ANALYSIS OF PROFITABILITY

Abstract

In order to make a deeper analysis of the influencing factors of profitability on the basis of the data from annual reports, in a situation when there is a possibility of choosing between the profit or loss calculation methods, there is a need of another profitability index – profitability of the basic activity. Calculation formulas of the profit of the basic activity according to the indexes of the method of turnover cost and the method of payment for the period have been worked out. The article illustrates the application of both the formulas to the business in Latvia as a whole and specifically in Latgale on the basis of annual report for 2010.