Profitability is an indicator of work efficiency. Profitability - an indicator of the effectiveness of the organization

PROFIT AND PROFITABILITY AS PERFORMANCE INDICATORS

ACTIVITIES OF THE ORGANIZATION

E.V. Vylegzhanina, Ph.D. economy Sciences, Associate Professor K.A. Fashmukhova, student of Kuban State University(Russia, Krasnodar)

DOI: 10.24411/2500-1000-2018-10365

Annotation. The article analyzes such economic categories as "profit" and "profitability". Factors that can affect the state of profit and profitability of the enterprise are characterized. The main sources of profit for the enterprise are considered. Possible mechanisms of formation of financial results of the enterprise are investigated. An analysis of the calculation of the profitability of the enterprise is carried out and its main types are determined.

Keywords: enterprise, organization, profit, profitability, efficiency of the organization, the mechanism of formation of the financial results of the enterprise.

AT modern conditions market relations one of the most important performance indicators of all organizations are profitability and profitability. Achievement high level these indicators contribute to a thorough economic study of the formation of the financial results of the organization. Every company strives to improve efficiency.

Demchuk O.V. writes that, as an economic category, profit is a net income expressed in monetary terms.

the course of the entrepreneur on the invested capital, characterizing his reward for the risk of implementation entrepreneurial activity, which is the difference between the total income received and the total costs incurred in the process of this activity.

According to M.M. Shadurskaya, the profit received by the enterprise from the production economic activity, has the following characteristics, shown in Figure 1.

effective performance criterion

organizations

purpose

studio activities and

shows the degree of business activity

Figure 1. Characteristics of profit from production and economic activities

enterprises

Not only the enterprise itself, but also the state is interested in profit growth. ON THE. Buzaeva believes that there are external and internal factors that can affect gross profit indicators. To external factors include the location of the enterprise and the climatic conditions of the area, indications of ecology, economics, politics, as well as legislation adopted in the country, etc.; to internal factors - the pace and capacity of production, measures to reduce costs, marketing strategies, measures to improve the quality of goods and services.

According to A.S. Medunov, the amount of profit of the organization depends on several indicators:

The fidelity of the choice of the production orientation of the organization for the production of products (products that are in consistently high demand);

Formation of competitive conditions for the sale of products (price policy, terms of delivery of products, the level of service in customer service, after-sales support);

Production volumes (direct dependence of volume on the mass of profit);

Product range.

Loseva Yu.Yu. notes that in the conditions of market relations there are two main sources of profit for the enterprise.

The first source is the monopoly position of the enterprise in terms of the volume and uniqueness of its products.

The second source is knowledge of market conditions and the ability to adapt the efficiency of one's production to it.

V.F. Protasov writes that the mechanism for forming the financial results of an enterprise includes:

Proceeds from the sale of the company's products or services;

Gross profit;

Sales profit;

Profit before tax;

net profit.

The base indicator is revenue, since it reflects the primary income of the enterprise. Next in decreasing order is the marginal (minus variable costs), gross (minus the cost of technological), from sales (minus the cost of the full), operating (minus other expenses with the addition of other income and interest payable), balance sheet (minus other expenses with the addition of other income), net (for deduction of taxes).

Profit reflects the absolute result of the organization's activities without taking into account the resources invested by the enterprise for its life, therefore it should be supplemented with profitability values, which show the degree of enterprise efficiency.

Each type of profit is necessary to solve certain problems. Without taking them into account, a full-fledged analysis of activity is impossible. Profit is a financial result and an absolute indicator. In other words, it can only be used for internal needs. Strategy development is based on the types of profit. If it is necessary to compare with the activities of other organizations, then profit indicators cannot be used; efficiency indicators, for example, profitability, are used instead.

Vorobyov I.P. believes that the financial results of the organization's activities are characterized by the amount of profit received and the level of profitability.

Demchuk O.V. determines that profit, revenue and sales are absolute figures or economic effect and it is incorrect to compare these data of several enterprises, because such a comparison will not show the true state of affairs.

Profitability, unlike profit, is a relative indicator, so the profitability of several enterprises can be compared with each other.

Profitability is a general indicator economic efficiency activities of the enterprise or the use of capital

tala/resources (material, financial, etc.). This indicator is necessary for the analysis of economic activity and for comparison with other enterprises.

Shadurskaya M.M. says that a group of interrelated factors forms the profitability of the enterprise. These factors in their composition show a heterogeneous impact on the results of the organization's work (both positively and negatively), in accordance with this they are systematized according to various criteria (by type of activity, sources of formation, order of formation).

Factors affecting the value of the financial results of the reporting period are divided into external and internal.

External factors include: factors of market conditions and administrative and legal factors. Internal factors include logistical, organizational and

managerial, economic incentive factors and social factors of working conditions.

According to V.F. Protasov, it is possible that an enterprise with a smaller sales volume will be more efficient and sustainable, that is, it will bypass another enterprise in terms of relative indicators, which is more important. Profitability is also compared with efficiency (coefficient of performance). AT general view profitability shows how many rubles (kopecks) of profit one ruble invested in assets or resources will bring. For the profitability of sales, the formula reads as follows: how many kopecks of profit are contained in one ruble of revenue. Measured as a percentage, this indicator reflects the effectiveness of the activity.

There are several main types of profitability:

Profitability of products/sales;

Profitability of the cost price;

Return on assets;

Return on investment;

Staff profitability.

The universal formula for calculating profitability is as follows:

RO \u003d (Type of profit / Indicator, the profitability of which must be calculated) * 100%

In the numerator, the type of profit is most often used profit from sales (from sales) and net profit, but it is possible to calculate on the basis of gross profit, balance sheet profit and operating profit. All types of profit can be found in the income statement (profit and loss).

Thus, we can say that profit is the economic difference between total income and expenses for the production and sale of products, taking into account losses in various business transactions during reporting periods. Profitability indicators that can determine the final results of the organization's activities help to trace the ratio of consumed resources to invested capital.

In developed market economy the decisive incentive for entrepreneurial activity is to obtain and increase a positive financial result, which is characterized by the amount of profit received and the level of profitability. The greater the amount of profit and the higher the level of profitability, the more efficiently the business entity functions, the more stable its financial condition. Therefore, the search for reserves to increase profits and profitability is one of the most important tasks in any business area.

Bibliographic list

1. Analysis of financial economic activity enterprises / V.F. Protasov. - M.: Jurist. 2014. - 422 p.

2. Buzaeva N.A. Analysis of the profitability and profitability of the enterprise // Research publications. - 2014. - No. 11 (78). - S. 90-99.

3. Demchuk O.V. Profit and profitability of the enterprise: essence, indicators and ways to improve // Problems of Economics and Management. - 2015. - No. 8 (48). - S. 6-15.

4. Loseva Yu.Yu. Profit and profitability as strengthening factors financial condition organizations // Corporate Governance and innovative activity. - 2017. - No. 9 (18). - S. 367-369.

5. Medunov A.S. Indicators of profit and profitability of the enterprise and their analysis // Issues of structuring the economy. - 2016. - No. 11 (31). - S. 77-83.

6. Shadurskaya M.M. Profit and profitability of the enterprise // Materials XI International Conference"Russian regions in the focus of change". - 2016. - S. 978-985.

7. Economics and management of an organization (enterprise): tutorial/ I.P. Vorobyov, E.I. Sidorova, A.T. Eye. - Minsk: Kviloriya V. T., 2014. - 422 p.

PROFIT AND PROFITABILITY AS EFFICIENCY INDICATORS ORGANIZATION ACTIVITIES

E.V. Vylegzhanina, candidate of economic sciences, associate professor K.A. Fashmukhova, student Kuban state university (Russia, Krasnodar)

abstract. The analysis of such economic categories as "profit" and "profitability" is conducted in the article. Factors influencing on the state of profit and profitability of enterprise are characterized. The basic sources of receipt of profit an enterprise are examined. The possible mechanisms of forming of financial results of enterprise are being investigated. The analysis of calculation ofprofitability of enterprise is conducted and its basic kinds are determined.

Keywords: enterprise, organization, profit, profitability, efficiency of activity of organization, mechanism of forming of financial results of enterprise.

INTRODUCTION 3

CHAPTER I. THEORETICAL FOUNDATIONS OF THE CONCEPT OF PROFITABILITY AS AN INDICATOR OF THE EFFICIENCY OF THE ORGANIZATION. 5

1.1 Profitability, as one of the most important indicators of the efficiency of the economic activity of the enterprise. 5

1.2 Profitability indicators. 7

1.3 Factors affecting the change in the level of profitability. 10

II CHAPTER. PRACTICAL CALCULATIONS OF PROFITABILITY ON THE EXAMPLE OF THE ENTERPRISE JSC BPO PROGRESS. 13

2.1 Technical and economic indicators of the enterprise BPO "Progress". 13

2.2 Calculation and analysis of profitability indicators of the enterprise JSC BPO "Progress". 16

2.3 Ways to improve profitability indicators. 21

CONCLUSION. 25

LIST OF USED LITERATURE. 27

APPS 28

INTRODUCTION

In modern conditions, in order for buyers to prefer products manufactured by this enterprise, so that goods are in great demand, it is necessary to carefully monitor financial position to properly organize production activities and track economic performance.

When an enterprise is just being created, its owner is primarily concerned with profitability, that is, that the profit of the organization covers all costs. But in order to evaluate the performance and economic feasibility the activity of the enterprise is not enough just to determine the absolute indicators: gross income, sales, the absolute amount of profit received by the enterprise. A more objective picture can be obtained through profitability indicators.

Profitability indicators are relative characteristics of the financial results and performance of the enterprise. That is, profitability is a relative indicator of economic efficiency, which comprehensively reflects the degree of efficiency in the use of material, labor and financial resources, as well as natural resources. The profitability ratio is calculated as the ratio of profit to the assets, resources or flows that form it and can be expressed both in profit per unit of invested funds, and in the profit that each received monetary unit carries.

Based on the calculation of profitability levels, it is possible to determine which types of products and which business units provide greater profitability, this is especially important now, because at the moment the financial stability of an enterprise depends on the specialization and concentration of production.

The relevance of this topic lies in the fact that the profitability

is one of the main criteria for the effectiveness of an enterprise, its increase characterizes the goal of an enterprise in any industry in a market economy; the growth of profitability contributes to the increase financial stability enterprises, as well as for entrepreneurs, the profitability indicator characterizes the attractiveness of business in this area.

This term paper is the calculation of profitability indicators and the identification of ways to increase the profitability of the enterprise BPO "Progress".

To achieve this goal, it is necessary to perform the following tasks:

To study the concept of profitability;

Consider different types profitability and methods of their calculation;

Investigate the factors influencing the change in the level of profitability;

To reveal the features of the technical and economic indicators of the enterprise BPO "Progress";

Introduction.

In economic analysis, the performance of enterprises can be assessed by indicators such as gross income, sales, profit. However, the values of the listed indicators are not enough to form an opinion about the effectiveness of an enterprise. This is due to the fact that these indicators are absolute characteristics of the enterprise's activities, and their correct interpretation in terms of performance evaluation can only be carried out in conjunction with other indicators that reflect the funds invested in the enterprise. Therefore, to characterize the efficiency of the enterprise as a whole, the profitability of various areas of activity (economic, financial, entrepreneurial) in economic analysis, profitability indicators are calculated.

It should be noted that profitability ratios are important elements, reflecting the factor environment for the formation of profits of enterprises. Therefore, they should be in the comparative analysis and assessment of the financial condition of the enterprise.

In addition, profitability indicators are used in the analysis of the effectiveness of enterprise management, in determining the long-term well-being of the organization, are used as an instrument of investment policy and pricing.

Chapter 1. Profitability as the main synthetic indicator of the efficiency of a trading enterprise.

One of the main requirements for the successful functioning of enterprises and their associations in the conditions of the formation of a market economy is the break-even of economic and other activities, the reimbursement of expenses by their own income and the provision of certain amounts of profitability, profitability of management.

The main indicators characterizing the financial results of economic activity trade enterprises, are gross income, other income, profit and profitability. Profitability is one of central places in the system of indicators and levers of economic management. It is a measure of the performance of the enterprise.

In the economic literature, several concepts of profitability are given. So, one of its definitions is as follows: profitability (from German rentabel - profitable, profitable) is an indicator of the economic efficiency of production at enterprises, which comprehensively reflects the use of material, labor and financial resources 1 .

According to other authors, profitability is an indicator that is the ratio of profit to the amount of costs, monetary investments in the organization of commercial operations or the amount of the company's property used to organize its activities 2 .

Either way, profitability is the ratio of income to the capital invested in generating that income. By linking profits to capital invested, profitability compares the rate of return of an enterprise with alternative uses of capital or the return received by the enterprise under similar risk conditions. Riskier investments require higher returns to be profitable. Since capital always makes a profit, in order to measure the level of return, the profit, as a reward for risk, is compared with the amount of capital that was needed to generate this profit. Profitability is an indicator that comprehensively characterizes the efficiency of the enterprise.

With its help, it is possible to evaluate the effectiveness of enterprise management, since obtaining high profits and a sufficient level of profitability largely depends on the correctness and rationality of the management decisions made. Therefore, profitability can be considered as one of the criteria for the quality of management.

By the value of the level of profitability, one can assess the long-term well-being of the enterprise, i.e. the company's ability to earn a sufficient return on investment. For long-term creditors, investors who invest in the company's own capital, this indicator is a more reliable indicator than indicators of financial stability and liquidity, which are determined on the basis of the ratio of individual balance sheet items.

By establishing a relationship between the amount of profit and the amount of invested capital, the profitability indicator can be used in the process of profit forecasting. The forecasting process compares the expected return on investment with actual and expected investment. Estimated profit is based on the level of profitability for previous periods, taking into account projected changes.

In addition, profitability is of great importance for making decisions in the field of investment, planning, budgeting, coordinating, evaluating and monitoring the activities of the enterprise and its results.

Thus, we can conclude that profitability indicators characterize the financial results and performance of the enterprise. They measure the profitability of the enterprise from various positions and are systematized in accordance with the interests of the participants in the economic process.

In practice, the level of profitability of the economic activity of trade enterprises is usually determined by the ratio of profit to retail turnover. It shows how many percent is the profit in the turnover. This level of profitability should not be calculated for the entire (balance) profit, but only for profit from the sale of goods, since the financial results from the sale of fixed assets and other assets, as well as non-operating income, expenses and losses are not directly dependent on changes in the volume of trade . This indicator is called the level of profitability of sales and is considered one of the main indicators for evaluating the effectiveness of the functioning of trade enterprises. It is directly dependent on the change in the level of gross income and inversely on the increase or decrease in the levels of distribution costs and taxes levied at the expense of realized trade allowances.

It is believed that the minimum level of profitability of sales in retail in the conditions of the formation and development of the market mechanism, it should be at least 4-6% of the turnover.

The level of profitability of sales for individual product groups and products is not the same. In this regard, a change in the structure of retail turnover leads to an increase or decrease in the level of profitability of sales of a trading enterprise. The impact of changes in the structure of trade turnover on the level of profitability of sales of a trading enterprise is manifested through the level of gross income and the level of distribution costs.

The level of profitability, calculated as the ratio of profit to turnover, has a significant drawback: it does not take into account what economic resources (assets), equity and borrowed capital will achieve the final financial result and how effectively they are used. In this regard, economists propose to define the profitability of economic resources as the ratio of the annual amount of profit to the average annual value of long-term, intangible and current (current) assets. It shows how much interest the profit takes in the assets of the enterprise or how many kopecks of profit are received from each ruble of the total (total) capital. In foreign practice, it is called the level of return on total capital (all assets). When calculating the return on total capital, the calculation should include all production fixed assets (own, leased and donated), other long-term, intangible assets and all current assets. The actual average annual cost of long-term, intangible and current assets is calculated according to the balance sheet data.

The level of return on total capital is directly proportional to the change in the amount of profit and inversely - from the change in the balances of long-term, intangible and current assets. The impact of these factors on the return on total capital can be measured using the chain substitution method. To do this, the conditional level of return on total capital is preliminarily determined with the planned amount of profit and the actual average annual balances of long-term, intangible and working capital. Then, the planned capital is subtracted from the conditional level of profitability of the total capital, and as a result, the impact on its size of changes in the balances of economic resources (assets) is determined. If we subtract the conditional capital from the actual level of return on total capital, we determine the impact on its size of a change in the amount of profit.

The amount of profit, in turn, depends on a number of factors (changes in the volume of retail turnover, levels of gross income, distribution costs and taxes levied at the expense of realized trade margins, amounts of profit or loss from the sale of fixed assets and the sale of other assets, non-operating income, expenses and losses), the impact of which on the level of return on total capital can be determined by the equity method. To do this, it is necessary to find the share of influence of each factor in the amount of deviation from the plan or in the dynamics of book profit and multiply the results obtained by the size of the impact of profit on the level of return on total capital.

The equity method can also measure the effect on return on total capital of a change in average balances certain types trading company assets.

Further, it is necessary to study the causes and factors that influenced the changes in the average balances of non-current and current (current) assets, to identify reserves for increasing the efficiency of their use. The average balances of non-current assets can be mathematically represented as the ratio of the volume of trade to the level of their return on assets. The impact of capital productivity of non-current assets on the return on total capital can also be determined by the equity method.

The average balance of working capital can be represented as the product of the average daily turnover and their turnover in days. In this regard, the impact of the second qualitative indicator of the work of trade enterprises, the turnover of current assets, can be studied on the level of return on total capital. To do this, determine how much freed up or additionally invested funds by changing their turnover (by multiplying the actual average daily turnover by reporting year on the acceleration or deceleration of the turnover of current assets in days), and the method of equity participation determine its impact on the level of return on total capital.

Profitability is a relative indicator of profit, which reflects the ratio of the effect obtained with the available or used resources.

Profitable is such a state of activity when, over a certain period, cash receipts compensate for the costs incurred, and profit is created and accumulated. The opposite state is unprofitability, when cash receipts do not compensate for the costs incurred.

Performance indicators characterize the ability of the costs incurred to pay off, which is the basis for the further activities of the enterprise. Profitability indicators more fully than profit reflect the results of the enterprise; they are used as instruments of investment, pricing policy, etc.

Profitability of production is the most generalizing, quality indicator economic efficiency of production, the efficiency of the functioning of enterprises in the industry.

Profitability indicators - refer to relative indicators derived from profit that allow evaluating the effectiveness of invested funds, are used in economic calculations and financial planning. Profitability indicators are calculated in order to be able to compare them with previous indicators.

They measure the efficiency of an enterprise as the ratio of profit to the absolute value of the factor that generates it - capital, turnover, revenue, costs.

Exist a large number of profitability indicators that characterize the efficiency of the enterprise from various positions. These indicators can be grouped into 3 areas:

product profitability;
profitability of sales;
return on capital.

Product profitability indicators (Rp) measure the efficiency of production and sales various kinds end products firms. There are the following approaches to the calculation of these indicators

, (7.10)

where Ped is profit in the unit price structure, r.,

Sed - the cost of a unit of production, r.

, (7.11)

where Prp - profit from the sale of products (profit from sales), r.;

Srp - total cost sold products, r.

Return on sales indicators are of particular importance in financial management to assess the profitability of certain types of products. Depending on which indicator of profit is in the numerator of the formula, the following indicators related to this group can be distinguished:

return on sales (Rprod)

(7.12)

net return on sales (NRprod)

,(7.13)

3. Indicators of return on capital show how many rubles of profit the use of one ruble of capital brings. This group of indicators characterizes the relationship between profit and investment and is the most important in the system of profitability indicators for evaluating the effectiveness of the enterprise.

Return on equity indicators include:

return on equity (Rk)

, (7.14)

net return on equity (NRK)

,(7.15)

profitability equity(Rsk)

.(7.16)

Net return on equity (CRsk) shows how many rubles net profit accounts for the ruble of own invested funds:

,(7.17)

where Pdon - profit before taxation, thousand rubles;

K - the average value of the capital of the enterprise, thousand rubles;

SC - the average value of the company's own capital, thousand rubles.

The profitability of production (profitability of the main activity) characterizes the efficiency of the use of fixed and working capital of the enterprise. This indicator is calculated by the formula:

, (7.18)

where Prp - profit from the sale of products, thousand rubles;

F - the average annual cost of fixed assets, thousand rubles;

ObS - the average value of the working capital of the enterprise, excluding short-term financial investments, thousand rubles.

In the sectoral economy, the most general ways to increase the profitability of production include the following.

1. All ways that increase the amount of profit.

2. All ways that improve the efficiency of the use of fixed assets.

3. All ways that improve the efficiency of the use of working capital.

The profitability of production is one of the key parameters, thanks to which it is possible to determine how effective the enterprise is. In the article we will talk about why and how to calculate the profitability of production.

It is important to calculate the profitability of production at all stages of the development of an enterprise, regardless of the field of activity. Any production, commercial, intellectual or economic project involves the investment of resources and profit, therefore, it is necessary to calculate income, taking into account all influencing factors, at the stage of planning economic activity. If you have a question about how to find the profitability of production, but you can’t do it on your own, contact the specialists of the Glavbukh Assistant service - they will help you solve all the routine and paper tasks related to doing business.

Why calculate the profitability of production

The purpose of any commercial enterprise is determined by the receipt of income from the invested funds and resources. The profitability of production shows how well the resources are used and what is the return on investment. In fact, profitability can be compared with indicators of the efficiency factor (COP), that is, it allows you to quantify the ratio of funds spent and profit received.

Any reporting enterprise can express the financial result of its activities in monetary terms, but this indicator does not always fully reflect the information. This is especially true when it is necessary to invest or lend to the company. For financial structures, the level of profitability of production is more understandable and informative.

For each area of activity there is a suitable formula for the profitability of production, as a result of the calculations, the percentage of costs to income for a certain period of work is displayed. The profitability of the enterprise allows you to assess how effectively the funds invested in production, goods, products pay off.

In what situations it is necessary to calculate the profitability of production:

When drawing up a business plan at the stage of preparation for the launch of the company;

In the process of pricing for a product or service as a factor determining the planned profit;

When evaluating the results of the enterprise for a certain period of time;

Profit forecast in the next reporting period to make cost adjustments and estimate the projected income;

Competitiveness analysis to identify opportunities to improve the status of a product, product or service in relation to competitors;

Argumentation of investments as an indicator of the predicted return and benefits of investing;

Estimation of the real market value companies when planning resale and justifying the price;

When lending to obtain loans for the development of production or when planning joint projects with other companies, partners.

Factors affecting the profitability of the enterprise

To understand how the profitability of an enterprise is calculated, it is important to understand what factors affect production performance. All factors are divided into two groups - external and internal.

Environmental factors include:

economic situation in the country/region, inflation, competition;
climatic and geographical features of the location of the enterprise;
the ratio of supply and demand for a particular type of product or service;
prices for raw materials or products necessary for work;
tax and credit policy of state and financial structures.

The internal factors of profitability of the enterprise include:

level of technical equipment, progressiveness of technologies;
working conditions of workers as the main attribute of labor productivity;
volume of production;
the amount of costs and the level of production costs;
efficiency of logistics and marketing of the organization;
general financial policy and management practices of the company.

When calculating the profitability of production, it is important to take into account all the factors that affect the result. Many of them are defined specific type activities of the company, as well as types of profitability.

The main types of profitability of the enterprise

The main indicators of profitability by the nature of the company's activities are divided into three groups:

return on investment;
profitability of sales;
product profitability.

They are characterized by the type of investments and expenses, the features of the work and the final result. The relationship between investments and results, taking into account internal factors, is reflected in the table, called the "Provision of the four" P "".

The profitability of the enterprise, depending on the scope of the company and the specifics of the invested resources, is divided into several types. Each of the types of profitability includes several indicators:

The profitability of a company's products or services. One of the most important performance indicators of the enterprise. In essence, this is the ratio of revenue to cost, which shows the degree of benefit received from the product produced or the service provided. Profitability of products can be calculated for all products of the enterprise or for a specific product / service to determine how profitable they are.

The overall profitability of the enterprise. This is a large group of calculations, the results of which make it possible to judge the efficiency of the enterprise as a whole. There are several formulas for calculating the profitability of production, they are used to evaluate work for a certain period of time as an indicator of the feasibility of investments or to report to the founders.

Return on assets. A rather large group of indicators by which one can judge how rationally certain resources are used (finance, labor, raw materials, material base).

Production profitability indicators

To calculate the overall profitability of production, the formula is used

revenue/expenses*100%.

In addition to the overall profitability, there are many other indicators that allow you to analyze the work of the enterprise in more detail. Using various indicators and formulas for calculating the profitability of production, it is possible to determine in exact numbers the effectiveness of investing funds, using resources, and determining the benefits from production and sales.

The main indicators of profitability of production and calculation formulas.

Indicator and main characteristic	Formula for calculating profitability
ROA - return on assets, the formula for the profitability of production on the balance sheet.	Balance sheet profit/total assets*100% For the calculation, you will need accounting and financial reports and the derivation of accurate indicators of the total balance sheet profit (BP) and the total cost of all working capital and fixed assets of the enterprise (SA).
ROM - profitability of production products.	Net profit/cost*100% This indicator provides information about the benefits the company receives from the manufactured and sold products. For the calculation, you will need information on net profit (NP) and cost of production (C).
ROS is the ratio of profit to revenue, which characterizes the profitability of sales.	Profit from sales/revenue*100% The indicator is the main indicator characterizing the entire pricing policy enterprises.
ROFA - return on fixed assets.	Net profit/fixed assets*100% The result of the calculation shows how efficiently the equipment, real estate, material resources directly or indirectly involved in the production process.
ROL - personnel profitability.	Net income/headcount*100% The result shows what percentage of the total profit falls on one employee of the company. The indicator determines the efficiency of using the labor of employees. The same indicator can be calculated for each individual structure of the enterprise.
ROE - return on equity.	Net income/Equity*100% The result shows how efficiently the invested funds are used, shows what benefit the company receives from its own capital.
ROI - return on investment.	Net profit/cost of initial investment*100% Used in commercial enterprises to evaluate the return on investment.
Project profitability	Net Worth/Amount of Initial Investment *100% All indicators are taken at the current moment. Allows you to evaluate the index of profitability per unit cost. An informative tool for planning and developing a project of any kind.
Return on revenue	Net profit/revenue*100% This is one of the most important indicators for analyzing the activities of the enterprise. At comparative analysis reveals weak sides and business problems.

How to calculate the profitability of production

Let us give an example of how the profitability of production is calculated. To obtain information about how efficiently the company is operating, you will need accounting reports for a certain period. An example of calculating the profitability of production by general formula requires the following data:

SR - total costs, including the cost of raw materials, wages, rent, tools, materials, fuel, etc.;
SD - total income (revenue).

We take the initial indicators:

Total expenses - 18 million rubles;
Total income - 22 million rubles;
The revenue is 4 million rubles.

Profitability: (4,000,000/18,000,000)*100%=22.2%

What indicator of profitability is considered acceptable depends largely on the scope of the enterprise. There is no single level of production profitability. According to economists, profitability is determined by industry. For example, for mining, an excellent indicator is profitability from 50%, for woodworking - up to 1%, for the service sector, the norm is from 12 to 22%.

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