You will need
  • - indicators of economic activity of the company;
  • calculator.
Profitability of sales is expressed in a certain coefficient, the dynamics of which you can compare in different reporting periods. To start, determine the period for which you will calculate the profitability of sales, for example, year or quarter. Identify the two basic quantities needed to search for this ratio: net profit and total revenue from sales. Net profit (RAS) is a portion of the gross profit on the balance remaining after deduction of the tax (after paying all tax deductions and contributions to the budget). It is used for payment of dividends to shareholders, capital renewal and development of the company.
Revenue from sales is the total amount of the income received through sales of goods, services and works.
Once you have calculated these two values, you can determine the ratio of profitability of sales. Divide net profit by sales and profit, and you will find out the profitability.For example, before last year, revenues amounted to 3.5 million rubles, and net profit of 900 thousand rubles. Thus, the coefficient of return on sales = 0,9/3,5 = 0,2571, that is 25,71%. And last year, revenues from sales amounted to 3.7 million rubles, and net profit of 950 thousand rate of return - 25,67%. This example demonstrates that the increase in revenue and net profit does not increase profitability, since the profitability index decreased by 0.04%.
Having such data and the company's executives can make decisions to optimize the business and finding the reasons for the reduced profitability.
For a more complete picture of the performance of the company, calculate the profitability of sales on multiple levels. For example, a particular group of products or for each major client. This technique will allow you to make more accurate conclusions on the future work. You may waive certain products or optimize your client base.