Increasing the profitability of the enterprise is a guarantee of its stability

The indicator of profitability for any type of production is generalizing and showing its economic efficiency. After all, a sufficient level of profitability speaks about the level of profitability of the enterprise, its profitability. In this regard, increasing the profitability of the enterprise is a key area of activity to optimize costs and increase revenues.

How is profitability calculated ? Calculation of profitability is carried out by comparing the volume of gross income or profit of an enterprise with the costs incurred for production or the volume of resources used. After analyzing the average level of profitability, you can determine which products and which departments of the enterprise give the required level of profitability, and which are unprofitable. This information in a competitive market economy is very important, because financial indicators directly depend on the concentration and specialization of production.

Increasing the profitability of an enterprise in a situation of increasing competition is a priority.

As you know, the main source of the company's free cash is revenue from sales of manufactured products. In this connection, the key direction of the subject's activity is to increase the profitability of production, by reducing costs and adhering to the economy, as well as efficient use of resources available to the enterprise.

After all, these costs determine the level of income and cost structure. The volume of costs for raw materials takes a significant share, and as a result, an increase in the profitability of the enterprise and a decrease in the cost of manufactured products will significantly affect the increase in profits. Due to this, it is possible to obtain an increase in profits, which will affect the index of breakeven performance of the organization. In addition to reducing costs for the production of goods, increasing the profitability of sales also significantly affects the increase in the number of products sold. To increase sales, in addition to marketing activities, such products should be produced that meet the requirements of consumers, and will enjoy stable demand.

At each enterprise on a regular basis there should be responsible departments which carry out the analysis of the cost price of the made production, and also the full-scale program of its decrease is carried out. It should be comprehensive, take into account all possible factors that influence the formation of production and sales costs.

Positive impact on improving the profitability of the enterprise is provided by measures aimed at optimizing the used working time.

These include:

- maintaining the optimal number of working personnel;

- Reducing the costs for units that are concomitant and do not participate in production;

- constant work on raising the skill level of employees, whereby labor productivity will improve, outrunning the average wage;

- the use of progressive payment systems, increasing the interest of workers in improving productivity;

- automation of production processes, which reduces the cost of a payroll fund;

- Increased motivation of work.

It is also essential to reduce the amount of overhead costs for operation and management of the production process. This is facilitated by an increase in the volume of production through the implementation of reconstruction, technical renovation of the enterprise, reducing the size of the administrative and management apparatus and support services, as well as by improving the process of production management.