How to calculate production profitability
Video: Production Function Profit Maximization Problem 2024, July
Profitability of production is one of the most important indicators of the production and economic activity of the enterprise. Analysis of the results of calculating the profitability of production allows us to assess the general situation at the enterprise and make corrective decisions to increase the values of this indicator. Improving profitability can be achieved by increasing profits from product sales, reducing costs, as well as the efficient use of equipment. How to calculate the profitability of production?
You will need
- balance sheet
Instruction manual
1
Calculate the balance sheet profit of the enterprise. Carrying profit is calculated as the difference between the income of the company from operating activities and the expenses of the company for these operations. Incomes of the enterprise can be divided into two groups: sales and non-sales. The first group includes income from the sale of products or services, fixed assets (including land) and other property. Non-operating income includes income from the rental of property, income from shares, bonds, and bank deposits.
2
Calculate the average annual value of fixed assets of the enterprise. Fixed assets are inventory items that participate in production, and in the process of depreciation transfer their value to manufactured products. The average annual value of fixed assets of an enterprise is defined as follows: you need to add half the value at the beginning and end of the year, the total value of fixed assets at the beginning of all months of the year, and divide the resulting amount by 12.
3
Determine the average annual value of working capital. Current assets - this means that the company uses in its production and economic activities. The average annual value of working capital can be determined by adding the average annual value of inventories, work in progress, semi-finished products of their own production and deferred expenses. Data for the calculation can be found in the balance sheet for the reporting period.
4
Calculate the profitability of production. Profitability of production is calculated as the quotient of dividing the balance sheet profit of an enterprise by the sum of the average annual value of fixed assets and the average annual value of current assets.
