Net profit to revenue ratio. The profitability is clean. Operating profit

Globally, profitability is a set of indicators that together characterize the efficiency of a business, or rather its profitability. Profitability is always the ratio of profit to the object, the effect of which you want to know. In fact, this is the share of profit per unit of the analyzed object.

Using profitability indicators, you can find out how efficiently the company's equity or assets are used ( see "Determining the return on assets (balance sheet formula)" ), whether its production is profitable. But in this article, we will focus directly on the ROI.

Return on sales is the ratio of profit to revenue

Return on sales gives an idea of \u200b\u200bwhat is the share of profit in the company's revenue. In the analysis, it is usually denoted ROS (short for return on sales).

The general formula for ROI is as follows:

ROS \u003d Pr / Op × 100%,

where: ROS - return on sales;

Pr - profit;

Op - sales volume or revenue.

Return on sales is a relative indicator, it is expressed as a percentage.

How to calculate the return on sales by balance

To calculate the profitability of sales, information from the statement of financial results (form 2) is used.

Read the article about Form 2 "Filling out form 2 of the balance sheet (sample)" .

At the same time, the formula for the profitability of sales by balance depends on what profitability the user is interested in:

1. Gross margin. In this case, the formula for calculating the return on sales will be as follows:

ROS \u003d line 2100 / line 2110 × 100.

1. Operating profit margin:

ROS \u003d (line 2300 + line 2330) / line 2110 × 100.

1. Net profit margin:

ROS \u003d line 2400 / line 2110 × 100.

What is the regulatory value of ROI

There are no special guidelines for profitability of sales. The average statistical values \u200b\u200bof profitability by industry are calculated. For each type of activity, its own coefficient is considered normal.

In general, the coefficient in the range from 1 to 5% indicates that the enterprise is low profitable, from 5 to 20% - average profitable, from 20 to 30% - highly profitable. Over 30% is already super profitable.

In the process of analyzing business activities, the indicator of product profitability is widely used. This indicator is determined by the ratio of profit from sales or net profit from operating activities to the amount of costs for products sold... The profitability of a particular type of product is determined by the ratio of profit from the release (sale) of this product to full cost this type of product.

Product profitability characterizes how much a business entity has profit or self-financed income from each ruble spent on production and sales of products.

Formulas for calculating product profitability:

1. Profitability of all sold products:

R \u003d, R \u003d
,

where R is the profitability of products sold,%;

P - profit from sales, rubles;

З - costs of production and sale of products, rubles;

PE - net profit from core activities, rubles.

2. Profitability certain types products:

R ID \u003d
,

where R IZD is the profitability of a particular type of product,%;

Сi - the cost of the i-th type of product, rubles.

Return on sales

Return on sales is one of the most important indicators of a company's performance. The indicator is calculated as the ratio of profit from the sale of products (works, services) or net profit to the value of products sold (the amount of proceeds received).

This coefficient shows how much profit from sales the company receives from each ruble of products sold. In other words, how much remains for the enterprise after covering the cost of production. If the result is expressed not as a percentage, but in kopecks, it will show how many kopecks of profit from sales are received from each ruble of proceeds from the sale of products.

Formulas for calculating profitability of sales:

1. Return on sales for the whole enterprise:

R PR \u003d
, R PR \u003d
,

where R PR is the profitability of sales as a whole for the enterprise,%;

P PR - profit from sales, rubles;

In PR - sales proceeds (with or without indirect taxes), rubles;

PE - net profit, rubles

2. Profitability of sales of certain types of products:

R PRizd \u003d
,

where R PRizd is the profitability of sales of certain types of products,%;

Tsi is the price of the i-th type of product, rubles;

Сi - prime cost of the i-th type of product, rubles.

The indicator of profitability of sales characterizes the most important aspect of the company's activity - the sale of main products, and also estimates the share of the cost price in sales. This indicator reflects only the operating activities of the enterprise. It has nothing to do with financial activities.

Return on assets

Return on assets is a comprehensive indicator that allows you to assess the results of the main activities of an enterprise. It expresses the return per ruble of the company's assets.

Return on assets is determined using the following formulas:

,
,

where R A - return on assets,%;

A is the average value of assets for the period, rubles.

This coefficient shows the effectiveness of the organization's asset management through the return of each ruble invested in assets, and characterizes the generation of income by this company. This indicator is also another characteristic of resource productivity, but not through the volume of sales, but through profit before tax.

Profitability- relative ratecharacterizing the degree economic efficiency use of any resource (material, monetary, labor). It is calculated according to special formulas, usually has a percentage. Profitability can be called the most important indicator for assessing the activities of a commercial enterprise.

This concept is used very broadly, is divided into several types, but, in principle, it represents the ratio of the received from the activity to any asset or resource.

Therefore, the profitability ratio is calculated by dividing the amount of profit by the amount of interest. Both values \u200b\u200bare accepted in the same units. Since it is rather difficult to express profit in non-cash form, the denominator is also given in monetary terms. Most often, profitability is calculated as a percentage.

It should be noted that the approach to profitability coefficients is not as strict as to purely mathematical formulas, there is a replacement for words that are similar in sound and content of concepts. So the profitability of production can be considered both as the profitability of the process and as the profitability of the production complex. Therefore, it is worth considering not only the name of the term, but the components of a particular formula, their practical meaning.

The most common are following indicators profitability:

• Product profitability (sold) - the profit received from the sale of a certain amount of products is divided by the cost of these products.

Approximately the same way is calculated profitability of services sold... Only the denominator takes the cost of providing a specified number of services in the numerator.

• Profitability of fixed assets - the ratio of net profit from activities for the period to the value of fixed assets.
• Enterprise profitability - is equal to the ratio of profit to the total value of fixed and circulating assets of the enterprise
• Staff profitability - represents the ratio for a certain period to average size personnel for the specified period.

The following indicators are also used:

• General - the ratio of net profit for the period to the average total value of the company's assets.
• - the same as the above ratio, but in relation to the organization's own capital.
• Return on assets used - profit before taxes and mandatory interest in relation to the amount of equity and long-term loans.

The list of profitability ratios used is not limited to those listed above. With the development of economic and financial relations, the development of investment, new, previously unused ratios appear. General rule their uniting could be roughly expressed as the ratio of the value of the benefit (profit) to the resource used to obtain it.

Let's dwell on the most frequently used in our conditions and, therefore, informative indicators for us:

Return on sales (ROS, from the English Return on Sales,) - very important indicatorreflecting the share of profit in the total amount (turnover). Most often, the calculation uses profit before taxes - operating profit. This seems to be reasonable, since the amount of taxes is not directly related to the efficiency of activities, and profitability, first of all, is the indicator economic effect... But it can also be applied net profit margin... This allows you to better represent real sales value.

Accordingly, the return on sales can be calculated using the following formulas:

Total Return on Sales \u003d Gross Profit / Revenue;

Net return on sales \u003d Net profit / Revenue.

The concept of revenue can be replaced by the concept of turnover, which does not affect the essence of the ratio.

These coefficients are used primarily to assess the current state of affairs. Return on sales measures the operational efficiency of an organization, i.e. her ability to organize and control current activities. Which, in turn, shows the direction of the company's movement, decline or growth.

The profitability of products sold is defined as the ratio of profit from product sales to the sum of costs of production and sale of these products. The composition of costs, in this case, includes material costs of production (the cost of raw materials, components, energy resources, etc.), labor costs, overhead costs, and trade costs.

Rrp \u003d (CPU - PSP) / PSP x 100;
Where:

• Rrp - profitability of products sold;
• CP - the selling price of the product;
• PSP is the total cost of this product.

Sometimes this ratio is called the profitability of production (as a process).

The profitability of production (as a production complex) is calculated as the ratio of the amount of profit (total) to the sum of the values \u200b\u200bof fixed and normalized working capital.

ORP \u003d OP / (OS + OBS);

Where PIU is the total profitability of production;

OS - fixed assets of the enterprise (buildings, structures, equipment);

OBS-rated working capital (productive reserves, semi-finished products for the production cycle, finished products in warehouses).

Based on the foregoing, we can conclude that the concept of profitability is very broad. Methods and formulas for its calculation are a flexible working tool for determining profitability, benefits from certain investments in material, human and other resources, assets.

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The profitability indicator is extremely important for analyzing the efficiency of an enterprise in a specific period. in general view reflects the relationship of one indicator to another.

The profitability of sales reflects the performance of the enterprise in reporting period... For medium and long-term planning this indicator is not suitable.

The formula for calculating the return on sales

Profitability of sales reflects what share of the company's revenue (income) is profit. Traditionally, the share of net profit in revenue is calculated, but to solve specific practical problems, it is possible to find the share of gross, balance sheet and other types of profit in revenue.

By gross profit

The gross margin of sales is called GrossProfitMargin and is calculated as the ratio of gross profit to revenue. This profitability is called gross return on sales.

GPM \u003d VP / TR,

where VP -, TR - revenue. This profitability reflects how many kopecks of gross profit are contained in one ruble of revenue.

The indicator of gross profit is indicated in the statement of financial results. The value of gross profit can be found using the formula:

where TC is the total cost.

Revenue is found as the product of price (P - price) and sales volume (Q - quantity):

By operating profit EBIT

The return on sales by operating profit is called Return on Sales and is found as the ratio of operating profit to revenue (sales volume in value terms - TR - Total Revenue). The operating profit margin is called operating profitability.

ROS \u003d EBIT / TR,

where EBIT is operating profit (Earnings before Interests and Taxes), TR is revenue. This profitability reflects how many kopecks of operating profit are contained in one ruble of revenue.

The amount of operating profit must be calculated on the basis of the items of the statement of financial results using the formula:

EBIT \u003d line 2300 "Profit (loss) before tax" + line 2330 "Interest payable".

It is an intermediate indicator between profit from sales and net profit.

Return on Sales - Balance Formula

The indicator of return on sales can be calculated according to the balance sheet according to the formula:

RP \u003d profit (loss) from sales / revenue (net) from sales

RP \u003d line 050 / line 010 f. # 2,

where line 050 is the profit / loss from sales (in form No. 1 - the company's balance sheet), line 010 is the revenue (net) from sales (in form No. 2 - the statement of financial results).

RP \u003d line 2200 / line 2110,

where line 2200 is sales profit / loss, line 2110 is sales revenue.

The profitability of sales, calculated according to the financial statements, reflects the share of profit from sales in the company's revenue.

Net return on sales

Net return on sales is also called profitability of sales by net profit called Net Profit Margin and is found as the ratio of net profit to revenue (sales volume in value terms - TR - Total Revenue). This is how many kopecks of net profit are contained in one ruble of revenue.

NPM \u003d NP / TR,

where NP is net profit, TR is revenue. Both indicators can be found in the statement of financial results. Net profit and revenue can be calculated independently.

P - price, Q - number of units sold (sales volume - quantity).

CP \u003d TR-TC-PrR + PrD-N,

where the net profit is found as revenue minus the total cost (TC - Total cost), other expenses, taxes and the addition of other income. Other income and expenses depend on the non-core activities of the company - these are exchange rate differences, purchase / sale valuable papers, participation in the activities of other enterprises through the authorized capital, etc.

Return on sales must be calculated to analyze the share different types profit in revenue. This indicator calculated for several periods allows you to identify the dynamics of profits and promptly make changes to activities to improve profitability indicators.

There are no clear normative values \u200b\u200bfor the profitability of sales - the normative value of the indicator largely depends on the specifics of the activity.

Video - sales profitability: formula, calculation and analysis example

Discussion (5)

It is necessary to calculate the profitability, but, unfortunately, many neglect this, and as a result, numerous bankrupt enterprises appear. And why? Because many entrepreneurs lack economic knowledge in such matters. Concrete formulas will help in this difficult task. Indeed, in business it is important to calculate your every step, and the assessment of profitability is one of the most important points in understanding how successful your business is.

You helped me calculate the profitability by key types of profit while undergoing pre-graduation internship at my native company, PJSC Irkut. Due to the "delicate moment" indicators of profitability per annum, as well as the relative change for the reporting periods (year). Meanwhile, they are negative STARTING FROM 2012. There is something to think about, especially since we are talking about an enterprise that produces combat fighters that are not inferior to world counterparts from developed countries.

I was engaged in transport and forwarding activities and had never bothered with formulas like these before. I have always calculated the revenue and profitability of the business, roughly speaking, on my fingers. In principle, profitability formulas are interesting, although not in all areas. They may not take root in the service sector, but in the region wholesale trade they are necessary. Especially in those areas where you need to take into account several indicators of expenditure.

When I opened my own business (catering), I calculated my profit differently. The bottom line is a year in the red, and almost complete ruin. Then, of course, recalculation, additions. The business has gotten a little positive. I calculated everything from scratch, almost for each of the above, brought income to net profit. Of course, I would be more experienced, I would immediately use it, but we learn from mistakes. When opening or expanding a business, it is imperative to fully calculate income and expenses. Special large enterprises may simply “not survive” in the market without accurate calculations.

Of course, it is necessary to calculate these indicators in the enterprise! After all, many organizations, especially those related to small and medium-sized businesses, simply do not maintain data on the formation of profitability - this must be admitted))) But in fact it is an integral part of doing business in any area of \u200b\u200bbusiness. Moreover, these indicators are relative for each sulfur. By the way, as far as small business is concerned, of course, not all indicators will be useful to us, and this is understandable ... trade enterpriseswho are engaged in various types of transactions for the sale of something, use the calculations of the formulas for the profitability of sales. I myself work in a wholesale trading company, we are selling food products. So all of the above indicators are extremely useful to us and we use them when drawing up reports.

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

In a general sense, product profitability implies that the production and sale of this product brings profit to the enterprise. Unprofitable production is production that is not profitable. Negative profitability is an unprofitable 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.

Return on sales

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

Return on Sales \u003d Net Income / Revenue

Return on sales is an indicator pricing policy the company and its ability to control costs. Differences in competitive strategies and product lines cause significant variability in ROI in various companies... It is often used to assess the operating performance 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 to calculate all of them, only the data on the profit (loss) of the organization (i.e. e. data of form No. 2 "Profit and loss statement", without affecting the data of the Balance sheet). For example:

• profitability of sales by (the amount of profit from sales before interest and taxes in each ruble of proceeds).
• profitability of sales based on net profit (net profit per ruble of sales proceeds (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 the return on sales indicators, the return on assets is calculated as the ratio of profit to the average value of the assets of the enterprise. Those. the indicator from form No. 2 "Statement of financial results" is divided by the average value of the indicator from form No. 1 "Balance sheet". The return on assets, like the return on equity, can be considered as one of the indicators of the return on investment.

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

Return on assets is an indicator of the profitability and efficiency 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 using the formula:

where:
Ra is the 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 efficiency of using certain types of assets (capital) have become widespread:

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

The required level of profitability is achieved with the help of organizational, technical and economic activities... Increasing profitability means getting more financial results at lower costs. The profitability threshold is the point that separates profitable production from unprofitable, the point at which the enterprise's income covers its variable and conditionally fixed costs.