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Profitability factor of organic and regular production

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12/31/2024
profitability factor
11/13/2015
Yes
Natural Resources Institute Finland, Economydoctor
Luke_Ind_Kannkerr_01
Luke/Tilastot
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The indicator evaluates the profitability of different production methods with regard to organic and regular production.
The profitability factor which represents relative profitability is calculated by dividing entrepreneurial income by the sum of salary and interest requirements. When the profitability factor is 1.0, total returns cover all costs, including the costs of production factors, and entrepreneurial income is zero. Being a relative figure, the profitability factor is suitable for making comparisons between different years and between farms of different sizes and different production methods.