Normal return on sales. Profitability net

What does the concept of profitability mean? This relative value, which displays the performance indicator of the enterprise.

Calculation of the formula for profitability of sales.

Return on sales is a kind of indicator pricing policy. Alternatively, considered as an indicator of cost control.

For example, in competing companies, the net return on sales and the formula display performance depending on the strategy and product line assortment.

Often this data is used to evaluate operational efficiency. One caveat: given the same revenue, costs and relatively equal profit (before tax), the profitability of sales of similar companies can differ dramatically.

This may be due to the influence of the volume of interest payments on the size of the NP (net profit).

What is the meaning of the return on sales ratio? This indicator is characterizing in determining the efficiency of production activities.

That is, the level of profitability of sales and the formula that clearly displays the calculations actually shows the size of the NP (net profit) from the currency unit of sales.

That is, how much remains with the company after the cost of production, interest payments on existing loans and the corresponding tax deductions are covered. In other words, this indicator displays the share of cost in sales.

KRP is determined primarily by the performance indicators of a certain reporting period. Important to know: CPI does not reflect the intended effect of long-term investments.

For example, an enterprise is switching to new technologies, or, alternatively, plans to release new products, which may require additional investments. In such cases, the CRP may decrease.

However, subject to the right strategy, this cannot be considered an indicator of the company's low efficiency, since the costs pay off rather quickly.

How to find the ROI formula?

RP (profitability of sales) is an indicator of pricing policy that reflects the ability of the company's management to keep potential costs under control.

For example, Gross Profit Margin - RP for marginal income.

The indicator is expressed as a percentage of marginal income to the proceeds received from the sale of goods/services.

For example, Gross Profit Margi: how to calculate return on sales, formula:

GPM = (sales revenue, taking into account the deduction variable costs/ sales proceeds) x 100%

The formula for profitability of sales by balance sheet.

The profitability ratio, which reflects the share of profits in each earned currency unit, is actually profitability. The calculation is not complicated: the ratio of profit after tax (net profit) to sales (in monetary terms) for a certain period.

That is, the profitability of sales is determined by the formula:

PE / V;

where: NP - net profit, B - revenue.

The formula for the return on sales ratio.

KRP shows the share of NP (net profit) in the total sales of the company. This main indicator, which is used most often to display the profitability of the enterprise.

Accordingly, the indicator should not be negative and correspond to the current inflation rate. Alternatively, for firms in advanced economies, CRP is correlated by industry.

The calculation is made as follows: return on sales - formula, example:

ROS = NI/NS

Decryption:

ROS: Return on Sales - the actual profitability of sales;
NI: Net Income - net income in a certain currency;
NS: Net Sales - revenue and net sales in general.

Important! KRP is the most important indicator that allows you to determine the profitability of the enterprise from each currency unit due to the sale of goods / services.

The return on sales ratio can be calculated as individual positions goods/services, and in general. This is especially important for the analysis economic activity enterprises.

Profitability- relative indicator of economic efficiency. The profitability of an enterprise comprehensively reflects the degree of efficiency in the use of material, labor and monetary and other resources. The profitability ratio is calculated as the ratio of profit to the assets or flows that form it.

In a general sense, the profitability of products implies that the production and sale of this product brings profit to the enterprise. Unprofitable production is production that does not bring profit. Negative profitability is a loss-making activity. The level of profitability is determined using relative indicators - coefficients. Profitability indicators can be conditionally divided into two groups (two types): and return on assets.

Profitability of sales

Return on sales is a profitability ratio that shows the share of profit in each earned ruble. Usually calculated as the ratio of net profit (profit after tax) for a certain period to expressed in cash sales volume for the same period. Profitability formula:

Return on Sales = Net Profit / Revenue

Return on sales is an indicator of a company's pricing policy and its ability to control costs. Differences in competitive strategies and product lines cause a significant variation in profitability of sales in different companies. It is often used to evaluate the operating efficiency of companies.

In addition to the above calculation (profitability of sales by gross profit; English: Gross Margin, Sales margin, Operating Margin), there are other variations in the calculation of the profitability of sales indicator, but for the calculation of all of them only data on the profits (losses) of the organization (i.e. e. data of Form No. 2 "Profit and Loss Statement", without affecting the data of the Balance). For instance:

• return on sales by (the amount of profit from sales before interest and taxes in each ruble of revenue).
• return on sales by net profit (net profit per ruble of sales revenue (English: Profit Margin, Net Profit Margin).
• profit from sales per ruble invested in the production and sale of products (works, services).

Return on assets

Unlike return on sales indicators, return on assets is calculated as the ratio of profit to average cost enterprise assets. Those. the indicator from form No. 2 "Report on financial results" is divided by the average value of the indicator from form No. 1 "Balance sheet". Return on assets, as well as profitability equity, can be considered as one of the indicators of return on investment.

Return on assets (ROA) is a relative performance indicator, divided by dividing the net profit received for the period by the total assets of the organization for the period. One of the financial ratios included in the group of profitability ratios. Shows the ability of the company's assets to generate profit.

Return on assets is an indicator of the profitability and performance of the company, cleared of the influence of the amount of borrowed funds. It is used to compare enterprises in the same industry and is calculated by the formula:

where:
Ra - return on assets;
P - profit for the period;
A is the average value of assets for the period.

In addition, the following indicators of the effectiveness of the use of certain types of assets (capital) have become widespread:

Return on equity (ROE) is a relative measure of performance, quotient of dividing the net profit received for the period by the equity of the organization. Shows the return on shareholders' investment in the enterprise.

The required level of profitability is achieved through organizational, technical and economic measures. Increasing profitability means getting more financial results at lower costs. The threshold of profitability is the point separating profitable from unprofitable production, the point at which the company's income covers its variable and semi-fixed costs.

Monitor the success of your own business, control income and expenses, understand what the net proceeds are - a pledge successful business. That is why the profitability of sales is so important, which allows you to get an accurate picture of the company's profitability and make timely corrections.

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What is profitability, how is it formed, what are the analysis formulas, and how can it be increased? We will discuss all this in detail below.

Return on sales is

Return on sales is an indicator that reflects the share of net profit in total sales.
It is worth paying attention, without profitability it is difficult to understand how successfully the business is progressing, whether it is profitable or unprofitable, how it will develop, and what this moment should be taken to increase income while reducing costs. The calculation of profitability indicators allows you to fully assess the effectiveness of the enterprise.

Profitability is calculated:

• for profit control
• to track business development
• for comparison with the profits of competing companies
• for the ability to determine profitable and unprofitable sales, etc.

But not every entrepreneur can professionally determine profitability. He keeps records and records at an amateur level, not knowing how to conduct financial affairs professionally.

In order to more clearly understand what net profit is and how to calculate it as soon as possible, one should refer to a fairly common formula for calculating profitability.

Formulas for analyzing profitability of sales

It is important to understand that it is not at all necessary to have supernatural mathematical knowledge in order to calculate the formula. It is more than simple and looks like this:

ROS=NI:NS

The presented formula has the following interpretation:

• Part of the Equation ROS, from the English Return on Sales, stands for "profitability of sales".
• N.I.- from English Net Income, is the net profit in a particular currency.
• NS- in English Net Sales, represents the revenue or net from all types of sales in general.

So, to find out the profitability, it is necessary to divide the net profit by the total revenue as a whole. And then the indicator will be more than obvious.

ROS=GP:NS

In this case, the net profit is an integral part of the gross profit GP (Eng. Gross Profit), which ultimately gives the desired result.

Example of calculating profitability of sales

In order to fully understand how profitability is calculated, one should consider specific example, which will help to solve all issues in the blink of an eye.

So, let's take the total sales revenue of the enterprise for 2011, which in total amounted to 10.5 million rubles. And in 2012, the total sales revenue increased to 12.2 million rubles. At the same time, net profit in 2011 amounted to 3.1 million rubles, and in 2012 - 3.23 million rubles.

So how did return on sales change in 2012?

To answer this question, it is necessary to determine the value of the profitability ratio of sales in 2011. This can be done according to the formula above. By substituting the available numbers into the formula, you can get the following:

ROS2011 = 3.1: 10.5 = 0.2952 or 29.52%.

ROS2012 = 3.23: 12.2 = 0.2648 or 26.48%.

ROS = ROS2012 - ROS2011 = 26.48 - 29.52 = -3.04%.

It follows from this that in 2012 the profitability of sales decreased significantly, namely by 3.04%.

Results of analysis of profitability of sales

Regularly conducting this analysis, you can get a lot of necessary and extremely important information. In particular, to understand how production is developing at the enterprise, what needs to be corrected, and what should be left as it was.

And in view of the fact that there is nothing more important than constantly increasing your income, the calculation of profitability must be carried out regularly and record the results.

How to increase profitability?

Of course, the head of any company strives to achieve certain indicators, looking at which we can say with confidence that the business is developing steadily.

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Profitability- characteristic financial condition company, which allows to evaluate the ability to make a profit on the invested funds. Profitability is calculated as profit per unit of invested funds.

Profitability is a general indicator of the enterprise's activity in terms of the ratio of costs and results. The final result is influenced by two components: internal organizational and economic factors and external market conditions. The first component includes changes in labor productivity, specifications production, the method of its organization, that is, everything that depends on the enterprise itself. The second component includes, on the one hand, resource prices ( labor force, raw materials, materials, fuel, energy, etc.) that the company uses to produce / sell the product, and on the other hand, the prices for the manufactured / purchased product, which may vary from the ratio of supply and demand in the market.

When analyzing the cost of manufactured/sold products in the current year, one should take into account both the change in the volume of growth in manufactured/sold products and the change in prices for it, as well as the change in the range of products. The costs (production costs) should take into account: changes in production volumes, changes in prices for resources, changes in resource consumption rates for the production of a unit of product and changes in the range of products. As the main indicator of the economic efficiency of current costs (resource consumption), you can use the indicator of costs per 1 ruble. manufactured or sold products.

As factors influencing the level and dynamics of the cost indicator, private indicators of the use (application) of living labor resources and means of labor can also be singled out. The growth and development of the enterprise are closely related to the development and implementation of the strategy and tactics of managing the process of formation, increase and distribution of profitability.

The growth of the profitability of the enterprise is facilitated by the manipulation of three most important indicators: the acceleration of trade, the reduction in the mass of costs, and the increase in the rate of return by raising prices. In the Western market, it is believed that the long-term profitability of companies depends on a much larger number of factors (more than 30) that characterize the state of the competitive situation, the situation on the manufacturer's market, the current economic situation, etc. Therefore, it is important in the process of profitability analysis not to lose sight of a number of other important factors: capital intensity, the relative quality of products (services), the company's market share, and labor productivity.

There is a close relationship between the goals of enterprise development and the factors that determine them. If the goal is to meet the need for savings for production development, then the most important factors are the structure of sales of goods and services, the level of trade margins, sales prices, volume, structure and efficiency of use. resource potential, the amount of profitability. If the goal is to ensure the sustainable position of the enterprise, then it is achieved on the basis of ensuring stable relations with suppliers, banks and other counterparties (the number of goods sold, the price of a unit of goods) and a sufficient amount of profitability. If the goal is to satisfy the interests of the owner of the property, then the most important factors ensuring its achievement are the volume of own and borrowed working capital and the efficiency of their use, as well as the amount of profitability.

If an enterprise determines the provision of social consumption and social development collective, then the main factors that should be used to achieve it are the distribution costs, the number and composition of the employed labor resources, measures of state regulation (norms and standards for contributions to various funds social protection population, minimum wage, minimum subsistence level, etc.), the level of profitability.

All of the above goals and factors are themselves closely interconnected. It is important that all activities carried out by the enterprise to increase profitability (using all opportunities) contribute to the achievement of the most important goals of the enterprise's development. When analyzing profitability, the following coefficients are calculated:

. Profitability of implementation is the ratio of profit from sales to the amount of revenue from sales for the period.

• profit from sales for the period = line 050 of Form No. 2,
• the amount of proceeds from sales for the period = line 010 of Form No. 2,
• the sum of the cost for the period = line 020 of Form No. 2.

Standard for trade:- 0 - 0.3
Standard for industry: - 0 - 0.4

When analyzing profitability ratios, it is necessary to analyze the structure proceeds organizations and prime cost her products. The amount of revenue is influenced by objective and subjective factors.

Objective are divided into internal and external. Internal - this is the volume of production, the level of costs, product quality, the rhythm of release, the assortment (in production), the rhythm of shipment, the timely execution of documents, the optimal forms of payment (in circulation). External - the situation on the market of raw materials, materials, semi-finished products, the volume of production in its competence, quality compared to analogues of other enterprises, the rhythm of deliveries (in production), the timing of document circulation, compliance with the terms of contracts, the optimal form of payment (in the sphere of circulation). In addition, there may be additional costs caused by: violations of the terms of delivery of materials and other resources, errors in transport provision, late payment.

TO subjective factors include: factors of a moral plan, the political situation in the market, the scope of activity and advertising ordered from the right agency - advertising-code.rf. As a rule, revenue from sales of products is based on the volume of sales of products based on prices excluding VAT, excises, trade and sales discounts, without customs duties and tariffs.

The costs of production and sale of products consist of the cost of raw materials, materials, energy, fixed assets, labor resources, other operating costs, and non-production costs used in the production of products. The costs of production and sale of products are combined into five groups: material costs, labor costs, social contributions, depreciation of fixed assets and other costs.

. Return on assets is the ratio of net profit for the period to the value of assets for the period.

For the calculation, indicators are used:

• net profit for the period = line 190 of Form No. 2,
• assets for the period (balance sheet currency) = line 300 of Form No. 2.

Return on assets measures the ability of a company's assets to generate profit. In other words, it is an indicator of the profitability and performance of the company, cleared of the influence of the amount of borrowed funds. In addition, the return on assets (capital) shows the efficiency of the use of all property of the enterprise. The decrease indicates a falling demand for the company's products and an overaccumulation of assets.

Standard for trade - 0 - 0.05
Standard for industry - 0 - 0.1

. Return on current assets is the ratio of net profit for the period to current assets for the period.

This indicator reflects the efficiency of using the company's current assets and shows how much profit the company receives from each ruble invested in current assets enterprises. Demonstrates the ability of the enterprise to provide a sufficient amount of profit in relation to the used working capital companies. The higher the value of this ratio, the more efficiently working capital is used.

Standard for trading - 0 - 0.08

. ROI is the ratio of net income for the period to own funds and long-term liabilities for the period.

For calculation is used:

• average value of own funds and long-term liabilities according to data for the period = Own funds (line 490 of Form No. 1) + Long-term liabilities (line 590 of Form No. 1) for the period.

Standard for trade - 0 - 0.07
Standard for industry - 0 - 0.16

. Return on equity(equity) is the ratio of net profit for the period to equity for the period. Shows the return on shareholder investment, in terms of accounting earnings.

Standard for trade - 0 - 0.06
Standard for industry - 0 - 0.2

Comments

Currently, the question remains, what indicators to take into account the profitability from sales - revenue or cost, net profit or revenue. If we proceed from the fact that the profitability threshold (Break-even Point) is the volume of operations at which the total income is equal to the total costs, i.e. this is the point of zero profit or zero losses, and the profit is already included in the sales proceeds, it is advisable to consider the profitability from the sale as the ratio of the profit from the sale not to the revenue, but to the cost, in order to avoid underestimating the profitability indicators. In addition, it is advisable to include in the calculation not net profit, but profit after taxation, since net profit can include profit not only from core activities, but also from non-operating and operating ones.

Example

Initial data:
Revenue = 100 million rubles.
Cost price = 70 million rubles.
Selling expenses = RUB 1.2 million

Payment:
Profit from sales \u003d 100-70-1.2 \u003d 28.8 million rubles.
Return on sales \u003d Profit / Revenue \u003d 28.8 / 100 \u003d 0.288 \u003d 28.8%.
Return on sales = Profit / Cost = 28,8/70 = 0,41 = 41%.

As can be seen from the example, in the first case, the profitability is lower than in the second, since the proceeds already include profit from sales.

Profitability calculation deserves special attention in Russian conditions. Due to the high income tax rate (as of September 1, 2009, income tax is 20%), taxpayers are engaged in tax optimization. In addition, in some cases, profits increase due to unreasonable price increases. As a result, it is not possible to evaluate the performance of a borrower solely on the basis of what the profitability shows. Additional performance indicators for the organization are discussed below.

To assess the profitability of a company, it is advisable:

• track the dynamics of the cost/revenue ratio;
• analyze how the net profit was received (at the expense of core activities or at the expense of other income);
• analyze the structure of management, commercial, operating, non-operating and other expenses;
• compare revenue with credit turnover on account 62 “Settlements with buyers and customers” and receipts on account 51;
• clear revenue from the share of offsets when calculating profitability from sales;
• to analyze, due to which there is a decrease / increase in profitability from sales. Too high profitability of sales may arise due to a large margin on a product / service or the establishment of an unreasonably high price of a product, which is negative factor when assessing the payment risk. The increase in profitability of sales is a consequence of the increase in prices with fixed costs to produce sold products or reduce production costs at constant prices.

The decrease indicates a decrease in prices at constant production costs or an increase in production costs at constant prices, i.e., a decrease in demand for the company's products.

Profitability calculation example

How to determine how profitable business? First, you need to understand that if a company does not operate in industries such as gas, oil, gems or the construction of business centers, the profitability will be in the range of 15 to 35% per annum.

An industry such as trucking is, in principle, subject to “losses”. trading companies receive a margin of 10-15%. Production also does not skim big cream - up to 25% per annum.

Let's give an example of calculating the profitability of a company that is engaged in timber processing, namely, the production of boards.

Let's start by dividing costs into fixed and variable costs. Next, we determine the maximum capacity of the equipment, the number of shifts and workers. We consider the costs of production capacities:

One shift - 8 hours - 15 people.
The cost of 1 cu. raw materials - 6 thousand rubles.
The capacity of the sawing machine is 3000 cubic meters / month, of which 50% is waste. From 3000 cu. it turns out 1500 cubic meters / month. finished raw materials.
Drying capacity - 750 cubic meters / month. Drying cycle 14 days. Total 1500 cubic meters / month.
The selling price is for 1 cubic meter. dried board 15 thousand rubles.

Costs:

Income:

1500 * 15,000 = 22,500,000.00 rubles

Net profit:

22,500,000- 18,754,500=3,745,500 rubles - 749,100 (20% income tax) = 2,996,400 rubles.

Profitability:

2 996 400/18 754 500 = 16%

When calculating profitability, one should not forget about the influence of seasonality factors, reduced demand, equipment downtime, and defects.

Performance indicators can be divided into direct and inverse. Direct performance indicators are return ratios that show what conditional unit of result is obtained from a conditional unit of costs to obtain it. Inverse efficiency measures are capacity factors that illustrate how many conventional cost units are needed to obtain a conventional unit of result.

One of the key performance indicators economic activity enterprises favored profitability. Profitability indicators are less subject to the influence of inflation and are expressed by different ratios of profit and costs. Profitability indicators are mainly measured in the form of ratios.

Profitability

Profitability can be defined as an indicator of economic efficiency, reflecting the degree of efficiency in the use of material, monetary, production, labor and other resources.

Profitability indicators are divided into different groups and are calculated as the ratio of the selected meters.

The main types of profitability are the following indicators:

1. Return on assets.
2. Profitability of fixed production assets.
3. Profitability of sales.

Return on assets

Return on assets is a financial ratio showing the profitability and efficiency of the enterprise. Return on assets shows how much profit the organization received from each ruble spent. Return on assets is calculated as the quotient of dividing net income by average value assets multiplied by 100%.

Return on assets \u003d (Net profit / Average annual value of assets) x 100%

The values ​​for calculating the return on assets can be taken from financial statements. Net profit is shown in form No. 2 “Profit and Loss Statement” (new name “Statement of Financial Results”), and the average value of assets can be obtained from form No. 1 “Balance Sheet”. For accurate calculations, the arithmetic mean of assets is calculated as the sum of assets at the beginning of the year and the end of the year, divided by two.

Using the return on assets indicator, you can identify what are the discrepancies between the predicted level of profitability and the actual indicator, as well as understand what factors influenced the deviations.

Return on assets can be used to compare the performance of companies in the same industry.

For example, the value of the company's assets in 2011 amounted to 2,698,000 rubles, in 2012 - 3,986,000 rubles. Net profit for 2012 is 1,983,000 rubles.

The average annual value of assets is 3,342,000 rubles (arithmetic mean between the indicators of the value of assets for 2011 and 2012)

Return on assets in 2012 amounted to 49.7%.

Analyzing the obtained indicator, we can conclude that for each ruble spent, the organization received a profit of 49.7%. Thus, the profitability of the enterprise is 49.7%.

Profitability of fixed production assets

Profitability of fixed production assets or profitability of fixed assets is the quotient of dividing net profit to the cost of fixed assets, multiplied by 100%.

OPF profitability = (Net profit / Average annual cost fixed assets) x 100%

The indicator shows the real profitability from the use of fixed assets in the production process. Indicators for calculating the profitability of fixed assets are taken from the financial statements. Net profit is indicated in the form No. 2 “Profit and Loss Statement” (new name “Statement of Financial Results”), and the average value of the value of fixed assets can be obtained from form No. 1 “Balance Sheet”.

For example, the value of fixed production assets of the enterprise in 2011 amounted to 1,056,000 rubles, in 2012 - 1,632,000 rubles. Net profit for 2012 is 1,983,000 rubles.

The average annual cost of fixed assets is 1,344,000 rubles (arithmetic average of the cost of fixed assets for 2011 and 2012)

The profitability of fixed production assets is 147.5%.

Thus, the real return on the use of fixed assets in 2012 amounted to 147.5%.

Profitability of sales

Return on sales shows how much of an organization's revenue is profit. In other words, the profitability of sales is a coefficient that illustrates what share of the profit is contained in each earned ruble. Return on sales is calculated for a given period of time and is expressed as a percentage. With the help of profitability of sales, an enterprise can optimize, as well as the costs associated with commercial activities.

Return on Sales = (Profit / Revenue) x 100%

The values ​​of profitability of sales are specific to each organization, which can be explained by the difference in the competitive strategies of companies and their range.

To calculate the profitability of sales can be used different kinds profit, which leads to the existence of different variations of this coefficient. The most commonly used return on sales calculated on gross profit, operating profit on sales, return on sales calculated on net profit.

Return on sales by gross profit = (Gross profit / Revenue) x 100%

Gross profit margin on sales is calculated as the quotient obtained by dividing gross profit by revenue multiplied by 100%.

Gross profit is determined by subtracting cost of sales from revenue. These indicators are contained in Form No. 2 “Profit and Loss Statement” (new name “Statement of Financial Results”).

For example, the gross profit of the enterprise in 2012 amounted to 2,112,000 rubles. Revenue in 2012 is 4,019,000 rubles.

The return on sales in terms of gross profit is 52.6%.

Thus, we can conclude that each earned ruble contains 52.6% of gross profit.

Operating return on sales = (Profit before tax / Revenue) x 100%

Operating return on sales is the ratio of profit before tax to revenue, expressed as a percentage.

Indicators for calculating operating profitability are also taken from Form No. 2 "Profit and Loss Statement".

The operating profitability of sales shows how much of the profit is contained in each ruble of revenue received, minus interest and taxes paid.

For example, profit before tax in 2012 is 2,001,000 rubles. Revenue in the same period amounted to 4,019,000 rubles.

Operating return on sales is 49.8%.

This means that after deducting taxes and interest paid, each ruble of proceeds contains 49.8% of the profit.

Return on sales based on net profit = (Net profit / Revenue) x 100%

Return on sales based on net profit is calculated as net profit divided by revenue multiplied by 100%.

The indicators for calculating the profitability of sales based on net profit are contained in Form No. 2 “Profit and Loss Statement” (new name “Statement of Financial Results”).

For example, Net profit in 2012 is 1,983,000 rubles. Revenue in the same period amounted to 4,019,000 rubles.

Return on sales in terms of net profit is 49.3%. This means that in the end, after paying all taxes and interest, 49.3% of the profit remained in each ruble earned.

Profitability analysis

The return on sales is sometimes called the rate of return because the return on sales measures specific gravity profit in proceeds from the sale of goods, works, services.

To analyze the coefficient characterizing the profitability of sales, you need to understand that if the profitability of sales decreases, then this indicates a decrease in the competitiveness of products and a drop in demand for it. In this case, the company should think about holding events that stimulate demand, improve the quality of the product offered, or conquer a new market niche.

As part of the factor analysis of the profitability of sales, the impact of profitability on the change in the price of goods, works, services and the change in their cost is considered.

To identify trends in changes in the profitability of sales in dynamics, it is necessary to single out the base and reporting periods. As the base period, you can use the indicators of the previous year or the period in which the company received the highest profit. The base period is needed to compare the resulting sales profitability ratio for the reporting period with the ratio taken as a basis.

Profitability of sales can be increased by increasing the prices for the offered assortment or by reducing the cost price. To make the right decision, the organization must focus on such factors as: the dynamics of market conditions, fluctuations in consumer demand, the possibility of saving internal resources, assessing the activities of competitors, and others. For these purposes, the instruments of commodity, price, marketing and communication policy are used.

The following main areas for increasing profits can be distinguished:

1. Increasing production capacity.

Using the achievements of scientific progress requires capital investments, but allows you to reduce the costs of the production process. Existing equipment can be upgraded to save resources and improve operational efficiency.

2. Product quality management.

Quality products are always in demand, therefore, if the profitability of sales is insufficient, the company should take measures to improve the quality of the products offered.

3. Development of marketing policy.

Marketing strategies focus on product promotion based on market research and consumer preferences. In large companies, entire marketing departments are created. Some enterprises have a separate specialist who is engaged in the development and implementation of marketing activities. In small organizations, the duties of a marketer are assigned to managers and other specialists of management departments. requires significant costs, but its successful implementation leads to excellent financial results.

4. Cost reduction.

The cost of the proposed product range can be reduced by finding suppliers who offer products and services cheaper than others. Also, saving on the price of materials, you need to ensure that the quality of the final product offered for sale remains at the proper level.

5. Staff motivation.

Personnel management - a separate sector management activities. The production of quality products, the reduction of defective products, the sale of the final product, to a certain extent, depends on the responsibility of workers. In order for employees to perform efficiently and promptly assigned to them labor obligations, there are various motivational and stimulating strategies. For example, reward the best workers, holding corporate events, organizing corporate press, etc.

Summarizing the above, readers of MirSovetov can conclude that profit and profitability indicators are the main criteria for determining the effectiveness of the financial and economic activities of an enterprise. In order to improve the financial result, it is necessary to evaluate it, and on the basis of the information received, analyze which factors hinder the development of the organization as a whole. After existing problems identified, you can proceed to the formulation of the main directions and activities in order to increase the company's profits.