The company's return on investment implies an indicator of the company's profitability, which reflects how long and how efficiently the organization has functioned.
Instructions
Step 1
Calculate or take from the financial report the main quantitative indicators of the enterprise: the amount of profit, the amount of costs for the production and sale of products and the total costs.
Step 2
Evaluate the performance of your business. Compare these indicators with the planned ones. After all, the main meaning of the company and running a successful business is to get the highest profit and determine the prospects for financial activities. That is why profitability determines the efficiency of a company's development and its attractiveness in relation to investment policy.
Step 3
Calculate the value of the profitability of the business, which implies a quantitative assessment of profitability and is determined in the form of the ratio of the total profit to the total (total) costs.
Step 4
Determine the profitability of your products. This indicator is the ratio of the profit received and the amount spent on production, that is, the cost and the cost of selling goods.
Step 5
Calculate your production profitability. In this case, the payback is calculated in the form of the ratio of profit to production costs. Production costs mean the cost of purchasing, repairing and maintaining equipment, as well as the payment of wages to employees.
Step 6
Analyze the prospects for the development of each individual area of production, first of all, be guided by the profitability indicators of these areas. At the same time, the area of activity of the organization (production), which has the highest rate of profitability, and will be preferable for further investment and business development.
Step 7
Make a plan for the further activities of the enterprise. This will further increase your profitability and, as a result, your company's financial prosperity.
