Scribd
Upload
45 views

Screening Profitability

The document discusses various factors that determine a business's profitability. It defines profitability as a business's ability to generate income. Key determinants of profitability mentioned include sales, pricing strategies, expenses, and the cost of staying in business. The document also discusses different profitability ratios and metrics that can be used to measure a business's financial health and success, such as return on sales, return on net worth, and analyzing income statements. Ensuring adequate sales, proper pricing, cost control, and that revenue exceeds expenses are important ways for businesses to guarantee profitability.

Uploaded by

Suriaga Gerlz
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
45 views

Screening Profitability

The document discusses various factors that determine a business's profitability. It defines profitability as a business's ability to generate income. Key determinants of profitability mentioned include sales, pricing strategies, expenses, and the cost of staying in business. The document also discusses different profitability ratios and metrics that can be used to measure a business's financial health and success, such as return on sales, return on net worth, and analyzing income statements. Ensuring adequate sales, proper pricing, cost control, and that revenue exceeds expenses are important ways for businesses to guarantee profitability.

Uploaded by

Suriaga Gerlz
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 47

By Louell E.

Bodios
Recognize a potential market:
Screen the proposed solution/s
based on viability, PROFITABILITY
and customer requirements.
1 • Define PROFITABILITY.

2 • Identify determines entity’s profitability.

3 • Identify the ways to guarantee success and


profitability in starting a business.
4 • Appreciate the value of profitability in
business.
How much is your allowance everyday?
How much is you total spendings for the day?
How much is left with your money everyday?
What did you do with the money left at the end
of the day?
How will you ensure that your money will
grow?
Lorem ipsum dolor sit amet, consectetur Lorem ipsum dolor sit amet, consectetur
adipiscing elit, sed do eiusmod tempor adipiscing elit, sed do eiusmod tempor
incididunt ut labore et dolore magna incididunt ut labore et dolore magna
aliqua. Ut enim ad minim veniam, quis aliqua. Ut enim ad minim veniam, quis
nostrud exercitation ullamco laboris nisi nostrud exercitation ullamco laboris nisi
ut aliquip ex ea commodo consequat. ut aliquip ex ea commodo consequat.
1 • Sales

2 • Pricing

3 • Expenses

4 • Cost of Staying in Business


The return on sales ratio measures profits
after taxes based upon the current year’s
sales.
If the number of sales are high, a company is
better prepared to handle adverse market
conditions and economic downtrends.
An effective sales strategy is essential in
increasing a company’s profitability.
Price setting is a key factor in determining
profit.

Careful analysis is necessary in determining


the correct pricing strategy for a company.
A business owner must look at what
competitors are charging and determine what
prices he would charge to maximize profit.
An important factor to consider to consider in
pricing strategy is determining what price
customers are willing to pay for a product.
Expenses can be defined as the cost of
resources used in the activities of a business.

Profits for the company are determined by


analyzing what is left over after expenses are
subtracted from total revenue.
Any cost-saving measures initiated by a
company will bring expenses down and
increase overall profitability.
For a company to become profitable, income
must exceed expenses.
Return on net worth shows how much a profit
a company generates on the money equity
shareholders have invested.
The return on net worth should at least be
equal to the rate a business can borrow
money from its creditors to achieve the cost
of staying in business.
A company that is showing a profit but has a
low return on net worth still has profitability
issues.
Measuring profitability is the same as
measuring the success of a business.
An income statement shows a breakdown of
income and expenses during the business year.
One measure of a company’s profitability is
the profitability ratio. Profitability ratios
analyze the financial health of a business.
1 • Start by identifying a customer want to serve.

2 • Talk to your customers.

3 • Let your customers create your business.

4 • Presell your product


5 • Launch your business when you have
sufficient funds
6 • Create your Minimum Viable Product (MVP)
and let your customer improve it.

7 • Scale your business.


As a student, how do you make extra
profit?
Why profit-generating ventures like
entrepreneurship essential in the modern
day situations?
1. It is the ability of the
a. Viability
business to generate
b. Salability
income.
c. Profitability
d. Opportunity
2. Which is TRUE about a. Expenses is greater
profit? than revenue.
b. Revenue is greater
than expenses
c. It generate losses
d. None of the above
3. Which of the following is a. Customer
b. Product
essential in business’
profitability? c. Sales
d. Viability
4. The following are ways a. Scale your business.
that provides profitability b. Talk to your market.
to businesses except one. c. Know your expenses.
What is it? d. Presell your product.
5. COVID-19 pandemic is a a. Alcohol
worldwide health issue. b. Face masks
Which product is profitable c. All of the above
in this trying times? d. None of the above
Screen your group’s Business Ideas
based on Viability. Choose the three (3)
most profitable business idea.
Report your findings and your reasons
why it is profitable in class.
By Louell E. Bodios

You might also like