Profitability AnalysisAnalysis of each element of profit is of great importance for the management of the enterprise, its founders, creditors, etc. For managers, this analysis allows you to determine the prospects for the development of the enterprise, since profit is one of the sources of financing capital investments and replenishment of working capital. For founders, profit is a source of income for the capital invested by them in a particular enterprise. Lenders have an opportunity to assess the prospect of repayment of loans or loans granted to the enterprise, including interest on them.
In the conditions of market relations, the role of profitability indicators of products characterizing the level of profitability (unprofitableness) of its production is also of great importance. Profitability indicators are relative characteristics of the company's performance. They characterize the relative profitability of an enterprise, measured as a percentage of costs or capital from various positions. At the same time, profitability indicators are the most important characteristics of the actual environment for the formation of profit and income of the enterprise.
For this reason, they are mandatory elements of comparative analysis and assessment of the financial condition of the enterprise. Analysis of financial results Various aspects of the organization's production, marketing, supply and financial activities receive a complete monetary assessment in the system of financial results indicators. Summarized, the most important indicators of the company's financial performance are presented in the income statement in the form No. 2 of the annual and quarterly statements. The financial result is the difference between aggregate income and total costs in the process of carrying out economic and financial activities. The system of indicators of financial results includes absolute (profit) and relative indicators (profitability) of efficiency of use.
Profit is the final financial result of the economic activity of the organization. It represents the realized part of the net income created by surplus labor. Profit is the net income of the entrepreneur in terms of invested capital expressed in monetary form. Profit is the most important source of budgets of all levels. Thus, in the growth of profit, both enterprises and the state are interested.
In economic practice, the following indicators are distinguished:
- Gross profit;
- Profit (loss) from sales;
- Profit (loss) before taxation;
- Profit (loss) from ordinary activities;
- Net income or uncovered loss.
Profitability AnalysisEfficiency and economic feasibility of the enterprise is assessed not only absolute, but also relative indicators. In the broad sense of the word, profitability means profitability or profitability. An enterprise is considered to be profitable if the results from the sale of production cover production costs and form a profit amount sufficient for the normal functioning of the enterprise.
In the process of analysis, two groups of profitability indicators are distinguished:
- Product profitability;
- Return on capital.