Tip 1: How to calculate profitability
To consider profitability correctly one of the coefficients
To assess the effectiveness of a particular economic activity, you can use a certain coefficient of profitability. All coefficients of profitability are divided into three groups. The first group includes coefficients that allow you to consider the profitability of capital, also called return on investment, the second refers to the coefficients by which the profitability of sales is calculated, and the third factors to calculate the profitability of production. When calculating any type of profitability, use the coefficient that corresponds to the selected type of profit. Most often, to calculate profitability, choose gross, operating or net profit.
Correctly consider profitability - the task of a profile economist.
It is necessary to apply to it for drawing up a business plan, one of the main parts of which is the calculation of the profitability of the newly created structure. In the event that you need to add an activity to the existing business plan and you need to calculate its profitability, you can do this by contacting a specialized company authorized to provide this type of consulting services. The task of the specialist, whose services you have addressed, includes determining the coefficient most suitable for calculating the profitability of the constituent parts of your business. Not every novice economist is able to consider the profitability correctly. In order not to stay in the red, it is better to contact a specialist with experience and high qualification.
During the assessment of the effectiveness of the economic activity of the organization, specialists use the calculation of profitability indicators, which are also known under another name - profitability ratios. To determine the overall efficiency of the organization, you need to know the value of this indicator.
Identifyprofitability organizations can be using such official documents of the company as the "Balance Sheet" and the "Profit and Loss Statement". The indicator of profitability of the enterprise shows, how much effectively in its activity all property actives of the company, namely turnaround and fixed assets are used. A more precise sense of the profitability ratio is in calculating the amount of profit the organization receives when investing one ruble in its production assets. To determine the level of profitability of the company it is necessary to use the formula: РП = БП / (VOSS + Osr.), Where РП - the profitability of the enterprise;
BP - the accounting (balance) profit of the organization, received in the reporting period;
The average value of the value of current assets calculated for the reporting period;
VOSr. - The average value of the value of non-current assets calculated for the reporting period.
The accounting (balance) profit of the organization is the profit that was received by the company based on the results of the reporting period, and is the basis for calculating the profit tax. In other words, it is the profit of the organization before taxation. To find out the value of this indicator, it is necessary to remove from the amount of revenue received from the sale of services and goods: - management and commercial costs;
- cost of services provided or goods sold;
- balance from non-operating activities;
- balance from operating activities.
To calculate the average value of the organization's production assets, it is necessary to find out their book value at the beginning and end of the analyzed period. Then, using the formula to determine a simple average value, calculate the average value of the organization's assets in the reporting period.