What is the profitability of labor

The efficiency of using fixed assets at the enterprise is usually analyzed using indicators of capital profitability, capital productivity, capital intensity and capital ratio. Fixed assets include buildings, structures, vehicles, machinery and equipment, tools and other fixed assets of the company.

Profitability ratio

The profitability indicator shows how much profit falls on the ruble of the value of fixed assets. For analysis, the total (book) profit from sales before tax and the average annual book value of fixed assets are used. Profitability is calculated using the balance sheet of the company.

Formula: Fund profitability = Profit before tax / Average value of non-current assets * 100%.

Typically, an indicator is analyzed in dynamics. An increase in capital profitability indicates an increase in the efficiency of the use of funds, a decrease indicates an increase in the capital costs of the enterprise. As a rule, a decrease in fund profitability is observed when new products are introduced into the assortment or new technology is mastered. This is due to the fact that investments in production require time for their return on investment, thus, profitability will increase as the return on investment.