Yield represents. Enterprise profitability. Analysis of relative indicators of profitability
Profitability (profitability) of the enterprise
financial profitability efficiency profitability
Profit is the part of the proceeds remaining after the reimbursement of all costs of production and commercial activities enterprises. Characterizing the excess of receipts over resource costs, profit expresses the goal business activitiesserves as the main economic indicator last.
The meaning of profit is that it (profit) is:
\u003e the main source of financing for the development of the enterprise, improving its material and technical base and products, ensuring all forms of investment;
\u003e object of taxation and source of tax payment. There are such types of profit, depending on its formation and use.
Total profit - all the profit of the enterprise received from all types of activities, before its taxation and distribution.
Profit after tax (net) - the real profit received by the company after taxes.
Gross margin is the difference between revenue and production costs (the cost of production as determined by partial costing). This concept includes the actual profit and the so-called non-production costs (administrative, commercial).
Operating profit, often referred to as net profit, equals gross profit less non-operating costs.
Marginal profit characterizes the amount of proceeds from the sale of products minus variable costs. Therefore, such a profit in magnitude will coincide with the gross profit if the calculation is carried out only for variable costs.
The sources of the formation of the total amount of the enterprise's profit are:
- a) sale (sale) of products (services);
- b) sale of unnecessary property;
- c) non-operational (passive) operations.
Profit from the sale of products is calculated as the difference between the proceeds from the sale of products (excluding value added tax and excise duty) and its full cost.
Profit from the sale of property includes income from the sale of property, plant and equipment, intangible assets, securities of other companies. It is determined as the difference between the selling price and the book (residual) value of the object, taking into account the costs of selling (dismantling, transportation, payment of agency services, etc.).
Profit from non-operating transactions is profit from equity participation in joint ventures, renting out property (leasing), dividends from securities, income from owning debt obligations, royalties, income from economic sanctions, etc.
According to the Law of Ukraine "On Taxation of Enterprise Profits" (1997), taxable profit is calculated as the difference between the gross income for certain period, gross costs and the amount of depreciation deductions from the book value of fixed assets and intangible assets for the same period;
The received profit is used in the following directions:
- 1.profit directed outside the enterprise in the form of payments to owners corporate rights and the staff of the company according to the results of work as an incentive measure, on social support etc. (distributed profit);
- 2. the profit remaining at the enterprise is the financial source of its development and is directed to the reserve and investment funds (retained earnings).
In corporatized enterprises, shareholders receive a portion of corporate profits in the form of dividends. The value of the latter depends on the adopted dividend policy, the main options of which are:
- · Payment of stable dividends at the same level;
- · Payment of dividends with a certain annual increase;
- The direction to dividends of the established (normative) part net profit;
- · Payment of dividends from the balance of profits after financing investment needs;
- · Payment of dividends not in money, but in additionally issued shares of the enterprise.
Experience of foreign firms and successfully working domestic enterprises indicates that the share of dividend amounts in net profit fluctuates between 30 - 70%.
The economic feasibility of the operation of the enterprise in the conditions of a market economy is determined by the receipt of income. The profitability of the enterprise is characterized by absolute and relative indicators.
The absolute rate of return is the amount of income or profit. In special foreign literature, the concept of "income" is defined as follows:
“Income is an increase in economic benefits during the reporting period in the form of an inflow of funds or an increase in the value of assets or a decrease in liabilities, which leads to an increase in capital, except in cases where such growth is provided by contributions from shareholders” (15),
More succinctly, this concept is defined in the Decree of the President of the Republic of Kazakhstan, which has the force of the Law, dated December 26, 1995 No. 2732 "On accounting", where Article 13 says: "Income is an increase in assets or a decrease in liabilities in the reporting period" ( eleven). As a rule, it is impossible to obtain the desired income without carrying out the corresponding expenses. Without receiving income, in turn, it is impossible to develop the enterprise and successfully solve social issues.
The system of profitability indicators consists primarily of absolute indicators financial results, which include: income from the sale of products (works, services); gross income; operating income; income from non-core activities; income from ordinary activities before tax; income from ordinary activities after tax, income from emergencies; net income, which is the final financial result of the enterprise.
Income in a generalized form reflects the results of management, the productivity of the costs of living and materialized labor. Some economists refer it to indicators economic effect, others - the efficiency of the enterprise. In our opinion, the first are right, since the absolute amount of income does not allow judging the return on investment.
The role of income in market conditions has increased significantly. As you know, under a planned-directive economy, its role was belittled. Receiving income (profit) as the target function of any enterprise was diminished. With the transition to a market economy, income (profit) became its driving force. It is he who determines the solution to three fundamental interrelated problems, what to produce, how to produce and for whom to produce. Receiving 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. The growth of income creates a financial basis for self-financing, which is a prerequisite for the successful economic activity of an enterprise. This principle is based on the full recoupment of production costs 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. With a temporary shortage of funds, the need for them can be provided by short-term bike loans and commercial loans when it comes to operating costs, as well as long-term bank loans used for capital investments.
At the expense of income, part of the company's obligations to the budget, banks and other enterprises and organizations is also fulfilled. Thus, the income becomes the most important indicator to assess the production and financial activities of the enterprise. It characterizes the degree of his business activity and financial well-being. Income is determined by the level of return of advanced funds and the profitability of investments in the assets of the 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 function of income. They are credited to him from two to six. In our opinion, it performs only two functions: 1) a source of income for the state budget, 2) a source of industrial and social development of enterprises and associations.
The unity of functions in their interdependence makes income the element of management in which the economic interests of society, the collective of the enterprise and each employee are linked. Hence, the importance of the problem of the formation and distribution of income is clear, the practical solution of which provides the necessary dependence of the efficiency of an economic entity on the amount of income received and left at its disposal.
In order for the income to be able to effectively perform its functions, the following basic conditions are necessary:
Product prices should, with a certain degree of approximation,
express publicly necessary costs labor and at the same time do not take into account
discontinuous increase in labor productivity and cost reduction.
The system for calculating products and determining the cost of production must be scientifically based.
The mechanism of distribution of income should play an active role to serve as a stimulating factor for the development of production and increase its efficiency.
Effective use of income is possible only in the system of all other financial levers (depreciation, financial
sanctions, taxation, excise taxes, rent, dividends, interest
rates, funds special purpose, deposits, shares, investments,
forms of payment, types of loans, exchange rates and securities, etc.).
It should be noted, however, that the absolute value of income refers to indicators of economic effect, and not to the efficiency of financial and economic activity enterprises. An income of 500 thousand tenge can be the income of enterprises of different sizes in terms of the scale of activity and the amount of invested capital. Accordingly, the degree of relative weight of this amount will not be the same. Therefore, for a more realistic assessment of the income received, relative indicators of profitability are used, which include various profitability indicators expressing the level of profitability and characterizing the efficiency of the enterprise.
Both the economic entity itself and the state are interested in the growth of profitability indicators of the enterprise. Therefore, at each enterprise it is necessary to carry out a systematic analysis of the absolute and relative indicators of profitability.
The tasks of analyzing profitability indicators include:
Evaluation of the implementation of the plan of absolute indicators of profitability;
The study constituent elements the formation of net income;
Identification and quantification of the influence of factors affecting income;
Study of directions, proportions and trends of income distribution, identification of income growth reserves;
Research of various rates of return (profitability) and
factors affecting their level.
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 financial condition organizations, since they are used to assess the ability of a business entity to receive income, its reliability, solvency and efficiency. Rates of return are also known as "rate of return".
Groups of yield ratios
Profitability ratios are usually indicated in percentage terms (the result is multiplied by 100) and are divided into 2 groups:- margin ratios that determine the firm's ability to generate sales profit at different measurement stages (net, operating, or gross margin). These parameters show the relationship between profit and sales;
- return ratios used to assess the level of efficiency of the company in using its assets, equity capital for profit and return to its shareholders. The ratio of the coefficients of this group shows the relationship between profit and investment.
Types of profitability ratios
IN financial analysis various profitability ratios are used, the most common of which are:- Gross profit margin (also called “gross profit margin”), calculated as the sum of gross profit divided by total sales revenue. This parameter shows the amount of sales revenue minus the cost of goods sold, which is accounted for by 1 monetary unit of revenue.
- Operating profit margin (also known as operating profit margin), which is the ratio of operating profit to sales revenue, which measures the percentage of sales revenue less cost products sold and operating costs derived from each revenue currency.
- Net profit margin (also known as “net profit ratio”) is the ratio of net profit to income from sales, which is used to measure the percentage of profit after tax, obtained from each currency unit of trade.
- Return on assets ratio - the percentage of net income and book value of assets, which shows how intensively the company generates income from its non-current and working capital... The more assets a firm has, the more sales and, as a result, profits it can get. If profits grow faster than assets, the return on them increases.
- The return on equity ratio is a parameter expressing the percentage of net profit in relation to equity capital. This ratio gives an idea of \u200b\u200bthe amount of profit available to shareholders, that is, it estimates the possibility of earning income from investments invested in the company's shares. The higher the ratio, the more profitable the investment is for shareholders and investors.
Thus, the rates of return determine the firm's profitability in terms of its sales or investment. The increasing trend of these ratios indicates a reduction in costs, an increase in productivity and efficiency of enterprise management.
Profitability indicators:
1. The sum of all income of the enterprise (thousand rubles):
∑∂ \u003d 2110 + 2310 + 2320 +2340 ± 2430 ± 2450 ± 2460
2. Return on assets:
Shows how much the company received total income from each ruble invested in assets.
3. The sum of all expenses:
∑ρ \u003d 2120 + 2210 + 2220 + 2330 + 2350 + 2410 ± 2430 ± 2450 ± 2460
4. Return on costs:
where is the profit before tax.
Shows how many kopecks of total profit the company receives from each ruble of total expenses.
5. Profitability of expenses:
If a< 1, то финансовый результат убыток.
6. Share of revenue in total income:
Shows how much revenue is included in all received income of the enterprise. If\u003e 50% this means that the company receives income related to the operating activities of the company.
Business activity indicators
In a broad sense, business activity means the entire spectrum of the firm's efforts aimed at promoting it in the markets of products, labor, and capital. In a narrower sense, business activity is expressed in the dynamism of an organization's development, in the speed of achieving its goals.
In the financial aspect, business activity is manifested, first of all, in the turnover of the property of the enterprise and its components.
The turnover is characterized by two indicators:
The turnover ratio shows the number of revolutions that the assets of the enterprise and its components have made during the analyzed period;
The period of full turnover is the average period for which the company returns cashinvested in assets and their components.
1. Turnover of assets (property, capital).
1.1. Asset (property, capital) turnover ratio:
,
where IN - revenue;
Average asset value;
Average property size;
Average capital.
; 
.
1.2. Full asset turnover period:
,
where D - the analyzed period in days.
2. Turnover of current assets.
2.1. Turnover ratio of current assets:
where is the average value of current assets.
.
2.2. Turnover period of current assets:
.
Attraction (release) of current assets as a result of deceleration (acceleration) of the turnover:
,
where t 1 and t 0 - the period of turnover of current assets of the reporting and the previous year.
The result with a minus sign indicates an acceleration of the turnover of current assets and their release from circulation. The result with a plus sign indicates a slowdown in the turnover of current assets and their additional attraction into turnover.
3. Inventory turnover.
3.1. Inventory turnover ratio:
where s pr. - cost of sales;
Average stocks.
.
3.2. Stock turnover period:
.
4. The turnover of receivables.
4.1. Accounts receivable turnover ratio:
where is the average amount of accounts receivable.
4.2. Accounts receivable turnover period:
This indicator tells how many days, on average, debtors pay off their debts.
5. Turnover accounts payable.
5.1. Accounts payable turnover ratio:
,
where is the average amount of accounts payable;
Full cost sales.
5.2. Accounts payable turnover period:
This indicator tells how many days, on average, a company pays off its debts.
HELL. Sheremet recommends calculating return on assets within the framework of business activity analysis.
1. Capital productivity of fixed assets:
where IN - revenue;
Average value of fixed assets in form No. 5 ..
.
This indicator tells how much revenue in value terms the firm receives from each ruble invested in fixed assets.
2. Capital productivity of the active part of fixed assets:
This indicator tells how much revenue in value terms the firm receives from each ruble invested in machinery, equipment and vehicles.
Also, for the analysis of business activity, the ratio of receivables and payables is considered.
The indicators are also calculated:
1. The duration of the operational (production and commercial) cycle:
.
Shows how many days, on average, the company's financial resources are immobilized in inventories and receivables.
2. Duration of the financial cycle:
Among quality indicators business activity can be distinguished:
1.current performance:
1.1. presence of stable buyers and suppliers;
1.2. breadth of product markets;
1.3. competitiveness of products;
1.4. business reputation;
1.5. impact on industry or regional level prices;
2.Quality perspective indicators:
2.1. purchase of new high-tech equipment;
2.2. modernization of production technology;
2.3. attracting highly qualified personnel;
2.4. active participation in government programs and obtaining promising profitable orders.
To characterize business activity, the coefficient of sustainability of economic growth is calculated:
,
where P - profit;
DIP - dividends and interest on securities;
Average equity capital.
.
This coefficient shows the rate at which percentage increases or decreases equity in the course of business activities of the enterprise.
The income of an enterprise is what a particular legal entity is doing its business for. Thanks to this indicator, it becomes possible to expand, pay wages, purchase new equipment, purchase materials, pay for the services of third parties, and so on.
Definition
The income of an enterprise is the money that a legal entity receives for providing its own services, selling goods, performing work, and so on.
Traditionally, income is calculated after all expenses incurred by the company in the course of performing its functions have been deducted from the funds received. Income is calculated for a certain reporting period, but can be used for any suitable purpose.
Types of enterprise income
There is a certain division of funds received for the performance of services. Highlight options such as money received in connection with emergencies, the receipt of additional profits through the taxation system, the company's income from various options for activities and directly direct receipt of funds from the performance of basic functions.
Sales income
The profit that was received by the firm from the sale of goods, the performance of work or the performance of services is the income of the enterprise. In accordance with applicable norms, standards and laws, the concept of such factors includes any basic functions that have been fully implemented. That is, if these are goods, then they must be fully paid for and sent to the buyer (or exported by him independently from warehouse). It should be noted that in this case, from the money that was transferred for the products, it is necessary to deduct any possible expenses such as fees for and so on.
The situation is similar with works and services. They must be completed in a timely manner and fully, and the funds for them must be received at the company's account. An example of such a situation would be a simple implementation of some goods. The seller and the buyer enter into a contract. Under this contract, the seller manufactures (or resells) any product. The buyer picks it up (or receives it through transportation from the seller) and, at a predetermined time, makes a payment to the company's account. This can happen both before the immediate receipt of the cargo, and after this moment. Among other things, many other possibilities can be taken into account, such as payment as the goods are sold to end customers or the transfer of funds even before the start of production. Much depends on the relationship and trust between the two parties to the transaction, their reputation, the specifics of the work process, established practice, and so on.
Gross income
If the main income of an enterprise implies receiving money for performing basic functions, then its gross variety is the difference between the money received and the funds that were spent on the purchase of materials, maintenance or purchase of equipment, and so on. In fact, this is the profit that the company receives in its pure form, that is, when it is clear exactly how much money was spent on creating a product and how much was received for it.
The following situation can serve as an example. The company purchases the materials required to produce the goods. She spends money on it. Now it is additionally required to purchase equipment, pay salaries to employees, and so on. This is also considered a cost. Then, as a result, products are produced that are sold to the buyer. This is already income. Here is the difference between the amounts that were spent to create the product and those that were ultimately received, and is
Income from main and secondary activities
The financial income of the enterprise from the main activity is the next stage of calculations, which takes into account the previously calculated one, excluding all funds spent on the general activities of the company at a certain point in time. That is, if in the previous paragraph only those expenses were taken into account that were incurred by the company in the process of creating a product or providing a service, then almost everything that is possible and what cost the company money before making a profit is already taken into account.
There is also other income of the enterprise. These are the funds that it receives from certain extraneous activities that are not directly related to the main functions, but also allow it to have a certain profit. There are a lot of such options, and they directly depend on the features specific organization... An example of this is the receipt of profit from the lease by other persons of the company's property, from deposits, the sale of fixed assets, materials, ownership of shares, and so on. You can clearly consider this example: there is a certain company that sells its products. To receive it, it can offer to transport the ordered goods to the specified point for a fee, unload it, install it, teach it to use, and so on. The sale of products itself is the main income, and everything else - transportation, installation, etc. - is no longer the main activity.
Taxation and income
Among other things, income is directly related to taxes. So, they highlight those profits that exist until the money is paid to the state budget and their balance after the implementation of this operation. The first option shows a more honest income that was received as a result of the firm's activities, but the focus is mainly on the second option. This is due to the fact that taxes will still have to be paid, and it is much easier to immediately take this factor into account when distributing funds that will definitely not go anywhere between different directions, than to further cut off funding due to incorrect calculations.
In some cases, the company is entitled to a refund of funds previously paid as taxes. That is, at first, you still have to give the money, but there is a high probability that they will eventually end up in the account again. Given the fact that it is not always possible to calculate exactly when such a return will occur, it is extremely difficult to predict anything on this basis. However, it is still worth taking into account a certain amount that can be spent profitably in the future.
Emergencies
Despite the fact that in most cases, various non-standard moments that can affect the work of the company, most often lead to losses (in one amount or another), with a certain amount of luck and the presence of properly executed insurance, they can also become a reason for making a profit. For example, a situation occurs in which the insured equipment is damaged. The case fits the one described in the contract with the insurance company, and she pays all the due funds. At the same time, the damaged equipment was either not needed at all, or it was planned to be replaced. As a result, the amount of insurance payments may significantly exceed the money that the company could receive for the sale of unnecessary fixed assets.
An illustrative example: there is a company that produces a product. Then she realizes it and gets paid for it. The next step is to pay taxes and, as an option, incur certain costs associated with force majeure situations. That is, the product is sold, money is received, then taxes are paid. Further, for example, a flood occurs, and repairs are carried out from the funds calculated in the previous paragraph, and only what remains can be considered the company's net income.
Outcome
From all that has been said above, it follows that financial activities enterprises in terms of receiving funds for the performance of their functions is divided into several stages, at each of which it is possible to calculate certain types of income. They can both carry useful statistical information and be taken into account in the future for subsequent calculations, determining the future capabilities of the company, and so on.
Enterprise income is the foundation on which all activities are based. It is the meaning of functioning legal entity (at least most of them). Of course, there are some companies that do not make income their main responsibility. However, they also profit from charitable foundations, from performing any non-core work and so on.