How to plan profitability
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Profitability implies an economic indicator of production efficiency, which is performed at the enterprise and which can comprehensively reflect the result of the use of material, monetary, as well as labor resources.
Instruction manual
1
Find the planned profitability by the following formula: divide the planned profit by the cost of production and multiply by 100%.
2
Establish a relationship between profit margin and value of invested capital. In this case, use the profitability indicator in the activity of forecasting profit. At the same time, compare the estimated return between the actual and planned (expected) investments.
3
Calculate the planned total profitability of associations in the form of the ratio of the planned book profit to the average annual planned cost of all fundamental production assets plus normalized working capital.
4
Determine the actual total profitability in the form of retained earnings in relation to the average annual actual cost of the value of fixed assets, as well as working normalized assets that were not credited by the bank.
5
In turn, the actual balances of the working capital of normalized funds are calculated based on their balances on the balance sheet minus the amount of arrears to suppliers for accepted payment requirements, the due date of which has not yet arrived, and to other suppliers for all unbilled deliveries.
6
Find the level of planned profitability, which depends on the amount of profit and the volume of production assets. Estimated profitability implies the ratio of the amount of retained earnings minus payment of production assets, fixed payments, profits directed to the designated purpose and interest on bank loans.
7
Define the indicator of the planned profitability for specific products, which reflects the efficiency of the costs of materialized and living labor for the production of goods. For example, in engineering or other manufacturing industries, planned profitability is defined as the ratio of planned profit to cost value minus the cost of used fuel, raw materials, energy, materials and components.
