How to calculate net profit margin. Profitability of sold products

Performance indicators can be divided into direct and inverse. Direct performance indicators are return ratios that show what conditional unit of result is obtained from a conditional unit of costs to obtain it. Inverse efficiency measures are capacity factors that illustrate how many conventional cost units are needed to obtain a conventional unit of result.

One of the main indicators of the efficiency of the economic activity of the enterprise is profitability. Profitability indicators are less subject to the influence of inflation and are expressed by different ratios of profit and costs. Profitability indicators are mainly measured in the form of ratios.

Profitability

Profitability can be defined as an indicator of economic efficiency, reflecting the degree of efficiency in the use of material, monetary, production, labor and other resources.

Profitability indicators are divided into different groups and calculated as the ratio of the selected meters.

The main types of profitability are the following indicators:

Return on assets.
Profitability of fixed production assets.
Profitability of sales.

Return on assets

Return on assets is a financial ratio showing the profitability and efficiency of the enterprise. Return on assets shows how much profit the organization received from each ruble spent. Return on assets is calculated as net income divided by average assets multiplied by 100%.

Return on assets \u003d (Net profit / Average annual value of assets) x 100%

The values for calculating the return on assets can be taken from the financial statements. Net profit is shown in form No. 2 “Profit and Loss Statement” (new name “Statement of Financial Results”), and the average value of assets can be obtained from form No. 1 “Balance Sheet”. For accurate calculations, the arithmetic mean of assets is calculated as the sum of assets at the beginning of the year and the end of the year, divided by two.

Using the return on assets indicator, you can identify what are the discrepancies between the predicted level of profitability and the actual indicator, as well as understand what factors influenced the deviations.

Return on assets can be used to compare the performance of companies in the same industry.

For example, the value of the company's assets in 2011 amounted to 2,698,000 rubles, in 2012 - 3,986,000 rubles. Net profit for 2012 is 1,983,000 rubles.

The average annual value of assets is 3,342,000 rubles (arithmetic mean between the indicators of the value of assets for 2011 and 2012)

Return on assets in 2012 amounted to 49.7%.

Analyzing the obtained indicator, we can conclude that for each ruble spent, the organization received a profit of 49.7%. Thus, the profitability of the enterprise is 49.7%.

Profitability of fixed production assets

Profitability of fixed production assets or profitability of fixed assets is the quotient of dividing net profit to the cost of fixed assets, multiplied by 100%.

OPF profitability = (Net profit / Average annual cost of fixed assets) x 100%

The indicator shows the real profitability from the use of fixed assets in the production process. Indicators for calculating the profitability of fixed assets are taken from the financial statements. Net profit is indicated in the form No. 2 “Profit and Loss Statement” (new name “Statement of Financial Results”), and the average value of the value of fixed assets can be obtained from form No. 1 “Balance Sheet”.

For example, the value of fixed production assets of the enterprise in 2011 amounted to 1,056,000 rubles, in 2012 - 1,632,000 rubles. Net profit for 2012 is 1,983,000 rubles.

The average annual cost of fixed assets is 1,344,000 rubles (arithmetic average of the cost of fixed assets for 2011 and 2012)

The profitability of fixed production assets is 147.5%.

Thus, the real return on the use of fixed assets in 2012 amounted to 147.5%.

Profitability of sales

Return on sales shows how much of an organization's revenue is profit. In other words, the profitability of sales is a coefficient that illustrates what share of the profit is contained in each earned ruble. Return on sales is calculated for a given period of time and is expressed as a percentage. With the help of profitability of sales, an enterprise can optimize, as well as the costs associated with commercial activities.

Return on Sales = (Profit / Revenue) x 100%

The values of profitability of sales are specific to each organization, which can be explained by the difference in the competitive strategies of companies and their range.

To calculate the profitability of sales, various types of profit can be used, which leads to the existence of different variations of this coefficient. The most commonly used return on sales calculated on gross profit, operating profit on sales, return on sales calculated on net profit.

Return on sales by gross profit = (Gross profit / Revenue) x 100%

Gross profit margin on sales is calculated as the quotient obtained by dividing gross profit by revenue multiplied by 100%.

Gross profit is determined by subtracting cost of sales from revenue. These indicators are contained in Form No. 2 “Profit and Loss Statement” (new name “Statement of Financial Results”).

For example, the gross profit of the enterprise in 2012 amounted to 2,112,000 rubles. Revenue in 2012 is 4,019,000 rubles.

The return on sales in terms of gross profit is 52.6%.

Thus, we can conclude that each earned ruble contains 52.6% of gross profit.

Operating return on sales = (Profit before tax / Revenue) x 100%

Operating return on sales is the ratio of profit before tax to revenue, expressed as a percentage.

Indicators for calculating operating profitability are also taken from Form No. 2 "Profit and Loss Statement".

The operating profitability of sales shows how much of the profit is contained in each ruble of revenue received, minus interest and taxes paid.

For example, profit before tax in 2012 is 2,001,000 rubles. Revenue in the same period amounted to 4,019,000 rubles.

Operating return on sales is 49.8%.

This means that after deducting taxes and interest paid, each ruble of proceeds contains 49.8% of the profit.

Return on sales based on net profit = (Net profit / Revenue) x 100%

Return on sales based on net profit is calculated as net profit divided by revenue multiplied by 100%.

The indicators for calculating the profitability of sales based on net profit are contained in Form No. 2 “Profit and Loss Statement” (new name “Statement of Financial Results”).

For example, Net profit in 2012 is 1,983,000 rubles. Revenue in the same period amounted to 4,019,000 rubles.

Return on sales in terms of net profit is 49.3%. This means that in the end, after paying all taxes and interest, 49.3% of the profit remained in each ruble earned.

Profitability analysis

The profitability of sales is sometimes called the rate of return, because the profitability of sales shows the share of profit in the proceeds from the sale of goods, works, services.

To analyze the coefficient characterizing the profitability of sales, you need to understand that if the profitability of sales decreases, then this indicates a decrease in the competitiveness of products and a drop in demand for it. In this case, the company should think about holding events that stimulate demand, improve the quality of the product offered, or conquer a new market niche.

As part of the factor analysis of the profitability of sales, the impact of profitability on the change in the price of goods, works, services and the change in their cost is considered.

To identify trends in changes in the profitability of sales in dynamics, it is necessary to single out the base and reporting periods. As the base period, you can use the indicators of the previous year or the period in which the company received the highest profit. The base period is needed to compare the resulting sales profitability ratio for the reporting period with the ratio taken as a basis.

Profitability of sales can be increased by increasing the prices for the offered assortment or by reducing the cost price. To make the right decision, the organization must focus on such factors as: the dynamics of market conditions, fluctuations in consumer demand, the possibility of saving internal resources, assessing the activities of competitors, and others. For these purposes, the instruments of commodity, price, marketing and communication policy are used.

The following main areas for increasing profits can be distinguished:

Increasing production capacity.

Using the achievements of scientific progress requires capital investments, but allows you to reduce the costs of the production process. Existing equipment can be upgraded to save resources and improve operational efficiency.

Product quality management.

Quality products are always in demand, therefore, if the profitability of sales is insufficient, the company should take measures to improve the quality of the products offered.

Development of marketing policy.

Marketing strategies focus on product promotion based on market research and consumer preferences. In large companies, entire marketing departments are created. Some enterprises have a separate specialist who is engaged in the development and implementation of marketing activities. In small organizations, the duties of a marketer are assigned to managers and other specialists of management departments. requires significant costs, but its successful implementation leads to excellent financial results.

Cost reduction.

The cost of the proposed product range can be reduced by finding suppliers who offer products and services cheaper than others. Also, saving on the price of materials, you need to ensure that the quality of the final product offered for sale remains at the proper level.

Staff motivation.

Personnel management is a separate sector of management activity. The production of quality products, the reduction of defective products, the sale of the final product, to a certain extent, depends on the responsibility of workers. In order for employees to perform their work duties efficiently and promptly, there are various motivational and stimulating strategies. For example, rewarding the best employees, holding corporate events, organizing branded press, etc.

Summarizing the above, readers of MirSovetov can conclude that profit and profitability indicators are the main criteria for determining the effectiveness of the financial and economic activities of an enterprise. In order to improve the financial result, it is necessary to evaluate it, and on the basis of the information received, analyze which factors hinder the development of the organization as a whole. After the existing problems are identified, you can proceed to the formulation of the main directions and activities in order to increase the company's profits.

The calculation of the standard value of return on sales for industrial enterprises and other organizations is extremely important in the management of the company. Knowing these indicators, it is possible to conduct a qualitative economic analysis and improve the efficiency of the enterprise. If a company wants to maintain its position in the market or even improve it, then it is very important to carry out such calculations for short periods. This will allow not only to better manage the organization, but will also provide an opportunity to respond in a timely manner to any changes in the market.

Basic concepts

Before understanding what the standard value of return on sales is, you need to understand what it is. In accounting, this concept means an economic indicator, by determining which you can find out the level of efficiency in the use of certain resources in an enterprise. Moreover, not only tangible assets are taken into account, but also natural, labor resources, investments, capital, sales, and so on. In simpler terms, profitability means the level of profitability of a business, its economic efficiency and the benefits that it brings.

Thus, it turns out that if the profitability indicator is below zero, then such a business is unprofitable, and it is urgent to increase this indicator, find out what influenced the occurrence of such a situation and eliminate the causes of the problem. The level of profitability is usually expressed in coefficients, but they are expressed for the profitability of sales as a percentage. The normative value can also indicate the efficiency of exploitation of the enterprise's resources; at normal values, the organization will not only cover costs, but also make a profit.

Profitability indicators

When calculating all indicators, it is very important to pay attention to such a concept as the profitability threshold. This indicator, or more precisely, the point, actually stands on the division of the unprofitable and effective state of the company. It serves as a comparison with the break-even point, reflecting at what point a loss-making business became efficient. To analyze the performance of the company, it is necessary to compare the actual profitability with the planned ones. In addition, the comparison uses data for past periods and the performance of competitor companies. But the coefficients, or, as they are also called, sales indices, are determined by calculating the ratio of total income to the main assets and flows.

Main groups of standards

The standard value of return on sales and profitability can be divided into certain groups, namely:

Profitability of sales (profitability of the enterprise).
Profitability of non-current assets.
Return on current assets.
Return on personal capital.
Product profitability.
Profitability of production assets and profitability of their use.

Using these indicators, taking into account the scope of the company, you can determine its overall profitability. To determine the return on assets, it is necessary to determine the efficiency of operating the company's own capital or its investment funds: it all depends on how the company's assets bring profit to it, how much of it, taking into account the resources spent on production. To calculate the return on assets, the ratio of profit for a specific period of time to the size of the company's assets for the same period is used. The formula looks like this:

R assets \u003d P (profit) / A (size of assets).

The same indicators are used in the economy to calculate the profitability of the operation of production assets, investments and equity. For example, a joint-stock company, you can find out how effective the investments of shareholders in this industry are.

Profitability calculation

Profitability of sales (normative value) is an indicator of profitability, which is expressed in coefficients and represents a display of the share of income for each cash equivalent spent. To calculate the profitability of sales of the company, the ratio of net profit to the amount of proceeds is calculated. Calculations are carried out according to the formula:

R prod. \u003d P (net income) / V (revenue).

This indicator is directly affected by the pricing policy of the organization, as well as its flexibility in the market segment where its products are involved. Many firms use various external and internal strategies to increase their own profits, as well as analyze the activities of competitors, the range of products they offer, and so on. There are no clear schemes, norms, designations of profitability. This directly depends on the fact that the normative value of return on sales is directly related to the specifics of the organization's activities. All indicators can only reflect the overall performance of the company for a specific period.

Basic formulas

To effectively manage sales and monitor the performance of the organization, the profitability of the enterprise is calculated. To do this, it is customary to use certain indicators, namely: gross and operating EBIT profit, balance sheet data, net return on sales. taking into account the indicator of gross income, it shows a coefficient denoting the share of growth from each earned cash equivalent. To calculate this indicator, they take the ratio of net income after the payment of tax levies to the total amount of funds for a specific period of the organization's operation. In other words, operating margin is equal to gross income divided by trading revenue.

It should be noted that this ratio must be included in the financial statements. But operating profit EBIT is equal to the ratio of EBIT to total revenue. However, this indicator reflects the total income before all interest and taxes are deducted from it. It is this formula that calculates the operating profitability of sales, the standard value in production, as well as other important values. It is believed that this ratio is between the general data on profit and the net earnings of the organization.

Profitability ratios

But the profitability of sales on the balance sheet is a coefficient, the calculation of which is carried out on the basis of data from accounting reports and represents a characteristic of the share of profit from the total revenue of the organization. The calculation of this coefficient is carried out according to the formula of the ratio of the total income or loss from the sale of products to the volume of revenue. To get the result, you just need to use ready-made data from the balance sheet of the enterprise.

The calculation of the net profitability of sales is carried out by the ratio of net profit after all payments to the total revenue. To carry out independent calculations of the standard value of the profitability of sales in trade, you need to find out how many products were sold and what income the organization received from this sale after it paid all taxes, taking into account other expenses related to operating activities, but without affecting non-operating expenses .

Analysis of results

Thanks to all these formulas, the company's specialists can calculate a wide variety of profits relative to the total revenue. But still, the dependence on the features of the main direction of the enterprise remains quite significant. If the profitability of sales, the standard value and other coefficients for several periods of the organization's activity were calculated, then the employees of the enterprise will be able to make a qualitative economic analysis. That is, these indicators will help to conduct operational management of the economic activity of the enterprise. In addition, this will allow you to quickly respond to fluctuations and changes in the market, which will undoubtedly help improve performance and provide the company with a steady income.

Indicators reflecting the normative value of return on sales are used in the calculations of operational activities. But it is not worth using them for long-term periods, since changes in the market occur quite often, and with such calculations it will not be possible to respond to them in a timely manner. They will help to solve daily and monthly tasks, helping to build plans for the sale of manufactured products.

Increasing profitability

There are ways to increase the standard value of return on sales. Among them, the following are considered the most common: reducing the cost of production by reducing the cost of producing goods and increasing the volume of goods produced, which will increase gross revenue. But in order to effectively use these methods, the organization must have enough labor and material resources. Again, to hold such events, you need to work with highly qualified employees or increase the level of professionalism of your staff through various trainings and using new methods and practices of the world economy that improve the skills of workers.

In order to increase the standard value of return on sales in terms of net profit, it is important to study what positions the organization's competitors are in, what their pricing policy is, whether promotions or other enticing events are held. And already having this data, it is possible to carry out an analysis of which factors it is advisable to use to reduce the cost of production. Moreover, for analytical activities, one should use not only data on competitors in the region, but also use information about the leaders of this market segment.

Conclusion

In order to increase the profitability of sales, the normative value by industry should be calculated using all the necessary formulas and an analysis of the data obtained should be carried out. It should be borne in mind that the increase in the efficiency of an enterprise is influenced not only by its pricing policy, but also by the assortment that it can offer its consumers.

Most often, the best solution to reduce the cost of production is the introduction of modern technologies into production. To understand whether this method will improve production, it is imperative to conduct an economic analysis and find out what costs are needed for this, how long it will take for the development of new equipment by employees, and after what period this investment will pay off.

One of the main performance indicators of the organization is the profitability of sales in terms of net profit. What characterizes this indicator? How is it calculated? All details are below.

What is return on sales in terms of net profit?

The concept of profitability is directly related to the success, that is, the profitability of any business. This financial indicator can be calculated for the enterprise as a whole or separately for its divisions (types of activity). In the process of calculations, it is easy to determine the profitability of assets, fixed assets (fixed assets), sales, goods, capital, etc. First of all, the calculation is based on the analysis of income accounting data for a certain time period.

An analysis of profitability values allows you to find out how effective the management of funds invested in the creation and further development of the company is. Since the calculations are carried out as a percentage or as a coefficient, the higher the results obtained, the more profitable the business is considered. Profitability calculation is used in the following situations:

With short- and long-term profit forecasting.
When receiving credits and loans.
When developing new directions and analyzing existing types of commercial activities.
During benchmarking across the industry.
In order to justify future investments and investments.
To establish the real market price of a business, etc.

The profitability of sales indicator indicates what component of the company's revenue is profit. In other words, how much income each ruble of sold products (works or services) brought. By controlling this ratio, the head of the firm can adjust the pricing policy, as well as current and future costs.

Return on sales by net profit - formula

When calculating the indicator, the accounting data of the organization for a given period of time are used. In particular, to determine the profitability of sales, information on net profit is required, which are indicated on page 2400 f. 2 "Report on financial results" (the current form was approved by the Ministry of Finance in Order No. 66n dated 02.07.10).

The formula looks like this:

RP \u003d PE of the company / V, where:

RP is the value of return on sales,

PE - the amount of net profit (line 2400 f. 2),

B - the amount of revenue (line 2110 f. 2).

Additionally, for detailing indicators, you can calculate the profitability of gross profit or operating profitability. The formulas change according to the given goals:

RP for VP \u003d VP of the company / B, where:

RP for VP - profitability by gross profit,

VP of the company - gross profit of the company (line 2100 f. 2),

B is the amount of revenue.

Operating RP \u003d Profit before tax (line 2300 f. 2) / V.

What value of return on sales is considered the norm?

We have already found out that RP shows the level of profit for a certain period. In dynamics, this ratio helps to establish how the profitability of a business changes over time. To do this, analyze data for several periods - base and reporting. After that, it is easy to calculate the profit margin by performing factorial calculations.

What value of profitability is considered the norm? There is no single answer to this question. Optimal indicators depend on the type and specifics of the activity of the enterprise or its division. Of course, the higher the value obtained, the better, but the results can also be influenced by such features as the duration of the production cycle, the presence of investments, etc.

An average indicator of good profitability is a coefficient in the range of 20-30%, average - 5-20%, low 1-5%.

In order not to burn out and not go bankrupt, it is necessary to keep abreast of the economic situation. You should always have an idea of the real state of affairs. If there is reliable accounting information, then mathematics will help to find out in what state the enterprise is. And if more - the ratio of profitability of sales.

general information

The profitability ratio of sales shows the financial result of the organization's activities, focusing on how much of the revenue received is profit. It should be noted that different approaches and characteristics can be used for calculations, which creates different variations of this indicator. What is used most often? This is the return on sales in terms of net or gross profit. But the emphasis can be placed on the operational component.

Example

There is a lot to be said about the return on sales ratio. The formula will allow you to understand it and use knowledge to your advantage. Let's consider, taking net profit as the main value. The formula in this case is as follows: KRP \u003d PE / OP * 100%. The first abbreviation (KRP) stands for "sales profitability ratio". This is, in fact, the indicator we need. PE is pure profit. OP is Here is such a simple formula. But it allows you to calculate the net return on sales ratio.

Data for calculations should be taken from the report, which summarizes profits and losses. The resulting value allows you to estimate the company's income for each earned ruble. This is potentially useful for interpreting available turnover data as well as preparing economic forecasts in a limited market that is holding back sales growth. In addition, the coefficient can be used to evaluate the effectiveness of different companies that operate within the same industry.

Changing values

The formula itself will not change. If the company faces a certain task or difficult conditions, then instead of the state of emergency, one should substitute:

operating profit;
gross margin;
profit before taxes (and sometimes before interest).

If the value of the sales profitability ratio is known, then to begin with, in order to have an understanding of the situation on the market, it is enough to compare its value with similar characteristics of other enterprises that exist here.

And based on these data, we can say whether the activity is successful, what is being carried out and whether the organization has a future while maintaining this tactic. And this all allows you to find out the coefficient for it does not exist, but if you want to navigate this issue, you can do the following: find the average value for the sector of the economy, for which you need to use government statistics. If your own result is higher, then it is good and there is potential. And if the value is lower, the situation should be changed.

How to increase the return on sales ratio?

There are basically three options here:

Increasing the amount of revenue as a percentage of costs. The reasons are growth of sales volumes and changes in assortment. In this case, you can pay attention to variable and fixed costs. The structure in the cost price strongly influences the profit margin. So, if you invest in fixed assets, fixed costs will increase. At the same time, there is a chance for the variables to decrease. It should be noted that this dependence is non-linear. Therefore, it is problematic to find the optimal combination. A change in the range of products offered also favorably affects the increase in revenue.

Costs are declining faster than income. The reasons are an increase in the cost of products, works, services, or changes in the range of sales. Formally, the profitability ratio is growing, but the volume of revenue is falling. This trend cannot be called favorable. To draw the right conclusions, you need to analyze the pricing and the range offered.
Revenue is up, costs are down. Reasons - price increase, change in spending rates and / or range of sales. This is the most favorable trend. Organizations are interested in such a sustainable development direction.

downgrade

Alas, not everything is good. Often the return on sales ratio goes down. Here is a small list of options and reasons:

price reduction;
increase in cost rates;
changes in the structure of the sales assortment;
rising cost inflation outpaces changes in revenue.

This is an unfavorable trend. To correct the situation, you need to analyze pricing, cost control system, assortment policy. It may also be that revenue will fall faster than spending. A possible reason for this situation is the reduction in sales volumes. It should be noted that this situation is very common in cases where the company reduces its activities in the market. Then you need to conduct a thorough analysis of the marketing policy of the company.

It may also be that costs increase and revenue decreases. The reason for this state of affairs is lower prices, changes in the mix of sales mix and/or increased cost rates. In this case, it is necessary to conduct a pricing analysis and review the control system. This situation often arises either due to changes in the operating conditions (competition, demand, inflation), or with an inefficient production accounting system.

Other formulas

One formula has already been considered. Let's briefly focus on two more. The first is KRP = Gross Profit / Revenue. To convert to a percentage, you can multiply by 100%. This formula is used to show the difference between cost of sales and revenue. The second one looks similar and is written as follows: PSC = Earnings before taxes and interest / Revenue * 100%.

Conclusion

And finally, I would like to consider a few more points. The first concerns the volume of sales. It may not be immediately clear to everyone what this characteristic is. But she has a middle name, which should bring clarity - revenue. In different literature, these two concepts are used in the same context, therefore, when you see such a change, you should not worry, you can continue to count according to the formulas. And the second point is the normative value. Previously, it has already been casually considered, but it will be useful to supplement it.

When there are organizations with the same financial efficiency, then with a long production cycle, profitability will be higher. If the enterprise operates in a high-turnover area, then it is not necessary to count on a large value. It should be noted that profitability can show whether an enterprise is profitable or unprofitable, but it does not provide data on whether it is profitable to invest in it. Therefore, to answer this question, you can use other indicators and formulas that will help you understand the situation that is taking place.

A wide range of economic and financial indicators is used to analyze and calculate the effectiveness of the enterprise. They differ in the complexity of the calculation, the availability of data, and the usefulness for analysis.

Profitability is one of the best performance indicators - ease of calculation, data availability and great usefulness for analysis make this indicator mandatory for calculation.

What is the profitability of the enterprise

Profitability (RO - returnon)- a general indicator of the economic efficiency of the enterprise or the use of capital / resources (material, financial, etc.). This indicator is necessary for the analysis of economic activity and for comparison with other enterprises.

Profitability, unlike profit, is a relative indicator, so the profitability of several enterprises can be compared with each other.

Profit, revenue and sales volume are absolute indicators or economic effect, and it is incorrect to compare these data of several enterprises, because such a comparison will not show the true state of affairs.

It is possible that an enterprise with a smaller sales volume will be more efficient and sustainable, that is, it will outperform another enterprise in terms of relative indicators, which is more important. Profitability is also compared to efficiency(efficiency factor).

In general terms, profitability shows how many rubles (kopecks) of profit one ruble invested in assets or resources will bring. For the profitability of sales, the formula reads as follows: how many kopecks of profit are contained in one ruble of revenue. Measured as a percentage, this indicator reflects the effectiveness of the activity.

There are several main types of profitability:

profitability of products / sales (ROTR / ROS - totalrevenue / sale),
return on cost (ROTC - total cost),
return on assets (ROA - assets)
return on investment (ROI - invested capital)
personnel profitability (ROL – labor)

The universal formula for calculating profitability is as follows:

RO=(Type of profit/Indicator whose profitability needs to be calculated)*100%

In the numerator, the type of profit is most often used profit from sales (from sales) and net profit, but it is possible to calculate , balance sheet profit and . All types of profit can be found in the income statement (profit and loss).

The denominator is the indicator whose profitability needs to be calculated. The indicator is always in value terms. For example, to find the return on sales (ROTR), that is, the denominator should be an indicator of sales in value terms - this is revenue (TR - totalrevenue). Revenue is found as the product of price (P - price) and sales volume (Q - quantity). TR=P*Q.

The formula for calculating the profitability of production

Return on cost (ROTC - returnontotalcost)- one of the main types of profitability required for efficiency analysis. Return on cost is also called the profitability of production, as this indicator reflects the efficiency of the production process.

Profitability of production (cost) is calculated by the following formula:

ROTC=(PR/TC)*100%

In the numerator, profit from sales / sales (PR), which is found as the difference between income (revenue - TR - totalrevenue) and expenses (total cost - TC - totalcost). PR=TR-TC.

In the denominator, the indicator whose profitability needs to be found is the total cost (TC). The full cost consists of all the costs of the enterprise: the cost of materials, semi-finished products, the wages of workers and AUP (administrative and managerial personnel), electricity and other housing and communal services, workshop and factory costs, advertising costs, security, etc.

The largest share in the cost is materials, so the main production is called material-intensive.

Profitability of the cost price shows how many kopecks of profit from the sale will bring one ruble invested in the cost of production. Or, measured as a percentage, this indicator reflects the percentage of efficient use of production resources.

Balance sheet profitability formula

Many types of profitability are calculated on the basis of balance sheet data. The balance sheet contains information about the assets, liabilities and equity of the organization.

This form is compiled 2 times a year, that is, the status of any indicator can be viewed at the beginning of the period and at the end of the period. To calculate the profitability from the balance sheet, the following indicators are required:

assets (current and non-current);
the amount of own capital;
investment size;
and etc.

You can’t just take any of these indicators and calculate the profitability - this is wrong!

In order to correctly calculate the profitability, you need to find the arithmetic mean of the sum of the indicator at the beginning of the current (end of the previous) and the end of the current period.

For example, find the profitability of non-current assets. From the balance sheet, the sum of non-current assets at the beginning and end of the period is taken and divided in half.

In the balance sheet of medium-sized enterprises, the value of non-current assets is reflected in line 190 - Total for section I, for small enterprises, the value of non-current assets is the sum of lines 1150 + 1170.

The formula for the profitability of non-current assets is as follows:

ROA (in) \u003d (PR / (VnA np + VnA kp) / 2) * 100%,

where VnA np is the value of non-current assets at the beginning of the current (end of the previous) period, VnA kp is the value of non-current assets at the end of the current period.

The profitability of non-current assets shows how many kopecks of profit from sales will bring one ruble invested in non-current assets.

An example of calculating the profitability of production

To calculate the profitability of production, the following indicators are required: total cost (TC) and profit from sales (PR). The data are presented in the table.

PR 1 \u003d TR-TC \u003d 1500000-500000 \u003d 1,000,000 rubles

PR 2 \u003d TR-TC \u003d 2400000-1200000 \u003d 1,200,000 rubles

It is obvious that the revenue and profit from the sale of the second enterprise is higher. In terms of absolute indicators, the effect of the second enterprise is higher. But does this mean that the second enterprise is more efficient? To answer this question, production is needed.

ROTC 1 =(PR/TC)*100%=(1000000/500000)*100%=200%

ROTC 2 =(PR/TC)*100%=(1200000/1200000)*100%=100%

The profitability of the production of the first enterprise is 2 times higher than the profitability of the production of the second enterprise. We can confidently say that the production of the first enterprise is 2 times more efficient than that of the second.

Profitability, as an indicator of the effectiveness of the enterprise, more accurately reflects the real state of affairs in production, sales or investment of the enterprise, allowing you to correctly respond to the current situation, in contrast to the use of absolute indicators that do not give a complete picture.

Video about what shows profitability: