The profitability of enterprises is a generalizing indicator of the economic efficiency of its work for a certain period of time. It is characterized by excess of income over expenses, t. e. profit. Distinguish between two profitability indicators of profit and level of profitability.
The amount of profit is defined as the difference between the amount of revenue from the sale of products at the wholesale price of the enterprise and its cost. The amount of profit is completely dependent on the results of the production and economic activities of the enterprise.
The level of profitability of the enterprise is a pronounced percentage of the ratio of the amount of profit to the full cost of the products sold. The profitability indicator expresses not only cash accumulations, but also the effectiveness of the economic activities of enterprises.
The level of profitability of individual socialist enterprises is established in a planned manner, based on the tasks of the systematic development of socialist production and the need to strengthen the regiments.
The profit of the enterprise is formed from the profit received from each type of product. The profit size, thus, depends on the level of the price of the unit of the product, its cost and the number of products manufactured. The presence of a unified price level for similar products allows you to objectively evaluate the activities of enterprises, to compare the level of profitability of production at different enterprises. This helps to strengthen the self -evidence.
When assessing the activities of enterprises, it is customary to distinguish between three types of profitability: production, their sale and profitability of all production and economic activities of the enterprise.
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