# How to calculate the profitability?

The profitability of the enterprise shows how actively it works. To change the policy of an enterprise and analyze its activities, it is necessary to calculate its profitability.

So, how to calculate the profitability? It directly depends on net profit. Profitability is the sum of profitability and economic and financial activity, which is carried out in order to make a profit. All these indicators play a major role in the life of the enterprise, they participate in the formation of profitability.

The calculation is as follows: profitability is equal to the ratio of total profit to the cost (cost price) of products that are produced, or services. By profitability it is evident how the enterprise works, its profitability and production activity are estimated.

Profitability depends on profit size and sales volume. To increase it, you need to increase the labor intensity and capital intensity of the enterprise.

## Basic Profitability

To learn how to calculate the base yield,you need to make a list, specify physical indicators in it - they must correspond to the activity of the enterprise. In this list, you need to specify the sales location, the number of employees, the area of the hall, vehicles.

It is required to analyze the base yield andphysical indicators that relate to entrepreneurial activity. In square meters, workplaces, shopping halls, information fields and the like are measured. To calculate the base yield, you need to multiply the area by the amount of the base yield per month. On a trading place calculations of one of physical indicators "a trading place" are carried out. Write each value of the base yield against certain physical indicators and multiply each other. If the value of one of the indicators has changed, then at the beginning of the month you need to take this change into account.

To find the total value, it is necessary to summarizethe values of the basic profitability, using the physical indicators of the enterprise. After that, you need to adjust the base yield to determine the estimated income of an enterprise that is subject to taxation.