How to calculate profitability

The profitability of the enterprise is primarily characterized by the activities of the enterprise as a whole and its profitability. The calculation of the profitability of the enterprise is necessary for the analysis and timely changes in the company’s policy regarding the conduct of business.

Instruction manual

1

The profitability of the enterprise is an indicator of the net profit that the company has in the process of carrying out its activities. There are various scorecards based on which profitability can be calculated.

2

The profitability of the enterprise is summarized from the indicators of profitability of economic and financial activities carried out with the aim of making a profit, and indicators of profitability of production.

3

All forms of profitability indicators are the most important characteristics and form the profitability and profit of the enterprise. That is why these indicators are considered mandatory components of the comparative analysis used to assess the profitability and financial condition of the enterprise.

4

In the analysis of production activities of the enterprise, profitability indicators are used as tools for pricing and investment policy.

5

You can calculate the profitability of the enterprise by calculating the ratio of the total profit of the enterprise to the cost or cost of manufactured products or services. The profitability of the enterprise is determined by the efficiency of the enterprise, in terms of production activities and the sale of products or services.

6

The profitability of an enterprise is influenced by various factors. The main ones are, the size of the profit, the volume of sales of the results of the enterprise.

7

To increase the profitability of the enterprise are such procedures as reducing the complexity and capital intensity of production processes of the enterprise, increasing management efficiency.

8

The profitability of the enterprise displays the rate of reimbursement or remuneration of the totality of all sources used by the enterprise to carry out its activities.