Profitability of various. Difference between margin and markup

The profitability of an enterprise is an indicator of the efficiency with which fixed assets are used, calculated as the ratio of profit to the average cost of fixed and current assets.

Profit and profitability of an enterprise are directly interrelated.

Profit is an economic category that expresses those arising from the formation and subsequent use of the manufactured product. In the real sector, profit takes material form in the form of cash, resources, funds and benefits.

If a company makes any profit, then it is profitable. Those used in the calculations reflect relative profitability. Analysis of the financial stability of an enterprise is based on the analysis of these indicators. To assess the effectiveness and economic feasibility of the operation of an enterprise, absolute and relative indicators are taken.

Absolute indicators make it possible to analyze the dynamics of profit indicators for certain years. At the same time, to obtain more reliable results, the indicators are calculated taking into account inflation.

Relative indicators represent options for the ratio of profit and capital invested in production (profit and production costs). Therefore, they are not as susceptible to inflation.

The absolute amount of profit does not always give a correct idea of ​​the level of profitability of a particular enterprise, since it is influenced by both the quality of work and the scale of activity. In this regard, for more precise characteristics The work of an enterprise uses not only the absolute amount of profit, but also a relative indicator called the level of profitability.

These indicators should be considered in comparison with other time periods, since this allows us to judge the dynamics of the enterprise’s development.

The profitability of an enterprise characterizes the level of profitability or unprofitability of production. The profitability indicators themselves are relative characteristics of the results of financial growth and the efficiency of the organization. They reflect the relative profitability of a firm or enterprise, which is measured as a percentage of capital costs from different positions.

The most important characteristics The actual environment in which the profit and income of an enterprise is formed are profitability indicators. They are used in comparative analysis and assessment

The main indicators of profitability are: profitability of the enterprise's products, and overall profitability.

Product profitability is a reflection of the ratio of profit per unit products sold. This indicator increases with an increase in product prices with constant production costs or with a decrease in production costs while maintaining constant cents on products sold.

Return on capital shows the efficiency of using all assets at the disposal of the enterprise.

Enterprise) expresses the ratio of balance sheet profit to the average value of fixed assets production assets, as well as standardized working capital. This attitude funds to expenses shows the profitability of the enterprise. In other words, the level of total profitability, reflecting the increase in capital invested, is equal to earnings before interest multiplied by 100% and divided by assets.

Overall profitability is a key metric used in profitability analysis. For more precise definition development of the organization, two more indicators are calculated: profitability of production turnover and the number of asset turnovers.

Profitability of turnover is equal to the dependence of gross revenue on costs. The number of capital turnover is equal to the ratio of gross revenue to the amount of capital.

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.

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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 (the 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.

Activities of the Soz of this enterprise 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;

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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;

Any economic activity is carried out taking into account indicators, the main of which are profitability and profit from commercial activities. Profit is the result of the difference between income and expenses. This indicator is ultimately key in determining business efficiency.

Let’s look at the basic concepts of how profit and profitability differ. Profit is monetary reward as a result of the financial activities of the enterprise, but profitability is a relative indicator (%) that reflects the level of efficiency in the use of all labor, material and financial resources.

How to calculate profit and profitability

One of the most popular theories that explains the level of profit is the theory surplus value from K. Marx. He said that additional value is created already at the stage of production by another product “ labor force" What does surplus value consist of? It includes wages for production employees, expenses associated with loans, taxes and rent. Therefore, the concept of profit fully reflects the essence of surplus value.

Types of profit

In economic theory, there is net profit (the amount without taxes and payment various fees) and gross (total) profit.
To calculate them, use the following formulas.

Gross Profit Formula

VP = BH – S, Where
VP – gross profit;
BH – net income from the sale of services or sales of goods;
C is the cost of goods or services.

Net profit formula

PP = VP - ∑ costs - ∑ taxes, Where
PE – net profit;
VP – gross profit;
∑production costs;
∑ taxes, fines, penalties and various insurance payments, loans.

Profitability reflects the efficiency of all resources taken into account, including percentage. The profitability ratio itself can be obtained as a result of calculations based on the ratio of profits to resources.

Types of profitability indicators

They distinguish return on capital, fixed assets, assets, profitability of production, sales and others.

Let's look at the main two indicators.

Sales return formula

It shows the percentage of surplus value for each unit of money earned.

RP=CP/OP, Where
RP – return on sales;
PE – net profit;
OP – sales volume.

Production profitability formula

Thanks to this formula, you can find out how much profit a company receives from each unit of money spent on the production and sale of goods.

RP = P/∑costs, where
RP – production profitability;
P – profit from the sale of goods and services;
∑ costs – the amount of costs for production.

Reviews and comments

Thank you very much for the information collected. I can also add that in economic theory there is the concept of efficiency and production effect. Effect is the result of production, and efficiency is the ratio of results to costs. The main performance indicators are capital and material intensity, which are calculated as the ratio of the result (in currency) to the cost of materials (in currency).

Profitability is a benefit, and here you are no longer interested in a specific number, but in the result. Whether this or that business is profitable or not. And profit is expressed in specific figures. although here income matters more.

Oh, somehow everything is complicated. Income and expense. If the Balance is in plus, then there is a profit... if in the minus, then there is a loss... Profitability, in my opinion, implies receiving a guaranteed income in a certain period of time. When all the costs of organizing the business itself have been covered, sit back and make a profit. If the profit is good, then the business is profitable; if the profit is cheap, then there is no time to waste.

If the expected profit is still initial stage It is still possible to somehow foresee, then profitability, most likely, only with the passage of time and the promotion of the business itself, although I may be wrong in my assessments.

Profitability is an indicator that does not require special precision and determines only the possibility of extracting any net profit from an enterprise, be it 1 kopeck or hundreds of millions.

Profit is the result of the economic and financial activities of an enterprise and is calculated as the difference between the price of the product, or rather the proceeds from its sale, and its cost. In other words, profit is the net income of an enterprise. The profitability of an enterprise evaluates the efficiency of production - economic activity of a given enterprise, characterizes the level of return on costs and the degree of use of resources. It is equal to the ratio of net profit to equity capital in a given unit of activity.

Profit is good. Only many enterprises are trying to work, as they say, “to zero.” In this case, there is a “saving” on income tax. By the way, in Ukraine they already pay tax on losses. So neither profit nor loss is profitable today!

Miledan, are you serious about the loss tax? How can you pay anything when the company doesn’t even break even? And how this tax was considered then, why exactly, is not at all clear. Well, with such taxation, I do not envy entrepreneurs in Ukraine. When we had a default in our country, I didn’t hear about this.

Seriously! They count from the difference between income and expenses! At the company where I work now they are actively fighting losses. Moreover, we even began to tax pensions. If a pensioner works - 15%, if the pension is above 3000 UAH, then 20%! This probably doesn’t exist in any civilized country in the world!

When there is no profit, then income may be equal to expenses or even expenses will be more income. I don’t understand where the difference will come from. Or is it the opposite difference, negative. Struggling with low efficiency in production? Still unrealistic.
Previously, my mother told me, the income tax was such that from a hundred rubles there were measly pennies left. And from here it never occurred to anyone to strain too much and exceed the plan.

I agree with you - for businessmen such a decision is complete nonsense. But it’s very convenient for the state. In this case, most likely, the tax is levied on the profit itself. That is: you earned $10,000 and spent $30,000. So the tax will most likely be taken from $10,000.

Some countries have a similar tax system. The higher the income, the higher the tax.

JSC "Arsenal" (EXAMPLE)

as of 01/01/2015

Profitability and profitability are indicators of the effectiveness of an organization.

Profitability characterizes the ratio (level) of income to advanced capital or its elements; sources of funds or their elements; the total amount of current expenses or their elements. The profitability indicator indicates how many rubles of income the organization received for each ruble of capital, assets, expenses, etc.

Profitability characterizes the ratio (level) of profit to advanced capital or its elements; sources of funds or their elements; the total amount of current expenses or their elements. Profitability indicators reflect the amount of profit received by the organization for each ruble of capital, assets, income, expenses, etc.

Calculation of profitability indicators

The amount of income received by the organization per each ruble of investment in its assets increased by 0.712 rubles. and amounted to 371.4 kopecks per ruble of funds received.

Income receipts per each ruble of funds raised in the reporting period increased by 2,768 rubles, i.e. to the level of 782.6 kopecks per ruble of borrowed funds.

The amount of revenue received by the organization per each ruble of the cost of products sold (production expenses) increased and amounted to 2.42 rubles.

The amount of revenue received by the organization per each ruble of total expenses for ordinary activities (cost of production and sales) increased and amounted to 1,106 rubles.

The level of income per each ruble of total expenses of the organization in the reporting period increased to 1.1 rubles.

Thus, in the period under study, there was an increase in almost all profitability ratios, which indicates an increase in the efficiency of using funds raised to carry out financial and economic activities.

Calculation of main profitability indicators

Return on total assets characterizes the efficiency of use of all property of the enterprise. An increase in the indicator by 39.3% indicates a growing demand for goods and the accumulation of assets, which is positive.

Return on non-working capital characterizes the efficiency of using the organization's fixed assets, determining how well the total volume of available fixed assets corresponds to the scale of the organization's business. The efficiency of using non-working capital increased by 123.1%, which may indicate both the full utilization of equipment and the absence of reserves, as well as a significant degree of physical and obsolescence outdated production equipment.

Return on working capital reflects the efficiency of using the organization's working capital. It determines how many rubles of profit fall on one ruble invested in current assets. The return on working capital ratio in the reporting period increased by 41.7 and amounted to 35.5%, which indicates an increase in the efficiency of using working capital and a decrease in the likelihood of doubtful and bad receivables, and a decrease in the degree of commercial risk.

From the point of view of shareholders, the most important assessment of the effectiveness of an investment is the availability of return on invested capital. The indicator of profit on the capital invested by shareholders (owners) is called return on equity. During the reporting period, return on equity increased by 61.9 points, i.e. the return on investment of the owners has increased, which has increased the investment attractiveness of this enterprise.

Return on invested capital (return on investment) characterizes the efficiency of operating and investment activities companies; shows how competently managers work with debt and equity capital. An increase in these indicators indicates a targeted policy of the enterprise aimed at increasing the efficiency of capital use.

Return on permanent capital reflects the efficiency of using capital invested in the company's activities at long term. There is an increase in this indicator by 71.4%, which is undoubtedly a positive result.

Return on debt capital reflects the amount of profit per ruble of borrowed funds. In the reporting period, the return on debt capital was at the level of 70.7%.

The profitability of expenses for ordinary activities reflects the amount of profit from sales per each ruble of total expenses for ordinary activities (cost of production and sales). During the reporting period, the profit from each ruble spent on production and sales of products amounted to 10.6%, which is 11.5 points higher than in the same period last year. Thus, the efficiency production activities(cost recovery) has increased.

Return on total expenses is the amount of net profit received by the organization for the analyzed period, per each ruble of total expenses. The cost recovery increased by 9.2 kopecks of net profit per ruble of total costs.

The profitability of production is the amount of profit per each ruble of the cost of products sold (production expenses). There is an increase in production profitability.

Return on sales characterizes efficiency entrepreneurial activity: how much profit does the enterprise have from ruble sales. Gross profitability reflects the amount of gross profit per each ruble of sales revenue. When assessing the values ​​of these indicators, it should be borne in mind that the dynamics of the ratio of income and expenses depends not only on the efficiency of the use of resources, but also on the accounting principles applied at the enterprise. In the case under consideration, there is an increase in the return on sales indicator by 10.5%, which, undoubtedly, is a positive result.

The share of gross profit in revenue increased by 1.3% and amounted to 58.7%.

Additionally, you can analyze the dynamics of profitability indicators, calculated as the ratio of net profit (profit before tax) for a certain period to that expressed in cash sales volume for the same period.