# How to calculate profitability?

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

So how do you calculate profitability? It directly depends on the 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 crucial role in the life of the enterprise, they are involved in the formation of profitability.

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

From the size of the profit and sales volume depends on profitability. To increase it, it is necessary to increase the labor intensity and capital intensity of the enterprise’s production.

## Base yield

To find out how to calculate the basic profitability, you need to make a list, indicate physical indicators in it - they must correspond to the activities of the enterprise.In this list you need to specify the trading place, the number of employees, the area of the hall, vehicles.

It is required to analyze the basic profitability and physical indicators related to entrepreneurial activity. In square meters, workplaces, trading floors, information fields, and the like are measured. To calculate the base rate of return, it is necessary to multiply the area by the amount of the base rate of return for the month. Calculations of one of the physical indicators “trading place” are carried out on a trading place. Write down each value of the basic 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 out the total value, you need to sum up the values of the basic profitability using the physical indicators of the enterprise. After that, it is necessary to adjust the basic profitability to determine the estimated income of the enterprise, which is subject to taxation.

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