Profitability of the enterprise example. Formulas and tips for calculating the profitability of a company
The economic activity of any organization in the conditions of market relations requires the widespread attention of a large circle of business representatives who are interested in the results of its functioning.
Under the current conditions, enterprises will be able to survive through a real assessment of their financial condition and the possibility of potential competitors, to determine which it is necessary to carry out timely, qualitative analysis all economic activity identify shortcomings and correct them in time.
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What does this indicator mean?
The level of profitability shows how effectively the current costs of the enterprise are used. It is calculated as a percentage, expressed by the degree of profitability, that is, the size of net profit.
To get a net profit, the company must carry out expedient activities, depending on the turnover of capital, the volume of products produced or sold. Profit is spent on development, provision of scientific and technical equipment, increase wages employees, the formation of budgetary funds.
It is expressed in two terms:
- Absolute. It is the amount of revenue that exceeds the cost of economic activity, product manufacturing.
- Relative. Shows the rate of return.
The net profitability is calculated for the whole enterprise or its separate subdivisions, by type of product. Analysis of its indicators allows you to get the dynamics of development, production efficiency, sales of products.
Payback of different kinds with formulas
According to the instructions of the President of the Russian Federation, marginal levels of profitability in the amount of 10-20% are applied to products that, in accordance with the current legislation, set free prices - tariffs.
For goods with established rent payments in the form of excise taxes, they are determined without taking them into account.
With an increase specific gravity the cost of production due to the use of purchased materials, semi-finished products and components exceeding 85 % it is set to the size 15 percent.
Table 1. Current indicators
| No. p / p | Name | The level of profitability as a percentage of the cost |
| 1 | Products of metallurgical, machine-building, chemical, petrochemical, woodworking, pulp and paper, light industries | 25 |
| 2 | Products of mining enterprises of all industries and logging enterprises | 50 |
| 3 | Products of mining and metallurgical enterprises, non-ferrous metallurgy and mining and chemical enterprises | 40 |
| 4 | Construction Materials | 25 |
| 5 | Tobacco, tobacco products, egg products | 40 |
| 6 | Products of other industries | 25 |
| 7 | Transportation by all means of transport | 35 |
| 8 | Transportation of passengers by air and related works, services | 20 |
| 9 | Services of supply and marketing organizations and enterprises | 50 (to distribution costs) |
| 10 | Enterprises and organizations of wholesale trade | 3 (to turnover) |
| 11 | Enterprises and organizations of retail trade | 8 (to turnover) |
Cost
Payback is the economic efficiency of the investment authorized capital. The payback period is calculated by the formula:
T=Vzat/D, where
Vzat– the amount of invested capital;
D- the average amount of income growth for the period under consideration.
It is used when choosing the best options for the implementation of the enterprise's activities related to technical and design solutions, production technology. Different options require different capital investments and operating costs.
ROI is calculated as:
P=Prp/S,
where Prp- profit before tax;
With- the total cost of the product that was sold.
According to the indicator, a graph of dynamics is built, showing the need to revise the cost of production, increase the cost. The volume of trade increases with an increase in profitability, if the value of costs remains unchanged, then profit increases accordingly and vice versa.
Activities
Cost recovery in production activities is calculated as the ratio of net profit and depreciation for a certain period of time to the amount of expenses spent on the sale of products, which refers to operating costs.
Her formula:
R \u003d (Pchp + Amor) / Z,
where PPP- net profit;
Amor- depreciation deductions;
W- the cost of production and sale of products.
In production activities, the organization's profitability ratio expresses the payback of production costs, the amount of profit for each ruble spent on the production and sale of products.
Services
The provision of services in any area does not require certain production costs.
In this situation, the sold product becomes a “service”, so its cost and profit depend on the quantity.
It is necessary to form the cost of the service provided, taking into account the field of activity, calculate the projected demand, and find the gross income. Subtract variable and fixed costs from gross income.
The payback period for the rendered service is calculated by the formula:
Tu=Zu/Pu,
where Zoo- the costs invested in the business;
Pu- the planned profit that will be received as a result of activities for the provision of services.
The effectiveness of the services provided is calculated by the formula:
Rsd \u003d (Psd * Spvr) / Z * 100%,
where W- costs associated with the organization of services;
spvr- the number of services for a certain period of time;
PSD- profit from the sale of services.
Watch a video on the topic of profitability and profitability of the enterprise
Fixed assets
The means of labor that take part in the production process while maintaining their original form are classified as fixed assets. This also includes tangible assets used in the production or provision of services, which make up the difference between the cost of fixed assets and accumulated depreciation.
They ensure the activity of the enterprise for a long time, receiving physical wear and tear, which reduces them and transfers them to the cost price through depreciation.
Payback of fixed assets is determined by the formula:
T=Os/Pch,
where OS- fixed assets of the enterprise, expressed in monetary terms;
Pch- net profit for a certain period of time.
The effective use of fixed assets is determined by the formula:
Rosn \u003d Pch / Os * 100%,
where os- the value of fixed assets;
Pch- the amount of net profit.
Deals
The profit from the transaction for the sale of products should be commensurate with the costs of its organization. In a simplified form, a condition is provided in which the payback is equal to the costs.
The payback includes the total profit from all transactions:
O=P*Co,
where P– average profit per trade;
So- the number of transactions.
If a company has taken a loan from a bank for the development of an enterprise, then the bank loan is taken into account in the calculations.
You can estimate the payback period for separate types of transactions using the formula:
Tokup \u003d W / (Sper * P),
where W- costs associated with the organization of the transaction;
sper- the number of transactions for a certain period of time;
P- the average profit received as a result of the transaction.
Rsd \u003d (Psd * Sper) / Z.
Personnel
Capital investment in labor force should pay off, in addition to make a profit. The payback is in direct proportion to the length of service of the employee for this enterprise employee.
Payback of personnel is calculated by the formula:
T=Zed/Fgod,
where T- payback period;
Zed- one-time costs;
year– annual economic effect.
The enterprise, in order to obtain the effect and increase the length of service, carries out work on:
- expedient operation of the working time fund, employee training, increase in labor productivity;
- increase the period of stay of the employee at the enterprise. Great work experience leads to a quick payback.
Therefore, in a team with a stable environment, where work time is fully used, conditions are formed for obtaining a payback of funds and making a profit.
The profitability obtained from the use of personnel can be calculated by the formula:
R \u003d Pch / Kp * 100%,
where Pch- net profit;
Kp- the average number of employees on the list.
net profit
The payback period can be traced on the example of a store that has been operating for some time. To determine the payback of net profit, you need to find the amount of gross revenue outlet for the period under review. Further, the amount of profit that the organization intends to receive in the course of its activities for the same period of time is determined.
Then the net profit is:
P=W*Stz
where AT- gross proceeds from the sale of goods;
stz- current expenses.
The payback period is calculated by the formula:
Tokup=Ko/Pch
where Co.- investment in the purchase of goods;
Pch– net income after taxes.
The profitability ratio from the sale of goods can be determined by applying the formula:
Rpr=Ppr/Vpr *100%,
where PPR- profit received as a result of sales of products;
VPR- sales revenue.
properties
To determine the payback, it is necessary to compile a list of property that is on the balance sheet of the enterprise, indicating each of them. The depreciation cost must then be calculated individually.
The calculations contain the residual value of the property, calculated as the difference between the original cost and the depreciation amount. Depreciation is calculated according to the instructions of the Uniform norms for depreciation objects, which is given in accounting.
To determine the payback period of the property, the following formula is used:
Tim \u003d Comp / Pch,
where Composition- the value of the property of the enterprise;
Pch- net profit for the period under consideration.
Efficient use of property for a certain period of time is determined using the formula:
Rome \u003d Pch / Comp * 100%,
where Pch- net profit received as a result of the operation of the property;
Composition- the residual value of the property for a certain period of time.
General
The total payback period of funds invested in production is determined by the period of achievement of the result, which acts as a profit or a decrease in the cost of production.
Payback period is calculated different ways depending on the amount of incoming funds and accounting for inflation.
The overall profitability is determined as follows:
P=V/P,
where V is the total volume of capital investments;
P- average annual income to the enterprise.
According to the total payback period, the economic activity of the organization, its profitability, economic efficiency and feasibility are established. further development. Based on this assessment, improvement methods are developed to be adopted for the reorganization.
Methods for calculating the level of profitability
By balance
The activity of any organization is based on the indicator overall profitability, so most businesses are bound to ask themselves: how to calculate profitability? It is the main parameter in financial analysis.
Book profit margin is calculated using the formula:
R=Pb/F*100%,
where Pb- the total amount of profit on the balance sheet;
F- the average annual cost of fixed production assets, intangible assets and tangible working capital.
In order to establish how much an organization has developed over a certain period of time, in addition to the general one, it is necessary to find values that characterize the profitability of turnover and capital turnover.
In a market economy, the turnover indicator has received the greatest use: the higher the profit, the greater it is. The number of turnovers of capital is expressed by the ratio of gross proceeds, that is, turnover, to the value of its capital. An increase in the number of turnovers of capital leads to an increase in the gross proceeds of the organization.
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By EBITDA
To establish the capabilities of the enterprise, to determine the value of the business, the EBITDA index is used, which means gross profit without deducting interest accrued on it, dividends, before taxes, depreciation.
The initial data for calculating the indicator are qualitative and undistorted accounting data.
These numbers are obtained from financial report compiled in accordance with IFRS. With the help of the coefficient, the operating results of the enterprise are evaluated, which is closest to the operating cash flow.
The EBITDA calculation reflects the profitability of the company's sales, cash forthcoming and earned for the reporting period. The calculation helps to evaluate the return on investment and self-financing reserves.
EBITDA calculation is carried out according to the formula:
E \u003d P (U) days + (% purchase + Aon),
where P(U)day– profit (loss) before taxation;
%purchase- Percentage to be paid;
And he– depreciation deductions of fixed assets and intangible assets.
The calculation of the EBITDA margin is calculated as:
EBITDA margin = EDITDA / Sales revenue
EBITDA is earnings before interest, taxes and depreciation.
If there was a loss
If the company suffered a loss over the past year, then the profitability index does not need to be calculated, but you can calculate the payback of products.
To do this, use the formula:
Oprod=B/Sprod
where AT- proceeds from the sale of products;
Sprod- cost of goods sold.
Ways to increase the indicator
Many factors influence the level of profitability in sales of products. The main ones are:
- growing cost;
- decrease in product sales.
To increase it in the first case, a rigorous analysis of the costs included in the cost of production is carried out. Based on the data obtained, ways to increase profitability are modeled, studies of the possibility of reduction. Based on the audit, the following decisions should be made:
- on the basis of the analysis, identify significant and rising expenditure items;
- reduce costs as much as possible without compromising production;
- clearly distinguish between fixed and variable costs in order to calculate the profitability threshold, which corresponds to the volume of turnover without loss, but also without profit;
- to analyze the profitability of separate types of products, based on profit margin, to examine the possibility of replacing the range of products;
- review marketing activities, improve product quality, develop a sales plan for products using promotional activities.
Carrying out economic activities, the subject needs a constant analysis of the results of the application of forces and means and, accordingly, conclusions about the prospective development personal business. When it becomes necessary to analyze production activities enterprises, one of the main factors of such an analysis will be production profitability.
The concept of profitability
Profitability is an indicator economic efficiency, which characterizes the profitability of the operation of the enterprise. The presented characteristic makes it possible to understand the degree of effectiveness of the enterprise's use of its own resources. In case of consideration non-profit organizations overall profitability will equal the effectiveness of their activities.
When it means commercial structures, then the main ones are exact quantitative indicators. Profitability is compared with the coefficient useful action- the ratio of total costs to the final profit. In other words, total profitability is the ratio of income to expenses. If, according to the results of the reporting period, the business is profitable, then it should be understood as profitable.
Classification of profitability indicators
The overall level of profitability (R.) acts in different types, because the efficiency coefficients are completely different, it depends on commercial activities. 
When calculating different profitability indicators, it must be taken into account that the applied coefficients and calculation formulas will differ. Thus, the overall profitability ratio is classified as a combination of the following categories: total R. assets, R. goods, products and R. production.
Total R. assets
The overall return on assets ratio can show which loans the company used to achieve a profit equal to one ruble. Such a characteristic is calculated as the ratio of profit that was received before the payment of all existing taxes to the average value of the organization's existing assets for a certain period. Thus, it is the ability of the assets of the enterprise to generate income. When it comes to R. the formation of an organization's assets, then it is calculated by the ratio of the final profit of the enterprise (before paying all taxes) to the average total cost of assets used for the same period.
R. goods or products
R. goods, products acts as the ratio of profits received from the sale of goods and services to those spent on the organization production process enterprises funds. It helps to understand the extent to which the production of a particular product is profitable.
R. production
The profitability ratio of a manufacturing process describes how expedient it is to carry out a particular business. The indicator of overall profitability acts as a ratio between production costs and final net income. 
An enterprise can be considered profitable if there is a positive balance of income and funds spent.
Other types of R. and calculation formulas
For the purpose of a more complete understanding of R., it is necessary to present visual formulas and carry out the corresponding calculations:
The ROA ratio is equal to profit divided by the value of assets and multiplied by one hundred percent. ROA - return on assets. In this case, not only the company's own assets are taken into account, but also those that were attracted from outside (credits, loans, etc.).
The ROFA coefficient is the total profitability of fixed production assets. It allows you to evaluate how effectively the functioning of such funds, and not assets, so their value is used in the calculation.
The ROE ratio is equal to the profit divided by capital and multiplied by one hundred percent, ROE is the return on equity. This characteristic represents the effectiveness of the company's own funds spent. 
Here the ROE indicator is calculated as the ratio of net production income to the amount of authorized capital (in other cases, additional capital is also used). The difference between the return on assets and liabilities determines the amount of borrowed funds used in the implementation of commerce. It should be said that this coefficient is included in the group of main indicators when analyzing the economic activities of an organization in states.
ROI, or return on investment. It allows you to evaluate the profit received from the initial investment. Thus, this is the ratio of profit to the amount of funds originally used. This ratio should not be considered the main indicator successful functioning enterprise, because it does not reflect the situation that occurs with certain operational flows. But the effectiveness of the latter is shown very clearly.
Calculations of the efficiency of economic activity of companies are carried out taking into account permanent and single investments. Classify the profitability of products and the profitability of production separately.
The ROM ratio, or product profitability, shows the extent to which financial costs are effective. In this case, we mean the ratio of the profit received from the sale of products and its cost. This characteristic is used in the calculations for all products provided, and for its individual types. The calculation formula is presented as follows:
ROM = (P / Sp) * 100%,
where ROM is the profitability of products that are sold (calculated as a percentage), P is the profit from the sale, Cn is the cost of the product that was sold. 
The profitability of production provides an opportunity to assess the effectiveness of the use of the property of the enterprise (fixed and working capital). It is found according to the formula:
Rp \u003d (Pb / (F. os.f. + F. equipment)) * 100%,
where Rp - production profitability (in percent), Pb - balance sheet profit (thousand rubles), F. fixed assets - the cost of fixed assets (average annual, thousand rubles), F. turnover. funds - the amount of working capital (in thousands of rubles).
Additional profitability ratios
In order to most fully determine the overall profitability of the enterprise, the following types of indicators are additionally used:
Return on sales, or ROS, which has the following calculation: the ratio of profit received from the sale of products (or operating profit) to the income of the organization. Such an indicator acts as the ratio of net profit (after deducting all taxes) to sales. It characterizes the level of profit (in%) contained in each ruble earned by the enterprise. Given this characteristic, prices for the goods and services provided are formed, and it can be used to judge significant organizational costs.
ROL, or personnel profitability, acts as the ratio of net profit to the regular number of working personnel for a certain period. In other words, the organization must adhere to some threshold of staffing in order to maximize profits. 
The profitability of contracting services is the difference between the cost of work provided by the contractor and the cost of performing the services by the customer. Calculated according to the formula:
R. other services = (Z. unprev. - Z. prev.) / Z. prev.
In this case, it is necessary to take into account the losses incurred by the contractor (penalties for forced non-compliance with deadlines, etc.).
Conclusion
The author of the article hopes that it will help the reader understand what the overall profitability of the enterprise is. Because in the implementation of commerce it is always necessary to analyze the results of activities and evaluate the effectiveness of the spent own forces and means.
Before opening a business or already at the stage of its development, it is necessary to calculate the indicators of efficiency and possible payback of the business. Therefore, along with other indicators, profitability is also considered.
Having calculated this value even when creating your own business, you can predict the further profit of your enterprise. Based on the analysis of the enterprise's activities and the calculation of profitability, change financial policy companies.
What is profitability
profitability is economic indicator enterprise efficiency, i.e. the extent to which the business is bearing fruit.
The indicator is calculated in percentages and to determine it, it is enough to divide the profit by the amount of assets received. In other words, profitability allows you to determine the amount of profit for the money spent.
Profit and profitability are closely interrelated. For example, if a company makes a profit from the sale of products, then it is profitable. To analyze the profitability of a business, the company takes into account both absolute and relative indicators.
Absolute indicators allow you to determine the dynamics of the development of the enterprise based on the results of each year, profit. The analysis is performed together with inflation for greater reliability. In its turn relative performance, the value is more reliable, it is the ratio of income and invested funds for business development. Relative indicators are usually called the level of profitability.
Enterprise profitability is better spent in dynamics throughout the activity. So, if growth is observed, then the policy pursued by the administration is effective, but if profitability indicators are declining, it is worth reconsidering the company's policy.
The definition and calculation procedure is set out in the following video tutorial:
How to calculate these indicators
It is quite difficult to give an answer to the question of how to calculate profitability, since this concept is extensive and includes several components, the formula for each is different.
To calculate profitability, you need to apply formula:
R predp \u003d B inc / (STsP + STsPA) x 100%
Р enterprise profitability
B prib - balance sheet benefit
MSP - the average cost of the main fund
SPPA - average price of current assets
For a better understanding, consider each component separately.
balance sheet profit- the income that the company received as a result of its activities for the year. In other words, it is the net income of the organization.
To determine the value, you need from the profit from the sale of goods or the provision of services subtract the following components:
- Expenses for the cost of production or provision of services.
- Costs associated with the implementation of entrepreneurial activities.
- Management costs.
To the obtained indicators it is necessary add data from other sources of activity.
The amount that will result and will be the balance sheet profit of the enterprise, but before taxing it.
In an enterprise in form-2, this value can be observed, it is in the line "profit before tax".
The next step is to define average indicators of fixed assets and the average price of current assets. It is not difficult to determine these indicators. It is necessary to take the indicators of fixed assets as of January 1 and at the end of the year, add these amounts and divide by 2. We get the average value of fixed assets. The average value of current assets is also calculated.
In the balance sheet of the enterprise for No. 1 in the line "Fixed assets" you can find information on the indicators of fixed assets, in the line "Current assets" the amounts at the beginning and end of the year are indicated.
Knowing these data, it is easy to carry out mathematical calculations using the formula and calculate the profitability of the enterprise.
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Calculation example
In 2014, Volgayama LLC received an income of 300,000 rubles, this amount is subject to income taxation. The amount of fixed assets at the beginning and at the end of the year amounted to 63,000 rubles. and 113,000 rubles, respectively. Current assets amounted to 408,000 and 405,000 at the beginning and at the end of the year, respectively.
Let's make calculations for the specified company. 
Average cost of the main fund (63000+113000)/2=88000.
Average cost of current assets (408000+405000)/2=406500.
Profitability 300,000 / (88,000 + 406,500) x 100% \u003d 60.6.
As you can see, the profitability indicator was 60.6%, these are very good performance indicators of the enterprise, characterizing the good economic situation of the company.
In the future, it may be advisable to conduct a similar analysis annually and check its dynamics. If the figures remain the same high, this means that the company's policy is correct, if they continue to decline, it is worth reconsidering the conduct of business in the company.
Nuances and factors affecting this indicator
Profitability is the ratio of the funds spent and the profit received, in other words, it is the efficiency of the enterprise.
For the favorable development of business in the company, a favorable environment is important both on foreign market, and in internal affairs enterprises.
To external factors include the cost of materials purchased from outside, the cost of production will also depend on their price. The final cost of a product also determines the demand for it.
Internal factors:
The scheme of analysis of the profitability of the enterprise
- Performance.
- Production costs.
- Labor costs for employees.
- Taxes.
- Production volume.
How effective will the work be? production company depends on the internal optimization of the enterprise.
Increasing the prices of manufactured products and reducing costs with its release, there is more profit. Accordingly, the profitability of the enterprise becomes higher, its growth is observed.
Enterprises in which the level of profitability according to the results of the analysis is low, work needs to be revisited and make adjustments:
At the same time worth minimize the impact of negative factors on production: downtime, marriage, a decrease in demand.
Conducting optimization of activities, a competent marketing policy and making adjustments to the work of the enterprise will significantly increase the profitability of the business.
You can learn more about the twelve profitability ratios in the following video:
Modern market economy characterized by freedom of enterprise and competition between business entities.
Every business strives to maximize efficient use their resources. An economic analysis is carried out to evaluate the results of the work.
A large number of absolute and relative indicators and coefficients are calculated.
This allows you to identify narrow places, find reserves for improving efficiency and outline ways for further development. One of the most important indicators is profitability.
The concept of profitability and its purpose
Profitability is the resulting relative performance indicator of the enterprise, which shows the return on available resources and capital.
It is private from the division of profit (balance sheet, gross,) by total costs, revenue, individual groups of assets. Profitability shows, what efficiency the company receives from each ruble invested in production. It can be expressed as coefficients, but more often it is calculated as a percentage. If the enterprise incurs losses, then certain types of profitability are negative.
Unlike profit, which is absolute indicator, profitability is not affected by inflation and allows you to correlate received income with expenses incurred. This gives a more complete picture of the state of affairs in the enterprise. It is possible that a high growth in profits is accompanied by even higher growth in production costs. In this case, although profits increase, profitability will decrease. Analysis of this indicator in dynamics allows you to identify unprofitable types of products, hidden reserves for further growth and evaluate pricing policy companies.
Kinds
Performance indicators at different enterprises may differ, as each company has its own specifics of work.
All types of profitability are divided for 3 groups by the type of the analyzed production indicator:
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Calculation procedure and formulas
For calculations, forms No. 1 and 2 of financial statements are used - and.
The numerator of all formulas is profit. The net is more often used, but sometimes the balance sheet, gross, sales profit,.
The denominator is the analyzed indicator (assets, capital). It would be wrong to simply take these values from the reporting, since during the period - six months, a year - their value on the balance sheet changes. Therefore, for the correct calculation the average cost for the period is calculated. For example:
If the value of the introduced and retired assets is known, then the calculation can be made using a different formula:
The formula for calculating the total profitability:
Foreign analysts also call this indicator profitability of functioning capital or economic resources.
Formula shows the return of all means of labor involved in the production process. The denominator indicates the cost of not all fixed assets, but only those that are directly involved in production (OPF). These include: machine tools, machines, equipment, special tools, presses, turbines, engines and other production assets.
To normalized working capital include:
- production stocks (raw materials, fuel, auxiliary materials, components, spare parts);
- semi-finished products and products in work in progress (objects of labor that have not completely passed all stages of the production process). Only own products are taken into account;
- deferred expenses (funds for technology development, development and launch of new types of products in the future period);
- finished goods in stock.
All of the above working capital are most often working capital assets (ObPF). Therefore, sometimes they are put into the formula.
Formula return on sales:
This indicator gives an understanding of how effectively sales are going. That is, how many percent of the profit is contained in each ruble of revenue. To assess the impact of operating and non-operating income and expenses, it is possible to use the value of gross profit in the formula. Also, the calculation is carried out using the profit from the sale.
Formula return on assets:
When calculating this indicator, the sum of all assets of the enterprise (balance sheet currency) or their certain types(current, non-current). Estimated together with resource productivity (revenue/assets).
Calculation profitability of the reporting period:
This indicator evaluates all financial activities companies (not just sales of products) for the past period.
Formula profitability of OPF:
Shows the return on OPF. The cost of all fixed assets used in production, including leased ones, is taken for calculation.
Calculation return on costs (cost):
This indicator can be calculated both for all products and for individual product groups. An assessment of the profitability of the production and sale of each product (or the demand for the service provided) is given. When calculating this indicator, there is when the revenue will only cover the cost (profit in this case will be equal to 0).
ROI:
This indicator gives information to the investor about how effective the investment is. It is used to compare and evaluate different projects. Analyzed along with payback period, return on capital and net present value.
Calculation examples
We will carry out the calculation and analysis using the example of a plant for the production of cold-formed welded pipes. The main consumers are enterprises of the chemical, fuel and nuclear industries.
Initial data:
- Balance sheet profit for 2015 - 2760 thousand rubles.
- OPF at the beginning year - 17120 thousand rubles.
- OPF on con. year - 17330 thousand rubles.
- OB.Norm. to the beginning year - 3240 thousand rubles.
- OB.Sorm. per con. year - 3750 thousand rubles.
Let's calculate the annual average cost of OPF, normalized working capital and calculate the overall profitability:
Thus, over the past year, from each ruble of the means of labor involved in production, the plant has extracted 13.32% of the balance sheet profit.
Data analysis
To analyze the overall profitability, it is necessary to compare this indicator in dynamics with 2014.
All data for calculations will be reflected in the table:
| Indicator | 2014 | 2015 | Deviation |
|---|---|---|---|
| Balance sheet profit, thousand rubles | 2690 | 2760 | +70 |
| The average cost of the OPF for the year, thousand rubles. | 17185 | 17225 | +40 |
| The average cost of normalized working capital for the year, thousand rubles. | 2390 | 3495 | +1105 |
| General profitability, % | 13,74 | 13,32 | -0,42 |
Despite the growth of balance sheet profit, there is a negative trend in overall profitability. This was influenced by the growth in the cost of OPF and normalized working capital.
To assess the impact of each factor, we will carry out a factorial analysis by chain substitutions.
Change in book profit calculate according to the formula:
Change in OPFavg. year. calculate according to the formula:
Change in OB.Av.Year. calculate according to the formula:
The balance (total impact) of all 3 factors is calculated by the formula:
The increase in the balance sheet profit increased the overall profitability in 2015. by 0.34%. The growth in the cost of fixed assets reduced this figure by 0.03%, the increase in the cost of normalized working capital also had a negative effect - by 0.73%. In this case, the growth rate of profit is lower than the growth rate of the normalized working capital of the enterprise, and that is why the overall profitability has decreased in dynamics. The impact of OPF is minimal (the cost has slightly increased compared to the previous year).
In 2015, the plant received an additional order for the production of thin-walled pipes. More production capacity is required to fulfill it. The existing equipment is fully loaded and the company launched this additional order into production in parts, moving the deadlines for the implementation of current orders. This led to disruptions in the rhythm of work. Modernization of one pipe welding line is scheduled for 2016. This is the main event in relation to the OPF.
Also, over the past year, there was an increase in overstocking of warehouses and work in progress. The reason for this was the lack of hydrotesting equipment, the purchase of which is scheduled for next year. A large number of pipes lay before this stage of the production process. So far, it has been possible to agree with some customers on the optional conduct of these tests. Finished thin-walled pipes according to a new order were produced in small batches and had to lie in a warehouse in order to send a large batch to the customer.
The company is actively looking for new suppliers of auxiliary materials: lubricants and coolants, containers, packaging for pipes, solvent, gloves, liquid argon. They occupy a high share in normalized working capital. Some suppliers promise to raise prices for these materials, and in order to increase the level of overall profitability, the enterprise needs to reduce the cost of purchasing them.
The value of the overall profitability indicator in the production sector is on average 4–25% for different companies. However, as follows from our example, this value in itself does not allow us to draw correct conclusions. Holding factor analysis gives an idea of the real situation in the enterprise and helps to find problem areas and hidden reserves.
Each enterprise develops its own program to increase overall profitability, using the data of the analysis.
There are several groups of enhancement methods:
- Improving the use of OPF. If the growth rate of profits is higher than the growth rate of the cost of OPF, then their operation is recognized as effective. The methods in this group include:
- reconstruction, modernization and technical re-equipment;
- compliance with the deadlines for repairs of the BPF and control of their quality;
- reduction of downtime and optimal loading of equipment;
- material incentives for working personnel and increasing their motivation;
- introduction of computer programs in equipment management.
- Improving the use of normalized working capital. Similar to the OPF, their work is effective at higher rates of profit growth. The methods are as follows:
- establishing optimal size production stocks;
- turnover acceleration;
- control over the volume of work in progress (the danger of high growth is that it may be a hidden defect) and finished products in warehouses;
- timely provision of raw materials, materials and the establishment of reasonable consumption rates;
- the control .
- Reducing the cost of production;
- Growth in the production of more highly profitable products and the search for new customers;
- Increasing production capacity and production volumes;
- Improving product quality, reducing the final marriage and production waste.
All these methods are closely intertwined. objective economic evaluation businesses and right management decisions lead to increased profitability and positive operating results. As a result, the well-being of the whole society as a whole improves.
What is profitability and why it is necessary to calculate it is described in the following video lesson:
As a rule, this indicator is expressed in monetary terms or in special relative units.
Formula for calculating profitability
In this expression, P represents the final result in monetary terms, and E is the material costs allocated and spent to achieve an effective result.
It is important to note that in relation to an enterprise or the activity of private entrepreneurs, the profitability indicator is calculated for a certain period of time. It can be different, depending on the previously made decision, that is, a month, a quarter or a year.
AT such a case the final results for the selected period of time will exactly correspond to the balance sheet indicators for one or another corresponding period, that is, income and expenses.
The same applies to the situation of calculating the profitability of a group of enterprises and even industries, but only in this case one will have to resort to statistical estimates and be prepared for certain errors.
How to calculate the profitability of the enterprise?
More precisely, the meaning of the profitability indicator is to calculate the amount of profit received by the enterprise when investing one ruble in the existing production assets.
It is worth noting that the balance sheet profit of an enterprise is the material resources that were received at the end of a particular reporting period. It is she who is the basis for the calculation of tax on the income received. In other words, this is profit before taxation.
In order to calculate this parameter from the amount of revenue that was received from the sale of goods or services, one should subtract their cost, selling expenses, the balance of operating activities and the balance from non-operating activities.
After that, using the formula for calculating a simple average, it is worth calculating the average indicators of the value of the property of the entire enterprise for a month, quarter or year.
How to calculate the profitability of a business?
The most significant indicator that can be calculated in the process of evaluating the profitability of a business is the return on equity.
As a rule, the owners of the enterprise receive their profitability in the form of certain contributions to the authorized capital.
In exchange, the owners are entitled to a predetermined share of the profits. According to experts, it is profitability that is the main indicator of the company's activity, as it characterizes the amount of profit.
In order to effectively assess the efficiency of activities, you can take an indicator of assets and profitability. This is the main production indicator that reflects the effectiveness of the use of material resources invested in the business.
Summing up this section, it can be noted that the profitability of a business can be defined as the ratio of net profit and the average value of assets for a given period.
How to calculate the profitability of production?
The profitability and profit of the production process is also called accounting.
In fact, this is the profit that was received at the end of the pre-established reporting period, but before the payment of all required taxes.
In order to accurately know the level of profitability of the production process, it is necessary to subtract from the total revenue such investments as:
- the cost of the product, for example, the materials used;
- management expenses;
- commercial spending.
As soon as a certain amount is received, it will need to be added to the profit from special types activities - non-operating and operating.
It should be noted that in a situation where a loss is indicated for these types of operations, the amount is deducted. The resulting value will be an indicator of the profitability of production.
How to calculate return on sales?
Return on sales is usually expressed as certain coefficient. This indicator can be traced in dynamics in different reporting periods.
To begin with, it is worth determining the period for which the calculation will be carried out, it is also important to determine the indicators necessary for the search - net profit and total sales revenue.
There is one important requirement - in order to get a more complete picture of the efficiency of an enterprise or company, it is necessary to calculate the profitability at several levels simultaneously.
Regardless of the method of calculating profitability, as well as the object, such a technique will provide an opportunity to draw the most accurate conclusions about the prospects for a particular work.
According to the data received, it is possible to understand what needs to be done in the first place - to refuse certain goods or to optimize the work with customers as efficiently as possible.
Video on the topic of what is return on sales: formula, example of calculation and analysis
