In a general sense, financial indicators are data that fully characterize the financial activities of an enterprise. They help to assess the results of management, summarize and summarize the indicators of financial activity of the subject.
The financial performance of the enterprise can be considered as criteria for evaluating the performance of an economic entity, and can be associated with the choice of the direction and goals of the enterprise, i.e. used when making management decisions.
The main financial indicators in the work of the enterprise provide for the analysis of such values: revenue from sales, profits and cash flow balances of the organization.
Sales revenue shows the income received by the company from the sale of goods and finished products, from performing certain works and providing services for a specific period of time. The result can be expressed both in monetary and non-monetary form. The second form means netting, barter and the like.
Profit is the difference between the income represented by sales revenue and all expenses that the enterprise had in the corresponding period. Costs should take into account the cost of goods, services or work. It is the profit received that is subject to taxation. And that profit balance, which is at the disposal of the subject after calculating all taxes, can be used by the enterprise for its own needs (expansion of production, payment of dividends to founders, etc.).
The cash flow balance is calculated as the difference between the total amount received by the company and the money transferred by it to other organizations in a certain reporting period. Moreover, cash means both cash and non-cash money, and regardless of the currency in which the turnover is made.
These financial indicators must be clearly delineated among themselves. So, when calculating the profit, it is necessary to take into account completely all the income of the enterprise, including sales revenue, and absolutely all other income funds.
It should be noted that such financial indicators allow the founders or regulatory bodies to conclude on the effectiveness of the enterprise, identify problematic issues and decide on ways to solve them.
To fully characterize the financial activities of the enterprise, there are financial indicators that are formed in the process of conducting analytical activities or in the course of production and investment activities of an economic entity. At the same time, there is not a single universal coefficient that would fully characterize the results of the entrepreneur.
Financial indicators reflecting the results of an enterprise are profitability, financial stability, liquidity and market value of assets.
Profitability characterizes the economic efficiency of the enterprise, is a relative indicator that compares the result with the costs or resources used to achieve a positive effect. In practice, there are a large number of profitability ratios, the use of any of which depends on the selection of criteria for assessing the economic activity of a subject from the perspective of efficiency. The choice of the main assessment indicator, represented by profit, which is used in the calculations, also depends on this. So, gross profit, profit before tax, operating profit and net profit can be used