Enterprise Profitability Recorded in Profit and Loss Account

Abstract

Profitability is the economic category expressing the company’s ability to generate profitand reflects the enterprise performance. Profitability of an enterprise is a result of comparing theeffects materialized in revenues, with efforts, reflected in expenditures. Case study on profitability wasperformed at the Planifam SRL Company, located in Cluj-Napoca, company that has as main activityambulatory health care services (including the sale of medicines). Profitability and diagnosis analysishave been made based on data from Profit and Loss Account, and it was compared the result of year2010 to year 2011. Profit and Loss Account is the document which reflects all expenses and revenuesof financial year, in order to determinate the flow results on three level of activity: operational,financial and extraordinary, resulting the profit or loss on each level. Performance indicators, whichexpress profitability, include: those who are expressed in absolute form (obtained in the form ofmargins (differences) between income and expenses), and others who are expressed in relative form(obtained as rates (reports) between results and costs or capital used). It was done a comparisonbetween the „effects†and the „effortsâ€, for the years 2010 and 2011, using the performance indicators(in absolute and relative form) and were formulated several important conclusions that define thecompany’s ability to make profit, which reflect the performance of analyzed enterprise. Based on theresult it can further define companies self-financing capacity, and the concept of cash-flow, which areled to the concept of cash flow.