2 guides on the topic “Profitability”: legal obligations, concrete procedures, costs and deadlines.
Profitability measures whether an activity creates more value than it consumes. It answers a simple question: are you making money? This page helps founders and SME managers measure it, then improve it.
People often confuse “making money” with “having money”. Yet these ideas differ. Profitability shows in the income statement. Cash flow, on the other hand, tracks the money that actually comes in and goes out, month by month. Finally, solvency measures the ability to repay debts.
A profitable company can therefore run short of cash if customers pay late. Conversely, a comfortable cash position can hide an activity that loses money. Our guide to the three key tables shows how these three readings fit together.
Several balances in the income statement reveal performance.
Each indicator highlights a different problem. A low gross margin signals a price too low. A negative EBITDA shows fixed costs that weigh too much. Finally, weak net profit can come from expensive debt.
The break-even point gives the minimum turnover needed to cover all costs. You calculate it by dividing fixed costs by the margin rate on variable costs. Take a fictitious example: 36,000 euros of fixed costs a year and a 60% margin rate. Break-even then stands at 60,000 euros of annual turnover.
Below that level, the activity loses money. Above it, each extra euro of margin becomes profit. This calculation therefore helps you set a price, a realistic sales volume or a cost budget.
A forecast based on sound assumptions makes profitability defensible. Start from price and volume, never from a global figure. Include every cost, your own pay among them. Finally, test a cautious scenario with lower sales and slower collections.
The complete financial forecast guide details the seven-step method. To present these figures to a banker, also read our advice on convincing your bank.
After launch, track profitability every month. Compare actual figures with the forecast and look for the cause of every gap.
On the tax side, a company's final profit also depends on the tax it pays. Tax benefits for SMEs can lighten that burden. Finally, the annual accounts of other companies in your sector offer a useful basis for comparison. You can consult them on the National Bank website.
20 May 2026
A complete forecast puts figures on your project over three years and links sales, costs, cash and financing. Here is the seven-step method, with a worked example and the mistakes that make a banker hesitate.
12 May 2026
Profitability, liquidity, financing: three key tables answer three different questions. Here is how to read each table, and why a banker first checks that they reconcile.
