Coefficient of profitability as one of the ways to assess the effectiveness of resource use.
Every enterprise is created for any purpose. Typically, this goal is to obtain a certain effect. The effect can be social, ecological, some other, but most often it is supposed to receive an economic effect. Under this in this case is understood the profit that business activities should bring. If this effect is present, then the enterprise can be called profitable, but different organizations generate different profit for a number of reasons. In order to compare them among themselves, and also to study one firm from the point of view of profitability in dynamics, the profitability indicators that characterize the relative level of profit are calculated.
The structure of all indicators of profitabilitythe same: in the numerator there is a certain type of profit, and in the denominator - the profitability of which is determined. Usually, the profitability of any resources is calculated, which makes it possible to assess the degree of efficiency of their use. The final result of the calculations can be presented both in percentage and in the form of a coefficient. Consider, as an example, several indicators that are determined most often.
The profit of the enterprise is created in the course ofthe implementation of activities for which a property that is owned is used. It, as you know, is reflected in the asset of the balance sheet. The coefficient of profitability of assets is determined by the ratio of profit to the balance currency. In the calculations, either net profit or profit from sales can be used. In addition, it makes sense to assess the effectiveness of each of the large groups of property reflected in the balance sheet - turnover and non-current assets. The indicators of profitability in this case will show the amount of profit per unit of value of the property.
Regardless of whether the firm producesproducts or services, it carries out costs. Obviously, they must also be produced most effectively. In order to assess the level of efficiency, calculate the profitability ratio of core activities. It also has a different name, which more clearly reflects its meaning - the cost-effectiveness ratio. The calculation is extremely simple and consists in relation to profit to the sum of the realized costs of production. Of course, if the information is limited, then the net profit can be used in calculations, but the calculation based on the profit from sales will be more correct. The fact is that this type of profit was obtained precisely from the sale of the products for which creation costs were made.
The indicator of profit is more troublingowner of the enterprise. In this connection, the calculation of such an indicator as profitability of own capital acquires special significance. When dividing net profit by the amount of equity, it is possible to determine the amount of profit that each ruble invested in an enterprise by the owner brings. Based on this indicator, you can compare different companies from the point of view of the owner, for example, in order to assess the prospects for investment.
None of the profitability is unlimitedany normative values, so their comparison is most often carried out in dynamics, that is, they analyze the change over several years and determine the trends. In addition, you can compare the company's performance with similar indicators of similar firms or with industry average values.
The definitions of changes in profitability are sometimesis not enough, and may need to identify their causes. To do this, most often use factor analysis, based on the technique of DuPont. Using this method, we study the isolated and cumulative effect of various factors, for example, on the profitability of assets or equity.