Analysis of the profitability - A strategic approach

Dinu Eduard

The AMFITEATRU ECONOMIC journal, 2004, vol. 6, issue 16, 45-48

Abstract: The analysis of the profitability is a central point of the economic and financial system indicators at the microeconomic level. All the entities the firm has business with are directly interested in the positive result of its activity. We present a logical approach of the main possibilities for maximizing the profit at the level of the sold quantity, of the selling price and of the unit price. Thus, at the level of quantity, the main concern of the firm management should be to get the highest degree of utilization for the production capacity they have at disposal, so that the cost of an under-utilization should be avoid. Concerning the selling price, it is very important the estimate of the demand elasticity when the price is changed and concerning the cost, specific actions should be taken for improving all the specific resource consumption-material, human and financial ones. The approach of the three indicators together could create the mechanism for optimizing their evolution and for creating the business profitability.

Keywords: Economics of scale; Demand elasticity; Production capacity (search for similar items in EconPapers)
JEL-codes: F12 M11 (search for similar items in EconPapers)
Date: 2004
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Persistent link: https://EconPapers.repec.org/RePEc:aes:amfeco:v:6:y:2004:i:16:p:45-48

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