How to find profitability

The profitability of the organization determines how much profit brings every ruble of costs. Therefore, the criterion of cost is the profit of the organization. To determine profitability you need to calculate several indicators, which measure the profitability from different perspectives.

You will need

• Calculator, analyzed company Balance sheet (Form №1), profit and loss statement (Form №2).

Instruction

1. On the basis of the statement of profit and loss statement (Form No. 2) to calculate the return on sales at the beginning and end of the reporting period. Profitability of sales is calculated as a ratio of profit from sales of products to revenue:
   RP=PP (row 050) / (row 010)*100%
   The figure indicates either rising prices or increased production costs.
2. On the basis of the statement of profit and loss statement (Form No. 2) to calculate product profitability at the beginning and end of the reporting period. Profitability of production is calculated as a ratio of profit from sales of products to the total cost of this production:
   RP=PP (row 050) / SP (line 020)*100%
   The figure indicates a decline of cost per unit or 1 RUB products, the growth of production, growth of prices for products while improving its quality.
3. On the basis of the statement of profit and loss statement (Form No. 2) to calculate a return on ordinary activities at the beginning and end of the reporting period. The profitability of ordinary activities is calculated by the ratio of net profit to revenue:Rd=FD (line 190) / V (line 010)*100%
   The figure shows net profit.
4. Based on the data of balance sheet (Form №1) and profit and loss statement (Form No. 2) to calculate the economic rate of return at the beginning and end of the reporting period. Economic profitability is calculated by dividing net income by the average value of current assets:
   ROA=PCH (line 190) / AOC (line 300)*100%
   The ratio of economic profitability shows the efficiency of using the assets of the enterprise. The figure shows the growth of sales, increase the value of the property.
5. Based on the data of balance sheet (Form №1) and profit and loss statement (Form No. 2) to calculate the return on equity at the beginning and end of the reporting period. Profitability of own capital is calculated by dividing net income by average equity capital:RSK=PCH (line 190) / SKS (line 490)*100%
   This ratio shows the efficiency of use of capital. Its meaning is that it shows how much profit falls on unit of own capital of the enterprise.