There are many ways to measure the performance of an organization. The main one is to calculate the profitability ratio. It is this indicator that should be primarily taken into account by the owner of the enterprise, taking into account that the profitability of a business is determined by the size of the result obtained in relation to the resources expended.

Based on the analysis of the data obtained during the calculation, it is possible to draw a conclusion about how the business is developing, what strengths and weaknesses are in the company's activities at the moment, and also what actions need to be taken to improve the efficiency of its work.

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One of the important indicators of the results of the sale of products is the return on sales, which reflects the net income from the sales of the company.

Definition and economic meaning

Before moving on to methods of calculating profitability, it is necessary to understand its economic meaning. Profitability shows how efficiently the business uses the resources involved.

In general, profitability is calculated in order to:

• control profits;
• track the dynamics of the business;
• compare the results obtained with those of competitors;
• identify which products are profitable and which are unprofitable sales.

With regard to sales, the activity of an enterprise should be determined not only in terms of maximizing revenue, but also in terms of the volume of net profit from trade turnover. For this purpose, the profitability of sales ratio is calculated, which shows the effectiveness of the sale of goods and allows you to determine the percentage of its cost in the total amount of revenue.

Return on sales, assets and equity

When analyzing the activities of an organization, various profitability ratios are usually considered not separately, but in aggregate.

At the same time, the following profitability ratios are the main indicators of the company's performance:

• assets;
• capital;
• sales.

The indicator shows how much profit is received from the sources involved in production - monetary resources, capital and other resources. To determine the return on assets, you need to divide the net profit by the amount of assets in average annual terms (the sum of the values ​​for the first and last days of the year, divided by 2) and multiply by 100%.

The return on assets values ​​are compared on an annual basis to determine how much the real value differs from the forecast and what exactly influenced the deviation.

The return on equity is calculated as the result of dividing the net (after payment of deductions to the budget) profit by the total cost of fixed assets in average annual terms multiplied by 100%. This ratio reflects the income received from the use of capital assets in the production of goods.

The profitability of sales makes it clear what share of the company's revenue is profit, and is calculated in several ways (depending on the various subspecies of profit), which will be listed below. Based on the data on the profitability of sales, the company makes decisions on pricing and the amount of associated households. activity costs.

Profit Margin Analysis

By calculating the profitability of sales for several periods, you can determine the dynamics of change per unit of production. The profit margin can vary depending on various factors that will be considered in the factor analysis.

Its increase occurs in the following cases:

• with an increase in revenue, accompanied by a decrease in costs;
• with a simultaneous decrease in revenue and expenses, when the latter decrease faster;
• with an increase in revenue and a slower increase in costs.

The decrease in the indicator occurs under the following circumstances:

• profits and expenses grow at the same time, but expenses increase faster;
• revenue and expenses are decreasing, but the rate of decrease in revenue is greater;
• costs increase and revenues fall.

The profit margin is also influenced by other factors: inflation, changes in demand for products, competing firms.

Calculation formulas

Return on sales is determined by three different methods:

• by using the amount of net profit in the calculation;
• by preliminary calculation of gross profit;
• based on operating profit.

By net profit

The formula for determining profitability in this case is as follows:

R = [net profit] / [revenue] * 100%

The value, as a rule, is calculated over several periods - only then can an objective assessment of the company's activities and its payback be obtained.

Based on sharp changes in the ratio or, conversely, its stability, you can get a general idea of ​​the company:

• how well decisions are made;
• whether the attracted resources are used efficiently;
• what successes and problems the organization has.

By gross profit

In order to determine the gross profit, you need to deduct the cost of production from the proceeds.

The formula for calculating the gross profit ratio is as follows:

R = [gross profit] / [revenue] * 100%

Operating profit

To calculate the profitability of sales for the main line of business of the company, you first need to determine the operating profit by deducting direct and operating expenses from the net profit.

Operating profit margin formula:

R = [operating profit] / [revenue] * 100%.

By balance

All the necessary values ​​for calculating the profitability of sales according to the above formulas are taken from the balance sheet and form 2, which reflects the financial results of the company.

In this case, the formula for calculating the ratio on the balance will depend on what type of profit the profitability is determined by:

Example of calculating the coefficient

Initial data:

• sales revenue for 2019 amounted to RUB 21 million;
• net profit for 2019 - 6.2 million rubles;
• sales revenue for 2019 - 24.4 million rubles;
• net profit for 2019 - 6.46 million rubles;

To determine the change in the profitability of sales in 2019, you must first calculate the value of the profitability in 2019.

If you plug in the values ​​into the above formula, you get the following result:

R2015 = 6.2: 21 = 0.295, or 29.5%

R2016 = 6.46: 24.4 = 0.265, or 26.5%

By subtracting one factor from the other, you can get the percentage change in profitability:

R = R2016 - R2015 = 26.5 - 29.5 = -3%

Thus, this example shows that in 2019 the decrease in profitability was significant - the indicator decreased by 3%.

Regulatory value in the enterprise

There is no specific standard for the return on sales ratio. Anything above zero is a good indicator. If Krp<0, то руководству стоит всерьез задуматься об эффективности управления компанией.

If we proceed from the statistical data available for various sectors of the national economy, then we can focus on the following average values ​​for Russia:

With a low or negative coefficient, the management team of the organization must change the methods of enterprise management, increasing the efficiency of its work by expanding the customer database, increasing the rate of asset turnover and reducing the purchase cost of raw materials, goods or services from contractors.

Dynamics of change and its impact

Thanks to the analysis of profitability of sales, you can get an accurate and objective assessment of the current state of affairs of the company. Considering that this coefficient reflects the most important result of the enterprise's activity - the sale of products, the tendency of the organization's development can be determined depending on the increase or decrease in the coefficient.

Increase in indicator

An increase in the return on sales ratio is generally a good indicator, but depending on its reasons, it can have a different connotation.

A favorable trend is when the growth of revenue in terms of the rate outstrips the growth of costs. This means that the company manages to contain the increase in variable costs, which in this case increase non-linearly.

If the coefficient increases due to the fact that both costs and revenues decrease simultaneously, and the latter decreases more slowly, then this trend can no longer be unequivocally called favorable, although the coefficient has formally increased. This situation requires a deeper analysis in order to be able to determine why the revenue has decreased.

Finally, the most optimal scenario is to increase revenue while reducing costs. In this case, the company should analyze why this is happening, and in the future try to adhere to this course of events.

Decrease in indicator

The decline in profitability of sales is negative in any case - regardless of the nature of changes in revenue and costs.

To correct the current trend, the company must take appropriate actions (depending on the reasons that led to the decrease in the indicator):

• revise pricing and marketing policies;
• change the assortment of goods;
• reduce costs.

Factor analysis

In order to understand why there was an increase or decrease in the profitability ratio of sales, factor analysis is used, with the help of which one can find out the strengths and weaknesses of the company's activities and predict the further development strategy of the company.

The increase in revenue while reducing costs is due to the following reasons:

• growth in sales;
• changing the assortment of goods;
• reduced cost control.

A decrease in revenue at a lower rate of cost reduction may occur due to higher prices for goods and changes in the assortment.

The following factors influence the simultaneous growth of revenue and expenses at a lower rate of the latter:

• reducing costs;
• price increase;

The reasons for the growth in revenue and expenses that increase faster are usually the following:

• increase in the cost of goods;
• high price level;
• structural change in the assortment.

A decrease in revenue with a simultaneous, slower, decrease in costs is observed when there is a loss of market influence or the curtailment of production.

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... Profitability ratios

The first three indicators assess the profitability of turnover when selling products. To obtain values ​​in percent, multiply the coefficient value by 100%.

Gross profit margin (GPM) - Another name for this ratio is the Gross margin ratio. Demonstrates the share of gross profit in the company's sales.

Calculated by the formula: GP / NS = Gross Profit / Total Revenue.

Operating profit margin (OPM) - demonstrates the share of operating profit in sales.
Calculated by the formula: OP / NS = Operating profit / Total revenue.

Net profit margin (NPM) - demonstrates the share of net profit in sales.
Calculated by the formula: NI / NS = Net Income / Total Revenue.

The following 4 coefficients assess the return on capital invested in the company. The calculation is made for an annual period using the average of the corresponding items of assets and liabilities. To calculate for a period of less than one year, the profit value is multiplied by the appropriate coefficient (12, 4, 2), and the average value of current assets for the period is used. To obtain the values ​​in percent, as in the previous cases, it is necessary to multiply the value of the coefficient by 100%.

Return on current assets (RCA) - demonstrates the ability of the enterprise to ensure a sufficient amount of profit in relation to the used working capital of the company. The higher the value of this coefficient, the more efficiently the circulating assets are used.
Calculated by the formula: NI / CA = Net Income / Working Capital.

Return on non-current assets (RFA)- d Demonstrates the ability of an enterprise to provide a sufficient amount of profit in relation to the fixed assets of the company. The higher the value of this ratio, the more efficiently fixed assets are used.
Calculated by the formula: NI / FA = Net Income / Fixed Assets.

Return on Assets (Return on Investment) (ROI) - there was little terminological confusion regarding this indicator. Literally translated from English, the name of this indicator sounds like "return on investment", although, as follows from the formula, there is no talk of any investment.

Calculated by the formula: NI / ЕА = Net Income / Total Assets.

Return on Equity (ROE) - n Allows you to determine the efficiency of the use of capital invested by the owners of the enterprise. Usually this indicator is compared with a possible alternative investment in other securities. It shows how many monetary units of net profit "earned" each unit invested by the owners of the company.
Calculated by the formula: NI / ЕQ = Net Income / Total Equity.

... PM ratios

These ratios allow you to analyze how efficiently the company uses its funds.

Inventory Turnover Ratio (ST) - reflects the speed of the inventory realization. To calculate the coefficient in days, 365 days must be divided by the coefficient value. In general, the higher the inventory turnover rate, the less funds are tied up in this least liquid group of assets. It is especially important to increase turnover and reduce inventories in the presence of significant debt in the company's liabilities.

Calculated by the formula:
CGS / I = Cost of Goods Sold / Inventory Value.
The calculation is made only for the annual period, using the sum of direct production costs for the current year and the average value of the amount of inventory for the current year. If the calculation is carried out for a period of less than a year, the value of direct production costs should be multiplied by a coefficient, respectively: for one month - 12, quarter - 4, half a year - 2. In this case, the average value of the amount of stocks for the calculation period is used.

Accounts Receivable Turnover Ratio (ACP) - n renders the average number of days required for debt collection. To obtain the desired value (number of days), it is necessary to multiply the value of the coefficient by 365. The smaller this number, the faster the receivables turn into cash, and, consequently, the liquidity of the company's working capital increases. A high value of the ratio may indicate difficulties in collecting funds from debtors' accounts.

Calculated by the formula:
AR / NS = Average value of accounts receivable for the year / Total revenue for the year.

The calculation is performed only for the annual period, using the total revenue for the year and the average value of accounts receivable for the current year. In the case of a calculation for a period of less than one year, the value of proceeds from the sale of products (services) should be multiplied by a coefficient, respectively: for one month - 12, quarter - 4, half a year - 2. In this case, the average value of accounts receivable for the calculation period is used ...

Accounts payable turnover ratio (CP) - This indicator is the average number of days it takes a company to pay its bills. To get the desired value (number of days), it is necessary to multiply the value of the coefficient by 365. The smaller this value, the more internal funds are used to finance the company's working capital needs. Conversely, the more days, the more accounts payable are used to finance the business. It is best when these two extremes are combined. Ideally, it would be desirable for an enterprise to collect debts from debtors before having to pay debts to creditors. A high CP value may indicate an insufficient amount of cash to meet current needs due to a decrease in sales, an increase in costs, or an increase in the need for working capital.

Calculated by the formula:
AP / P = Average annual accounts payable / Total purchases for the year.

The calculation is made only for the annual period, using the total amount for which purchases were made (direct production costs: costs of raw materials, materials and components, excluding piecework wages) for the current year and the average value of accounts payable for the same period. If the calculation is carried out for a period of less than a year, the value of the purchase amount should be multiplied by a coefficient, respectively: for one month - 12, quarter - 4, half a year - 2. In this case, the average value of accounts payable for the billing period is used.

Working capital turnover ratio (NCT) - shows how effectively the company uses investments in working capital and how it affects sales growth. To get the required number of days, it is necessary to multiply the value of the coefficient by 365. The higher the value of this coefficient, the more efficiently the company uses its net working capital.

Calculated by the formula:
NS / NWC = Total Revenue for the Year / Average Net Working Capital.

The calculation is made only for an annual period, using the total revenue from the sale of products or services for the current year and the average value of net working capital for the current year. In the case of calculation for a period of less than a year, the amount of revenue should also be multiplied by the appropriate coefficient, and the value of net working capital should be the average for the calculation period.

Fixed assets turnover ratio (FAT) - This ratio is similar to the concept of return on assets. It characterizes the efficiency of using the fixed assets at its disposal by the enterprise. The higher the value of the ratio, the more efficiently the company uses fixed assets. A low level of capital productivity indicates insufficient sales or an unreasonably high level of capital investments. However, the values ​​of this coefficient are very different from each other in different industries. Also, the value of this ratio strongly depends on the methods of depreciation and the practice of assessing the value of assets. Thus, a situation may arise that the turnover rate of fixed assets will be higher in an enterprise that has worn out fixed assets.

Calculated by the formula:
NS / FA = Total revenue for the year / Average value of the amount of non-current assets.

The calculation is made only for the annual period, with the use of the total proceeds from the sale of products (services) for the current year and the average value of the amount of non-current assets for the current year. In the case of calculating the coefficient for the periods: month, quarter, half year - the calculation uses the average value of the amount of non-current assets for the billing period, and the value of the proceeds received for the reporting period should be multiplied by 12, 4 and 2, respectively.

Fixed assets turnover ratio (TAT) - characterizes the efficiency of the company using all the resources at its disposal, regardless of the sources of their attraction. This coefficient shows how many times a year a complete cycle of production and circulation takes place, bringing the corresponding effect in the form of profit. This ratio also varies greatly from industry to industry.

Calculated by the formula:
NS / TA = Total revenue for the year / Average value of the sum of all assets for the year.

The calculation is made only for a period of one year, with the use of the total proceeds from the sale of products (services) for the current year and the average value of the sum of all assets for the current year. In the case of calculating the coefficient for the periods: month, quarter, half year - the average value of the sum of all assets for the billing period is involved in the calculation, and the value of the proceeds received for the reporting period should be multiplied by 12, 4 and 2, respectively.

Business project managers are interested in the profitability of their business, since the initial purpose of its creation is enrichment. The correspondence of the resources expended for production support expressed in monetary terms and the result obtained determines the effectiveness of the functioning of the subject. The main indicator that makes it possible to make a decision on the expediency of further work in the previous mode, or in the need to adjust it, is the profitability of the enterprise. In economic calculations, the parameter is displayed as coefficients.

Profitability parameters

About the parameter of the enterprise efficiency

Profitability is an indicator that allows you to assess the economic efficiency of a business entity. It determines the degree of effectiveness of the use of the company's resources. For the analysis, it is necessary to separately take into account investments in the business for the selected period, which have the character:

• labor;
• production;
• material;
• cash.

Gross profitability

The effectiveness of sales allows you to estimate the share of profit in the proceeds received from the sale of labor results.

Another name for the indicator is known as the rate of return. According to standard practice, the parameter is determined by calculation based on net profitability in revenue. If it is necessary to identify the weak points of the business, it is recommended to divide the income into gross, balance sheet and operating components.

Types of profitability

Gross profitability is the rate of efficiency of the enterprise, calculated using the parameter of gross profitability. It allows you to determine the profitability of sales by gross margin. The parameter is determined by the quotient of gross profit and revenue. It allows you to determine the number of gross profit kopecks in the ruble of revenue.

Gross profitability, the formula takes into account the specific nature of profitability, allows you to determine the indicator of gross profit displayed in the financial statements of results of activities. Its value corresponds to the difference between revenue and total cost. Revenue in this formula is interpreted as the product of sales and selling prices.

Operating profit margin

Operating profit is positioned as an intermediate value of profitability from sales and net profit. It allows you to define the Return on Sales ratio as a quotient of the parameter and revenue.

Profit types

Operating profitability is the second name for the operating profit margin indicator. It reflects the number of ruble kopecks per ruble of revenue. The data of the components of the formula are determined on the basis of the items reflected in the financial report.

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Parameter analysis

A decrease in the economic indicator indicates a drop in demand for the result of labor of an entrepreneur and a decrease in the competitiveness of its products. To stabilize the situation, the head of the enterprise needs to initiate activities that stimulate demand and improve the quality of the goods produced. Alternatively, it is possible to consider the option to engage in activities from a new market niche.

The trend of changes in the indicator of sales efficiency is assessed in the dynamics of the base and reporting periods. The base period is the previous time period in which the indicator showed high marks. It is necessary to ensure the possibility of comparing a parameter with an indicator taken as a standard.

Determined in relation to net income, an economic indicator of the efficiency of an entity's activities is calculated by the quotient of net profit and revenue, determined by the volume of sales in monetary terms. Net profit is calculated as the product of the unit price by the volume of production, expressed in units of output. The net profit margin shows how many kopecks of net profit are in the proceeds from the sale of the results of labor.

Profitability ratio

Analysis of the effectiveness of the organization is impossible without taking into account the indicators of profitability. An indicator characterizing 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, monetary and natural resources.

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

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 expenses to income). A business that brings profit based on the results of the 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 a cost approach, a resource approach, or an approach that characterizes the profitability of sales.

Various types of profitability calculation pursue their own tasks and use many different accounting indicators (net profit, production cost, selling or administrative expenses, sales profit, etc.).

The profitability of the core business.

Refers to cost indicators, characterizes the effectiveness of not only the main activities of the company, but also the work related to the sale of products. Allows you to assess 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 goods, works, products or services sold;
• the cost of selling expenses;
• the cost of administrative expenses.

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

Genus = Prp / Z,
Where Z is the cost, and Prp is the profit received from the sale.

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

Profitability of current assets.

The profitability of circulating (otherwise - mobile, current) assets shows the profit received by the organization from each ruble invested in circulating 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 provide a sufficient amount of profit in relation to the used working capital.

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

Calculated by the formula:

Ptot = Chp / Oa, where

Rbsch is the total profitability, net profit is Chp, and Oa is the value of current assets.

Internal rate of return.

The criterion used to calculate the return on investment. This indicator allows you to assess the feasibility of investing in investment projects and demonstrates a certain discount rate at which the net value 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 the lower rate of internal rate of return.

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

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

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 = Chp / Os, where

Ros is the profitability of fixed assets, Pp is the net profit, Os is the cost of fixed assets.

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

Calculating the return on sales.

The indicator, reflecting the 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, in terms of 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.

For gross profit: Ppvp = Bp / B, where Bp is gross profit, and B is revenue.

Gross profit is the difference between the proceeds received from sales and the cost of sales.

By net profit: Рчп = Чп / В, where Чп - net profit, and В - revenue.
Operating margin: Op = EBIT / B, where EBIT is pre-tax profit and B is revenue.

The optimal value of the return on 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 of companies that operate with a high turnover, although their effectiveness may be the same.

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

Profitability threshold.

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

Calculated by the following formula:

Pr = Зп / Квм, where

Pr is the profitability threshold, Zp is fixed costs, and Kvm is the gross margin coefficient.

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

Bm = B - Zpr, where Bm is the gross margin, B is revenue, and Zpr are variable costs,
Kvm = Vm / V.

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

Cost-effective.

It characterizes the payback of funds spent on production, shows the profit received from each ruble invested in production and sale. Used to assess 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 to be decapitalized, written off from the balance sheet asset presented in the report.

The return on cost indicator is calculated as follows:

Pz = P / Dp, where P is profit, and Dp is decapitalized expenses.

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

Factor analysis of profitability.

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

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

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

Combinations of these models give combined or mixed models. For a full-fledged factor analysis of profitability, multifactor models are created, in which various profitability indicators are used.

Profitability- a relative indicator characterizing the degree of economic efficiency of the use of any resource (material, monetary, labor). It is calculated according to special formulas, usually has a percentage. Profitability can be called the most important indicator for assessing the activities of a commercial enterprise.

This concept is used very broadly, is divided into several types, but, in principle, it represents the ratio of the received from the activity to any asset or resource.

Therefore, the profitability ratio is calculated by dividing the amount of profit by the amount of interest. Both values ​​are accepted in the same units. Since it is quite difficult to express profit in non-cash form, the denominator is also given in monetary terms. Most often, profitability is calculated as a percentage.

It should be noted that the approach to profitability coefficients is not as strict as to purely mathematical formulas; there is a replacement for words that are similar in sound and content of concepts. So the profitability of production can be considered both as the profitability of the process, and as the profitability of the production complex. Therefore, it is worth considering not only the name of the term, but the components of a particular formula, their practical meaning.

The most common are the following profitability indicators:

• Product profitability(sold) - the profit received from the sale of a certain amount of products is divided by the cost of these products.

Approximately the same way is calculated profitability of services sold... Only in the denominator is the cost of providing a specified number of services in the numerator.

• Profitability of fixed assets- the ratio of net profit from activities for the period to the value of fixed assets.
• Enterprise profitability- is equal to the ratio of profit to the total value of fixed and circulating assets of the enterprise
• Staff profitability- represents the ratio for a certain period to the average number of employees for the specified period.

The following indicators are also used:

• General- the ratio of net profit for the period to the average total value of the assets of the enterprise.
• - the same as the above ratio, but in relation to the organization's own capital.
• Return on assets used- profit before taxes and mandatory interest in relation to the amount of equity and long-term loans.

The list of profitability ratios used is not limited to those listed above. With the development of economic and financial relations, the development of investment, new, previously unused ratios appear. The general rule that unites them could be roughly expressed as the ratio of the value of the received benefit (profit) to the resource used to obtain it.

Let's dwell on the most frequently used in our conditions and, therefore, informative indicators for us:

Return on sales(ROS, from the English Return on Sales,) is a very important indicator that reflects the share of profit in the total amount (turnover). Most often, the calculation uses profit before taxes - operating profit. This seems reasonable, since the amount of taxes is not directly related to the efficiency of activities, and profitability is, first of all, an indicator of the economic effect. But it can also be applied net profit margin... This allows you to better represent the real value of your sales.

Accordingly, the return on sales can be calculated using the following formulas:

Total Return on Sales = Gross Profit / Revenue;

Net return on sales = Net profit / Revenue.

The concept of revenue can be replaced by the concept of turnover, which does not affect the essence of the ratio.

These coefficients are used primarily to assess the current state of affairs. Return on sales is a measure of the operational effectiveness of an organization, i.e. her ability to organize and control current activities. Which, in turn, shows the direction of the company's movement, decline or growth.

The profitability of products sold is defined as the ratio of the profit from the sale of products to the sum of the costs of production and sale of these products. The composition of costs, in this case, includes material costs of production (the cost of raw materials, components, energy resources, etc.), wages, overhead costs, trade costs.

Rrp = (CPU - PSP) / PSP x 100;
Where:

• Rrp - profitability of products sold;
• CP - the selling price of the product;
• PSP is the total cost of this product.

Sometimes this ratio is called the profitability of production (as a process).

The profitability of production (as a production complex) is calculated as the ratio of the amount of profit (total) to the sum of the values ​​of fixed and normalized working capital.

ORP = OP / (OS + OBS);

Where PIU is the overall profitability of production;

OS - fixed assets of the enterprise (buildings, structures, equipment);

OBS - standardized working capital (production stocks, semi-finished products for the production cycle, finished products in warehouses).

Based on the above, we can conclude that the concept of profitability is very broad. Methods and formulas for its calculation are a flexible working tool for determining profitability, benefits from certain investments in material, human and other resources, assets.

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