This Profitability Indicator Is

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Calculating profitability indicators allows you to do two things. First, compare the profitability between projects and between companies in the same sector. The second is to check if the invest capital has a sufficient return to return it. Importance of measuring profitability indicators Both entrepreneurs and company directors or business creators ne to establish a measurement system to quantify their activity . Profitability indicators are part of this system and have their own characteristics. Its objective is to facilitate in-depth analysis of the results of the capital contribut to the company.

Examples of profitability indicators

These are some profitability indicators that you should measure to find out more details about the behavior and health of your business. profitability indicators 1.Margin The company’s Romania Business Email List margin is the difference between your sales of goods and/or services and the price at which you buy them. It is a very good indicator for: Setting sales prices according to purchases, Being able to determine when you will not make money or when you will lose it, Compare yourself with the competitors and the statistics of your industry. To calculate gross margin , do the following calculation: Gross margin = Gross profit / Net income In this case, as an investor you will find out how much the company made before paying other charges like taxes etc.

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The net margin in turn

Takes into account all of these charges. The calculation is as follows: Net Margin = Net Profit / Net Income If the margin is high, the investment will be better, because as a DP Leads company you will have more benefits for the capital invest. Know the differences between gross margin and net margin . 2. EBITDA. Earnings before interest, taxes, depreciation and amortization EBITDA is an acronym in English (earnings before interest, taxes, depreciation and amortization) which means Earnings before interest, taxes, depreciation and amortization. It represents a company’s income before ductions for taxes, interest, depreciation and amortization, and provisions for fix assets.