{"id":50514,"date":"2024-01-10T14:41:14","date_gmt":"2024-01-10T14:41:14","guid":{"rendered":"https:\/\/epidosis.gr\/EpidosisBlog\/profitability-indicators-assess-the-viability-of-your-business\/"},"modified":"2024-01-17T12:55:36","modified_gmt":"2024-01-17T12:55:36","slug":"profitability-indicators-assess-the-viability-of-your-business","status":"publish","type":"post","link":"https:\/\/epidosis.gr\/en\/profitability-indicators-assess-the-viability-of-your-business\/","title":{"rendered":"Profitability indicators: Assess the viability of your business"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"50514\" class=\"elementor elementor-50514 elementor-49999\" data-elementor-post-type=\"post\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-29e2893 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"29e2893\" data-element_type=\"section\" data-e-type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-f85e6c8\" data-id=\"f85e6c8\" data-element_type=\"column\" data-e-type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-30645b3 elementor-widget elementor-widget-text-editor\" data-id=\"30645b3\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>One way of assessing sustainability is the calculation of ratios that capture the profitability indicators or efficiency indicators that businesses must review at regular intervals, which are:<\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-072ddff elementor-widget elementor-widget-text-editor\" data-id=\"072ddff\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<ul>\n<li>The gross profit margin ratio<\/li>\n<li>Operating Profit Margin Ratio<\/li>\n<li>The Net profit ratio<\/li>\n<\/ul>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-d8ca3c7 elementor-widget elementor-widget-text-editor\" data-id=\"d8ca3c7\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>The three metrics come from the entity&#8217;s income statement.<\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-8ef3161 elementor-widget elementor-widget-text-editor\" data-id=\"8ef3161\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<ul>\n<li><strong>Gross profit <\/strong> = net sales minus cost of goods sold (Net sales = gross sales minus any returns and discounts)<\/li>\n<li><strong>Operating profit <\/strong> = Gross profit less administrative and selling expenses (Administrative expenses = salaries, payroll taxes, benefits, rent, utilities, office supplies, insurance, depreciation, etc.)<\/li>\n<li>Operating profit includes all expenses except income taxes. <strong>Net Profits =<\/strong> Operating profits (plus any other income) minus any additional charges and minus taxes<\/li>\n<\/ul>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-6b10d7d elementor-widget elementor-widget-heading\" data-id=\"6b10d7d\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-large\">Gross profit is the difference between sales and cost of goods sold. <\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-7395c6a elementor-widget elementor-widget-image\" data-id=\"7395c6a\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<img fetchpriority=\"high\" decoding=\"async\" width=\"1000\" height=\"463\" src=\"https:\/\/epidosis.gr\/wp-content\/uploads\/2024\/01\/BLOG_C_110124_Epidosis.png\" class=\"attachment-large size-large wp-image-50006\" alt=\"\" srcset=\"https:\/\/epidosis.gr\/wp-content\/uploads\/2024\/01\/BLOG_C_110124_Epidosis.png 1000w, https:\/\/epidosis.gr\/wp-content\/uploads\/2024\/01\/BLOG_C_110124_Epidosis-300x139.png 300w, https:\/\/epidosis.gr\/wp-content\/uploads\/2024\/01\/BLOG_C_110124_Epidosis-768x356.png 768w\" sizes=\"(max-width: 1000px) 100vw, 1000px\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-9940186 elementor-widget elementor-widget-heading\" data-id=\"9940186\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-large\">Operating profit is the difference between sales and cost of goods sold plus selling and administrative expenses.<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-98c26c4 elementor-widget elementor-widget-heading\" data-id=\"98c26c4\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-large\">Net profit is the difference between net sales and all expenses, including income taxes.<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-814b61c elementor-widget elementor-widget-text-editor\" data-id=\"814b61c\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><span style=\"font-family: GothamGRMedium, sans-serif, \"Proxima Nova\", sans-serif; font-size: 1rem; font-style: inherit; font-weight: inherit; background-color: var(--ast-global-color-4);\">Dividing each item by net sales and expressing the result as a percentage yields the viability rate.<\/span><br><\/p>\n<p><\/p>\n<p>Owners and managers should carefully monitor the three most important profitability ratios: Gross profit, operating profit and net profit.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-d186602 elementor-widget elementor-widget-text-editor\" data-id=\"d186602\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>An effective means of utilizing common size ratios as a management tool is <strong>to prepare them regularly,<\/strong> preferably at least quarterly with monthly calculation providing the best results.<\/p>\n<\/p>\n<p>It would be a good idea to calculate <strong>common size ratios <\/strong> for your company and consider which ones <strong>you think are most important<\/strong>. What items in your account statement are most critical to you or of greatest concern? Also, how do your company&#8217;s ratios compare to others in the same industry?<\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-67bc873 elementor-widget elementor-widget-image\" data-id=\"67bc873\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<img decoding=\"async\" width=\"1000\" height=\"463\" src=\"https:\/\/epidosis.gr\/wp-content\/uploads\/2024\/01\/BLOG_C2_110124_Epidosis.png\" class=\"attachment-large size-large wp-image-50004\" alt=\"\" srcset=\"https:\/\/epidosis.gr\/wp-content\/uploads\/2024\/01\/BLOG_C2_110124_Epidosis.png 1000w, https:\/\/epidosis.gr\/wp-content\/uploads\/2024\/01\/BLOG_C2_110124_Epidosis-300x139.png 300w, https:\/\/epidosis.gr\/wp-content\/uploads\/2024\/01\/BLOG_C2_110124_Epidosis-768x356.png 768w\" sizes=\"(max-width: 1000px) 100vw, 1000px\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-7ed09fb elementor-widget elementor-widget-text-editor\" data-id=\"7ed09fb\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><strong>The calculation process of profitability ratios <\/strong> allows any company to adopt correct strategic decisions regarding sales, marketing, and cash flow control. It also defends the possibility of locating and <strong>acquiring investment funds, positively influencing the course of the company, the sector, and the economy in general<\/strong>.<\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-0bc668d elementor-widget elementor-widget-text-editor\" data-id=\"0bc668d\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><span style=\"font-family: GothamGRMedium, sans-serif, 'Proxima Nova', sans-serif; font-size: 1rem; font-style: inherit; font-weight: inherit; background-color: var(--ast-global-color-4);\">You can send us a message on the&nbsp;<\/span><strong style=\"font-size: 1rem; font-style: inherit; color: #000000; background-color: var(--ast-global-color-4);\"><a style=\"color: #000000;\" href=\"https:\/\/epidosis.gr\/contact\" target=\"_blank\" rel=\"noopener\" data-saferedirecturl=\"https:\/\/www.google.com\/url?q=https:\/\/epidosis.gr\/contact&amp;source=gmail&amp;ust=1682768182473000&amp;usg=AOvVaw3ySEhDn_ynTjCq-mHLnJpj\"><span style=\"color: #ff6600;\">Contact Form&nbsp;<\/span><\/a><\/strong><span style=\"font-family: GothamGRMedium, sans-serif, 'Proxima Nova', sans-serif; font-size: 1rem; font-style: inherit; font-weight: inherit; background-color: var(--ast-global-color-4);\">or you can call at our offices in Athens <\/span><strong style=\"font-size: 1rem; font-style: inherit; color: #000000; background-color: var(--ast-global-color-4);\"><span style=\"color: #ff6600;\"><a style=\"color: #ff6600;\" href=\"tel:+302106810690\" target=\"_blank\" rel=\"noopener\">2106810690<\/a><\/span><\/strong><span style=\"font-family: GothamGRMedium, sans-serif, 'Proxima Nova', sans-serif; font-size: 1rem; font-style: inherit; font-weight: inherit; background-color: var(--ast-global-color-4);\"> or in Thessaloniki <\/span><strong style=\"font-size: 1rem; font-style: inherit; color: #000000; background-color: var(--ast-global-color-4);\"><span style=\"color: #ff6600;\"><a style=\"color: #ff6600;\" href=\"tel:+302310477725\" target=\"_blank\" rel=\"noopener\">2310477725 <\/a><\/span><\/strong><span style=\"font-family: GothamGRMedium, sans-serif, 'Proxima Nova', sans-serif; font-size: 1rem; font-style: inherit; font-weight: inherit; background-color: var(--ast-global-color-4);\">to analyze the above. <\/span><\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>One way of assessing sustainability is the calculation of ratios that capture the profitability indicators or efficiency indicators that businesses must review at regular intervals, which are: The gross profit margin ratio Operating Profit Margin Ratio The Net profit ratio The three metrics come from the entity&#8217;s income statement. Gross profit = net sales minus [&hellip;]<\/p>\n","protected":false},"author":36,"featured_media":49964,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","site-sidebar-layout":"default","site-content-layout":"default","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[27,28,29],"tags":[],"class_list":["post-50514","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-accounting-en","category-blog","category-newsletter-en"],"acf":[],"_links":{"self":[{"href":"https:\/\/epidosis.gr\/en\/wp-json\/wp\/v2\/posts\/50514","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/epidosis.gr\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/epidosis.gr\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/epidosis.gr\/en\/wp-json\/wp\/v2\/users\/36"}],"replies":[{"embeddable":true,"href":"https:\/\/epidosis.gr\/en\/wp-json\/wp\/v2\/comments?post=50514"}],"version-history":[{"count":1,"href":"https:\/\/epidosis.gr\/en\/wp-json\/wp\/v2\/posts\/50514\/revisions"}],"predecessor-version":[{"id":50515,"href":"https:\/\/epidosis.gr\/en\/wp-json\/wp\/v2\/posts\/50514\/revisions\/50515"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/epidosis.gr\/en\/wp-json\/wp\/v2\/media\/49964"}],"wp:attachment":[{"href":"https:\/\/epidosis.gr\/en\/wp-json\/wp\/v2\/media?parent=50514"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/epidosis.gr\/en\/wp-json\/wp\/v2\/categories?post=50514"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/epidosis.gr\/en\/wp-json\/wp\/v2\/tags?post=50514"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}