Why calculate profitability?
The financial profitability of a project is often a key indicator in analyzing a company's performance. In simple terms, by calculating the real profitability, you can understand how well the funds invested in the project pay off.
And we must not forget that profitability as an indicator is extremely important in a project that has not even begun to operate. Any startup will be judged by its estimated (based on numbers and analysis) profitability. And not only when it comes to investor valuation. An entrepreneur drawing up a business plan must evaluate how profitable his business will be in order to understand whether something needs to be changed, or whether it may not be worth investing resources at all.
This indicator is calculated as a numerical coefficient - the higher the number, the greater the profitability of the company.
There are several main reasons to calculate profitability, in addition to what we have already mentioned:
- To be able to predict the profit of the next period.
- To be able to compare performance with competitors.
- To be able to justify the investment. This is especially important when a third party is involved in the transaction, who invests their money with the aim of making a profit in the future.
- To determine the real market value of the company. Often used in preparation for sale.
Where can I get data to calculate the profitability of an enterprise?
We know that in order to calculate the profitability of an activity, the formula must contain information about the profit, revenue, assets, capital and borrowings of the enterprise. All this information can be gleaned from financial statements: the balance sheet and income statement.
For more information about the balance sheet, see the article “Filling out form 1 of the balance sheet (sample)” , and for form 2 - in the article “Filling out form 2 of the balance sheet (sample)” .
But on their basis, only fairly aggregated, general indicators can be calculated. A more detailed and in-depth analysis requires more detailed information. For example, to calculate the profitability of a particular type of product, we need figures for the profit and cost of a specific product; the profitability of sales can be calculated not for the organization as a whole, but for the type of activity, and for this we need to know the amount of revenue and profit specifically for the line of business that interests us. This means that in order to calculate the profitability of an enterprise, the formula must be supplemented with data from accounting analytics or management accounting.
Enterprise profitability
Once again, in simple words, we will define what profitability is for a company and why it is needed:
The profitability of an enterprise is one of the main economic indicators that can show the profitability of a company from its activities (or an entrepreneur). Calculating profitability will show how justified and profitable a project or line of activity is.
You need to understand that the economic activity of a company involves a lot of different resources - labor, economic, financial, natural. The use of each of them must be justified from the point of view of economic feasibility. That is, they all must generate income, or a result that will lead to an increase in income.
By assessing profitability, you can understand which resources are not bringing the desired result and adjust their use.
To put it even more simply, profitability is the ratio between the costs of the production process and the profit received as a result.
If a business has made a profit over a certain period of time, then it is called profitable. And accordingly – beneficial for the owner.
How to calculate correctly?
In most cases, in order to make calculations, specialists use the formula:
P=(K*T) * 100%
In this case, K is understood as the result of an activity, which is reflected in monetary terms, T – expenses of a material nature that are allocated and spent to obtain the required result.
It should be noted that regarding the activities of entrepreneurs or companies, calculations are carried out for a specific period.
Formula for calculation:
In this situation, the results of activity for a certain period of time fully correspond to the indicators reflecting the position of the enterprise’s balance sheet. The same rule applies to calculating the indicator for several companies, and can also be applied to industries. If an industry is being assessed, it must be taken into account that errors in calculations may occur.
Using this indicator, you can evaluate the effectiveness of using property assets inherent in the enterprise. Funds that are fixed and current are also reflected.
When it comes to the relative indicator of economic efficiency in a more precise sense, the benefit received by the company by investing one ruble in funds with a production purpose is calculated.
The balance sheet profit of companies refers to the funds that were received as a result of the reporting period. This parameter is used to calculate tax payments on income.
For business and production
When it comes to assessing the profitability of a particular line of business, it is customary to calculate profitability in relation to the capital that belongs to the company. Companies often achieve profitability by making various types of capital contributions.
Main indicators of the enterprise's economic activity
In exchange for this, business owners receive rights to a share of the profits that has been previously established. As experts in this area say, profitability is considered as an indicator of the company’s performance, which is the main one. This is due to the fact that it can be used to characterize profit.
To be able to effectively assess the efficiency of activities, profitability and asset indicators are used.
This indicator is the main one, as it is able to reflect the use of finances invested in the company’s activities.
This type is defined as the ratio of the volume of net profit received and the value of assets, which is averaged. They are reflected for a certain period of time.
We are considering a calculation for a company producing boards. To begin with, you will need to divide costs into those that are of a fixed and variable nature. Then the capacity of the equipment, the number of workers and the shifts during which they work must be determined.
For this enterprise, the number of workers is set at 15, who work 8 hours a day. The cost of raw materials is calculated as 6 thousand rubles. Taking into account the power of the processing machine, we can say that 1/2 of the result obtained is waste.
They sell 1 cubic meter of boards for 15 thousand. The company's revenue is 22,500 million. Of these, 2,996,400 is net income. To calculate profitability, net income is divided by costs (they amounted to 18,754,500), resulting in a 16 percent return.
Profitability and profit, which is characteristic of production, is also referred to in practice as accounting. In essence, this is income that is received based on the results of a certain period of time, considered reporting.
The calculation is made until all necessary types of tax payments are made. To know the indicator in question, you will probably need to subtract several investments from the total amount of revenue. These include the cost of production, expenses of managerial significance, and expenses of a commercial plan.
General economic indicators of the enterprise's activities
Once a certain amount is obtained, income received from such activities that are considered special is added to it. They are operating and non-operating profit.
It is worth noting that situations are possible when such calculations result in a minus amount - then it is deducted. The number obtained from the calculations is the profitability.
In order to know the profitability of production, you need to clarify the total cost, as well as the profit received from sales. To calculate the income received from sales from revenue, the cost is subtracted, for example, 1,500,000 – 500,000 = 1 million.
To calculate profitability, profit is divided by cost and multiplied by 100 percent, resulting in (1 million/500,000)*100 = efficiency equal to 200 percent.
For sales
To express the profitability of the sales area, a certain coefficient is used. Its determination occurs through an analysis of the dynamics that can be traced during the reporting periods.
Initially, in such a situation, it will be necessary to establish a period that will be assessed. It is also equally important to establish the indicators that are necessary. In this capacity, they consider income that is net, as well as funds received from sales.
Return on sales
There is an important requirement in the issue under consideration - they indicate that for a more specific calculation of the value under consideration, it is necessary to take into account the profitability that occurs at the same time at different levels.
Regardless of what calculation method is used, what object is being studied, this method allows one to sufficiently accurately assess prospects related to a particular direction.
Once the necessary data has been received, you need to immediately refuse some categories of goods, or direct efforts to optimize work with customers.
To change production profitability, profitability for two different years is compared. For example, in 204 the company received income equal to 12.2 million, and in 2013 - 10.5. Net income for the years was 3.1 and 3.23 million, respectively.
In order to calculate the profitability ratio, you will need to divide net income by income and it turns out that for 2013 the ratio is 29.52%. Next, the coefficient for 2014 is determined in the same way, which is equal to 26.48%.
In order to find out the change in profitability, subtract the first from the last value obtained and get 3.04 percent.
For products
An indicator characterizing the profitability of a product makes it possible to assess how effectively the sale of a particular product is carried out.
If we talk about the numerical expression of profitability from a sold product, the ratio between the profit received from the sale of products and the expenses made regarding the production process and sales will be reflected.
To put it simply, thanks to this indicator you can find out what income each ruble invested in production will bring.
To calculate it, use the formula below:
To determine the profitability of products that are sold, the following formulas are used:
The increase received from sales is calculated using the formula:
The level of revenue is reflected in documentation of financial significance. To calculate the total cost, the formula is used:
To calculate net income, the formula is used:
Calculation of product profitability is calculated both in relation to the total mass and for each individual type of product.
For the service sector
This indicator reflects the efficiency of the enterprise, indicates whether the organization receives income, and whether its costs are covered. As a rule, this indicator is reflected as a percentage.
Before you begin to calculate the indicator, you need to study the reports compiled in the accounting department. All types of expenses that affect the cost of services provided are subject to determination. Balance is not taken into account.
Cost return
To calculate profitability, you will need to correlate the profits or losses that were received in the process of selling services with the amount of expenses that arose after the sale. To determine the costs that occur, you will need to establish the cost of services.
It is necessary to add up the cost of services that were sold, administrative and commercial expenses. Due to the fact that the profitability indicator is relative, the resulting value must be multiplied by 100%.
Using the indicator under consideration, we characterize the profit received by the company based on each monetary unit spent on the production of services. If there is a need, then you can calculate the profitability in relation to a certain type of service provided by the enterprise, as well as for the company as a whole.
Profitability of production
After making the calculations under consideration, it is possible to determine which of the services provided bring a greater level of income, and the possibility of reducing the cost of the service is also reflected. When it is planned to introduce a new type of service, it is necessary to calculate the planned type of profitability.
Situations arise when a company invests quite large amounts of money during the implementation of a new type of service. For this reason, over a certain period of time, a company may be characterized as unprofitable. However, this situation will be corrected if the organization correctly introduced the new service into circulation.
The initial data indicates that the company's revenue from the provision of services amounted to 100 million. Their cost is 70 million. Commercial expenses – 1.2 million.
To calculate profit, all types of expenses are subtracted from revenue and the cost ends up being 28.8 million. Profitability is calculated by dividing profit by revenue to arrive at 28.8 percent.
For assets
When considering the return ratio relative to assets. This group reflects the level of efficiency in relation to financial management in the company.
The ratio reflects how many financial costs are incurred relative to a unit of assets that the company has. Assets are understood as property and funds of organizations.
Return on assets
In order to give a more accurate estimate of the coefficient under consideration, a certain period is taken. The formula for calculation looks like this:
In this case, Nl is considered as net income, and TA is the total assets.
With a net profit of 611,682 and a balance sheet value of 55,494,122, the return on assets ratio is 1 percent (as a result of dividing profit by the balance sheet value).
Profitability Factors
Many factors influence profitability. And you need to be familiar with them in order to understand how this process develops and how it can be calculated.
Experts distinguish exogenous and endogenous factors.
Exogenous factors of profitability
Exogenous (arising under the influence of something outside) include, for example, state tax policy. Because the company’s expenses on mandatory payments directly affect the company’s profitability. Also, exogenous factors include the geographical location of the enterprise, the general level of competition in the market, the political situation in the country, market conditions and other factors.
Endogenous (internal) factors
It is clear that, unlike exogenous ones, these factors appear within the company itself. For example, the working conditions of personnel directly affect the quality of products.
The company's logistics system has a direct impact on the company's expense items and the work of the marketing department. And in general, the financial and managerial activities of management also have something to do with all this.
There are a lot of nuances. Almost every action of the company affects other processes in one way or another. And to understand, you need to carry out analysis.
Factor analysis of firm profitability
Just in order to understand which factors influence what, factor analysis is carried out. Using it, you can determine the exact amount of the company’s income, which was received under the influence of endogenous factors. There are special formulas for determining:
Profitability = (Profit from sales of product or services / Cost) * 100%
There is another formula:
Profitability = ((Price of product or service – Cost) / Cost)) * 100%
The classic version of the analysis uses either three or five factors. For three-factor analysis, you need to take product profitability, capital intensity, and capital turnover.
For five-factor analysis, labor intensity, material intensity, depreciation, and capital turnover are used.
Due to the fact that during the analysis all factors are divided into quantitative and qualitative indicators, specialists are able to see the development of the company from different sides.
But for a better understanding, let’s first understand what types of profitability exist.
VAT burden
For companies using this type of tax, the fiscal service also calculates the share of deductions using the following formula:
Share of deductions = Total amount of deductions ÷ Total amount of accrued VAT × 100%, where:
- the amount of deductions is taken from line 190, section 3 of the VAT return;
- the VAT amount is from line 118, section 3 of the VAT return.
If the result of the calculations is more than 89%, then the enterprise will be classified as a risk group, so before each submission of a declaration it is worth checking the proportion of VAT deductions. In case of excess, it is better to transfer part of the deductions to the future or leave them as they are and prepare answers to questions from tax authorities and supporting documents.
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Types of profitability
You need to understand that profitability indicators may differ depending on the area in which the enterprise operates. Therefore, economists usually distinguish three groups:
Profitability of products and services. Here the main role is played by the funds spent on the project, as well as the profit from it. It is calculated both for the entire company and for a specific product or service.
Enterprise profitability. Here you can find many different indicators, each of which will, from one side or another, characterize the processes occurring in the company. An assessment of this type of profitability is needed to evaluate the performance of the entire project by investors or owners.
Return on assets. There is also a large set of different indicators that can reflect the appropriateness of a company’s use of a specific resource. So, for example, an entrepreneur can see how rationally it is to use credit funds, their own investments, or other assets.
As a rule, profitability is analyzed not only for internal needs. This is an important stage when preparing a project for presentation to an investor or lender. It is also used in preparing a business plan to obtain sponsorship.
Profitability calculation
The largest indicator is, of course, the profitability of the entire company. To calculate it, accounting and statistical documents for one period are usually used.
A simplified version of the calculation looks like this:
P = BP / SA * 100%
P – profitability of the enterprise
BP – balance sheet profit. It is calculated by subtracting the cost of the product from the revenue received. But this is done before taxes!
CA is the total value of all assets, both current and non-current, as well as production facilities and resources. The data is taken from the balance sheet.
If, according to the results of the analysis, profitability is low, then the entrepreneur should urgently take action. It may be necessary to adjust production costs, or reconsider the methods used by management, or perhaps find a different supplier.
Return on assets (ROA)
The previous analysis showed the full picture. But it is impossible to do this without a preliminary analysis of the efficiency of asset use. Because their use directly affects the profit of the entire enterprise.
If after analysis the result shows that the indicator is low, then we can conclude that capital, as well as other assets, are performing poorly. More precisely, not enough. But a high indicator will indicate that the company is using the right tactics.
ROA shows the financial return of the entire project. Therefore, such analysis must be carried out frequently. This will make it possible to understand which of the objects is not generating adequate profit, to take action - to modernize it, or to abandon its use altogether.
The formula here is simple:
ROA = P / A P – profit for the entire time period used for analysis A – average value by type of asset for the same period
One of the most necessary and indicative coefficients. If the result is less than zero, this will mean that the company is operating at a loss.
Return on fixed assets (ROFA)
Fixed assets usually include the means of labor that are used in the operation of the company. The period of use of such funds should not be more than 12 months, and the amount of depreciation should be included in the calculation of the cost of the product or service. To make it clearer, here are examples of such tools:
- Buildings, structures where your workshops, warehouses, offices, etc. are located.
- Equipment that produces goods.
- Transportation vehicles – forklifts, heavy trucks.
- Furniture from the office or work furniture.
- Other transport.
- Expensive instrument.
The formula for calculation is as follows:
R = (PE / OS) * 100% PE – net profit OS – cost of fixed assets
This indicator plays a big role in commercial enterprises, giving them an idea of the profit per ruble of invested funds.
The coefficient should not fall below zero. If this happens, something needs to be changed, because the company is operating at a loss and is using fixed assets irrationally.
Return on Products Sold (ROM)
The formula for calculating this indicator is also simple:
ROM = Net profit / cost
The value of this indicator can demonstrate how much each invested ruble can bring.
The calculation scheme is simple:
- First you need to determine the time period for which the analysis will be carried out. Usually a period of one month to one year is taken.
- Next comes the calculation of all profits received from sales. To do this, income is added up.
- Next, net profit is determined.
- The last step is to apply the ROM formula.
To improve the efficiency of the analysis, you can compare such profitability indicators for several periods at once. This will give an understanding of how efficiently the company operates.
Return on Sales (ROS)
This indicator is intended to reflect the percentage of total revenue that accounts for the profit of the enterprise.
Formula for calculation:
ROS = (Profit / Revenue) * 100%
Various types of profit are used for calculation, depending on the company. It all depends on the product range, field of activity and many other parameters.
Return on sales is also often called profit margin. Since it shows the share of profit in total revenue.
Comparing this indicator over different periods of time is also a useful tool for understanding the dynamics of growth or decline in a company's performance.
If we consider the short-term period, it is worth isolating the operating profitability of sales. The formula for this is:
Operating return on sales = (Profit before taxes / Revenue) * 100%
The higher the value, the better the company performs, and the more profit its owner receives.
Profit margin
If you want to know how profitable your project is, calculate this indicator. You also need to understand that without calculating it, for example, it is impossible to draw up a high-quality business plan.
Formula:
R = VP / V VP – gross profit (revenue received minus cost). B – sales revenue
Return on Personnel (ROL)
This is a relative indicator. But no less important. In fact, everyone has long understood how important the element of labor management is in a company’s activities. Because it affects the entire production as a whole. And in order to effectively manage personnel, you need to track the number, level of training, skills, proficiency, advanced training of each, etc.
Formula:
ROL = PE / ChSH PE – net profit CHSh – number of personnel
For a more detailed analysis, the ratio of employee maintenance costs to net profit is calculated. The profitability of one employee is also checked. This is done by dividing the costs that go into its maintenance by the share of profit that it brings to the company.
Such calculations can show the state of labor management, reveal weak and strong points, and indicate the need to reduce or expand staff.
It is especially important to calculate this indicator for small enterprises so that calculations can be more effectively optimized.
Profitability threshold
This term means the minimum amount of sales at which the proceeds from these sales will cover all costs of production and bringing the product/service to the consumer. But profit is not taken into account here.
Such an indicator can help an entrepreneur plan the number of sales he will need to make in order to operate without a loss.
This indicator is often called the break-even point, or the critical point (not to be confused with the point of reaching net profit!)
You can read more about this in the material Break-even point.
Formula for calculation:
PR = PP / Kvm PR - profitability threshold PR - fixed costs for the production of goods / services and for their sale
Kvm – gross margin coefficient. You can calculate it using another formula:
Kvm = (V – Zpr) * 100% V – revenue Zpr – sum of variable costs
Criteria such as the price for the product, as well as any variable and fixed costs of the company, are of great importance for this indicator. About them - also in the article Break-even point.
Return on sales by industry (type of activity)
| Averaging method: | ||||||
| Kind of activity | Year | |||||
| 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | |
| All industries of the Russian Federation | 2,4% | 3,9% | 3,8% | 3,9% | 4% | 4,3% |
| 01. Crop and livestock farming, hunting and provision of related services in these areas | 4,8% | 5,3% | 7,7% | 10,4% | 9,7% | 8% |
| 02. Forestry and logging | 0,6% | 4,1% | 5% | 5,1% | 5,4% | 6,1% |
| 03. Fishing and fish farming | 7% | 9,6% | 10,4% | 13,3% | 13,4% | 12,2% |
| 05. Coal mining | 3,5% | 1,6% | 3,7% | 4,1% | 5,5% | 8,1% |
| 06. Crude oil and natural gas production | 13% | 11,2% | 9,8% | 9,6% | 8,3% | 7,3% |
| 07. Mining of metal ores | 13,3% | 4,3% | 4,9% | 6,9% | 8,1% | 11,6% |
| 08. Mining of other minerals | 5% | 3,6% | 3,6% | 3,6% | 3,8% | 4,4% |
| 09. Provision of services in the field of mining | 4% | 4,3% | 4,6% | 4,2% | 4,5% | 4,2% |
| 10. Food production | 3,1% | 3,8% | 3,8% | 3,8% | 3,7% | 3,9% |
| 11. Beverage production | 5,5% | 5,8% | 5,1% | 5% | 4,8% | 5,2% |
| 12. Production of tobacco products | 11,2% | 8% | 16,2% | 7,5% | 7,5% | 7,7% |
| 13. Production of textiles | 2,8% | 4,1% | 3,9% | 4,3% | 4,3% | 4,5% |
| 14. Clothing production | 3,1% | 5% | 4,7% | 5,2% | 5,6% | 5,6% |
| 15. Production of leather and leather products | 3,3% | 4,4% | 4,2% | 4,6% | 5% | 5,3% |
| 16. Wood processing and production of wood and cork products, except furniture, production of straw products and weaving materials | 1,7% | 4,1% | 4,3% | 4% | 4,2% | 4,5% |
| 17. Production of paper and paper products | 4,3% | 2,7% | 3,3% | 3,5% | 3,2% | 3,2% |
| 18. Printing activities and copying of information media | 2,1% | 3,9% | 3,5% | 3,9% | 4,1% | 4,3% |
| 19. Production of coke and petroleum products | 3,4% | 3,3% | 2,9% | 3,8% | 3,6% | 4,9% |
| 20. Production of chemicals and chemical products | 4,2% | 4,1% | 4,1% | 4,4% | 4,4% | 4,7% |
| 21. Production of medicines and materials used for medical purposes | 8,5% | 6,8% | 6,9% | 7,8% | 7,8% | 8,2% |
| 22. Production of rubber and plastic products | 3,4% | 3,5% | 3,1% | 3,2% | 3,3% | 3,4% |
| 23. Production of other non-metallic mineral products | 3,8% | 3,5% | 3,2% | 2,9% | 2,7% | 2,7% |
| 24. Metallurgical production | 3% | 2,7% | 2,8% | 2,9% | 3% | 2,7% |
| 25. Production of finished metal products, except machinery and equipment | 3,6% | 3,3% | 3% | 3% | 3,3% | 3,4% |
| 26. Production of computers, electronic and optical products | 6,4% | 5,9% | 5,4% | 5,7% | 5,9% | 7% |
| 27. Production of electrical equipment | 4,1% | 3,5% | 3,2% | 3,4% | 3,6% | 4% |
| 28. Production of machinery and equipment not included in other groups | 4% | 3,5% | 3,1% | 3,3% | 3,3% | 3,8% |
| 29. Production of motor vehicles, trailers and semi-trailers | 3,5% | 3,1% | 2,3% | 2,5% | 3% | 3,5% |
| 30. Production of other vehicles and equipment | 4,7% | 3,6% | 2,8% | 4% | 4,1% | 4,8% |
| 31. Furniture production | 2,7% | 4,7% | 4,3% | 4,4% | 4,5% | 4,5% |
| 32. Production of other finished products | 4,4% | 6% | 5,7% | 6,2% | 6% | 6,3% |
| 33. Repair and installation of machinery and equipment | 3,5% | 5,6% | 5,3% | 5,7% | 6% | 6,3% |
| 35. Providing electricity, gas and steam; air conditioning | 0,7% | 1,7% | 1,8% | 1,9% | 2,5% | 2,4% |
| 36. Water intake, purification and distribution | -0,6% | 0% | 0,1% | 0% | 0,1% | 0,4% |
| 37. Wastewater collection and treatment | -0,9% | 2,7% | 3,5% | 4,3% | 4,6% | 4,9% |
| 38. Collection, processing and disposal of waste; processing of secondary raw materials | 1,1% | 2,9% | 3,1% | 2,9% | 3,2% | 3,8% |
| 39. Provision of services in the field of cleanup and other services related to waste disposal | 1,1% | 6,2% | 5,1% | 4,5% | 4,3% | 4,5% |
| 41. Construction of buildings | 1,7% | 2,5% | 2,4% | 2,3% | 2,4% | 2,8% |
| 42. Construction of engineering structures | 2,2% | 3,4% | 3,2% | 3,1% | 3,3% | 3,4% |
| 43. Specialized construction work | 2,2% | 3,8% | 3,5% | 3,6% | 3,7% | 4% |
| 45. Wholesale and retail trade in motor vehicles and motorcycles and their repair | 1,8% | 3% | 2,9% | 3,2% | 3,2% | 3,2% |
| 46. Wholesale trade, except for wholesale trade of motor vehicles and motorcycles | 1,5% | 1,9% | 1,9% | 2% | 2,1% | 2,4% |
| 47. Retail trade, except trade in motor vehicles and motorcycles | 2,1% | 4,8% | 4,5% | 4,6% | 4,5% | 4,5% |
| 49. Activities of land and pipeline transport | 0,8% | 2,6% | 2,4% | 2,3% | 2,4% | 2,6% |
| 50. Water transport activities | 1,6% | 3,5% | 3,3% | 3,5% | 3,3% | 4% |
| 51. Activities of air and space transport | 1,6% | 2,6% | 2,7% | 2,3% | 1,7% | 3,3% |
| 52. Warehousing and auxiliary transport activities | 2,6% | 3% | 2,6% | 2,4% | 2,4% | 3% |
| 53. Postal and courier activities | 4,1% | 5% | 5% | 5,5% | 4,5% | 5,5% |
| 55. Activities to provide places for temporary residence | 4,3% | 7,1% | 6,2% | 6,1% | 6,7% | 6,9% |
| 56. Activities for the provision of food and beverages | 2,1% | 6,1% | 5,4% | 5,5% | 5,9% | 6,7% |
| 58. Publishing activities | 1,2% | 5% | 4,4% | 4,8% | 4,9% | 5,4% |
| 59. Production of films, videos and television programs, publication of sound recordings and notes | 1,7% | 3,7% | 3,3% | 3,6% | 4,3% | 5% |
| 60. Activities in the field of television and radio broadcasting | 6,1% | 6,8% | 5,5% | 5,2% | 5,7% | 6,4% |
| 61. Activities in the field of telecommunications | 4,7% | 6,1% | 5,7% | 5,7% | 6,4% | 6,1% |
| 62. Computer software development, consulting services in this area and other related services | 3,9% | 7,7% | 7,4% | 8,1% | 7,9% | 8,4% |
| 63. Activities in the field of information technology | 4,4% | 7,6% | 7% | 7,1% | 7% | 7,7% |
| 64. Activities for the provision of financial services, except for insurance and pension services | 2,3% | 9,4% | 8,6% | 9,5% | 10,7% | 11,1% |
| 65. Insurance, reinsurance, activities of non-state pension funds, except for mandatory social security | 6,5% | 14% | 9,5% | 8,6% | 10,6% | 7,3% |
| 66. Support activities in the field of financial services and insurance | 0,4% | 7,9% | 7,9% | 9,1% | 9,1% | 10,9% |
| 68. Real estate transactions | 5,9% | 11,3% | 11,4% | 11,4% | 11,1% | 11,4% |
| 69. Activities in the field of law and accounting | 3% | 10,4% | 10,4% | 11,1% | 11% | 11,5% |
| 70. Activities of head offices; management consulting | 4,2% | 8% | 7,7% | 8,1% | 8,6% | 8% |
| 71. Activities in the field of architecture and engineering design; technical testing, research and analysis | 4,2% | 7% | 6,7% | 6,9% | 7,1% | 8,2% |
| 72. Research and development | 5,1% | 6% | 6,1% | 6,5% | 6,6% | 7,2% |
| 73. Advertising activities and market research | 4,5% | 5,1% | 4,5% | 4,4% | 4,6% | 4,8% |
| 74. Other professional scientific and technical activities | 3,5% | 6,7% | 6,8% | 7,2% | 7,4% | 8% |
| 75. Veterinary activities | 8,4% | 7,4% | 6,3% | 7% | 7,4% | 7% |
| 77. Renting and leasing | 7,5% | 8% | 6,4% | 6% | 6% | 6% |
| 78. Employment and personnel selection activities | 2% | 4% | 2,9% | 2,9% | 3% | 3,6% |
| 79. Activities of travel agencies and other organizations providing services in the field of tourism | 4,7% | 8,4% | 7,9% | 8% | 8,8% | 10% |
| 80. Security and Investigation Activities | 3% | 7,5% | 7,2% | 7,5% | 7,5% | 7,8% |
| 81. Activities for maintenance of buildings and territories | 2% | 5,1% | 5% | 5,1% | 4,9% | 5,1% |
| 82. Administrative and economic activities, support activities to ensure the functioning of the organization, activities to provide other support services for business | 3,4% | 6,5% | 5,9% | 6,2% | 5,9% | 6,6% |
| 84. Activities of government bodies to ensure military security and compulsory social security | 3,4% | 7% | 8% | 6,7% | 7,2% | 9,5% |
| 85. Education | 3,5% | 7,1% | 6,9% | 6,9% | 6,9% | 6,4% |
| 86. Health activities | 2,8% | 8,3% | 7,7% | 7,8% | 8,1% | 8,6% |
| 87. Residential care activities | 0,2% | 6,5% | 4,6% | 4,3% | 8,6% | 7% |
| 88. Providing social services without providing accommodation | 3,3% | 7,3% | 7,3% | 5,7% | 6,7% | 7,5% |
| 90. Creative activities, activities in the field of art and entertainment | 0,8% | 5,7% | 5,3% | 5,3% | 6,1% | 7,1% |
| 91. Activities of libraries, archives, museums and other cultural facilities | 3,9% | 7,2% | 6,1% | 5,6% | 7,3% | 7% |
| 92. Activities for organizing and conducting gambling and betting, organizing and conducting lotteries | 1,3% | 4,9% | 4,1% | 4,3% | 6,4% | 6,7% |
| 93. Activities in the field of sports, recreation and entertainment | 1,4% | 7% | 6,5% | 6,6% | 6,9% | 7,1% |
| 94. Activities of public organizations | 2,5% | 8,2% | 7,8% | 7,9% | 8,2% | 9,7% |
| 95. Repair of computers, personal and household items | 2,7% | 6,3% | 6,4% | 6,9% | 7,1% | 6,8% |
| 96. Activities related to the provision of other personal services | 1,5% | 6,2% | 6,1% | 6,5% | 6,6% | 6,7% |
Project profitability
Every entrepreneur strives to increase the scale of his business in order to increase capacity, develop and ultimately make more profit. Assessing profitability at each stage can show whether development is moving in the right direction and what indicators require adjustment and intervention.
Most often, several methods are used to calculate profitability:
- A method that allows you to calculate net present value, which will help determine the net profit from a project.
- The method used to calculate the profitability index. Used when you need to know the ratio of costs and income.
- A method that calculates the marginal efficiency of capital (internal rate of return). Used to calculate the possible level of capital expenditure for a new project.
Formula:
IRR = (net present value / initial investment amount) * 100%
Purposes for which the calculation is used:
- Determine the costs if the project is carried out using funds raised.
- Confirm the profitability and benefits of the project.
If a bank loan is taken out to implement a project, then calculating the internal rate of return will show what the maximum allowable interest rate will be. Anything above this value indicates that the course taken is unprofitable.
