Profit and profitability. Some aspects
Any organization in the course of its operation has to bear certain expenses. This is the cost of utilities, staff wages, fuel and other. In the economic literature, it is customary to divide all production costs into two groups. The first one is explicit. These include the costs incurred by the company when paying for incoming resources. The second group is implicit. These include such costs that are associated with the use of the organization’s own resources. The combination of these two groups constitutes economic costs.So, for the functioning of an enterprise, profit and profitability are of great importance. It is about these economic indicators will be discussed further.
Profit and profitability of production
In addition to costs, the company also receives a certain amount of income in the course of its business. It consists of sales revenue and non-operating sources of income.And there is one feature. It is important to distinguish between indicators such as income, profit and profitability of production. Let's start with the first definition. The income of the organization is the funds remaining at the disposal of the organization after deducting from the proceeds from the sale of expenses incurred in the manufacture of products. In turn, profit is the difference between the cost at which the company sells its goods, and their cost. Comparison of income and expenses allows you to determine the degree of profitability of a company, firm, in other words - its profitability. Such an economic indicator is calculated as a percentage. Profit and profitability are parameters for assessing the financial condition of the company, as well as for its stability and market stability.
Profit and profitability. Kinds
In order to determine the direction of the distribution of income received by the organization, there is a kind of division of these indicators. Let's start with the first. So, the profit is divided into the balance sheet, from the sale of existing fixed assets, obtained as a result of non-operating transactions, as well as net.
Now a few words about profitability. This economic indicator reflects how effective one-time and current costs. In the most generalized form, profitability can be determined by dividing the profit by the costs incurred. There are several types of this indicator, more precisely, two. There are profitability not only production, but also products.
Profit and profitability. Brief summary
The first indicator is a source for the expansion of production, the implementation of social development of the enterprise, as well as the formation of the most profitable part of the budget for the founders. The amount of factors, both subjective and objective, influences the amount of profit and profitability. The second indicator, in contrast to the first one, does not show the effect obtained as a result of doing business, but characterizes its effectiveness. It is advisable to note that it is relative.