The results of enterprises are evaluated by absolute and relative indicators. One of the main performance indicators is profitability analysis. In the general concept of profitability means the profitability of the enterprise. If the result from the sale of products exceeds the cost of its production, forming a certain amount of profit, the company is considered profitable. Profitability has a deeper economic essence, which is revealed by a whole system of indicators. They have one common meaning - the calculation of profit per ruble of capital invested in assets. All indicators of profitability are measured in relative terms.
Each enterprise carries out operational, investment and financial activities. Based on this, the analysis of profitability is carried out using indicators such as profitability of assets, products, production assets, investments and securities.
With a full analysis of profitability, the profitability of the products is evaluated, characterized by the following indicators:
- profitability of sales,
- profitability of products.
Profitability analysis, in contrast to profit analysis, most fully reflects the final economic result. The level of profitability, which is the ratio of profit to the volume of work performed, allows you to really evaluate the activity in the reporting period and compare it with the results of activities in previous periods. Profitability analysis data is used by the company to evaluate its activities and to implement investment policies and pricing.
Profitability of production (RP) is the ratio of profit to cost. It is calculated by the formula:
RP = (PP / SP) * 100%,
where SP is the cost of production,
PP - profit from sales.
One of the most effective types of analysis of profitability of the enterprise is a factor analysis of profitability of products. With its help, the influence of various factors on the level of profit from sales is determined. For calculations, use the following formulas:
- the impact of sales revenue:
∆ Pn = PPg × (Iv - 1),
where ∆ PP - profit fluctuation due to revenue,
PPG - profit of the previous year,
Yves - revenue change index calculated as the ratio of the revenue of the reporting year (VO) to the revenue of the previous year (Vp);
- the impact of the cost level:
∆ Ps = Cn × Iv - Co,
where ∆ Ps - fluctuation of profit due to cost,
where Co, Cp - the cost of production of the reporting and previous periods;
- the impact of the level of management expenses:
∆ Pur = URp × Yves - URo,
where ∆ Pur - profit fluctuation due to the level of management expenses,
URo and URp - management expenses of the reporting and previous period;
- the impact of the level of business expenses:
∆ Pcr = CRP × Iv - CRo,
where ∆ Pcr - profit fluctuation due to business expenses,
and - selling expenses of the reporting and previous period;
The sum of the factor changes gives the result of a general change in profit for a certain period:
∆ P = ∆ Pn + ∆ Ps + ∆ Pur + ∆ Pcr.
Analysis of return on equity is calculated by the following indicators:
- return on equity of the enterprise (RCP):
Rkp = (ChP / KP) * 100%,
KP - the amount of capital,
PE - net profit;
The indicator reveals the effectiveness of the capital of an enterprise and calculates the amount of profit that falls on a unit of capital. Changes in return on equity are often caused by fluctuations in stock prices on stock exchanges. Therefore, a high value of the indicator does not always indicate a high return on capital;
- return on investment capital (Rick):
Rick = PP / IR * 100%,
where IR is investment capital.
This indicator reveals the effectiveness of using long-term investments. Their value is determined by accounting data as the sum of long-term liabilities and equity;
- return on total capital of the enterprise (Rokp):
Rokp = state of emergency / B * 100%,
where B is the balance sheet for a certain period.
This ratio reveals the efficiency of use of the total capital of the enterprise. In this case, an increase in the coefficient indicates a high efficiency of capital use. Sometimes a decrease in the value of this coefficient may indicate a drop in consumer demand for products or surplus assets.