Profit and profitability, as indicators of economic efficiency of production

Abstract

In Georgia, for enterprises involved in market relations, protecting their industrial sovereignty, overcoming economic competition and conducting business correctly, requires obtaining highly positive financial results with minimal losses of resources.

The business plan of the company, financial reporting and accounting information are used as analytical information.

To characterize the efficiency of production, profit indicators are determined at different levels and the following types of profit are obtained:  Profit from the products realization, operating profit, balance sheet profit, net profit and retained profit.

These indicators are absolute indicators which help us to analyze the profit dynamics of several years.

The efficiency of production is evaluated by the relative rate of profitability.

The economic essence of profitability indicators lies on the fact, that are characterized by them, and the profit obtained from one Lari, ofrom owned or borrowed capital, invested in the enterprise.

The amount of profit shows the volume of profitability, and the level of profitability - the relationship of quantitative indicators, expressed as percentages or coefficients, which determines the level of profitability of the business.

Thus, managers with new decisions based on the analysis of profit and profitability indicators ensure to achieve rational economic efficiency of production.