Abstract
The company's profit and profitability are one of the most important criteria for assessing the enterprise performance. According to the achieved results of profit and profitability, it is being judged what benefits may receive different interest groups of the company - owners, employees, investors and creditors. All business enterprises are concerned to increase the profitability. The article analyses the theoretical aspects of profit and profitability assessment. The analysis of scientific literature of foreign and Lithuanian authors suggests that the company's profitability analysis helps to determine the financial aspects of the company's financial performance, to assess the current situation in order to make appropriate management decisions. The company's profit and profitability are one of the most important criteria for assessing the enterprise performance. According to the achieved results of profit and profitability, it is being judged what benefits may receive different interest groups of the company - owners, employees, investors and creditors. All business enterprises are concerned to increase the profitability. The article analyses the theoretical aspects of profit and profitability assessmentWhile assessing company’s activity efficiency in various aspects, its competitiveness and growth possibilities, it is not enough to analyse absolute profit indices and based on them to take particular decisions, because an absolute profit index does not reflect company’s real financial situation. More comprehensive information is obtained by calculating relative profitability indices and comparing them with profitability. Besides, profitability indices in a structured form provide to company’s managers the most important and most precise information in form of indicators based on which there is a possibility to assess company’s financial situation and to forecast company’s future financial situation, foresee activity’s success and failures. Therefore, even a profitable company needs a constant analysis of these indices, their dynamics, affecting factors, because due to affecting factors the company’s managers can assess and forecast profitability indices. In search for the ways how to increase a profit and profitability indices, it is very relevant for the company’s managers to assess introduction of new services to a market, because new implemented services reach a success, the company’s managers can take decisions, determining dynamics of development of profitability indices, and direct company’s management towards profitable direction.The article analyses the theoretical aspects of profit and profitability assessment. The analysis of scientific literature of foreign and Lithuanian authors suggests that the company's profitability analysis helps to determine the financial aspects of the company's financial performance, to assess the current situation in order to make appropriate management decisions
Highlights
Profit is the main objective of every company that seeks profit
The profitability of the asset is important to single-step, where the costs are divided the company managers because they decide about according to their nature
When analysing the theoretical aspects of profit and profitability, it can be said that the profit is one of the most important indicator of the company's peformance assessment
Summary
Profit is the main objective of every company that seeks profit. This is the result, which reflects the company's ability to earn income as much as possible at costs as little as possible. The instability of the market, supply and demand change in the market have an impact on corporate profits and profitability These issues are extensively dealt with in both foreign and Lithuanian economic literature. The global economy promotes the rapid development and expansion of companies In this rapidity the companies are frequently lack of enough attention to the individual financial indicators, such as profit and profitability analysis. It is related to all company's performance indicators: assets, liabilities, capital, income, expenses, etc It shows the company team‘s performance, internal links among the economic phenomena: the efficiency of innovative technology application, labour productivity rising, reduction of cost price and others.
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