The profitability of production is one of the most important indicators of the production and economic activity of an enterprise. Analysis of the results of calculating the profitability of production allows you to assess the general situation at the enterprise and make corrective decisions to increase the values of this indicator. Increased profitability can be achieved by increasing profits from product sales, reducing costs, as well as efficient use of equipment. How do you calculate the profitability of production?
It is necessary
enterprise balance sheet
Instructions
Step 1
Calculate the balance sheet profit of the enterprise. Balance sheet profit is calculated as the difference between the company's income from operating activities and the company's expenses on these operations. The company's income can be conditionally divided into two groups: sales and non-sales. The first group includes income from the sale of manufactured products or services, fixed assets (including land) and other property. Non-operating income includes income from the lease of property, income from stocks, bonds, and from bank deposits.
Step 2
Calculate the average annual value of the company's fixed assets. Fixed assets are inventory items that are involved in production and, in the process of wear and tear, transfer their value to manufactured products. The average annual cost of fixed assets of an enterprise is determined as follows: you need to add half of the cost at the beginning and end of the year, the full cost of fixed assets at the beginning of all months of the year and divide the resulting amount by 12.
Step 3
Determine the average annual cost of working capital. Working capital is the funds that the company uses in its production and economic activities. The average annual cost of working capital can be determined by adding the average annual cost of inventories, work in progress, self-made semi-finished products and deferred expenses. The data for the calculation can be found in the balance sheet of the company for the reporting period.
Step 4
Calculate your production profitability. The profitability of production is calculated as the quotient of dividing the company's balance sheet profit by the sum of the average annual value of fixed assets and the average annual value of current assets.
