell cheaper raw materials. To increase the profitability of the enterprise, additional markets for more expensive products are being sought, and trade in products with a high profitability ratio is increasing.