Instructions for calculating profitability and profits from commercial activities. Why efficiency and profitability are different things

For the fruitful functioning of every serious institution, it is important not only to draw up a competent business plan in advance, but also to calculate profits and profitability. What are the differences between these two terms, and what should profit and profitability management be like? We invite you to find out.

What is profit and profitability?

Profit is usually understood as a value that reflects the efficiency of the structure and is a source of financing for both social and production costs. Profitability is the ratio that is calculated as the ratio of what is received to the costs of sales and production. The concept of profit and profitability is important for every company.

Profit and profitability of the enterprise

Management controls the profit and profitability indicators of the enterprise, which are associated with the level of operational efficiency and are expressed in material equivalent. Data can reveal full picture functioning of the structure. In other words, profit is the quantity material resources, which we managed to master after selling our own services and products for a specific time.

Dependence of profit on profitability

The two concepts of profit and profitability are interrelated and can have an equally important impact on performance. However, they have certain differences, which are that the first is an absolute value, and the profitability indicator is relative. Moreover, the first directly depends on the second. If the calculations are incorrect, even a reputable institution can end up at a loss.

Types of profit and profitability

In order for the operation to be fruitful, it is important to plan everything in advance down to the smallest detail and highlight the essential. At the same time, you need to know what types of profit and profitability of an enterprise there are. Among the most famous categories of the first:

1. Operating - the result of production and sales, or the main work for a given company.
2. Marginal.
3. Clean.
4. Capitalized.
5. Consumed – that which is provided for the payment of dividends to all shareholders and founders.
6. Taxable – one that should be subject to taxes.
7. Tax-free – one that does not involve taxation.
8. Nominal and real.
9. Adjusted for inflation rate.
10. Planned profit for the reporting year.

Profitability is divided into:

1. Product profitability - the value is calculated as the ratio of what was managed to be taken from sales to the total cost.
2. Profitability of production - used to analyze certain types of businesses or projects by investors and owners
3. Return on assets – the goal is the effectiveness of using assets at each stage of the business.

Profitability and profit - the difference

Before you start drawing up a business plan, you need to thoroughly study economic concepts and find out how they differ from each other and what they have in common. It is very important to see the difference here. At first glance, these two terms may seem similar, but they have quite a few differences. Many people are interested in the difference between profit and profitability. Experts in the field of economics highlight the following differences:

1. Profitability is reflected in relative terms, and profit - in absolute terms.
2. Profit is called the difference between the costs and revenue of its collection, and profitability is the ratio of income and revenue.
3. Income indicates financial status, high level profitability - on the effective use of resources.
4. Profitability is calculated in only one way, and profit can be calculated by sales, personnel, funds and other economic indicators.

The main goal of everyone commercial enterprise with which its activities are carried out is making a profit. Profit and profitability are one of the most important indicators that characterize its activities and indicate success or failure. The emergence of new potential opportunities for it depends on growth, and profit also affects the level. It is by profit that the share of income that the founders and owners receive is determined. Profit and profitability are inextricably linked concepts. When calculating the profitability of borrowed and own funds, fixed assets, capital and shares, it is profit indicators that are taken into account. In addition to the fact that profit, or rather its receipt, is the main goal of each commercial organization, it (profit) is one of the most important economic categories.

As an economic category, the profit of an enterprise reflects the net income that is created in the sphere of material production. In an enterprise, the form of profit is taken by net income.

Profit characterizes the economic effect that is obtained during the activities of the enterprise. If the enterprise has it, it means that the enterprise’s income exceeds its expenses.

Profit has a stimulating function. This indicator is both a financial result and also the main element of financial resources. In well-functioning enterprises, the share of net profit that remains at the disposal of the enterprise after payment of all mandatory payments is sufficient to finance the expansion of production, the development of the enterprise in scientific, technical and social terms, as well as material incentives for employees.

It should be noted that in order to assess the effectiveness and economic feasibility that characterizes the activities of an enterprise, only absolute indicators are not enough. In this aspect, profit and profitability must be considered together. In addition, they provide an opportunity to see a more objective picture. Profitability indicators are relative characteristics of operational efficiency and financial results.

The term profitability comes from the word rent - literally “income”. Broad meaning The term profitability means profitability, profitability.

Most businesses make a profit from production and entrepreneurial activity. Profit and profitability directly depend on the ability of managers to effectively use planning, analysis, and marketing tools.

The efficiency of any enterprise directly depends on knowledge and understanding of market conditions, as well as the ability to timely adapt production development to constantly changing conditions external environment.

A positive profit is generated right choice production profile; creating competitive conditions for selling products; production volumes; ability to reduce production costs.

Income, profit and profitability are the most important

To assess the performance of a business, profits and profitability for a certain period are analyzed. How are these indicators interconnected? What formulas are they used to calculate? Details below.

What is profit and profitability of an enterprise?

In the context of the topic, profit is the final monetary result of an organization's activities. The absolute value is calculated as the difference between the income received during the period and the total expenses incurred, including data on the main and additional areas of business. Depending on which costs are taken into account, a distinction is made between gross profit, from sales, before tax and net profit.

To accurately assess the effectiveness of activities, in addition to the profitability indicator, it is also necessary to analyze profitability. What it is? The profitability of an enterprise characterizes the level of profitability attributable to a given indicator. The latter is used by the amount of revenue, PF (fixed assets), equity capital, SAI (non-current assets), etc. For the analysis, calculations are carried out using generally accepted formulas, one of the components of which is profit, and the second is a given indicator.

Profit and profitability indicators - calculation formulas

How to determine profitability? The formula is given below. The answer depends on what parameter of the enterprise’s activity is being analyzed. Thus, the profitability of sales based on gross profit is calculated by one method, and on profit from sales - by another.

Return on sales based on sales profit - formula

RP = Profit from sales / Revenue (excluding VAT) x 100.

When calculating the RP, accounting data is taken from f. 2 of the “Report on Financial Results” on pages 2200 and 2110. The resulting value characterizes exactly how much profit is generated for each ruble earned by the company. In this case, it is necessary to take into account not only the main costs in the form of cost sold products(works or services), but also additional ones in the form of managerial and commercial ones. If you need to determine gross profit margin, the calculation methodology will change slightly.

Gross Profit Margin – Formula

RP = Gross profit / Revenue (excluding VAT) x 100.

For calculations, information from f. 2 “Reports on financial results” on pages 2100 and 2110. Accordingly, this indicator is more generalized, since only costs at cost are included in the calculations. Additional costs in the form of commercial and administrative expenses are not incurred. Other profitability indicators can be determined in a similar way.

Return on assets - formula

RA = Net profit / Average assets for a given period x 100.

The asset ratio may change. For example, if you need to analyze non-current assets, data is taken from form 1 of the “Balance Sheet” under section. I. If current assets are assessed, it is necessary to calculate the average value according to section. II. If you are evaluating investments, you should use the indicators of total assets on page 1600. All profitability ratios of this group characterize how much profit each ruble of certain assets earned in a given period. To calculate the average values ​​of the denominator, the arithmetic average of the opening and closing balances is calculated.

SK profitability (equity capital) – formula

RK = Net profit value / SK value x 100.

This indicator helps to assess how effective the investment of capital is for the owners of the enterprise. The resulting value characterizes how much profit accrues for each placed (invested) ruble of capital. If it is necessary to analyze the success of raised funds as well, the formula is adjusted to the value of long-term liabilities (LT):

Return on equity and invested capital = Net profit / (SC + DO) x 100.

How to conduct profitability and profitability analysis - example

Management analysis of the profit and profitability of an enterprise is carried out over a certain period of time. Suppose it is necessary to determine the RP for gross profit for 2017 for two organizations. Sources are in the table.

Thus, despite the fact that Enterprise 2 has revenue of RUB 850,000.00. more, which is 37.77%, the profit for the period is less by 240,000.00 rubles, which is 36.92% (compared to Enterprise 1). The calculated RP coefficient confirms the decrease in the level of operational efficiency of Enterprise 2. Consequently, Enterprise 1 has almost twice the quality of sales than Enterprise 2.

Profitability- a relative indicator of economic efficiency. The profitability of an enterprise comprehensively reflects the degree of efficiency in the use of material, labor, monetary and other resources. The profitability ratio is calculated as the ratio of profit to the assets or flows that form it.

IN in a general sense Product profitability implies that the production and sale of a given product brings profit to the enterprise. Unprofitable production is production that does not make a profit. Negative profitability is an unprofitable activity. The level of profitability is determined using relative indicators - coefficients. Profitability indicators can be divided into two groups (two types): and return on assets.

Return on sales

Return on sales is a profitability ratio that shows the share of profit in each ruble earned. Usually calculated as the ratio of net profit (profit after tax) for a certain period to expressed in cash sales volume for the same period. Profitability formula:

Return on Sales = Net Profit / Revenue

Sales return is an indicator pricing policy the company and its ability to control costs. Differences in competitive strategies and product lines cause significant variation in return on sales in various companies. Often used to evaluate the operating efficiency of companies.

In addition to the above calculation (return on sales by gross profit; English: Gross Margin, Sales margin, Operating Margin), there are other variations in calculating the return on sales indicator, but to calculate all of them, only data on the profits (losses) of the organization are used (i.e. e. data from Form No. 2 “Profit and Loss Statement”, without affecting the Balance Sheet data). For example:

• return on sales (the amount of profit from sales before interest and taxes in each ruble of revenue).
• return on sales based on net profit (net profit per ruble of sales revenue (English: Profit Margin, Net Profit Margin).
• profit from sales per ruble invested in the production and sale of products (works, services).

Return on assets

Unlike return on sales indicators, return on assets is calculated as the ratio of profit to average cost enterprise assets. Those. the indicator from form No. 2 "Report on financial results" is divided by the average value of the indicator from form No. 1 " Balance sheet". Return on assets, like return on equity, can be considered as one of the indicators of return on investment.

Return on assets (ROA) is a relative indicator of operational efficiency, the quotient of dividing the net profit received for the period by the total assets of the organization for the period. One of the financial ratios is included in the group of profitability ratios. Shows the ability of a company's assets to generate profit.

Return on assets is an indicator of the profitability and efficiency of a company's operations, free of the influence of the volume of borrowed funds. It is used to compare enterprises in the same industry and is calculated using the formula:

Where:
Ra—return on assets;
P—profit for the period;
A is the average value of assets for the period.

In addition, the following performance indicators have become widespread: individual species assets (capital):

Return on equity (ROE) is a relative indicator of operating efficiency, the quotient of dividing the net profit received for the period by equity organizations. Shows the return on shareholder investment in a given enterprise.

The required level of profitability is achieved through organizational, technical and economic measures. Increasing profitability means getting greater financial results with lower costs. The profitability threshold is the point separating profitable production from unprofitable, the point at which the enterprise’s income covers its variable and semi-fixed costs.

Laboratory work

discipline

Subject: "Profit and Profitability"

Kumertau 2012

Consider the concept of profit and types of profit.

consider the concept of profitability. Types of profitability.

Brief summary of the topic:

Profit characterizes the economic effect obtained as a result of the enterprise's activities. The presence of profit in an enterprise means that its income exceeds all expenses associated with its activities.

Profit has a stimulating function, at the same time being a financial result and the main element of the financial resources of an enterprise. The share of net profit remaining at the disposal of the enterprise after paying taxes and other obligatory payments must be sufficient to finance the expansion of production activities, scientific, technical and social development of the enterprise, and material incentives for employees.

Profit is one of the sources for the formation of budgets at different levels

A distinction is made between accounting profit and net economic profit. As a rule, under economic profit– refers to the difference between total revenue and external and internal costs.

The internal costs also include the normal profit of the entrepreneur. (An entrepreneur's normal profit is the minimum fee required to retain entrepreneurial talent.)

Profit based on data accounting, represents the difference between income from various types activities and external costs.

Gross profit is defined as the difference between the proceeds from the sale of goods, products, works, services (minus VAT, excise taxes and similar mandatory payments) and the cost of goods, products, works and services sold. Revenue from the sale of goods, products, works and services is called income from normal activities. The costs of producing goods, products, works and services are considered expenses for ordinary activities. Gross profit is calculated using the formula

Where VR- revenues from sales; WITH– cost of goods, products, works and services sold.

excluding administrative and commercial expenses:

Where R at– management costs; R To– commercial expenses.

Profit (loss) before tax– this is profit from sales taking into account other income and expenses, which are divided into operating and non-operating:

Where WITH bed – operating income and expenses; WITH vdr – non-operating income and expenses.

Profit (loss) from ordinary activities can be obtained by subtracting from profit before tax the amount of income tax and other similar mandatory payments (the amount of penalties payable to the budget and state extra-budgetary funds):

Where N– amount of taxes.

Net profit is profit from ordinary activities taking into account extraordinary income and expenses (Fig. 20):

Where H etc. – extraordinary income and expenses.

End of form

Product profitability(rate of profit) is the ratio of the total amount of profit to the costs of production and sales of products (the relative amount of profit per 1 ruble of current costs):

Where C- unit price; WITH- unit cost of production.

Production profitability (total) shows the ratio of the total amount of profit to the average annual cost of fixed and standardized working capital(amount of profit per 1 ruble of production assets):

Where P– amount of profit; OS Wed- average annual cost of fixed assets; OS Wed– average working capital balances for the year.

This indicator characterizes the efficiency of the production and economic activities of the enterprise, reflecting at what amount of capital used a given amount of profit was obtained.

Problem 1

When creating the enterprise, its owner invested 200 thousand rubles. The production process is carried out in a building that he rented out before organizing the enterprise. The rent was 50 thousand rubles/year. Before the organization of the enterprise, its founder was a hired manager with an annual wages 100 thousand rubles.

The activities of the established enterprise are characterized by the following indicators:

Calculate: profit from product sales, gross profit (before tax), net profit; profitability of the enterprise (production); product profitability. Justify the answer to the question about the advisability of creating your own enterprise (calculate economic profit).

Solution

Let's calculate the profit from product sales:

P R= 1,000 × 10,000 – (250,000 + 150,000 + 160,000 + 140,000) =

300,000 thousand rubles.

Let's determine gross profit:

P shaft= 300 + 50 – 10 = 340 thousand rubles.

Let's calculate the net profit:

P h= 340 – 340 × 0.24 = 258.4 thousand rubles.

The profitability of the enterprise will be

R O= 300 / (600 + 200) × 100 = 37.5%.

Product profitability

R P= 300 / 700 × 100 = 43%.

Economic profit is calculated as accounting profit minus internal costs, namely: interest on a time deposit that could be received on invested funds; rent; lost wages of the owner of the enterprise. Thus, the economic profit will be

258.4 – 200 × 0.18 – 50 – 100 = 72.4 thousand rubles.

Test control

1. It is advisable to calculate economic profit

Beginning of the form

when preparing company reports; for tax purposes; when opening a new enterprise or a new type of activity;

End of form

2. Gross profit is

Beginning of the form

the difference between revenue from the sale of products (works, services) and the cost of products (works, services); profit from sales of products taking into account other income and expenses; enterprise profit minus taxes;