The most accurate assessment of the functioning of any company is provided by profitability, which is not just a calculated, statistical parameter, but a complex socio-economic complex criterion. It characterizes, in contrast to profit, the effectiveness of the financial activities of each individual economic entity. Profitability means profitability, profitability of the enterprise. It is calculated by comparing profit or gross income with the resources used or costs.
Instructions
Step 1
Profitability shows how profitable the activity of the enterprise is, therefore, the higher the profitability ratio, the more efficient the activity itself. Accordingly, the company should always strive for the highest performance, and management should determine ways to increase profitability. One of the conditions for the organization's effective operation is to expand the sales market for the products offered by reducing the prices of products. The internal factors of the enterprise also deserve special attention: an increase in production volumes, a decrease in production costs, an increase in the return on fixed assets.
Step 2
With low profitability at the enterprise, it is necessary to accelerate the turnover of assets. The return on equity can be increased by increasing the share of borrowed funds in the total capital. At the same time, the return on assets becomes higher when the profitability of products becomes higher, the return on all non-current assets will also be higher, the turnover rate of these current assets will be higher when the total costs per unit of production and costs for the main economic elements (materials, labor) are lower …
Step 3
The influence of individual factors cannot be considered in an abstract manner, because the entire set of production and economic factors influences the dynamics and the level of profitability indicators: the degree of use of all production resources; the level of organization of management and production; the structure of the capital itself, as well as sources; quality, structure and volume of products; costs for the cost of goods and production; direction of use of profit.
Step 4
The profit can be directed to the formation of consumption funds and accumulation funds, deductions to reserve capital, diversion to charitable purposes in order to expand the activities of the organization at its own expense. However, there is another alternative - you can invest your own funds in the securities of other larger companies, for example, form an investment portfolio and properly manage in order to get income after a while that can be invested in your company to improve competitiveness and financial condition. enterprises.
