Project Report on Profitability Analysis
An empirical approach has become very popular during the recent
years. The reason for the growing popularity of the subject is that
it primarily concerns with the concept and techniques of the
analysis of profitability which can be advantage only used by
managers, creditors, owners.
Analytical and critical assessment of the various aspects of
financial principles helps judicious application of assets and
enables to take right decision at right time. A comprehensive idea
is gained to run day to day business in proper perspective.
Thesignificance of production/operation, marketing, finance and
personnel managementis being increasingly realized in
modern-corporate world both in India and abroad.
This realization has come into light because of increasing
complexities of the task of managers and administrators. These
branches of management help the managers to reach the objectives of
an organization.
A study of these management activities enables the people,
engaged in either small size unit or a large core industry, to
understand their objectives and the way how to achieve them
successfully.
Profit & Profitability
1.Concepts of Profit :
Profit plays an important role in every business organization
and its determination is really a tough one. Profit is not only
concern with the proprietors but also income-tax authorities,
managers, directors etc. because all of them are get apercentage of
net profit.Even the accountants are not unanimous on this
matter.
Now question arises, "What is Profit?"
Law and even the accountants have not defined the word "Profit".
Generally speaking "The Profit of Business during a given period is
the excess of income over expenditure for the period." It may arise
from other sources.
Maximization of profit has ever been one of the important goals
of every business enterprises. The existence, continuance and
expansion of business depends, to large extent, on its capacity to
earn a good amount of profit every year.
The efficiency of a business is measured by the amount of profit
earned. A company should earn profits to serving and grow over a
long, period of time. The adequacy of profits says Korn and Boyd.
"Underlies the entire financial structure of a firm. Only if a
company to earn profit will it survive in the long run.
Profits are essential, but it would be wrong to assume that
every action initiated by the management of the company should be
aimed at maximization of profits, irrespective of social
consequences. "It is unfortunate that the word profit is looked
upon as a term of abuse since some firms always act to maximize
profits at the cost of employee's customers and society."
There are three concepts of profit :
1. Economic Profit
2. Accounting Profit
3. Social Profit
