The rate of net profit is a normative value. Calculation of the net profit margin (formula)

It is one of the most significant indicators of the success of an enterprise. It affects the determination of the cost of products. With its help, you can respond in a timely manner to fluctuations in supply and demand. The rate of return clearly demonstrates how the amount of capital contributed to the project has changed over a certain period of time. Measured in percentage.

Calculation procedure

Starting the calculation, first of all, it is necessary to determine the total amount of advance funds invested in production (Yes). To do this, you need to add up the cost of production (Cp) and the funds spent on the payment of wages to specialists (Cp). The cost of production should include costs directly related to the production of goods or the provision of services. These include the cost of consumables, raw materials, equipment, tools, and intellectual property.

A calendar year is usually taken as the calculation period, therefore, for the calculation, you need to use the value of annual profit (Pv), that is, the total total income received by the enterprise for the year, minus the expenses incurred during the same period.

The formula for determining the rate of return (Np) in this case will look like this:

Np \u003d Pv / (Yes) \u003d Pv / (Sp + Zp) x 100, where

Pv - the amount of annual profit;
Yes - funds invested in production;
Sp is the cost of production;
Zp - wages.

The higher the rate of return turned out to be, the more profitable, and, therefore, the more financially successful the analyzed one.

The economic essence of the indicator of the rate of return

The rate of return can be used to determine the financial health of a company. In this case, three main indicators are subject to analysis:

• , allowing to evaluate the financial result of the enterprise.
• product, that is, the ratio of its value to the amount of money spent on its production.
• Return on assets, that is, the ratio of profit to the value of fixed and working capital of the enterprise.

In addition, the rate of return clearly demonstrates the degree of activity of capital owners, and even their loyalty to compliance with legal norms in the field of business.

Factors affecting the rate of return

Two groups of factors can have a serious impact on this important economic indicator:

• internal production;
• market.

The first ones include:

• lot of profit. The main factor determining the amount of profit is its mass. Any activities leading to its growth have a beneficial effect on the results of the enterprise;

• cost structure. The rate of profit also depends on the composition of expenses;

• capital. The higher it is, the faster its owner will return his investment back. Increasing the number of turnovers causes an increase in production volumes and profits;

• cost reduction. Of great importance for the rate of profit is cost savings. The introduction of new technologies and cost reduction reduce production, causing profit growth;

• scale of production. Large players have very significant advantages over their smaller counterparts. Within the framework of a large concern, an increase in the output of one type of product makes it possible to simultaneously reduce the cost of its manufacture due to the latest technological equipment and a more detailed division of labor.

Market factors include:

• prices;
• supply and demand;

First of all, the change in profits is influenced by the prevailing market prices for the products or services of the enterprise. They, in turn, are under pressure from supply and demand. And those are under the influence of competition. All these factors are closely interconnected with each other, but affect the profitability of the enterprise in different ways.

Competition contributes to the equalization of market value in any of the economic sectors. As a result, the same goods are sold at similar prices. This means that players with the lowest cost get more profit.

In the most advantageous position are large monopolies, which have the ability to dictate the market prices for their own goods, while receiving a monopoly.

Stay up to date with all important United Traders events - subscribe to our

Nobody is in business at a loss. Even the sale of seeds brings a certain profit to the seller. But here it is easy to figure out what it will be and where to use it. At enterprises, issues of profit are more difficult to solve - first you need to find funds, invest them, sell goods, distribute debts, and get a net profit. How is the rate of profit calculated in production? Let's try to figure it all out.

Profits and production costs

In any field of activity, and especially in production, important concepts income and expenses are considered. These are the main economic indicators that directly form the cause and financial features of the enterprise. In order for an enterprise to eventually form a net profit margin, it is always necessary to incur expenses. Important point is to ensure that expenses do not exceed income, otherwise the organization's activities are meaningless. Therefore, the costs must be properly distributed. But the profit already depends on how correctly the employees allocate these costs and in what direction they will be directed.

Rate of return: definition

Having dealt with some concepts, it will become easier to understand the features of the economics of production. Thus, the rate of profit is the percentage ratio between the profit for a certain period and the capital advanced before its beginning. In other words, this indicator reflects the increase in capital that was invested at the beginning of the reporting period. The funds advanced, in turn, include workers' wages and production costs. The main thing in this definition is the mass of profit.

What affects the dynamics of profit?

The rate of return, like any other economic indicator, depends on many factors. One of the factors influencing its dynamics is the market price and market macroeconomic conditions. And, of course, the rate of net profit depends on supply and demand in the market. This indicator determines the return on investment in relation to the amount of money invested.

When there is a difference between these indicators in the direction of decreasing demand for the company's products, this indicates that the rate of return is at a low level, and there is a threat of a loss.

Changes affect its dynamics:

• the structure of capital, if the expenditure on elements of constant capital is less, then the rate of profit becomes higher, and vice versa;
• capital turnover rate - the higher it is, the better it affects profit; more income brings short-term turnover of capital, in contrast to the long-term.

Factor determining the rate of return

The main determining factors of the rate of return are considered to be the mass of profit, the rate of capital turnover, the cost structure of the money invested, the scale of the means of production and their savings. Each of these factors affects income and its components in its own way. But the biggest impact on profitability is the amount of profit. This is the absolute value of the profit received. The higher this indicator, the more profitable business. This approach helps to determine the right steps in the subsequent development of the business.

How can profit be expressed?

Profit can be expressed in the profitability of the enterprise. Since this indicator is very tightly intertwined with the rate of return. What is it expressed in? As well as profit, the real indicator can be determined at the end of life cycle project.

The qualitative measurement of profit is considered directly the rate of profit, which is calculated by the ratio of surplus value to the advanced capital.

The owner can calculate the income received as a percentage of the invested funds or in monetary units common in many countries. On the this moment dollars are used when receiving and calculating profits.

How is this indicator calculated?

Profit is the end result of the enterprise, which is determined by the following formula:

P \u003d W-W general.,

where "P" - profit, "B" - proceeds from the sale of products, "Z total." - the total cost of creating a product and its promotion.

The calculation of the rate of return is determined by the ratio of net profit to total investment. The data is received as a percentage.

This allows you to determine the evaluation of projects that directly require capital investment. And on the basis of the data obtained, conclusions can be drawn.

The higher the profit value, the better for the enterprise, since profit can be invested in further development project organization or expansion of production. This will positively influence the activity of the enterprise and increase the level of income in the future. According to the indicators of profit, one can judge the expediency of investing funds in the company. The value of this indicator speeds up the decision-making process.

Two ways to generate income for an enterprise

The internal rate of return is the type of income that arises when investments and cash flows from investments are equal. AT this case The company will receive income in two ways:

• capital investments under IRR(%) in any monetary instruments;
• capital investments that produce a cash flow, in this case, all components of this flow are invested at IRR (%).

IRR in this case plays the role of a barrier. For an investor, this is very important indicator, because, having studied it, he sees: to develop the project or reject it. If the cost of invested funds is higher than the value of this indicator, then the project will be unprofitable and should be rejected.

IRR is the ratio of the cost of capital raised and the benefits of the project, taking into account the funds spent. Most favorable meaning This indicator is achieved by reducing the time between discount rates.

How is the average rate of profit formed?

There is a natural mechanism for the formation of the average rate of profit. This value is no longer determined specifically by the market, it is formed by the owners (capitalists) and investors. Here the leading role is occupied by the emergence of competition, which we will discuss below.

In general, the process of formation of the average rate of profit lies in the fact that capitalists, seeing a sufficiently high profit received by the company, seek to earn more on production. For this reason, more favorable sales conditions are being developed. Investors also seek to inject their capital into an industry that will bring profit. There is intra-industry competition, as there are more homogeneous industries. But intersectoral competition may also arise, which also determines the formation of the average rate of profit.

The impact of competition on this indicator

The average rate of profit is affected by two types of competition: intersectoral and intrasectoral.

Intra-industry competition is rivalry in one industry where homogeneous goods are produced. Here, all forces and means are directed to the production of this product. In this case, its cost increases. In the market, the competition of a commodity is determined not by individual, but by equal social value. And its value is due to averages. As a result, the rate of profit of the enterprise may tend to decline, which has a bad effect on the work as a whole. To avoid this phenomenon, capitalists seek to introduce new technologies that promote a rapid production process at minimal cost and try to match market prices without loss.

Intersectoral competition is competition between the capitalists themselves from different branches, where profits, the rate of profit, are at a higher level. Since capitals are poured into various branches, they have different structure. As is well known, surplus value is created only by attracting hired workers, and a corresponding amount of surplus value is accounted for by a smaller capital. And in enterprises with a high organic composition of capital, the surplus value will be less. The emergence of this type of competition leads to the transfer of funds from one industry to another. The transfer of capital leads to a decrease in surplus value in an industry with a low structure, an increase in the production of goods, a fall in the market price, and a reduction in the industry mass. As a result of the transfusion, the average rate of return is leveled, which is determined by the formula: P΄ cp =Ʃ m:Ʃ (C+V) × 100%,

where Ʃm- the total surplus value that is created in different industries;

Ʃ (C+V)- the total capital advanced in various branches.

As a result, the company receives an average profit in all industries.

The indicator of profit in domestic and foreign practice has been studied for a long time. Periodically, factors arise that significantly affect the financial result of an economic entity.

The rate of return is to be understood the ratio of profit to advanced capital.The indicator should be expressed as a percentage. The considered financial ratio reflects the effectiveness of the use of funds. It is customary for financiers to refer to the rate of return as the return on capital.

Factors that determine business performance

Frequent use of significant sources of increasing business efficiency involves the use of a set of measures that reflect the main directions of development and improvement of activities.

SleIt is worth noting the most important classification of business efficiency factors, based on determining the level of production management. These are internal and external factors, since they significantly affect the degree of efficiency of entrepreneurial activity.

In more detail, we highlight three fundamental factors that directly affect the conduct of a business and its economic results:

1. Equipment, the so-called means of production. With high productivity, quality service and optimal workload, you can get the maximum result with minimal costs.
2. Raw materials, materials and similar components. Good quality, minimal waste and low energy intensity combined with good inventory management should guarantee high levels of production, low scrap and minimum costs.
3. Technological security of business a good sign of production intensity.

How to determine the estimated rate of return

Using the Initial Investment as the Denominator

To determine the estimated rate of return, you must first determine the annual profit, which is found by the formula:

P=VV-OI
where P is the profit of the organization
ВВ - gross revenue
OI - total costs

Then you should determine the cost of depreciation of fixed assets using data on the cost of fixed assets.

This is done in two steps:

OS = NS - LS SI = OS/SPI
SPI - useful life

PS \u003d B - SI
B - revenue

The calculated rate of return can be determined by a simple ratio:

RNP = Ps / PV

Calculate the company's average profit.

The method under consideration is based on the standard formula:

SNP=Ps/SV

Determine the average investment.

This indicator includes capital investment costs and is calculated using the formula:

SW=(NV+LS)/2

Calculation of the rate of return:

RNP=PS/SV*100

The ratio of savings in net cost and initial investment, presented as a percentage, is RNP.

It is quite easy to determine SNP, all data can be obtained in accounting reports.

How to calculate profitability?

Evaluation of the financial performance of a business is not possible without calculating the profitability indicator, which reflects the economic efficiency of the activity.

Several types of profitability are calculated: sales, products, assets, capital, and so on, for which there is a calculation procedure. Profitability ratios are often used in financial analysis, in forecasting.

Existing methods for determining profitability pursue their own goals and use various reporting indicators.

Profitability of core business

This is a cost indicator that allows you to estimate the amount of profit per ruble of costs:

Rod \u003d Profit from sales / cost.

Return on working capital

Characterizes the effectiveness of the ruble invested in working capital.

Rok = Net profit/Working capital

The higher the ratio, the more efficiently working capital is used.

Return on fixed capital

The profit received is not yet a sign of effective activity. It is necessary to calculate other financial indicators in more detail.

Rok = Net profit / Fixed capital

The coefficient reflects what share of net profit falls on a unit of the company's fixed capital.

Calculation of profitability of sales

The coefficient characterizing net profit in the amount of gross revenue shows financial performance . For the financial result, you can take different indicators of profit.

The normative value depends on a number of features, for example, industry affiliation.

Profitability threshold

It is also called the break-even point, which characterizes such a level of business activity at which the amount of costs is equal to the amount of income and helps to calculate the company's financial safety margin:

Pr \u003d Pos costs / K gross margin

The gross margin ratio is found by the formula:

Vm \u003d (Gross Revenue - Variable Costs) / Gross Revenue

When planning and forecasting, many managers take this as the basis for making decisions when it is necessary to conduct business in such a way that this threshold is not exceeded.

ROI

It shows how much the funds spent on the business are paid off, reflects how much profit is obtained per ruble invested. Used for cost-benefit analysis.

The indicator is defined as follows:

Рз = Profit / Decapitalized expenses.

Additive ones are used when the indicator is calculated as the difference or sum of the resulting factors, multiplicative ones - as their product, and multiples - when the factors are divided by each other to obtain the result.

The application of these models lead to combined or mixed models. For a complete factorial analysis of profitability, multifactorial models are used, which include different profitability ratios.

Net profit

Net profit is a rather complex economic category. The best minds of our time, both domestic and foreign, are studying it.

The management of the company has a high responsibility for managing the enterprise in such a way that the business generates maximum profit. Because owners always want to receive dividends.

Thus, management faces the important task of managing income and expenses in such a way that there are more of the former and as few of the latter as possible. Considering that when calculating net profit, all direct, variable and indirect costs are taken into account

Under the net profit of the economic part should be understood as the share of gross revenue, minus the cost of paying wages and taxes.

Making a profit is the main goal of a commercial organization.

Profit generation is a rather complicated process, only a few owners have the necessary skills and ability to make the right management decisions.

Theoretically, profit is a component of the company that remains at the disposal of the owners, which can then be distributed at their discretion. Net profit indicators are incredibly important for every enterprise, because investors are more focused on them.

Calculation of net profit

Determining net income is quite simple. First you need to determine the period for which the calculations will be made.

Net profit is found by the formula:

NP = Financial Profit + Gross Profit + Other Profit - Mandatory Tax Payments.

Distribution of net profit

Basic legislative framework, regulating the distribution of net profit, is the Federal Law "On Limited Liability Companies".

An organization can distribute profits quarterly, once every six months or annually. The decision is made at the general meeting of participants. Net profit, as we found out, is the financial result of the company.

Business owners can distribute it for the following purposes:

• payment of dividends
• business financing in the form of investments in fixed or working capital
• reserve capital and beyond

In addition, joint-stock companies that issue shares and trade them on the stock exchange are interested in paying dividends, as this is the main indicator that investors are guided by when investing their capital.

Experienced owners understand when to profit and when to invest. As long as the business has room to grow and develop, it would be inappropriate to withdraw capital when it can be advanced.

Therefore, the study of the market, competitors and development prospects provides certain data on the stages of activity and the possible achievement of maximum production volumes.

At this point, the company will no longer be able to actively and dynamically develop, but will enter a phase of stagnation, and then the net profit should be withdrawn in the form of dividends.

The profit is distributed among the participants in proportion to their shares. It can also be directed by the enterprise for any necessary purpose. AT recent times widespread use of profits for charity.

Formation of net profit

The volume of net profit of the reporting period does not provide complete information, due to the fact that not all income and expenses are taken into account. In turn, this line of reporting characterizes the activity quite indicatively.

Net profit ismain indicator , which characterizes the activity of an economic entity. This indicator is of interest to creditors in order to study creditworthiness, counterparties to determine the reliability and shareholders to calculate efficiency.

Noskova Elena

I have been in the accounting profession for 15 years. She worked as a chief accountant in a group of companies. I have experience in passing inspections, obtaining loans. Familiar with the areas of production, trade, services, construction.

To understand the success of the enterprise, one of the main criteria is the amount of profit. AT general view profit is the difference between the cash received from sales and the costs of the enterprise. There is the concept of the rate of return, the calculation formula and the economic essence of which we will consider below.

The concept of the rate of return

Decree of the Government of the Russian Federation of June 25, 2003 No. 367 “On Approval of the Rules for Conducting a Financial Analysis by Arbitrators” defines the net profit rate as the ratio of the amount of net profit to the amount of revenue excluding value added tax and excises included in the sale price of goods or services of an enterprise .

The rate of return shows how many kopecks of profit fall on each ruble of revenue. This indicator allows you to evaluate how effective the ratio of the company's costs and funds received from sales.

The formula for calculating the rate of return

Rate of return = Net profit / Revenue

The numerator is the indicator of net profit, which is the final indicator of the profitability of the enterprise, cleared of all possible expenses.

For the lines of Form 2 "Profit and Loss Statement", the formula is calculated as:

Net income = Profit (loss) before tax - Current income tax - Change in deferred tax liabilities - Change in deferred tax assets - Other

The denominator is the revenue indicator, which reflects the amount of revenue received by the enterprise from the sale of goods and services in this reporting period, net of value added tax and excises. In Form 2 "Profit and Loss Statement" this indicator is reflected in line 2110 "Revenue".

Application of the rate of return

The rate of return is applied by the management of the company to:

• tracking the dynamics of business profitability when the indicator is compared with previous periods;
• comparing the performance of branches, divisions or subsidiaries of the company for the purpose of analyzing the performance of a particular asset and subsequent decision on the transformation of the structure of the asset portfolio;
• benchmark with other enterprises in the industry, if the average rate of return for similar companies is known, which allows you to maintain or achieve competitive advantages in terms of price at low costs;
• the expected rate of return is used to decide whether to launch or abandon an investment project, or when choosing from among several investment projects, when the investment with the highest rate of return is preferred.

Factors affecting the rate of return

The rate of return is formed by the ratio of two indicators of profitability, respectively, the factors affecting the numerator and denominator also affect the final value.

The numerator, revenue, depends on the volume of sales in natural units of measurement and on the selling price of the company's goods or services. At the same time, the pricing policy of the company, the established rules for payments - with deferrals, advance payments, and so on - affect the volume of sales.

Net profit depends both on the price and volume of sales, and on all costs incurred by the enterprise in the course of economic activity, both production and related to other supporting processes in the company.

So, a company can sell large volumes of products at affordable prices, but if the cost is very high and other costs are also higher than their acceptable level, then the entire effect of large sales will be offset by inefficient production and management processes.

Hello! Today we will talk about profitability, what it is and how to calculate it. aimed at making a profit. To assess the correctness of the work and the effectiveness of the applied management methods, you can use some parameters. One of the most optimal and informative is the profitability of the enterprise. For any entrepreneur, understanding this economic indicator is an opportunity to assess the correctness of the expenditure of resources at the enterprise and adjust further actions in all directions.

Why Calculate Profitability

In many cases, the financial profitability of an enterprise becomes a key indicator of the analysis of a business project, which helps to understand how well the funds invested in it pay off. Correctly calculated indicators for several factors and articles are used by the entrepreneur for, when pricing services or goods, for general analysis at the working stage. They are calculated as a percentage or used in the form of a numerical coefficient: the larger the number, the higher the profitability of the enterprise.

In addition, it is necessary to calculate the profitability ratios of an enterprise in the following production situations:

• To forecast the possible profit that the company will be able to receive in the next period;
• For comparative analysis with competitors in the market;
• To justify large investments, helping a potential participant in the transaction to determine the projected return on a future project;
• When determining the real market value of the company during pre-sale preparation.

The calculation of indicators is often used when lending, obtaining loans or participating in joint projects, developing new types of products.

Profitability of the enterprise

Discarding scientific terminology, we can designate the concept:

Profitability of the enterprise as one of the main economic indicators, which well characterizes the profitability of the entrepreneur's work. Its calculation will help to understand how profitable the chosen project or direction is.

In the process of production or sales, many resources are used:

• Labor (employees, personnel);
• Economic;
• Financial;
• Natural.

Their rational and proper operation should bring profit and a steady income. For many enterprises, the analysis of profitability indicators can become an assessment of the effectiveness of work for a certain (control) period of time.

In simple words, the profitability of a business is the ratio between the costs of the production process and the resulting profit. If after a period (quarter or year) a business project has made a profit, then it is called profitable and beneficial for the owner.

To carry out correct calculations and predict indicators in future activities, it is necessary to know and understand the factors that affect profitability to varying degrees. Experts divide them into exogenous and endogenous.

Among the exogenous are:

• Tax policy in the state;
• General sales market conditions;
• Geographic location of the enterprise;
• The level of competition in the market;
• Features of the political situation in the country.

In many situations, the profitability and profitability of an enterprise is affected by its geographical position, proximity to sources of raw materials or customer-consumers. The situation in the stock market and fluctuations in exchange rates have a huge impact.

Endogenous or internal production factors that strongly affect profitability:

• Good working conditions for personnel of any level (which necessarily affects the quality of products positively);
• Efficiency of logistics and marketing policy of the company;
• General financial and managerial policy of management.

Taking into account such subtleties helps an experienced economist to make the level of profitability as true and realistic as possible.

Factor analysis of enterprise profitability

To determine the degree of influence of any factors on the level of profitability of the entire project, economists conduct a special factor analysis. It helps to determine the exact amount of income received under the influence of internal factors, and is expressed in simple formulas:

Profitability \u003d (Profit from sales of products / Cost of production) * 100%

Profitability = ((Product price - Production cost) / Production cost)) * 100%

Usually, when conducting such a financial analysis, they use its three-factor or five-factor model. Quantity refers to the number of factors used in the counting process:

• For a three-factor one, the profitability of manufactured products, the indicator of capital intensity and the turnover of fixed assets are taken;
• For the five-factor, it is necessary to take into account the labor intensity and material consumption, depreciation, turnover of all types of capital.

The factor calculation is based on the division of all formulas and indicators into quantitative and qualitative ones, which help to study the development of the company from different angles. It shows a certain relationship: the higher the profit and return on assets from the production assets of the enterprise, the higher its profitability. It shows the manager the relationship between the standards and the results of economic activity.

Types of profitability

In various production areas or types of business, specific indicators of the profitability of the enterprise are used. Economists distinguish three significant groups that are used almost everywhere:

1. Profitability of products or services: the ratio of the net profit received from the project (or direction in production) and the costs spent on it is taken as a basis. It can be calculated both for the whole enterprise and for one specific product;
2. Profitability of the entire enterprise: this group includes many indicators that help characterize the entire enterprise as a whole. It is used to analyze a working project by potential investors or owners;
3. Return on assets: a fairly large group of various indicators that show the entrepreneur the appropriateness and completeness of the use of a certain resource. They allow you to determine the rationality of using loans, your own financial investments or other important assets.

An analysis of the profitability of an enterprise should be carried out not only for internal needs: this is an important stage before large investment projects. It may be required when granting a loan, or it may become the starting point for the consolidation or reduction of production.

A real complete picture of the state of affairs at the enterprise can be obtained by calculating and analyzing several indicators. This will allow you to see the situation from different angles, to understand the reason for the decrease (or increase) in expenses for any items. This may require several coefficients, each of which will reflect a specific resource:

1. ROA - return on assets;
2. ROM - the level of profitability of products;
3. ROS - return on sales;
4. ROFA - profitability of fixed assets;
5. ROL - personnel profitability;
6. ROIC - return on investment in the enterprise;
7. ROE - return on equity.

These are just a few of the most common odds. To calculate them, enough numbers from open sources– balance sheet and appendices to it, current sales reports. If an estimated business profitability assessment is required for launching, the data is taken from a marketing analysis of the market for similar products or services available in general overview competitor reports.

Calculation of the profitability of the enterprise

The largest and most generalized indicator is the level of profitability of the enterprise. For its calculation, only accounting and statistical documentation for a certain period is used. In a more simplified version, the formula for the profitability of an enterprise looks like this:

P=BP/SA*100%

• P is the main profitability of the enterprise;
• BP is an indicator of balance sheet profit. It is equal to the difference between the revenue received and the cost (including organizational and management costs), but before taxes;
• SA - the total cost of all current and non-current assets, production capacities and resources. It is taken from the balance sheet and appendices to it.

The calculation will require the average annual cost of all tangible assets, the depreciation of which is used in the formation of the selling price for services or goods.

If the assessment of the profitability of the enterprise is low, then certain management measures should be taken to improve the situation. It may be necessary to adjust production costs, review management methods or resource efficiency.

How to Calculate Return on Assets

A complete analysis of the profitability of an enterprise is impossible without calculating the efficiency of using various assets. This is the next important stage, which helps to assess how fully all assets are used, to understand their impact on profit. When evaluating this indicator, pay attention to its level. A low level indicates that the capital and other assets are not working enough, and a high level confirms the correct management tactics.

Practically, the return on assets (ROA) means for an economist the amount of money that falls on one unit of assets. In simple words, it shows the financial return of a business project. Calculation for all types of assets must be carried out with regularity. This will help to timely identify an object that does not bring returns or benefits in order to sell it, lease it or modernize it.

In economic sources, the formula for calculating the return on assets looks like this:

• P - profit for the entire analyzed period;
• A - the average value by type of assets for the same time.

This coefficient is one of the three most indicative and informative for the manager. Getting a value less than zero indicates the operation of the enterprise at a loss.

Profitability of fixed assets

When calculating assets, the profitability ratio of fixed assets is separately distinguished. They include various means labor that directly or indirectly participate in the production process without changing the original form. The term of their use must exceed a year, and the amount of depreciation is included in the cost of services or products. These main assets include:

• Any buildings and structures in which workshops, offices, laboratories or warehouses are located;
• Equipment;
• Heavy vehicles and loaders;
• Office and work furniture;
• Cars and passenger transport;
• Expensive tool.

The calculation of the profitability of fixed assets will show managers how effective the economic activity of a business project is and is determined by the formula:

R = (NP / OS) * 100%

• PE - net profit for a certain period;
• OS - the cost of fixed assets.

This economic indicator is very important for commercial manufacturing enterprises. It gives an idea of ​​the share of profit that falls on one ruble of invested fixed assets.

The coefficient directly depends on profitability and should not be less than zero: this means that the company is operating at a loss and is using its fixed assets irrationally.

Profitability of sold products

This indicator is no less important for determining the level of profitability and success of the company. In international economic practice, it is referred to as ROM and is calculated by the formula:

ROM=Net Profit/Cost

The resulting coefficient helps to determine the effectiveness of the sale of manufactured products. In fact, this is the ratio of sales revenue and the cost of its manufacture, packaging and sale. For an economist, the indicator clearly demonstrates how much, in percentage terms, each ruble spent will bring.

More understandable for beginners may be the algorithm for calculating the profitability of products sold:

1. The period in which it is necessary to analyze the indicator is determined (from a month to a whole year);
2. The total amount of profit from sales is calculated by adding up all income from the sale of services, products or goods;
3. Net profit is determined (according to the balance sheet);
4. The indicator is calculated according to the above formula.

A good analysis will include a comparison of the profitability of products sold over several periods. This will help determine the decline or increase in the company's income in dynamics. In any case, you can conduct a deeper review of each supplier, product group or range, work out the client base.

Profitability of sales

Margin or return on sales is another essential characteristic when pricing a product or service. It shows how many percent of the total revenue is accounted for by the profit of the enterprise.

There is a formula that helps to calculate this type of indicator:

ROS= (Profit / Revenue) x 100%

As a basis for calculation, can be used different types arrived. The values ​​are specific and vary depending on the product range, the company's line of business and other factors.

Sometimes experts refer to the profitability of sales as the rate of return. This is due to the ability to show the proportion specific gravity profit in total sales revenue. It is also calculated in dynamics in order to track changes over several periods.

In the short term, a more interesting picture can be given by the operating margin of sales, which is easy to calculate using the formula:

Operating return on sales = (Profit before tax / Revenue) x 100%

All indicators for calculations in this formula are taken from the Profit and Loss Statement, which is attached to the balance sheet. The new indicator helps the entrepreneur understand what the real share of revenue is contained in each monetary unit its earnings after payment of all taxes and fees.

Such indicators can be calculated for a small enterprise, one department or an entire industry, depending on the task. The higher the value of this economic coefficient, the better the enterprise works and the more profit its owner receives.

This is one of the most informative indicators that helps determine how profitable a business project is. Without its calculation, it is impossible to draw up a business plan, track costs in dynamics, or evaluate the profitability of the whole enterprise. It can be calculated using the formula:

R=VP/V, where:

• VP - gross profit (calculated as the difference between the proceeds received from the sale of goods or services and the cost);
• B is the proceeds from the sale.

The formula often uses net profit, which better reflects the state of affairs in the enterprise. The amount can be taken from the application to the balance.

Net profit no longer includes income tax, various commercial and overhead expenses. It includes current operating costs, various penalties and paid loans. To determine it, the calculation of the total revenue that was received from the sale of services or goods (including discounts) is carried out. All expenses of the enterprise are deducted from it.

It is necessary to carefully choose the time interval depending on the task of financial analysis. To determine the results of internal control, the calculation of the profitability of profit is carried out in dynamics on a regular basis (monthly or quarterly). If the purpose is to obtain an investment or a loan, a longer period is taken for comparison.

Obtaining the profitability ratio gives a lot of information for the management personnel of the enterprise:

• Shows the compliance of real and planned results, helps to evaluate the effectiveness of the business;
• Lets hold comparative analysis with the results of other competing companies in the market.

If the indicator is low, the entrepreneur needs to think about improving it. This can be achieved by increasing the amount of revenue received. As an option - increase sales, slightly increase prices or optimize costs. You should start with small innovations, observing the dynamics of changes in the coefficient.

Staff profitability

One of the interesting relative indicators is the profitability of personnel. Almost all enterprises, regardless of the form of ownership, have long considered the importance of effective management labor resources. They affect all areas of production. To do this, it is necessary to monitor the number of personnel, their level of training and skill, and improve the qualifications of individual employees.

You can determine the profitability of personnel by the formula:

• PE - net profit of the enterprise for a certain period of time;
• NS - the number of staff of different levels.

In addition to this formula, experienced economists use more informative ones:

1. Calculate the ratio of all staff costs to net profit;
2. The personal profitability of one employee, which is determined by dividing the costs associated with him by the share of profit brought to the enterprise budget.

Such a complete and detailed calculation will help determine labor productivity. On its basis, it is possible to carry out a kind of diagnostics of jobs that can be reduced or need to be expanded.

Do not forget that low-quality or old equipment, its downtime or other factors can affect the profitability of personnel. This can reduce performance and give additional costs.

One of the unpleasant, but sometimes necessary methods is often the reduction of the number of employees. Economists must calculate the cost-benefit for each type of workforce to highlight the weakest and most vulnerable areas.

For small businesses, regular calculation of this ratio is necessary to adjust and optimize their costs. With a small team, it is easier to carry out calculations, so the result can be more complete and accurate.

Profitability threshold

For many commercial and industrial enterprises great importance has a calculation of the threshold of profitability. It means the minimum volume of sales (or sales of finished products), at which the proceeds received will cover all the costs of production and bringing to the consumer, but without taking into account profits. In fact, the profitability threshold helps the entrepreneur to deduce the number of sales at which the company will operate without loss (but not make a profit).

In many economic sources, this important indicator can be found under the name "breakeven point" or "critical point". It means that the company will receive income only if this threshold is overcome and the coefficient increases. It is necessary to sell goods in a quantity that exceeds the volume obtained by the formula:

• PR - threshold (norm) of profitability;
• PZ - fixed costs for sales and production;
• Kvm - gross margin ratio.

The last indicator is calculated preliminary according to the formula:

Kvm \u003d (V - Zpr) * 100%

• B is the company's revenue;
• Zpr - the sum of all variable costs.

The main factors affecting the profitability threshold ratio:

• The price of the goods for one unit;
• Variable and fixed costs at all stages of production and sale of this product (service).

With the slightest fluctuation in the values ​​of these economic factors, the value of the indicator changes up or down. Of particular importance is the analysis of all costs, which economists divide into fixed and variable. The first ones include:

• Depreciation for major facilities and equipment;
• rent;
• All utilities and payments;
• Salaries of employees of the company's management;
• Administrative costs for their maintenance.

They are easier to analyze and control, can be tracked in dynamics. Variable costs become more “unpredictable”:

• Salary of the entire workforce of the enterprise;
• Commissions for servicing accounts, loans or transfers;
• Expenses for the purchase of raw materials and components (especially when exchange rates fluctuate);
• Payment for energy resources spent on production;
• Fare.

If a company wants to remain consistently profitable, its management must control the rate of return, analyze costs in all respects.

Any enterprise seeks to develop and increase capacity, open up new areas of activity. Investment projects also need a detailed analysis, which helps to determine their effectiveness and adjust investments. In domestic practice, several basic calculation methods are more often used, giving an idea of ​​what the profitability of a project is:

1. Methodology for calculating the net present value: it helps to determine the net profit from a new project;
2. Methodology for calculating the profitability index: necessary to obtain income per unit of costs;
3. The method of calculating the marginal efficiency of capital (internal rate of return). It is used to determine the maximum possible level of capital expenditure in new project. The internal rate of return is most often calculated using the formula:

GNR = (net worth current / amount of initial investment current) * 100%

Most often, such calculations are used by economists for certain purposes:

• If necessary, determine the level of costs in the case of project development at the expense of borrowed funds, loans or credits;
• To confirm the profitability and document the benefits of the project.

If there are bank loans, the calculation of the internal rate of return will give the maximum allowable interest rate. Its excess in real work will mean that a new enterprise or direction will be unprofitable.

1. Methodology for calculating the return on investment;
2. A more accurate modified method for calculating the internal rate of return, for the calculation of which the weighted average cost of the advanced capital or investments is taken;
3. Accounting rate of return methodology, which is used for short-term projects. In this case, the profitability will be calculated by the formula:

RP=(PV + depreciation/amount of investment in the project) * 100%

NP - net profit from a new business project.

A full calculation in various ways is done not only before the development of a business plan, but also during the operation of the facility. This is a necessary set of formulas that owners and potential investors use when trying to assess the possible benefits.

Ways to increase the profitability of the enterprise

Sometimes analysis yields results that require serious management decisions. To determine how to increase profitability, it is necessary to understand the reasons for its fluctuation. To do this, we study the indicator for the reporting and previous period. Usually, the base year or quarter is taken, in which there was a high and stable revenue. The following is a comparison of the two coefficients in dynamics.

The profitability indicator may be affected by a change in the selling price or cost, an increase in costs or the cost of raw materials from suppliers. Therefore, it is necessary to pay attention to factors such as seasonal fluctuations in the demand of buyers of goods, activity, breakdowns or downtime. Solving the problem of how to increase profitability and, it is necessary to use various methods to increase profits:

1. To improve the quality of a product or service, its packaging. This can be achieved by modernizing and re-equipping its production facilities. Perhaps, for the first time, this will require serious investments, but in the future it will more than pay off by saving resources, reducing the amount of raw materials, or at a more affordable price for the consumer. You can consider the option;
2. Improve the properties of their products, which will help attract new consumers and become a more competitive company in the market;
3. Develop a new active marketing policy for your business project, attract good management staff. Large enterprises often have an entire marketing department that deals with market analysis, new promotions and finding a profitable niche;
4. In various ways to reduce the cost in order to compete with a similar range. This should not be at the expense of the quality of the product!

The manager needs to find a certain balance among all methods in order to achieve a stable positive result and keep the profitability indicators of the enterprise at the proper level.