The theoretical aspect of profit and profitability analysis

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