Phenomenon of profitability in annuity economy

The urgency of this article is determined by the burning issues of modern Russian economy (its profitability nature, relatively high midrange of profitability on the one hand, and processes of technological degradation on the other), as well as upcoming trends of economic development (transition to long-term investment planning, tariffs in economic industries basing on the method of return on capital (ROC)). The object of the article is the process of accounting, control and regulation of profitability rates. The main issues of the article are: analysing of Russian and foreign experience in this field, revealing key problems in state regulation of profitability midrange in national economic industries. Traditionally, in theory the notion of profitability rate corresponds to the notion of normal (or fair) profit and price, which provides the required development for the company. Excess profit, which is the source of getting the rent and the key notion in annuity economy, today is the object of regulation from the side of the state abroad. The phenomenon of high Russian profitability is mostly explained by market power: the structure of the market represents comfortable oligopolies with moderate competition and good profit prospects, and high level of ratio in market concentration. To assess profitability rate it is crucial to get information about costs and profit of the company. Official, foreign and alternative profitability assessments of Russian business let us make a conclusion that there is significant discrepancy between them, and it is assessed not in percentage points, but in the order of the analysed volumes. It confirms serious problems in the issue of accounting, control and regulation of the phenomenon of profitability in modern Russian economy and the necessity of elaboration of expense structure on production and product marketing differentiated according to economic activity. Since the existing practice of the Federal State Statistics Service virtually excludes the access to work with primary information about expenses of companies, it is necessary to develop similar experience of federal statistics of developed states according to a regulation, which defines the order of limited publication and usage of inside information. Usage activating of profit indications for accounting objects and investments planning is adequate to the modern step of economic modernization

Keywords

Authors

References