Profitabilityprof‧it‧a‧bil‧i‧ty /ˌprɒfətəˈbɪləti $ ˌprɑː-/ noun uncountable BBPROFITwhen a business or an activity makes a profit , or the amount of profit it makes a decline in company profitability. Profitability can further be defined as the flexibility of a business to provide a return on an investment primarily based on its sources compared with another investment Although a company can notice a profit, this does not necessarily mean that the company is profitable.\n\nMarginal return, also referred to as marginal product, is a principle that states that the addition of employees up to a certain point increases the usage of capital in an efficient means; exceeding that number of employees leads to diminishing returns and in the end less profitability.\n\nNonetheless, web income may be distorted with the cash methodology of accounting by selling more than two years crops in one 12 months, selling feeder livestock purchased in a previous 12 months, and purchasing production inputs in the 12 months before they are needed.\n\nFor example, the purchase of a tractor is a cash outflow when you pay cash at the time of purchase as shown in the example in Table 2. If money is borrowed for the purchase using a term loan, the down fee is a cash outflow at the time of purchase and the annual principal and interest payments are cash outflows every year as shown in Table 3.\n\nA Complete set of Financial Statements (Determination Software), including the beginning and ending web price statements, the income statement, the cash move statement, the statement of owner equity and the financial performance measures is on the market to do a comprehensive financial analysis of your corporation.