The main goal of each commercial enterprise,with which its activities are carried out, is profit. Profit and profitability are among the most important indicators that characterize his activity and indicate success or failure. From the growth of the enterprise's profit depends the emergence of new potential opportunities for it, as well as profit affects the level of business activity. It is the profit that determines the share of income that the founders and owners receive. Profit and profitability are inextricably related concepts. When calculating the profitability of borrowed and own funds, fixed assets, capital and shares, the profit indicators are taken into account. In addition, that profit, or rather, its receipt is the main objective of each business organization, it (profit) is one of the most important economic categories.
As an economic category, the profit of an enterprise reflects net income, which is created in the sphere of material production. At the enterprise, the form of profit takes on a net income.
Profit is characterized by the economic effect that is obtained in the course of the enterprise. If the enterprise has a profit, it means that the enterprise's revenues exceed its expenses.
Profits are characterized by a stimulating function.This indicator is also a financial result, as well as the main element of financial resources. At well-functioning enterprises, the share of net profit that remained at the disposal of the enterprise after the payment of all compulsory payments is enough to finance the expansion of production, the development of the enterprise in the scientific, technical and social spheres, as well as the encouragement of workers in material form.
It should be noted that in order to assessefficiency and economic feasibility, which characterize the activities of the enterprise, only absolute indicators are not enough. In this aspect, profit and profitability must be considered together. In addition, profitability indicators provide an opportunity to see a more objective picture. Profitability indicators are relative characteristics of performance and financial results.
The term profitability came from the word rent - literally "income". The wide meaning of the term profitability means profitability, profitability.
The profitability indicators are used fora comparative assessment of the level of efficiency, which characterizes the work of individual enterprises and industries engaged in the production of different volumes and types of products. These indicators are a characteristic of the profit received in relation to the resources that were spent in the production and sale process. The most commonly used indicators that analysts operate on are the profitability of products, as well as profit and profitability of production.
Most enterprises make a profit fromindustrial and entrepreneurial activities. Profit and profitability directly depend on the ability of managers to effectively use planning, analysis, and marketing tools.
Efficiency of the activity of any enterprisedirectly depends on knowledge and understanding of the market situation, as well as the ability to timely adapt the development of production to the constantly changing conditions of the external environment.
The positive amount of profit is formedthe correct choice of the production profile; creation of competitive conditions for the sale of products; production volumes; ability to reduce production costs.
Profit and profitability are the most important economic indicators!
