Product profitability is calculated by dividing the profit by. What is profitability, calculation formulas and types. Ways to increase the profitability of the enterprise

06.03.2023

It is impossible to do without calculating the profitability of products

All entrepreneurs in the world use this method in order to clearly understand whether it makes sense to continue further work with a particular product. For this purpose, constant tracking and monitoring of profitability is carried out.

In order to be able to expand the scope of profits and successfully develop entrepreneurial activity, it is important not to be content with approximate “calculations in the mind”, but to maintain a clear system of mathematical actions.

You need to take into account the state of the market, the return on the introduction of products, as well as the time indicators for which the payback will occur. It is necessary to know the methods and variants of formulas that would include all indicators of income and expense.

To understand the level of profitability, you need to monthly enter data into accounting reports and additionally hold such an event once a quarter. Who is interested in the level of profitability of their enterprise:

entrepreneurs who want to understand how their steps in the chosen area are correct;
persons involved in lending and monitoring the economy of the enterprise.

The level of profit is considered as an absolute value, and therefore it can be easily presented as monetary units (for financial statements). If a system of correlation of absolute values \u200b\u200bis used (as a percentage of each other), then it is better to explain relative indicators. The overall indicator of profitability makes it clear how much profit falls on one unit of production costs.

How is the profitability ratio calculated?

The profitability ratio has the form of a fraction, in which: the numerator is the profit received from the sales made, and the denominator is the number of total funds spent on this product. The next step is to multiply the resulting indicator by 100. The initial number will show the ratio of benefits to the funds spent in the process.

A single calculation of profitability is not able to fully show the picture of production. It is necessary to take into account some nuances:

the difference in the actual and planned profitability of the goods sold;
comparison of the obtained figure of the profitability of your company and competing firms engaged in similar production;
analytics of past years regarding this production.

Types of profitability calculation concept

Product profitability: formula

The first tactic is the calculation of a specific unit of product. In this case, the ratio of profit and waste for a certain specific product is calculated. This method is mainly used by analysts for future forecasts.

The second tactic is to calculate the overall profitability figure. In this case, a certain period of time is taken for which the calculation is carried out. For a simpler perception, the profitability of a product is considered as a percentage. This method facilitates further calculations.

ROM - profitability of products sold. This concept shows how effective the selected type of product, or rather its implementation, is, given all the money spent that was required to produce it.

Methods for calculating the profitability of goods

To calculate the profitability, you will need to indicate the figure of the "net" monetary benefit received. Plus, you will need a cost figure, which in turn can be of two types: full (to which commercial expenses are added) and production (funds spent on release). Formulas for calculating profitability:

Profitability of the general type taking into account the full cost price: Total profit (PR) / total waste per cost price (TC) multiplied by 100%
Profitability made up of sales profit data, taking into account production costs: Total profit (PR) / Total production costs (TCprod.).
Profitability calculated from the data of net profit and total cost: Net profit (NP) / Total cost (TC). Clarification: Expenditures for taxes and other actions are excluded from the figure of the total profit.
Profitability calculated by the ratio of net profit and cost spent on the final output of products: Net profit (NP) / Total production costs (TCprod.).

Information about the proceeds from the sale made is taken from the financial report (line 050). The calculation of the proceeds received is made according to the following formula: Profit from sales (PR) is equal to the difference in sales proceeds (TR) minus the total cost of goods (TC). You can find out about the digital value of revenue from line 010. To calculate the full cost, the following formula is used: TS = line 020 (output costs) + line 030 (sales expenses) + line 040 (administrative expenses).

The value of the net benefit received can be removed from line 190 or using the formula below: Net profit (NP) \u003d Sales profit (PR) - Other expenses (PRother) - Other income (PRincome) - Statutory tax (N).

What about other expenses and income? This value implies costs indirectly related to production. The profitability of production can be calculated for one product or for a whole range. A one-time calculation of profitability means little, but if you make such calculations systematically, you can draw conclusions regarding the further development of the business and improve office work.

Important points regarding the calculation of profitability

It is necessary to pay attention to such nuances:

actions and factors that affect the profit forecast of the organization;
the cost figure for the cost price does not always decrease (for example, in the field of science, further advancement will require a considerable investment of funds for such expenses as the purchase of necessary equipment);
it is worth focusing on those products whose profitability has recently shown the best results.

To obtain specific data on profitability, you need to systematically (over months and years), then you can draw more generalized conclusions about further actions in the field of management.

Important: the constant calculation of profitability allows you to understand the true picture of production, but also the tax obligations that apply in the country where this production is unfolding play a huge role.

Examples

Product profitability: graph

Let's imagine a company producing paper products, which in the past month received a total amount of sales of 500 million rubles. From this figure, we subtract expenses for all types of cost (commercial, wages for production employees), which amounted to 265 million rubles. And so, what is the profitability for the last month?

The first logical action is to deduct the cost: 500-265 = 235 million rubles. Let's use the formula for deducting the profitability of PR / TS x 100%: 235/265 x 100% \u003d 88. 68%. The resulting figure shows how much revenue the company receives from 1 ruble of products sold. The revenue is 88.68 kopecks, which is quite an impressive figure. When the value of profitability is on the decline, we can judge the decreasing demand for these products. Based on the figure obtained, conclusions can be drawn about how competitive the company is in the general sales market.

The following calculation example: The company sells three types of products. Recently, an average profitability of which is 26% has been revealed. Initially, you need to find the profitability for each individual product:

First type of item. Formula A: 9/27 x 100% = 33.3%
The second type of goods. Formula B: 8/22 x 100% = 36.36%
The third type of goods. Formula B: - 1.89%

Let's conclude: initially it seems that product A brings more benefits to the enterprise than the rest of the products (this can be seen from the total value of 27%). But on the fact of calculating the profitability, it is clear that the product under the B sign brings 3 kopecks more profit from each ruble received in the process. This means that it makes sense for the manufacturer to focus on product B.

Goods under sign B bring only a loss. During sales, 1 ruble is lost on each monetary unit. 89 kopecks of funds. This means that it is better for the manufacturer to remove this unit of production as soon as possible, so as not to work to his own detriment.

Conducting activities without monitoring its results, the efficiency of the enterprise is simply unthinkable. Periodically, it is necessary to analyze the data obtained, to identify the profitability of operations and all activities in general, on the basis of this, to draw up reports with conclusions about the prospects for the further functioning of the enterprise.

To assess all activities, the main indicator was identified - , but we will consider it in a narrow specificity, namely, product analysis. Thanks to this calculation, competent compilation is possible, with the help of which it is possible to identify how much profit is attributed per unit of products sold.

The essence and composition of the concept

Profitability- this is a component of the structure of economic efficiency, which shows the profitability of the work carried out. It helps to calculate how profitable the organization is using its assets.

Exactly profitability of production any product and characterizes the profitability of products. It is the relationship between profit from sales and the cost of producing the product sold.

profitability base production is the efficiency of product sales. And regardless of the type of activity of the company, the ratio of profits and costs does not change. It is the formula that will help calculate the operating activities of the company.

Myself indicator consists from profitability:

all goods sold;
sales by PE (net profit);
generalized data.

Formula and data calculation

This indicator has the abbreviation "ROM" and is calculated as follows:

ROM= (Profit from sales)/(production costs)*100%

As we can see from the formula, we get the result as a percentage. He characterizes not the current situation at the enterprise, but taking into account strategic plans. The numerator and denominator are made up of data for a certain period, they are selected for a couple of months or years, i.e. the analysis is carried out in dynamics.

When calculating, do not overlook three key points:

price dictatorship;
increase in the cost of production;
heterogeneity of produced goods.

Rising prices, even with rising costs, can be controlled, but provided that you are engaged in monopoly activity, or your competitors have low activity, without posing a threat to your demand

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Calculation options

Using revenue, sales and total costs for production:

ROM = (Profit from sales)/(Full cost) *100%;

Using revenue and cost, consisting of the cost of raw materials and materials, workers, maintenance, depreciation (technological):

ROM = (Profit from sales) / (Technological cost) * 100%;

Using net profit and total cost:

ROM = PV / (Full cost) * 100%;

Using net profit and production cost manufactured product:

ROM = PV / (Manufacturing cost) * 100%;

Let's look at examples

Example 1 The total revenue from the sale of shampoo for the past month is 6 million rubles. The cost of manufactured products is 3.2 million rubles. Determine the profitability of products.

Initially, we will define total profit received last month.

PR \u003d 6 - 3.2 \u003d 2.8 million rubles.

Thus,

ROM = (2,800,000)/(3,200,000)*100%=87.5%

It turns out that profit from each ruble of sold products is equal to 87.5 kopecks. For a product, this is a fairly high performance. After analyzing all this, it is possible to assess the competition of this company in the market. If the indicator starts to decline, then this indicates a drop in demand for the product, or incomplete production efficiency is affected.

Example 2 The situation is more complicated, the enterprise produces several types of goods .

The conditions are:

Find the profitability for each type, and give feedback on each type of product.

First, let's determine the profitability of the product:

(46-37)/37*100 = 24,3%;
(40-32)/32*100 = 25%;
(31-33)/33*100 = -6,06%.

The first thing that catches your eye is the absolute unprofitability of the 3rd product, it even has a negative profit. Its release must be stopped, because it brings a loss of 1.89 kopecks for every ruble.

Product 1 brings more profit than the second, but it is less profitable. The second product is more profitable (by 0.7%), therefore, it is necessary to concentrate on its release.

Nuances in the calculation of balance sheet items

The formula calculation always has a high percentage of reliability and evaluates the effectiveness of products taking into account many factors, but sometimes the data is affected by fluctuations in the tax system, but this is an extreme case.

It is also possible to calculate according to the balance, with certain features.

ROM=((line 050)/(p.20+p.30+p.40)-1)*100%

We got profitability as a percentage for a certain period. But the formula itself may vary, depending on the number of types of manufactured products.

Analysis and conclusions based on the results obtained

We have already answered why the indicator is calculated: for a qualitative assessment of the result of the functioning of the enterprise. The head of the company can determine for himself how much profit he receives if he invests one ruble of his funds. If we calculate according to the technological cost, then we reveal the effectiveness of the costs of production of goods.

The result at the production cost is always higher than at the full cost, so both indicators must be calculated and taken into account. Undoubtedly, the greater the profitability, the more profitable the products are produced, and this also leads to effective competitiveness.

In order to maintain and improve profitability, follows:

Reduce costs, but not at the expense of quality. Try new techniques and methods of production;
Increase sales, use new directions in marketing and advertising, open or find new sales markets, increase the species assortment.

Like any activity, increasing the performance requires some costs, but later they will pay for themselves, if properly applied.

For information on what profitability is, what types of it exist and the features of the product profitability indicator, see the following video material:

Analysis of the effectiveness of the organization's activities is impossible without taking into account profitability indicators. An indicator that characterizes the profitability of an activity or, in other words, economic efficiency - this is the concept of profitability.

This parameter demonstrates how efficiently the company uses the available economic, labor, financial and natural resources.

For non-profit structures, profitability is the main indicator of work efficiency, and in commercial divisions, quantitative characteristics calculated with greater accuracy are important.

Therefore, there are many types of profitability: profitability of production, profitability of products, profitability of assets, etc.

But, in general terms, these indicators can be compared with efficiency indicators, the ratio between the costs incurred and the resulting profit (the ratio of costs to income). A business that brings profit according to the results of reporting periods is profitable.

Profitability indicators are necessary for financial analysis of activities, identification of its weaknesses, planning and implementation of measures to increase production efficiency.

The types of profitability are divided into those based on the cost approach, the resource approach or the approach that characterizes the profitability of sales.

Different types of calculation of profitability pursue their own goals and use many different accounting indicators (net profit, production cost, commercial or administrative expenses, profit from sales, etc.).

Profitability of the main activity.

Refers to cost indicators, characterizes the effectiveness of not only the main activities of the company, but also work related to the sale of products. Allows you to evaluate the amount of profit received per 1 ruble spent.

This takes into account the costs associated with the direct production and sale of core products.

It is calculated as the ratio between the profit from sales and the sum of the cost of production, which includes:

the cost of sold goods, works, products or services;
cost of business expenses;
cost of management expenses.

It characterizes the organization's ability to independently cover costs with profit. The calculation of the profitability of an enterprise is used to assess the effectiveness of its work and is calculated by the formula:

Genus = Prp / Z,
Where Z - costs, and Prp - profit received from the sale.

The calculation does not take into account the time elapsed between production and sale.

Return on current assets.

The profitability of current (in other words - mobile, current) assets shows the profit received by the organization from each ruble invested in current assets and reflects the efficiency of using these assets.

It is defined as the ratio between net profit (i.e., remaining after taxation) and current assets. This indicator is intended to reflect the organization's ability to generate a sufficient amount of profit in relation to the current assets used.

The higher this value, the more efficiently working capital is used.

Calculated according to the formula:

Ptot = Chp / Oa, where

Rtot is the total profitability, net profit is Np, and Oa is the cost of current assets.

Internal rate of return.

The criterion used to calculate the effectiveness of an investment. This indicator allows you to evaluate the feasibility of investing in investment projects and shows a certain discount rate at which the net worth of funds expected in the future will be equal to zero.

This is understood as the minimum rate of return, when the investment project under study assumes that the desired minimum rate of return or the cost of capital of the company will exceed a smaller indicator of internal profitability.

This calculation method is not very simple and is associated with careful calculations. In this case, inaccuracies made during the calculation can lead to the final incorrect results.

In addition, when considering investment projects, other factors are taken into account, for example, gross margin. But it is on the basis of the calculation of the internal rate of return that the enterprise makes decisions of an investment nature.

Profitability of fixed assets.

The presence of profit, as an absolute indicator, does not always allow you to get a complete picture of the efficiency of the enterprise. For more accurate conclusions, relative indicators are analyzed, showing the effectiveness of specific resources.

The process of work of some enterprises depends on certain fixed assets, therefore, for a general increase in the efficiency of activities, it is necessary to calculate the profitability of fixed assets.

The calculation is carried out according to the formula:

Ros \u003d Chp / Os, where

Ros - profitability of fixed assets, Np - net profit, Os - cost of fixed assets.

This indicator allows you to get an idea of what part of the net profit falls on the unit cost of fixed assets of the organization.

Calculation of profitability of sales.

An indicator that reflects net profit in total revenue demonstrates the financial performance of the activity. The financial result in the calculations can be various indicators of profit, this leads to the existence of several variations of the indicator. Most often these are: profitability of sales in terms of gross profit, net profit and operating profitability.

What is the formula for return on sales. Find the answer in this article.

Formulas for calculating the profitability of sales.

According to gross profit: Rpvp = Bp / B, where Bp is gross profit, and B is revenue.

Gross profit is the difference between sales revenue and cost of sales.

For net profit: Rnp = Np / V, where Np is net profit, and B is revenue.
Operating margin: Op = EBIT/B, where EBIT is profit before taxes and deductions, and B is revenue.

The optimal value of the profitability of sales depends on the industry and other characteristics of the enterprise.

So in organizations that use a long production cycle, such profitability will be higher than those companies that work with a high turnover, although their efficiency may be the same.

Sales efficiency can also show the profitability of products sold, although it takes into account other factors.

Threshold of profitability.

It also has other names: critical volume of production or sales, critical point, break-even point. Denotes a level of business activity of the organization at which the total costs and total income are equal to each other. Allows you to determine the margin of financial strength of the organization.

Calculated by the following formula:

Pr \u003d Zp / Kvm, where

Pr - profitability threshold, Zp - fixed costs, and Kvm - gross margin ratio.

In turn, the gross margin ratio is calculated by another formula:

Vm = V - Zpr, where Vm is the gross margin, V is revenue, and Zpr is variable costs,
Kvm \u003d Vm / V.

The company incurs losses when the sales volume is below the profitability threshold and makes a profit if this indicator is above the threshold. It is worth noting that with an increase in sales, fixed costs per unit of production decrease, while variables remain the same. The profitability threshold can also be calculated for certain types of services or products.

Cost-effectiveness.

It characterizes the payback of the funds spent on production, shows the profit received from each ruble invested in production and sale. Used to evaluate the effectiveness of spending.

It is calculated as the ratio between the amount of profit and the amount of expenses that brought this profit. Such expenses are considered decapitalized, written off from the balance sheet asset, presented in the report.

The cost-benefit ratio is calculated as follows:

Rz = P/Dr, where P is profit and Dr is decapitalized expenses.

It should be noted that the calculation of cost-effectiveness indicators demonstrates only the degree of return on costs spent on specific areas, but does not reflect the return on invested resources. This task is performed by indicators of profitability of assets.

Factor analysis of profitability.

It is one of the parts of financial analysis and, in turn, is divided into several models, of which additive, multiplicative and multiple are most often used.

The essence of building such models is the creation of a mathematical relationship between all the studied factors.

Additive ones are used in cases where the indicator will be obtained as a difference or sum of the resulting factors, multiplicative ones - as their product, and multiples - when the factors are divided into each other to obtain the result.

Combinations of these models give combined or mixed models. For a full factorial analysis of profitability, multifactorial models are created that use various profitability indicators.

Profitability is the most important characteristic of an enterprise's efficiency. It shows how correctly and efficiently an economic entity uses various resources: monetary, material, intangible, labor, etc. In a general sense, this is the ratio of the profit of a commercial organization to the flows that form it.

Why calculate the rate of return?

The most important indicator of the financial success of any company is profit. Its absence is an important signal to owners that something is going wrong and that action needs to be taken. But how to evaluate the effectiveness if the financial result is greater than zero? How to understand how big it is for a given field of activity?

The absolute values of the profit margin are not able to cope with this task for two main reasons:

First, they are affected by inflation, so their growth may not reflect the real picture;
Secondly, they depend on the size of the company and its chosen production and marketing policy.

Relative values cope much better with the problem of performance evaluation, one of which is the level of profitability. They exclude the influence of inflation and other extraneous factors and allow an objective and impartial assessment of the activity.

Such coefficients make it possible to determine the effectiveness of many points:

Chosen pricing policy;
production process;
Investments made;
Use of own capital;
The work of the company as a whole, etc.

A competent definition of profit indicators and profitability values is the basis for building analytical calculations. This is the base that enables the management of a commercial organization to draw conclusions about its current state and make plans for the future.

For different analytical purposes, different profitability indicators can be determined. Each of them has its own formula and its own calculation procedure. Let's consider them in more detail.

What is return on sales?

In order to determine the effectiveness of the organization's pricing policy and to check to what extent it can control the costs associated with the sale of products, the profitability of sales is calculated. This ratio shows the amount of net profit for each ruble of revenue earned.

The following formula is used to calculate the indicator:

P = Net profit / Revenue

The amounts of profit and revenue are taken in monetary terms for the same period of time. The source of information for calculations can be the "Profit and Loss Statement".

This ratio can vary greatly from company to company. It is influenced by pricing policy, overall marketing strategy, product line features and other factors.

Return on sales can be calculated based on different types of profit:

clean;
Before tax;
EBIT is earnings before taxes and interest on loans.

Return on sales is very important for financial analytics purposes. It shows how much money remains at the disposal of the enterprise after deducting the cost, taxes and interest on loans from profit. Often this ratio is used to assess the operating efficiency of the organization.

The recommended values of the indicator can vary significantly depending on the industry. It reflects the performance of the company in the reporting period, but it is not able to describe the effect of long-term investments. For example, if a firm has made large investments in the purchase of production facilities or in the improvement of manufactured goods, then the profitability of sales may temporarily decrease.

However, if the investors' calculation was correct, then soon it will not only reach the previous level, but also exceed it.

What is the level of profitability of the enterprise?

To evaluate a business, an indicator of the profitability of an enterprise is often used. It means the ratio of profit and the average market value of fixed and current assets of the organization. This ratio shows how efficiently the company as a whole works. To determine it, the formula is used:

R \u003d P / F, where:

P - balance sheet profit;

Ф - the average cost of fixed and current assets of the company.

This ratio is especially important for the owners of the company. It reflects how effectively the property and current assets at its disposal are used, as well as what are the company's prospects for the future.

For a more detailed analysis, individual indicators can be used:

The level of profitability of fixed assets is a coefficient that shows what part of the profit is received per unit cost of fixed capital. It is obtained by dividing the profit by the valuation of the main assets;
The value of the return on current assets - shows how much profit can be obtained from one ruble of working capital. For calculation the formula is used: P = Net profit / cost of current assets.

What is the level of profitability of products?

To determine what result current costs give, analysts calculate the profitability of products. This is the ratio of the profit received to the costs of production and sale of goods (or their cost). It shows to what extent the enterprise can cover its costs with profit.

To determine the value of profitability, the formula is used:

P \u003d P / Z, where

P - profit from the sale of goods and services;

Z - the value of the cost of production and marketing (cost).

As a rule, the following main items are included in the amount of costs:

The amount of commercial expenses;
The amount of management costs;
Cost of goods sold.

The calculation of profitability can be made both for the company as a whole and for individual types of products.

This coefficient is of great importance for analytics, it allows you to evaluate:

the work of the company as a whole;
The correctness of the chosen pricing strategy;
Investment policy;
Production efficiency.

If a company invests in production assets or product development, then the indicator may fall for some period, but subsequently it will not only reach its former level, but also exceed it (if investors have planned everything correctly).

What other indicators of profitability are there?

In addition to the main ones (profitability of sales, enterprises and products), economic analysis uses additional profitability indicators that allow you to evaluate the company's activities in more detail in one way or another. These include:

The level of return on capital - shows the amount of profit per unit of the value of the authorized capital. This ratio is actively used by financiers in developed countries;
The value of return on investment - shows what profit in terms of 1 ruble can bring investments in the company's capital. The resulting value clearly demonstrates whether the investment was successful;
Profitability of staff is the ratio between the amount of profit and the average headcount. The analysis of this ratio shows how many employees the organization needs to maintain in order to maximize income.

What should be considered in a profitability analysis?

In order for an economist to draw correct conclusions when analyzing various profitability indicators, he must take into account three important features of such ratios:

Time aspect of the company. Profitability is a ratio that is relevant only for the present moment, it does not reflect future results or financial planning goals. It is possible, for example, that the profitability of sales will decrease as a result of investments in the development of the product line. It would be wrong to regard this state of affairs as negative, because if the benchmarks were chosen correctly, then this "subsidence" will be only temporary;
The problem of risk. Very often, the company's management faces a choice, which is better: a high level of profitability with a serious risk of operations or lower profitability with risk-free activities. This problem is very well illustrated by the coefficient of financial dependence: if it is large, then the company is balancing "on the knife's edge";
The problem of evaluation. The indicator formula consists of a numerator and a denominator, which are expressed in monetary units with different purchasing power. The amount of profit is the result of the reporting period, while, for example, the cost of equity was formed over several previous years. In addition, the indicator fixed in the balance sheet may not take into account the prestige of the brand, modern technologies in production and management, etc.

Profitability is a very important indicator that can help to conduct an objective and impartial assessment of the activities of any enterprise. In this regard, it provides much greater analytical capabilities than, for example, the values of different types of profit. Drawing conclusions based on the values of certain coefficients, it is possible to make competent management decisions and lead the company to development and prosperity.

In the system of performance indicators of enterprises, the most important place belongs to profitability.

Profitability is a use of funds in which the organization not only covers its costs with income, but also makes a profit.

Yield, i.e. enterprise profitability, can be assessed using both absolute and relative indicators. Absolute indicators express profit and are measured in value terms, i.e. in rubles. Relative indicators characterize profitability and are measured as a percentage or in the form of coefficients. Profitability indicators are much less influenced than profits, since they are expressed by various ratios of profit and advanced funds(capital), or profit and expenses incurred(costs).

In the analysis, the calculated profitability indicators should be compared with the planned ones, with the corresponding indicators of previous periods, as well as with data from other organizations.

Return on assets

The most important indicator here is the return on assets (in other words, the return on property). This indicator can be determined by the following formula:

Return on assets- this is the profit remaining at the disposal of the enterprise, divided by the average value of assets; The result is multiplied by 100%.

Return on assets = (net profit / average annual value of assets) * 100%

This indicator characterizes the profit received by the enterprise from each ruble advanced for the formation of assets. The return on assets expresses the measure of profitability in a given period. Let us illustrate the procedure for studying the rate of return on assets according to the analyzed organization.

Example. Initial data for the analysis of profitability of assets Table No. 12 (in thousand rubles)

Indicators	Actually	Deviation from the plan



5. Total average value of all assets of the organization (2 + 3 + 4)
(item 1/item 5)*100%

As can be seen from the table, the actual level of return on assets exceeded the planned level by 0.16 points. Two factors had a direct impact on this:

above-planned increase in net profit in the amount of 124 thousand rubles. increased the level of return on assets by: 124 / 21620 * 100% = + 0.57 points;
overplanned increase in the assets of the enterprise in the amount of 993 thousand rubles. reduced the level of return on assets by: + 0.16 - (+ 0.57) = - 0.41 points.

The total influence of the two factors (balance of factors) is: +0.57+(-0.41) =+0.16.

So, the increase in the level of return on assets in comparison with the plan took place solely due to an increase in the amount of the net profit of the enterprise. At the same time, the rise in the average cost, others, also lowered the level return on assets.

For analytical purposes, in addition to indicators of profitability of the entire set of assets, indicators of profitability of fixed assets (funds) and profitability of working capital (assets) are also determined.

Profitability of fixed production assets

The indicator of profitability of fixed production assets (otherwise called the indicator of capital profitability) is represented as the following formula:

Profit remaining at the disposal of the enterprise multiplied by 100% and divided by the average cost of fixed assets.

Return on current assets

The profit remaining at the disposal of the enterprise multiplied by 100% and divided by the average value of current assets.

ROI

The indicator of return on invested capital (return on investment) expresses the effectiveness of the use of funds invested in the development of this organization. Return on investment is expressed by the following formula:

Profit (before income tax) 100% divided by the currency (total) of the balance sheet minus the amount of short-term liabilities (total of the fifth section of the balance sheet liabilities).

Return on equity

In order to receive an increment due to the use of a loan, it is necessary that the return on assets minus interest for using the loan be greater than zero. In this situation, the economic effect obtained as a result of using the loan will exceed the costs of attracting borrowed sources of funds, that is, the interest for using the loan.

There is also such a thing as financial leverage, representing the specific weight (share) of borrowed sources of funds in the total amount of financial sources for the formation of the organization's property.

The ratio of the sources of formation of the organization's assets will be optimal if it provides the maximum increase in the return on equity in combination with an acceptable amount of financial risk.

In some cases, it is advisable for an enterprise to receive loans even in conditions where there is a sufficient amount of equity capital, since the return on equity increases due to the fact that the effect of investing additional funds can be significantly higher than the interest rate for using a loan.

The creditors of this enterprise, as well as its owners (shareholders), expect to receive certain amounts of income from the provision of funds from this enterprise. From the point of view of creditors, the indicator of profitability (price) of borrowed funds will be expressed by the following formula:

The fee for using borrowed funds (this is the profit for lenders) multiplied by 100% divided by the amount of long-term and short-term borrowed funds.

Return on total capital investment

A generalizing indicator expressing the efficiency of using the total amount of capital available to the enterprise is return on total capital investment.

This indicator can be determined by the formula:

The costs associated with attracting borrowed sources of funds plus the profit remaining at the disposal of the enterprise multiplied by 100% divided by the amount of total capital employed (balance sheet currency).

Product profitability

The profitability of products (profitability of production activities) can be expressed by the formula:

Profit remaining at the disposal of the enterprise multiplied by 100% divided by the total cost of goods sold.

In the numerator of this formula, the indicator of profit from the sale of products can also be used. This formula shows how much profit the company has from each ruble spent on the production and sale of products. This indicator of profitability can be determined both as a whole for this organization, and for its individual divisions, as well as for individual types of products.

In some cases, the profitability of products can be calculated as the ratio of the profit remaining at the disposal of the enterprise (profit from the sale of products) to the amount of proceeds from the sale of products.

The profitability of products, calculated as a whole for a given organization, depends on three factors:

from changes in the structure of products sold. An increase in the share of more profitable types of products in the total amount of products contributes to an increase in the level of profitability of products .;
a change in the cost of production has an inverse effect on the level of profitability of products;
change in the average level of selling prices. This factor has a direct impact on the level of product profitability.

Profitability of sales

One of the most common measures of profitability is the return on sales. This indicator is determined by the following formula:

Multiply the profit from the sale of products (works, services) by 100% and divide by the proceeds from the sale of products (works, services).

Profitability of sales characterizes the share of profit in the composition of the proceeds from the sale of products. This indicator is also called the rate of return.

If the profitability of sales tends to decrease, then this indicates a decrease in the competitiveness of products in the market, as it indicates a reduction in demand for products.

Consider the order of factor analysis of the return on sales indicator. Assuming that the product structure has remained unchanged, we determine the impact on the profitability of sales of two factors:

change in the price of products;
change in the cost of production.

Let us denote the profitability of sales of the base and reporting period, respectively, as and .

Then we get the following formulas expressing the profitability of sales:

Having presented the profit as the difference between the proceeds from the sale of products and its cost, we obtained the same formulas in a transformed form:

Legend:

∆K— change (increment) of profitability of sales for the analyzed period.

Using the method (method) of chain substitutions, we determine in a generalized form the influence of the first factor - changes in the price of products - on the indicator of profitability of sales.

Then we calculate the impact on the profitability of sales of the second factor - changes in the cost of production.

Where ∆K N- change in profitability due to changes in the price of products;

∆K S- change in profitability due to changes. The total impact of the two factors (balance of factors) is equal to the change in profitability compared to its base value:

∆K = ∆K N + ∆K S,

So, increasing the profitability of sales is achieved by increasing prices for products sold, as well as reducing the cost of products sold. If the share of more cost-effective types of products increases in the structure of products sold, this circumstance also increases the level of profitability of sales.

In order to increase the level of profitability of sales, the organization must focus on changes in market conditions, monitor changes in product prices, constantly monitor the level of costs for production and sales of products, and also implement a flexible and reasonable assortment policy in the field of production and sales.