Profitability, an index of the efficiency of basic self-supporting elements of socialist social production. The economic nature of profitability is dictated by the prevailing type of relations of production. Under capitalism the profit (see Profit, Capitalist) is the motivating force and objective of producton. Under socialism profit cannot be the objective of production; profit (see Profit of Socialist Enterprises) is an important source of expanding production, satisfying the growing needs of the members of society, and forming reserves and contingent funds. Profitability is the ratio of profit to the cost of production and sales of the product, and the ratio of the profit to the cost of fixed production assets and standardised circulating assets. The former index characterises the effectiveness of utilising production assets. In determining the profitability of an enterprise, the index of overall profitability is used, i. e., the ratio of the balance profit (i. e., profit from sales of the product and services to customers) to the average annual cost of the fixed production assets and standardised circulating assets and the 293 index of rated profitability which is the ratio of rated profit (i. e., balance profit minus payment for production assets, fixed payments to the budget, and interest on bank credit) to the cost of fixed assets and standardised circulating assets. In addition, the profitability of each product is calculated by enterprises. In manufacturing industries it is the ratio of profit to cost price minus the cost of the raw and other materials, fuel, energy, semi-finished products, and accessories. The profitability level plays a role in the formation of the material incentives funds (see Economic Incentives Funds). Profitability is increased primarily through increasing profits and cutting current costs and the cost of fixed production assets and standardised circulating assets. It is a major lever in the centralised management of the economy. However, its utilisation is subordinate to the planned and balanced development of the economy and is geared to the best possible satisfaction of society’s needs. Therefore, it plays an auxiliary role in the regulation of socialist production.