Analysis of enterprise profitability indicators. Analysis of enterprise profitability Enterprise profitability and its indicators

Structure of enterprise income.

Absolute indicators of enterprise profitability.

Relative indicators of enterprise profitability and their relationship.

1. In market conditions, in order to make management decisions, you need to know not only the amount of profit received by the enterprise, but also their profitability. Profitability characterizes the efficiency of the enterprise and the skill of investment management. The main parts of profitability are profit, but the profit that is given in the calculations is a rather conditional value. In practice, it is carried out: in accordance with a number of documents, in accordance with the regulatory documents used by the State Tax Service.

The concept of income is more capacious than profit. In the explanatory dictionary, “income” is the flow of cash. Income- These are funds that come to the disposal of the enterprise in various forms. In modern economic conditions, along with profit, an enterprise can receive other income (dividends, interest on deposits, etc.).

Therefore, the final result from financial and economic activities would be correctly called not balance sheet profit, but income on the balance sheet.

The company has at its disposal temporarily free funds that are of a targeted nature, which are regularly received on the account. Such amounts of funds can only be used after a certain period of time. These are depreciation deductions, deductions to any reserve funds, for the creation of other funds provided for by law. When a reserve or other fund is created on the balance sheet, the profit itself decreases. These deductions are not included in the profit, but they remain at the disposal of the enterprise.

To determine the amount of funds of an enterprise, it is necessary to determine:

net profit amount

amount of depreciation charges

the amount of accrued reserve funds from profits.

They characterize the profitability of the enterprise for the reporting period.

2. When determining the degree of return on invested capital, a whole system of interrelated indicators is used. Each of these indicators has its own meaning for reporting users and has its own economic interpretation. When analyzing profitability, several calculation methods can be used, but most often they are calculated as a ratio of some type of income and some kind of comparison base.

Indicators(numerator):

Profit or income from the main activities of the enterprise, i.e. profit from the sale of products, services, type of work. This is the financial result of the enterprise for which the enterprise was created.

Profit or loss from financing activities. This is the balance between income and loss on operations not related to the sale of products, taking into account interest for using a bank loan.

Income from investment activities. This is part of the profit from financial and economic activities, which is the amount of income from any financial investments in shares of other enterprises, shares, bonds.

Book income or book profit. This is the amount of income from the financial and production activities of the enterprise.

Net profit. This is part of the balance sheet profit minus contributions to the reserve and other similar funds, minus the amount of profitable payments, minus income tax.

Profit is at the complete disposal of the enterprise. This is an absolute indicator, equal to income after completion of all distribution operations, differs from net profit by the amount of accrued dividends on shares.

Net result of investment exploitation. This is the economic effect received by the enterprise from the use of invested capital = the amount of book profit + interest on the loan. This indicator can be considered as payment for financial assets placed at the disposal of enterprises or as income from equity or borrowed capital.

Cash flow. The amount of funds that an enterprise has at its disposal, albeit temporarily = net profit + accrued depreciation + reserve fund.

Denominator of absolute indicators:

Revenue from sales of products excluding VAT and excise taxes.

Equity capital = authorized capital + amount of reserve capital + amount of reserve funds + amount of retained earnings from previous years + amount of social funds + amount of targeted financing + amount of budget revenues + amount of intersectoral extra-budgetary funds.

Net assets are the amount of funds invested in the enterprise = the amount of own sources of funds + the amount of long-term liabilities. Or the difference between the total balance sheet for the asset and the amount of short-term liabilities.

Profitability indicators can be calculated either for a specific date or based on average annual data.

3. These indicators are divided into:

profitability indicators of the enterprise

return on equity indicators

indicators of profitability of enterprise assets.

Every hunter wants to know where the pheasant is sitting. This children's saying perfectly describes the activities of an investor. Every asset owner wants to know where the profits are hidden. In the conditions of rapid development of the investment market, it is difficult for an unprepared person not to lose money.

Professionals use a whole range of economic indicators to assess risks and performance. The key concept in the analysis of investment projects is profitability. There are terms such as yield on bonds, stocks, investments, capital.

The concept of profitability

Profitability is a concept used by investors to evaluate the performance of investment operations. That is, this is the amount of profit that will remain with the investor after deducting all costs and expenses. Profit in this case is the sum of current income for a certain period and capital gains for the same period. Thus, the profitability formula can be presented as:

Dokh = PP / SV * 100%, where:

• Doh is the yield;
• PP - profit for the period;
• SV - the amount of investment.

Since profitability is usually determined as a percentage of the amount of investment, the profit divided by the amount of investment must be multiplied by 100%

Example of profitability calculation

Illarion Genrikhovich owns real estate - a house worth 1 million rubles. He decides to rent it out. Illarion Genrikhovich set the rental price at 30 thousand rubles. How to determine profitability for the year? According to the formula:

Profitability = 30,000 * 12 / 1,000,000 * 100%.

The return on Illarion Genrikhovich's investments will be 36%. Thus, profitability shows the return on investment as a percentage.

How to determine whether Illarion Genrikhovich made a good investment or not?
Profitability assessment must be approached logically. First of all, it is necessary to evaluate all costs of purchasing and capital turnover. Illarion Genrikhovich purchased the house for 1 million rubles - these are his expenses. Profit for the year amounted to 360 thousand rubles (30 thousand rubles * 12 months).

At first glance, it may seem that a return of 36% is remarkable. But in fact, Illarion Genrikhovich, having spent a million rubles, did not recoup his investments in a year.

There is one rule to follow when evaluating investments. Positive dynamics in investor activity occurs when the condition is met that the return is >100%.

That is, Illarion Genrikhovich’s investments will become profitable only when their profitability exceeds 1 million rubles.

Income and profitability

Before we begin to study the types of profitability and the factors influencing this very profitability, it is necessary to separate the concepts of “income” and “profitability” that are quite close in meaning. You can often find people, especially new traders, who mix these two terms and get confused.
Income is the amount of money received as a result of some activity during the reporting period. As applied to investment activities, income is the amount of benefit received after closing a position in monetary terms.

For example, a trader purchased a share of OAO Gazprom for 150 rubles. Before the close of trading, he sold this share for 450 rubles. His income was 300 rubles (450 rubles - 150 rubles) per day.

Profitability is the amount of change in the value of an asset relative to its original cost over a certain period of time, expressed as a percentage. For example, a trader purchased a share of OJSC Gazprom for 150 rubles and 4 days later sold it for 300 rubles. The return on investment per day will be 25%. In order to calculate it, you need to represent the value of the asset (share) as 100%. The share was sold for 300 rubles, that is, for 200% of the original cost. Thus, we subtract from 200% - 100% the initial cost (costs) and get 100% profitability in 4 days. We divide everything by 4 and get an average return of 25% per day.

Factors influencing profitability

According to their structure, factors influencing profitability are divided into external and internal. The latter relate to the enterprise and directly to production. External factors are a set of factors that cannot be influenced.

External factors

These include:

• political situation in the country and in the world;
• prices for foreign raw materials and materials;
• market relations and level of economic development;
• demographic picture;
• degree of inflation;
• solvency of people;
• climatic conditions and so on.

External factors primarily influence prices, product sales volume, and cost of materials.

Internal factors

The main internal factors include:

• decline and increase in production;
• decrease in sales volumes or their increase;
• changes in product prices;
• reduction and increase in production costs;
• changing the product transportation process.

All factors, to a greater or lesser extent, affect the profit of the enterprise, and therefore can affect the amount of profitability.

Types of profitability

To assess the level of costs invested in business activities, profitability is used. There are the following types of profitability:

1. Internal - the rate of return at which the net present value is zero, expressed as an interest rate.

The internal rate of return is determined using the equation:

0 = ∑ NPD/(1+ND), where

NPV - net cash flow for the period;
ND - rate of return.

2. To maturity is the yield on the bonds of the owner who holds the bonds until they mature.

It is calculated in the same way as the internal rate of return:

0 = ∑ NPP/(1+ND).

3. Current is the volume of coupon payments for 12 months, divided by the current value of the bonds. This type is used for stocks and bonds and allows you to compare several bonds or stocks.
Calculated by the formula:

TD = (NS * SK) / RS, where:

• TD - current yield of the stock (bond);
• NS - nominal value (initial cost);
• SC - coupon rate;
• RS - market value of shares (bonds).

4. Dividend is the yield of shares, reflecting the ratio of the dividend on a share to the value of the share itself.
The dividend yield of a stock is calculated using the equation:

DD = D / CA * 100%, where

• DD - dividend yield;
• CA - share price;
• D - dividend received on the share.

Return on capital

Return on capital is usually measured on an annual basis, but for long-term investments the return on capital is more appropriate.

Dk = TD + PC / Nper, where

• Dk - return on capital;
• TD - current income for a certain period;
• PC - capital gain for a certain period;
• Nper - initial capital.

Bonds and their yield

In order to determine the yield of bonds, it is necessary to consider the concept of “bond”, which is one of the main instruments of the investment stock market.

A bond is a type of security that confirms the debt relationship between the lender (the owner of the bond) and the borrower (the one who issued the bond). Essentially, buying a bond is buying debt. So why buy other people's debts?

Bonds have 2 prices:

• Nominal. This is the price when the bond is issued, which must be returned upon the expiration of the bond term.
• Market. This is the price at which that bond trades on the stock exchange.

The market price is influenced, first of all, by the reliability of the investment. This means that during the turnover process, securities either rise in price or fall. As the bond matures, its value decreases significantly.

The current yield on a bond can be calculated using a simple formula:

Dtek = (D/K) * 100%, where:

• Dtek - current bond yield;
• D - income;
• K is the bond rate.

Stocks and their returns

A share is a type of security that provides its owner with a portion of the company's profits. Profits are usually paid out in the form of dividends. Such income can also be received in the form of a margin if the market value of the paper increases.

Shares have a nominal, issue, book and market value. Each of them has its own characteristics:

• The par value is indicated on the face of the share. The total amount of the company cannot exceed the amount of the authorized capital.
• The issue price reflects the price of a share when purchased by its first holder, after its placement on the stock market.
• Book value is the result obtained by dividing a firm's book value by the number of shares outstanding.
• Market value is the price at which a stock trades on the secondary market.

Stocks have their own returns. This value is an indicator that allows you to estimate the amount of profit received during the ownership of the share from the moment of its purchase.

The profitability of a stock can be calculated using the formula:
Dakts = SK - PC / PC, where:

• DAC is the return on the stock;
• SK - total capital received since the purchase of shares;
• PC - the initial capital that was invested in the acquisition of shares.

Any security has its own profitability. It can be calculated using the above formulas. But how can you find out about the profitability of securities purchased on the secondary market a week, an hour, a year ago? Is there a way to find out how much profit the purchased shares brought to their owners? For this purpose, security yield ratings were created.

Profitability and rating

The yield rating is a rating of securities that have brought their owners the greatest profit over the previous period (usually a year). It is compiled based on data from stock exchanges around the world. The assessment of the investment attractiveness of shares (bonds) is taken into account. According to this assessment, securities are assigned a rating index from A+ to C-. A+ is the highest quality, and C- is therefore very low quality. The rating reflects the security's reliability, profitability and dividend payout. The rating index from A+ to C- was developed by Standard and Poor's Corporation.

In fairness, it is worth mentioning that it is quite common to see profitability ratings in professional printed publications, but this does not mean they are reliable. These are only competent expert opinions.

But it is better for novice investors to use such ratings as a cheat sheet. In most cases, securities from such lists do not bring high returns. But this is almost always a win-win option for those who are not chasing super-profits, but want to preserve their capital and even increase it a little. Such ratings often include preferred shares. In addition, the rating allows you to evaluate securities over time, view their history, analyze the benefits of an acquisition, etc.

Risk and return

Profitability is an effective method of qualitative and quantitative assessment of investments. It has its pros and cons. But it is an indispensable tool when analyzing the rationality of investment. Profitability has wide application in economic analysis, allowing you to weigh the decision about the need for investment. Often used in conjunction with risk indicators. When deciding on cash injections, an investor puts possible risks on one side of the scale, and the possible return on capital on the other. And if the second cup significantly outweighs, then the decision is made in favor of the investment.

We can say that profitability and risks are equilibrium concepts. They are always interconnected. The unspoken law of traders: the higher the risk, the higher the profitability. Every trader strives to reduce, calculate risk and increase profits.

This is how the stock market works. Every investor makes calculations and finds out where the profit is hidden.

The economic feasibility of operating an enterprise in a market economy is determined by the receipt of income. The profitability of an enterprise is characterized by absolute and relative indicators. The absolute indicator of profitability is the sum of income and profit. In specialized foreign literature, the concept of “income” is defined as follows:

“Earnings are an increase in economic benefit during an accounting period in the form of an inflow of funds or an increase in the value of assets or a decrease in liabilities, resulting in an increase in capital, unless such growth is provided by contributions from shareholders.”

A briefer concept is defined in the Decree of the President of the Republic of Kazakhstan, which has the force of Law, dated December 26, 1995 No. 2732 “On Accounting”, where Article 13 states: “Income is an increase in assets or a decrease in liabilities in the reporting period.” Without making the appropriate expenses, as a rule, it is impossible to obtain the desired income. Without receiving income, in turn, it is impossible to develop the enterprise and successfully resolve social issues.

Income in a generalized form reflects the results of management, the productivity of living and materialized labor costs. Some economists attribute it to indicators of economic effect, others - to the efficiency of an enterprise. The first ones are right, since the absolute amount of income does not allow us to judge the return on invested funds.

The system of profitability indicators consists, first of all, of absolute indicators of financial results, which include: income from sales of products (works, services), gross income; income from core activities; income from non-core activities; income from ordinary activities before taxes; emergency income; net income, which is the final financial result of the enterprise's activities.

The role of profit in market conditions has increased significantly. As is known, under a planned-directive economy, its role was diminished. Generating income (profit) as an objective function of any enterprise was downplayed. With the transition to a market economy, income (profit) became its driving force. It is he who determines the solution to the fundamental interrelated problems: what to produce, how to produce and for whom to produce. Generating income has become the goal of the functioning of any enterprise, since in a market economy it is the main source of its production and social development. Income growth creates a financial basis for self-financing, which is a prerequisite for successful management, which is a prerequisite for the successful economic activity of an enterprise. This principle is based on full recovery of costs for production and expansion of the production and technical base of the enterprise. It means that each enterprise covers its current and capital costs from its own sources. If there is a temporary lack of funds, the need for them can be met by short-term bank loans and commercial loans, if we are talking about current costs, as well as long-term bank loans used for capital investments.

At the expense of income, part of the enterprise’s obligations to the budget, banks and other enterprises and organizations is also fulfilled. Thus, income becomes the most important indicator for assessing the production and financial activities of an enterprise. It characterizes the degree of its business activity and financial activity of the enterprise. Income determines the level of return on advanced funds and the return on investment in the assets of a given enterprise.

The role of income in a market economy is determined by the functions it performs. In the specialized literature of the CIS countries there is no consensus on the issue of the income function. They are attributed to him from two to six. In our opinion, it performs only three functions:

1) source of state budget revenues,

2) a source of industrial and social development of enterprises and associations,

3) a source of increasing the well-being of the population.

The unity of functions in their interdependence makes income the element of management in which the economic interests of society, the enterprise team and each employee are linked. This makes clear the importance of the problem of the formation and distribution of income, the practical solution of which ensures the necessary dependence of the efficiency of an economic entity on the amount of income received and left at its disposal. .

In order for income to effectively perform its functions, the following basic conditions are necessary:

Prices for products must, with a certain degree of approximation, express socially necessary labor costs and at the same time take into account the continuous increase in labor productivity and, as a consequence, a reduction in costs.

The system for calculating products and determining the cost of production must be scientifically sound, taking into account state standards.

The income distribution mechanism should play an active role and serve as a stimulating factor for the development of production and increasing its efficiency.

Effective use of income is possible only in the system of all other financial levers (depreciation deductions, financial sanctions, taxation, excise taxes, rent, dividends, interest rates, special purpose funds, deposits, shares, investments, forms of payment, types of loans, courses currencies and securities, etc.).

5. It should, however, be noted that the absolute value of income refers to indicators of economic effect, and not to the efficiency of the financial and economic activities of the enterprise. An income of 500 thousand tenge can be the income of enterprises of different sizes in terms of scale of activity and size of investment. Accordingly, the degree of relative weight of this amount will be different. Therefore, for a more realistic assessment of the income received, relative profitability indicators are used, expressing the level of profitability and characterizing the efficiency of the enterprise.

6. Both the business entity itself and the state are interested in the growth of the enterprise’s profitability indicators. Therefore, at each enterprise it is necessary to conduct a systematic analysis of absolute and relative profitability indicators.

The tasks of analyzing profitability indicators include:

assessment of the implementation of the plan for absolute profitability indicators;

study of the components of the formation of net income;

identification and quantitative measurement of the influence of factors affecting income;

study of directions, proportions and trends in income distribution;

identifying reserves for income growth;

study of various profitability ratios and factors influencing their level.

Since in a market economy the main and final goal of an enterprise’s economic activity is to generate income and not loss, it is necessary to focus on the analysis of this indicator.

The first absolute indicator of profitability is income from sales of products (works, services). It is shown in the “Report on the results of financial and economic activities” minus value added tax, excise taxes, etc. taxes and mandatory payments, as well as the cost of returned goods, sales discounts and price rebates provided to the buyer.

This article of the “Report on the results of financial and economic activities” reflects income from core activities, which can be obtained from the sale of inventory, provision of services, as well as in the form of remuneration, interest, dividends, fees and rent, depending on the main activities.

The largest share in the income structure is occupied by income from the sale of finished products and goods, the value of which is predetermined by the level of production of products, their completeness and quality and other factors that will be discussed below. .

A certain impact on the amount of income from the sale of products is exerted by changes in the balances of unsold products in warehouses and shipped goods that are in safekeeping with buyers. A reduction in inventories or, conversely, an increase in them affects growth in the first case, and a decrease in the amount of income from sales in the second.

At enterprises, income (revenue) from the sale of products should flow from the planned commodity output and changes in the balances of the unsold part of the products - finished products, goods held in safe custody by buyers. However, there are cases of underestimation of sales income plans, in particular, due to overestimation of carry-over inventories. Remains of unsold products are formed for the following reasons.

Part of the finished product naturally settles in the warehouse for its assembly, packaging, preparation for shipment, accumulation to the size of the transport batch, and issuance of payment documents. An increase in the balance of finished products above the standard value should be the subject of attention of the financial services of the enterprise: perhaps the products are not sold due to a breakdown in economic ties or are not in demand for another reason. This phenomenon can occur at enterprises where they produce products that have a natural material form.

The performance of work and services provided, due to their specific form as goods, cannot take the form of product residues in the warehouse. The same applies to the products of some industries, for example, electricity, transport, communications.

Often goods are kept in safe custody by the buyer, i.e. the products were shipped and received by the buyer, but the latter legally refused to pay for them. The most likely reason for refusal may be the supplier's failure to comply with the terms of the supply agreement.

The transition to the accrual method has led to the fact that income from the sale of products is determined by the quantity shipped, and not as payment is received for it. This does not mean that analysts should not pay attention to the receipt of money for shipped products.

The second absolute indicator is gross income. It represents the financial result from the sale of products (works, services) and is defined as the difference between the income from the sale of products (works, services) and the production cost of sold products (works, services) as a result of the main activity.

The most important factor influencing gross income is production cost, so its reduction is noticeably affected by its value.

Under stable economic conditions, the main way to increase gross income is to reduce costs in terms of material costs. This is especially important for enterprises in manufacturing and processing industries (mechanical engineering and metalworking, metallurgical, petrochemical, textile, food, etc.), where the share of the cost of raw materials in the cost of production is very high.

An increase in the volume of product sales in physical terms, other things being equal, leads to an increase in income. Increasing volumes of production of products that are in demand can be achieved with the help of capital investments, which requires the use of income for the purchase of more productive equipment, the development of new technologies, and the expansion of production. This path is now difficult or almost impossible for many enterprises due to inflation, rising prices and the unavailability of long-term lending. Businesses that have the means and capacity to make capital investments actually increase their income if they ensure their income and return on investment is above the rate of inflation.

The income of enterprises is growing at a high rate, mainly due to rising prices. An increase in price in itself is not a negative factor. It is quite justified if it is associated with an increase in demand for products, with an improvement in the technical and economic parameters and consumer means of manufactured products.

The next absolute indicator of profitability is income from core activities. It represents a balanced financial result and is defined as the difference between gross income and expenses of the period according to the formula:

D° = D V - R p (1)

D° - income from core activities

D in gross income

R n expenses of the period.

The greater the gross income and the lower the period expenses, which are fixed costs that are not included in the production cost of goods sold, the higher the income from core activities. .

Relative indicators of profitability include indicators of profitability (profitability), characterizing the efficiency of an enterprise, which in a market economy determines its ability to financially survive, attract sources of financing and their profitable (profitable) use.

Profitability indicators are important characteristics of the factor environment for generating enterprise profits. Therefore, they are mandatory when conducting a comparative analysis and assessing the financial condition of an enterprise. When analyzing production, profitability indicators are used as a tool for investment policy and pricing.

The main profitability indicators can be grouped into the following groups:

return on capital (assets) indicators,

product profitability indicators;

indicators calculated on the basis of cash flows.

The first group of profitability indicators is formed as the ratio of profit to various indicators of advanced funds, of which the most important are; all assets of the enterprise; investment capital (equity + long-term liabilities); share capital

Net profit Net profit Net profit

All assets Investment capital Share capital (2)

The discrepancy between the levels and profitability of these indicators characterizes the degree to which the enterprise uses financial levers to increase profitability: long-term loans and other borrowed funds.

These indicators are specific to Tim, which meet the interests of all business participants of the enterprise. For example, the administration of an enterprise is interested in the return (profitability) of all assets (total capital); potential investors and creditors - return on invested capital; owners and founders - profitability of shares, etc.

Each of the listed indicators is easily modeled using factor dependencies. Consider the following obvious relationship:

Net profit Net profit Sales volume

Total assets = Sales * Total assets (3)

This model reveals the relationship between the profitability of all assets: profitability of sales and asset turnover. Economically, the connection lies in the fact that the formula directly indicates ways to increase profitability; when the return on sales is low, it is necessary to strive to accelerate asset turnover.

Let's consider another factor model of profitability.

Net profit Net profit Volume of sales Sov. capital

Aks. capital = Sales volume * Sov. capital * Shares Capital(4)

As we can see, the return on equity (shareholder) capital depends on changes in the level of product profitability, the rate of turnover of total capital and the ratio of equity and debt capital. The study of such dependencies is of great importance for assessing the influence of various factors on profitability indicators. From the above relationship it follows that, other things being equal, the return on equity capital increases with an increase in the share of borrowed funds in the total capital.

The second group of indicators is formed on the basis of calculating the levels and profitability of profit indicators reflected in the reporting of enterprises.

For example,

These indicators characterize the profitability of products for the base (K 0) and reporting (K 1) periods.

For example, product profitability based on sales income:

K 0 = P 0 / N 0 ; (6)

K 1 = P 1 / N 1 ; (7) Or

K 0 = (N 0 -S 0) / N 0; (8)

K 1 = (N 1 -S 1) / N 1; (9)

K = K 1 -K 0 , (10)

where - P 1,P 0 - income from sales of the reporting and base periods;

N 1, N 0 - sales of products (works, services) of the reporting and base periods;

S 1, S 0 - cost of products (works, services) of the reporting and base periods;

K is the change in profitability in the reporting period compared to the base period.

The influence of the factor of change in sales volume is determined by calculation (using the method of chain substitutions)

Accordingly, the impact of a change in cost will be

The sum of factor deviations gives the overall change in profitability in the reporting period compared to the base period:

K = ?K n - ?K s (13)

The third group of profitability indicators is formed similarly to the first and second groups, however, instead of profit, the net cash inflow is taken into account. NPV - net cash inflow

ChPDS ChPDS ChPDS

Sales volume Total capital Own capital (14)

These indicators give an idea of ​​the extent to which an enterprise can pay creditors, borrowers and shareholders with cash in connection with the use of existing cash inflows. The concept of profitability calculated on the basis of cash flow is widely used in countries with developed market economies. It is a priority because cash flow operations that ensure solvency are an essential sign of the state of the enterprise. .

In the system of enterprise performance indicators, the most important place belongs to profitability.

Profitability represents a use of funds in which the organization not only covers its costs with income, but also makes a profit.

Profitability, i.e. enterprise profitability, can be assessed using both absolute and relative indicators. Absolute indicators express profit and are measured in monetary terms, i.e. in rubles. Relative indicators characterize profitability and are measured as percentages or as coefficients. Profitability indicators are much less influenced than by profit levels, since they are expressed by different ratios of profit and advanced funds(capital), or profits and expenses incurred(costs).

When analyzing, the calculated profitability indicators should be compared with the planned ones, with the corresponding indicators of previous periods, as well as with data from other organizations.

Return on assets

The most important indicator here is return on assets (otherwise known as return on property). This indicator can be determined using the following formula:

Return on assets- this is the profit remaining at the disposal of the enterprise, divided by the average amount of assets; multiply the result by 100%.

Return on assets = (net profit / average annual assets) * 100%

This indicator characterizes the profit received by the enterprise from each ruble, advanced for the formation of assets. Return on assets expresses a measure of profitability in a given period. Let us illustrate the procedure for studying the return on assets indicator according to the data of the analyzed organization.

As can be seen from the table, the actual level of return on assets exceeded the planned level by 0.16 points. This was directly influenced by two factors:

• above-plan increase in net profit in the amount of 124 thousand rubles. increased the level of return on assets by: 124 / 21620 * 100% = + 0.57 points;
• an above-plan increase in the enterprise's assets in the amount of 993 thousand rubles. decreased the level of return on assets by: + 0.16 - (+ 0.57) = - 0.41 points.

The total influence of two factors (balance of factors) is: +0.57+(-0.41) =+0.16.

So, the increase in the level of return on assets compared to the plan took place solely due to an increase in the amount of net profit of the enterprise. At the same time, the increase in average cost, others, also reduced the level return on assets.

For analytical purposes, in addition to indicators of profitability of the entire set of assets, indicators of profitability of fixed assets (funds) and profitability of working capital (assets) are also determined.

Let us present the profitability indicator of fixed production assets (otherwise called the capital profitability indicator) in the form of the following formula:

The profit remaining at the disposal of the enterprise multiplied by 100% and divided by the average cost of fixed assets.

Profit remaining at the disposal of the enterprise multiplied by 100% and divided by the average value of current assets.

Return on Investment

The return on invested capital (return on investment) indicator expresses the efficiency of using funds invested in the development of a given organization. Return on investment is expressed by the following formula:

Profit (before income tax) 100% divided by the currency (total) of the balance sheet minus the amount of short-term liabilities (total of the fifth liability section of the balance sheet).

Return on equity

In order to obtain an increase through the use of a loan, it is necessary that the return on assets minus interest on the use of a loan is greater than zero. In this situation, the economic effect obtained as a result of using the loan will exceed the costs of attracting borrowed sources of funds, that is, interest on the loan.

There is also such a thing as financial leverage, which is the specific weight (share) of borrowed sources of funds in the total amount of financial sources for the formation of the organization’s property.

The ratio of the sources of formation of the organization's assets will be optimal if it provides the maximum increase in return on equity capital in combination with an acceptable amount of financial risk.

In some cases, it is advisable for an enterprise to obtain loans even in conditions where there is a sufficient amount of equity capital, since the return on equity capital increases due to the fact that the effect of investing additional funds can be significantly higher than the interest rate for using a loan.

The creditors of this enterprise, as well as its owners (shareholders), expect to receive certain amounts of income from the provision of funds to this enterprise. From the point of view of creditors, the profitability (price) indicator of borrowed funds will be expressed by the following formula:

The fee for using borrowed funds (this is the profit for lenders) multiplied by 100% divided by the amount of long-term and short-term borrowed funds.

Return on total capital investment

A general indicator expressing the efficiency of using the total amount of capital available to the enterprise is return on total capital investment.

This indicator can be determined by the formula:

Expenses associated with attracting borrowed funds plus profit remaining at the disposal of the enterprise multiplied by 100% divided by the amount of total capital used (balance sheet currency).

Product profitability

Product profitability (profitability of production activities) can be expressed by the formula:

The profit remaining at the disposal of the enterprise multiplied by 100% divided by the total cost of products sold.

The numerator of this formula can also use the profit indicator from sales of products. This formula shows how much profit an enterprise has from each ruble spent on the production and sale of products. This profitability indicator can be determined both for the organization as a whole and for its individual divisions, as well as for individual types of products.

In some cases, product profitability can be calculated as the ratio of the profit remaining at the disposal of the enterprise (profit from product sales) to the amount of revenue from product sales.

• from changes in the structure of sold products. An increase in the share of more profitable types of products in the total amount of production helps to increase the level of profitability of products.;
• changes in product costs have an inverse effect on the level of product profitability;
• change in the average level of selling prices. This factor has a direct impact on the level of profitability of products.

Return on sales

One of the most common profitability indicators is return on sales. This indicator is determined by the following formula:

Profit from sales of products (works, services) multiplied by 100% divided by revenue from sales of products (works, services).

Return on sales characterizes the share of profit in revenue from product sales. This indicator is also called the rate of profitability.

If the profitability of sales tends to decrease, then this indicates a decrease in the competitiveness of the product in the market, as it indicates a reduction in demand for the product.

Let's consider the procedure for factor analysis of the return on sales indicator. Assuming that the product structure remains unchanged, we will determine the impact on the profitability of sales of two factors:

• changes in product prices;
• change in product costs.

Let us denote the profitability of sales of the base and reporting period, respectively, as and .

Then we obtain the following formulas expressing the profitability of sales:

Having presented profit as the difference between revenue from sales of products and its cost, we obtained the same formulas in a transformed form:

Legend:

∆K— change (increment) in profitability of sales for the analyzed period.

Using the method (method) of chain substitutions, we will determine in a generalized form the influence of the first factor - changes in product prices - on the return on sales indicator.

Then we will calculate the impact on the profitability of sales of the second factor - changes in product costs.

Where ∆K N— change in profitability due to changes in product prices;

∆K S— change in profitability due to changes in . The total influence of two factors (balance of factors) is equal to the change in profitability compared to its base value:

∆К = ∆К N + ∆К S,

So, increasing the profitability of sales is achieved by increasing prices for products sold, as well as reducing the cost of products sold. If the share of more profitable types of products in the structure of products sold increases, then this circumstance also increases the level of profitability of sales.

In order to increase the level of profitability of sales, the organization must focus on changes in market conditions, monitor changes in product prices, constantly monitor the level of costs for production and sales of products, as well as implement a flexible and reasonable assortment policy in the field of production and sales of products.

An indicator that allows you to determine the profit received from sales and income from the use of assets or equity capital of the enterprise.

The higher the value of the coefficients, the better the financial condition of the organization, since they are used to assess the ability of a business entity to generate income, its reliability, solvency and efficiency. Profitability ratios are also known as “profitability ratios.”

Groups of profitability ratios

• Margin ratios, which measure a firm's ability to make a profit on sales at different measurement stages (net, operating, or gross profit margin). These parameters show the relationship between profit and sales;
• return ratios used to evaluate a company's level of efficiency in using its assets, equity capital to generate profits and return to its shareholders. The ratio of the coefficients of this group shows the relationship between profit and investment.

Types of profitability ratios

• Gross profit margin (also called "gross profit margin ratio"), calculated as gross profit divided by total sales revenue. This parameter shows the amount of sales income minus the cost of goods sold, which accounts for 1 monetary unit of revenue.
• Operating profit margin (also known as the operating profit margin ratio), which is the ratio of operating profit to sales revenue, measures the percentage of sales revenue minus cost of goods sold and operating expenses that is derived from each monetary unit of revenue.
• Net profit margin (also known as “net profit ratio”) is the ratio of net profit to sales income, which measures the percentage of after-tax profit derived from each monetary unit of turnover.
• Return on assets ratio is a percentage ratio of net profit and book value of assets, which shows how intensively the company generates income from its non-current and working capital. The more assets a company has, the more sales and ultimately profits it can make. If profits grow faster than assets, their returns increase.
• Return on equity ratio is a parameter expressing the percentage of net profit in relation to equity capital. This ratio gives an idea of ​​the amount of profit available to shareholders, i.e. it assesses the possibility of generating income from investments made in the company's shares. The higher the ratio, the more profitable the investment for shareholders and investors.

Thus, profitability ratios determine the profitability of a firm in terms of its sales or investments. The increasing trend of these ratios indicates a reduction in costs, increased productivity and efficiency in enterprise management.