1.4.5 Analysis of the enterprise’s net profit
The net profit of an enterprise is determined as the difference between the taxable profit of the reporting period and the amount of income tax (if standard system taxation) or as the difference between total taxable income and single tax(with a simplified taxation system). Thus, net profit depends on the tax base and the income tax benefits used.
The directions for using net profit are determined by the enterprise independently. The main directions for using profits are as follows: contributions to the reserve fund, the formation of accumulation funds, consumption funds, social sphere, diversion for charitable and other purposes, in joint-stock companies - payment of dividends.
The distribution of net profit in joint stock companies is the main issue in the dividend policy of enterprises. Most important indicators The company's dividend policy is:
· level of capitalization of net profit, i.e. distributing it to accumulation funds;
· dividend yield level, i.e. the share of profit allocated for the payment of dividends on shares (shares).
Capitalization of an enterprise's profits allows it to expand its activities through cheaper sources of financing and maintain the previous system of control over the activities of the enterprise, since the number of owners does not increase.
The stability of dividend payments is an indicator of the profitable activity of an enterprise and evidence of its financial stability. All this, in turn, reduces the level of risk for investors, stimulates demand for shares in a given enterprise, and leads to an increase in market value shares
1.4.6 Analysis of profitability indicators
Profitability indicators characterize the efficiency of the enterprise as a whole, the profitability of various areas of activity, cost recovery, etc. They reflect the final results more fully than profit economic activity enterprises, because their value shows the relationship between the effect and the available or used resources. They are used to assess the efficiency of an enterprise (also for comparative assessment efficiency of two or more enterprises) and as a tool in investment policy and pricing.
Profitability indicators can be grouped into three main groups:
1. indicators characterizing cost recovery;
2. indicators characterizing the profitability of sales;
3. indicators characterizing the profitability of the enterprise’s assets (involved in non-current and working capital);
4. indicators characterizing the return on capital, payback of investment projects.
Economic profitability(recoupment of costs) is the ratio of profit from the sale of services (P r) or net profit (PP) to the amount of costs for the sale of services (C):
P = P r / C x 100% (total profitability);
P = PP / C x 100% (estimated profitability).
It shows how much profit the company makes from each ruble spent on production and sales of services.
From the above formulas it follows that the main factors influencing the level of profitability of production activities are the profit from the sale of services (net profit) or the amount of costs from the sale of services. To assess the specific impact of each factor on the performance indicator, you can use conditional profitability, which is calculated as the ratio of the profit of the reporting period to the total cost of the base period or plan. For the purposes of this analysis, the conditional profitability indicator must be compared with the profitability indicators in each of the periods under consideration.
Commercial profitability, or profitability of sales (turnover), is the ratio of profit (profit from sales, profit before and after taxation, net profit or net income) to the amount of revenue received (B):
P=P p/B x 100%.
Return on sales indicators characterize efficiency entrepreneurial activity, i.e. how much profit does the company have from each ruble of sales (volume of sales of services). They can be calculated for the enterprise as a whole and certain species services.
Economic profitability, or return on assets, is the ratio of profit to the total value of the enterprise’s property, represented by non-current (A int) and current (A about) assets:
P=P/(A in + A about) x 100%.
Financial profitability or return on capital is the ratio of profit to the amount of equity capital (Kc) reflected in section 3 of the balance sheet:
P=P/K s x 100%.
Return on capital indicators characterize the degree to which an enterprise uses financial levers to increase profitability. They, as a rule, do not coincide with each other, since they reflect different quantities. These indicators are also specific in that they meet the interests of all participants in the enterprise’s business: enterprise managers are interested in the profitability of the entire total capital; potential investors and creditors – return on invested or borrowed capital; owners of the enterprise - return on equity.
Each return on equity indicator can be presented in mind factor model. For example:
P/K s = P/V x V/K,
where P/V is the profitability of sales;
B/C - capital turnover.
The economic connection between return on capital, capital turnover and return on sales is obvious. Consequently, the ways to increase return on capital are to increase return on sales and accelerate capital turnover.
In a similar way, the absolute efficiency (payback) of investment projects is determined and analyzed: the received or expected profit from the project relates to the amount of investment in this project.
In the process of further profitability analysis, the dynamics of all profitability indicators should be studied and compared with similar indicators of competing enterprises.
The main sources of reserves for increasing the level of profitability of services are an increase in the amount of profit from the sale of services and a reduction in the cost of services.
Analysis and assessment of the use of net profit
Net profit quantitatively represents the difference between the total amount of profit and the amount of taxes contributed to the budget from profits, economic sanctions and other obligatory payments of the enterprise, covered by profits. Its value depends on the factors of change in the total amount of profit and the factors that determine the share of net profit in the total amount of profit, namely: the share of taxes, economic sanctions, etc. etc.
The directions for using profits and the principles of distribution are determined by the enterprise independently and are reflected in the accounting policies. At the same time, the economic entity proceeds from the scale of profit, specific areas of activity and prospects for economic development, therefore, individual areas for using profit may change depending on the specific situation.
Necessary information for analysis is reflected in Form No. 2 and Form No. 3 (in the calculation of contributions to funds). In accordance with the law and constituent documents, the enterprise distributes net profit in the following areas of use:
Contributions to the reserve fund,
Contributions to the social sector fund,
For charitable and other purposes,
In joint stock companies - payment of dividends.
During the year, an economic entity directs profit to current needs in accordance with their purpose, that is, it spends the profit of previous years.
Part of the profit may be retained - this is additional financial reserve, which can be used to replenish funds and increase authorized capital.
When analyzing net profit, it is necessary to draw up an analytical table that reflects the areas of use of net profit (actual distribution of profit). Based on the data reflected in the table, it is necessary to find the absolute deviation, identify the reasons for the deviations, determine the percentage of profit according to the plan, in fact, find the relative deviation, and draw conclusions based on the results of the calculations. Special attention One should pay attention to the formation and use of the accumulation fund and the amount of retained earnings, i.e., reinvested earnings.
In joint stock companies, distribution of profits is a matter of the dividend policy of an economic entity.
Capitalization of net profit allows you to expand production using your own funds. This reduces the cost of servicing external sources of financing (credits, borrowings). The size of net profit capitalization makes it possible to evaluate not only the growth rate of the capital of a business entity, but also to evaluate the margin of financial strength (return on sales, turnover of all assets). The rate of increase in equity capital is an important limiter on the growth rate of an enterprise. The rate of production growth depends not only on the demand of sales markets, the capacity of the enterprise, but also on the capital structure.
The growth rate of equity capital characterizes the potential capabilities of an economic entity to expand production. The rate of sustainable growth for the future depends on current activities, which determine the amount of profit. The amount of current assets is flexible and depends on the scale of the business:
Industry affiliation,
Analysis of the enterprise's net profit should be carried out regularly, as it is necessary to improve the efficiency of the economic activities of any commercial entity. From our article you will learn about the types and stages of net profit analysis.
Types of net profit analysis
Net profit analysis carried out in a variety of ways. Among the most common are horizontal, vertical and factor analysis. Besides, important stage The study of the financial results of a company, a component of which is net profit, is an analysis of the quality of net profit and its use.
All of the above types of analysis have one important common element - a single preliminary stage. It includes studying the structure of the company's income and expenses. Such a study allows us to draw up a general picture of the impact of the complete set of income and expenses of an enterprise on its net profit.
General indicators of income and expenses act as aggregated factors in the formation of net profit, and their change acts as a factor in the change in net profit.
The basis is simple model factor analysis of changes in net profit:
∆ChP = ∆D - ∆P,
where ∆NP, ∆D and ∆Р are the change in net profit, income and expenses, respectively.
For example, if in the current period the company’s income increased by 5,000,000 rubles, and expenses by 3,000,000 rubles, then the change in net profit compared to the previous period will be 2,000,000 rubles. (∆NP = 5,000,000 - 3,000,000).
This analysis model can be detailed by deciphering income and expenses in the formula as income and expenses from core activities (OD and OR) and other income and expenses (PD and PR). As a result, we get the 2nd analysis model:
∆PP = (∆OD + ∆PD) - (∆OP + ∆PR) = (∆OD - ∆OP) + (∆PD - ∆PR).
From this formula, you can determine what contributed more to the change in the company’s net profit - its main activities or others.
The preliminary stage allows us to identify the general ratio of income and expenses, and all subsequent analytical operations are aimed at a detailed study of the factors influencing the formation of net profit.
We will talk more about these types of analysis in the following sections.
Horizontal and vertical analysis of net profit
For horizontal and vertical analysis, it is necessary to know the indicators that form net profit. All of them are presented in one of the most important accounting reports - financial results. By studying it, you can analyze the impact of each indicator on net profit over time.
The name “horizontal analysis” characterizes the process of its implementation. The study is carried out horizontally: the indicators of each component of net profit in the current period are compared with the corresponding indicators for the same period of time last year. The result is expressed as a percentage.
For example, sales revenue for 9 months of 2015 amounted to 100,000,000 rubles, and for 9 months of 2014 - 170,000,000 rubles. Horizontal analysis will reveal that in this year Revenue decreased by 41% compared to the previous period:
(100,000,000 - 170,000,000) / 170 × 100.
All indicators affecting net profit are considered similarly: production costs;
- gross profit;
- administrative and commercial expenses;
- revenue from sales;
- other income and expenses.
For more information about a firm's gross income, see the article .
Vertical analysis involves examining indicators from top to bottom along the lines of the income statement. It allows you to determine the structure of the formation of net profit indicators.
When analyzing net profit, company specialists assess the level and dynamics of indicators that form net profit and identify possible profit reserves based on optimization of sales volumes and production and distribution costs.
Factor analysis of net profit
Factor analysis of net profit begins with the grouping of all factors influencing its value. They form 2 large groups: external and internal factors.
External factors are those that do not depend in any way on the company itself and cannot be controlled by it. Such influences include force majeure, natural (climatic) features, etc. This also includes, for example, changes in state tariffs, inflationary impact on prices (for raw materials, fuel, etc.) or violation by counterparties of the terms of business contracts.
Internal factors are those that depend on the company itself and determine the results of its work (accounting methods, cost structure, etc.).
In general, net profit is determined using the following algorithm:
PE = B - SS - KR - UR + PD - PR - NP,
B - sales revenue;
CC - cost of production;
UR and CR - administrative and commercial expenses;
PD and PR - other income and expenses;
NP - income tax.
On the income statement lines it looks like this:
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Factor analysis of changes in net profit (∆NP) in the reporting period in comparison with the same period of the previous year is carried out using the following formula:
∆ChP = ∆B + ∆SS + ∆KR + ∆UR + ∆PD + ∆PR - ∆SNP,
∆B — change in revenue;
∆СС - change in cost, etc. (change in other factors affecting profit);
∆SNP is the change in the current income tax adjusted for deferred tax assets (IT) and liabilities (IT).
For more information about SHE and IT, see the article .
Factor analysis based on this formula gives a generalized idea of the impact of financial results various types the company's activities on its net profit.
Analysis of quality and use of net profit
The quality of profit is considered to be the generalized structure of sources of net profit. Analysis of the quality of net profit is aimed at reducing the gap between the amounts of net profit reflected in the accounting records and its real value, supported by the actual influx of money into the company.
Businessmen themselves are able to influence the amount of profit through the formation of rational accounting policies. For example, a company has the right to define and consolidate in its accounting policies such methods of accounting for assets as depreciation of fixed assets ( linear method, reducing balance method, etc.), the procedure for writing off the cost of inventories (FIFO, at average cost, etc.), the procedure for forming reserves, etc. All these factors can have a significant impact on the amount of net profit.
Another important task for the company is to analyze the use of net profit. Net profit is involved in the calculation of earnings per 1 share - a characteristic of the company’s market activity, indicating the net profit earned in the reporting period per 1 share:
PR A = (PE - D PA) / K A,
PR A - earnings per share;
D PA - dividends on preferred shares;
K A is the number of ordinary shares in circulation.
Any user of reporting can analyze the use of net profit of joint-stock companies. Public joint stock companies are required to disclose 2 indicators in their reporting: basic earnings (loss) per share and diluted earnings (loss) per share.
In this case, the basic profit is determined on the basis of actual data, and the diluted profit indicator is predictive in nature and shows possible degree a decrease in profit or an increase in loss per 1 ordinary share in the event of:
- conversion of preferred shares and other valuable papers joint stock company into ordinary shares;
- execution of contracts for the purchase and sale of ordinary shares from the issuer at a price below their market value.
Thus, dilution represents a decrease in profit (or increase in loss) per 1 ordinary share due to the possible future issue of additional ordinary shares without a corresponding increase in the assets of the joint-stock company.
Results
Analysis of net profit formation is divided into several types: horizontal, vertical, factor analysis. The quality of net profit, its dependence on the company's accounting policies and the use of net profit by owners are analyzed separately.
The study of all factors and indicators affecting profit allows us to identify potential profit reserves based on optimization of sales volumes and production and distribution costs.
The distribution of balance sheet profit is shown in Fig. 22.1.
The figure shows that one part of the balance sheet profit in the form of taxes and fees goes to the state budget and is used for the needs of society, and the second part remains at the disposal of the enterprise, from which deductions are made to charitable funds, interest payments, economic sanctions and other expenses covered due to profit. The remaining amount is net profit, which is used to pay dividends to the shareholders of the enterprise, to expand production, material incentives for employees, replenishment of own working capital, etc.
To increase production efficiency, it is very important that when distributing profits, optimality is achieved in satisfying the interests of the state, enterprise and workers. The state is interested in getting as much profit as possible into the budget. The management of the enterprise strives to direct a large amount profits for expanded reproduction. Workers are interested in increased wages.
However, if the state imposes very high taxes on enterprises, this does not stimulate the development of production, and therefore the volume of production is reduced, and, as a result, the flow of funds into the budget. The same can happen if the entire amount of profit is used on financial incentives employees of the enterprise. In this case, in the future, production will decrease, since fixed production assets will not be updated, own working capital will be reduced, which will ultimately lead to a decrease in the living standards of workers and job cuts. If the share of profits for material incentives for labor decreases, this in turn will lead to a decrease in the material interest of workers and to a decrease in production efficiency. This problem is especially acute in conditions of inflation, when purchasing power wages falls. The latter is determined by the real payment index according to the formula:
Obviously, if real pay decreases or remains at the same level, or increases, but not as quickly as in other enterprises, then workers will demand an increase in their pay. Therefore, every enterprise must find best option profit distribution. Analysis of economic activity should play a major role in this.
In the process of analysis, it is necessary to study the factors of change in the amount of taxable profit, the amount of dividends paid, interest, taxes on profits, the amount of net profit, contributions to the funds of the enterprise, the methodology of which was most thoroughly developed by N.A. Rusak.
The analysis uses the Law on taxes and fees levied on the budget, instructions and guidelines Ministry of Finance, the Charter of the enterprise, as well as data from the profit and loss statement, appendix to the balance sheet, capital flow statement, analytical accounting under account 81 “Use of profit”, calculations of taxes on property, on profit, on income, etc.
22.2. Taxable income analysis
The procedure for determining taxable profit. Factors shaping its value. The procedure for calculating their influence.
For tax authorities and enterprises, taxable profit is of great interest, since the amount of income tax, and, accordingly, the amount of net income depends on it.
To determine the amount of taxable profit, it is necessary to subtract from the balance sheet amount of profit:
the enterprise's income from securities, equity participation in joint ventures and other non-operating transactions is taxed at special rates and withheld at the source of its payment;
profit for which tax benefits are established in accordance with current tax legislation.
Table data 22.1 show that the actual amount of taxable profit is higher than the planned one by 1220 million rubles. The change in its amount is influenced by the factors that form the amount of balance sheet profit (Fig. 22.1), as well as indicators 5, 7 and 8 of table. 22.1, deducted from the balance sheet profit when calculating its value. Using data from factor analysis of profits from product sales, non-operating financial results, as well as data from Table. 22.1, we can determine how these factors influence the change in the amount of taxable profit (Table 22.2).
The table shows that the amount of taxable profit increased mainly due to an increase in the level of selling prices and specific gravity more expensive products in total sales. An increase in product costs, a decrease in sales volume, payment of fines and penalties, losses from debt write-off, and an increase in the amount of preferential profits contributed to a reduction in the amount of taxable profit.
22.3. Analysis of taxes from profits
Main types of taxes on profits. Factors of change in their magnitude. Methodology for determining their influence.
It is advisable to begin the analysis of taxes contributed to the budget from profits by studying their composition and structure.
Table data 22.3 show that taxes from profits increased by 29.5% compared to last year, and by 7.9% compared to the plan. The tax structure has also changed somewhat: the share of property tax has decreased, and the share of profit tax has increased. Taxes on profits in its total amount are about 34%, which is 1% lower than last year.
Change in property tax amount (Nim) may occur due to an increase or decrease in the average annual value of the property (Them), subject to taxation, and property tax rates ( Sn):
N im = Im X Sn / 100.
Using data from calculating the average annual value of property subject to taxation, it is possible to determine changes in its composition and the impact of each component on the amount of this tax. To do this, the change in the amount of taxable property for each type must be multiplied by the planned (basic) property tax rate:
them= i x CH 0 / 100.
If there is a change in the property tax rate, then this value must be multiplied by the actual amount of taxable property for the reporting period:
them= 1 x CH/100.
Income tax also depends on the amount of taxable income and the tax rate. To calculate the influence of these factors on changes in the amount of tax, it is necessary to multiply the change in the value of each type or the total amount of taxable income by the planned tax rate, and the change in the level of the latter by the actual amount of taxable income.
Amount of income tax (N p) may change due to the amount of taxable profit ( P n) and income tax rates ( S n):
Np = Mon X Sn / 100.
The change in the amount of tax due to the first factor is calculated using the formula:
P = P n X CH 0 / 100.
The influence of the second factor is established as follows:
P = P n X SN / 100.
If it is known due to what factors the taxable profit has changed, then their influence on the tax amount can be determined by multiplying its increase due to ith factor on the planned (basic) tax rate:
P = P nxi X Sn 0 /100.
According to the table. 22.2 we will calculate the influence of factors on changes in the amount of income taxes using the above formula.
From the table 22.4 shows which factors had a decisive influence on the change in the amount of taxable profit and the amount of income taxes.
22.4. Analysis of net profit formation
The procedure for determining the amount of net profit. Methodology of its factor analysis.
Net profit is one of the most important economic indicators characterizing the final results of the enterprise’s activities. Quantitatively, it represents the difference between the amount of balance sheet profit and the amount of taxes contributed to the budget from profits, economic sanctions, contributions to charitable foundations and other expenses of the enterprise covered by profits.
Table data 22.5 show that the actual amount of net profit is higher than planned in the reporting year by 850 million rubles, or 7.2%. Its value depends on the factors of change in balance sheet profit and the factors that determine the share of net profit in the total balance sheet profit, namely the share of taxes, economic sanctions, contributions to charitable foundations and other expenses in the total profit (Fig. 22.2).
To determine the change in net profit due to the factors of the first group, it is necessary to multiply the change in balance sheet profit due to each factor by the planned (basic) share of net profit in the amount of balance sheet profit:
Emergency= BPxi X UDchp o.
Increase in net profit due to the second group of factors calculated by multiplying the increase in specific gravity i-th factor (taxes, sanctions, deductions) in the total amount of balance sheet profit by its actual value in the reporting period:
Emergency = BP 1 X (-UD Xi).
From the table 22.6 it follows that the amount of net profit increased mainly due to an increase in selling prices and a change in the sales structure. Reduction in sales volume, increase in production costs, penalties and fines paid, losses from debt write-off, economic sanctions, an increase in the share of deductions from profits to charitable foundations caused a decrease in the amount of net profit. Therefore, when looking for ways to increase net profit, this enterprise must first of all pay attention to factors that negatively affect the formation of its value.
22.5. Analysis of net profit distribution
The procedure and methodology for analyzing the distribution of net profit. Factors determining the amount of profit deductions to enterprise funds. Methodology for calculating their influence.
Net profit is distributed in accordance with the Charter of the enterprise. At the expense of net profit, dividends are paid to the shareholders of the enterprise, accumulation and consumption funds, a reserve fund are created, part of the profit is directed to replenishing its own working capital, to the renovation fund and for other purposes.
In the process of analysis, it is necessary to study the implementation of the plan for the use of net profit, for which the actual data on the use of profit in all areas is compared with the plan data and the reasons for the deviation given in each area of profit use are clarified (Table 22.7). The data presented indicate that the analyzed enterprise used 20% of profits to pay dividends, 42% to the accumulation fund, 28% to the consumption fund and 10% to the reserve fund.
An analysis of the formation of funds should show how much and due to what factors their value has changed.
The main factors determining the amount of contributions to savings and consumption funds are there may be changes in the amount of net profit (PE) and the coefficient of profit deductions to the relevant funds (K i). The amount of profit deductions to the enterprise funds is equal to their product: Fi=Emergency X TOi . To calculate their influence, you can use one of the methods of deterministic factor analysis (Table 22.8).
Then you need to calculate the influence of factors changing net profit on the amount of contributions to the enterprise funds. To do this, we multiply the increase in net profit due to each factor by the planned coefficient of contributions to the corresponding fund:
Table data 22.9 show the reasons for the increase in the amount of deductions to the enterprise funds and dividend payments, which allows us to draw certain conclusions and develop measures aimed at increasing the amount of profit, and, accordingly, the enterprise funds. In our example, the increase in contributions to enterprise funds is caused by a change in the structure of sold products, an increase in selling prices, and income from non-sales operations. Bad influence were influenced by such factors as an increase in the cost of production, including due to an increase in the resource intensity of products, economic sanctions for concealing profits, underestimation of taxes and untimely payment of them to the budget, as well as above-plan profit contributions to charitable foundations.
In the process of analysis, it is necessary to study the dynamics of the profit share, which goes to pay dividends to the holders of the company's shares, self-financing of the enterprise (reinvested profit), a social fund, material incentives for employees, and such indicators as the amount of self-financing and the amount of capital investments per employee, the amount of salaries and payments per employee. Moreover, these indicators must be studied in close connection with the level of profitability, the amount of profit per employee, per one ruble of basic production assets. If these indicators are higher than at other enterprises or higher than the normative ones for a given industry, then there are prospects for the development of the enterprise.
An important task of the analysis is to study the use of savings and consumption funds. The funds from these funds have a designated purpose and are spent according to approved budgets.
Savings fund used mainly to finance the costs of expanding production, its technical re-equipment, introduction of new technologies, etc.
Consumption Fund can be used for collective needs (expenses for maintaining cultural and healthcare facilities, holding recreational and cultural events) and individual needs (remuneration based on the results of work for the year, material aid, the cost of vouchers to sanatoriums and holiday homes, scholarships for students, partial payment for food and travel, benefits for retirement, etc.).
In the process of analysis, the correspondence of actual expenses to the expenses provided for in the estimate is established, the reasons for deviations from the estimate for each item are clarified, and the effectiveness of activities carried out at the expense of these funds is studied. When analyzing the use of savings fund funds, one should examine the completeness of financing of all planned activities, the timeliness of their implementation and the resulting effect.
22.6. Analysis of the company's dividend policy
Approaches and indicators of dividend policy. Sources and options of dividend payments. Factors of their change.
The dividend policy of an enterprise has a great impact not only on the capital structure, but also on the investment attractiveness of the business entity. If dividend payments are high enough, then this is one of the signs that the company is operating successfully and it is profitable to invest in it. But if a small share of profits is allocated to updating and expanding production, then the situation may change.
One of the indicators characterizing the dividend policy is the level of dividend yield, those. the share of profits allocated for the payment of dividends on ordinary shares.
There are two different approaches in the theory of dividend policy. The first approach is based on the residual principle: dividends are paid after all opportunities for effective reinvestment of profits have been used, which implies their growth in the future. The second approach follows from the principle of risk minimization, when shareholders prefer low dividends at the moment to high dividends in the future.
Source of dividend payment may be the net profit of the reporting period, retained earnings from previous years and special reserve funds created to pay dividends on preferred shares in case the company receives an insufficient amount of profit or is at a loss. Therefore, there may be cases where dividend payments exceed the amount of profit received.
Deciding on the amount of dividends - not an easy task. On the one hand, in market conditions there are always opportunities to participate in new investment projects in order to obtain additional profit, and on the other hand, low dividends lead to a decrease in the market value of shares, which is defined as the ratio of the amount of dividend per share to the market rate of return (rate bank interest on deposits), which is undesirable for the enterprise.
In world practice, they have been developed various options dividend payments on ordinary shares:
constant percentage distribution of profits;
fixed dividend payments, regardless of income;
payments of guaranteed minimum and extra dividends;
payment of dividends in shares.
First option assumes a constant dividend yield ratio, but the dividend level can fluctuate sharply depending on the amount of profit received.
Fixed dividend policy provides for regular payment of a constant dividend per share.
Third option guarantees regular fixed dividends, and in case successful activities enterprises - extra dividends.
According to the fourth option instead of dividends, shareholders receive an additional block of shares, while the total balance sheet currency does not change, but falls per share. As a result, shareholders receive virtually nothing other than the opportunity to sell their shares for cash.
At the analyzed enterprise, the first option of dividend payments is practiced in the amount of 20% of the enterprise’s net profit. Therefore, the level of dividend per share depends only on the factors that form net profit. The share capital of the enterprise is represented by 10,000 shares, the par value of each share is 1 million rubles. The dividend payment per share in the reporting year is 253 thousand rubles. (RUB 2,530 million/10,000). The dividend rate (the ratio of the dividend amount per share to its par value) is 25.3% (253,000 / 1,000,000 x 100).
Share price, i.e. its market (current) price is 1.265 times higher than the accounting (nominal) price.
In the process of analysis, they study the dynamics of dividends, stock prices, net profit per share over a number of years, determine the rate of their growth or decline, and then perform a factor analysis of changes in their value.
Amount of dividends paid depends on changes in the number of issued shares and the level of dividend per share, the value of which, in turn, can be detailed by the factors that form the amount of net profit (Table 22.9).
In addition to these factors, dividends on ordinary shares also depend on the structure of securities, issued by the enterprise. With an increase in the share of bonds and preferred shares (more than 50%), the risk of a decrease in income on ordinary shares increases, and vice versa.
For example, an enterprise issued bonds in the amount of 10,000 million rubles. based on 8% of annual and preferred shares in the amount of RUB 5,000 million. with a dividend rate of 10%. If the enterprise’s profit after paying taxes and interest on loans amounted to 1,400 million rubles, then after paying interest on bonds - 800 million rubles. and dividends on preferred shares - 500 million rubles, only 100 million rubles will remain for the payment of dividends on ordinary shares. If profits increase by 10%, 240 million rubles will remain to pay dividends on ordinary shares, i.e. 2.4 times more. A decrease in profits by 10% will not only not allow the payment of dividends on ordinary shares, but even to pay part of the dividends on preferred shares, it will be necessary to use retained earnings from the previous year or reserve funds. As we can see, this situation with high leverage (a high proportion of preferred securities with a fixed rate of return) is very dangerous for owners of common shares. Cautious investors usually bypass companies with high level financial leverage, although the latter attracts those people who like to take risks.
At the analyzed enterprise, this leverage is equal to zero, since there were no issues of bonds and preferred shares.
Finally, measures are developed aimed at increasing the dividend return of share capital. These are mainly activities that help increase net profit and return on equity.
it is possible to identify exactly what interest was accrued on financial transactions. For other income and expenses, it is advisable to find out what kind of property transactions took place and whether there were any unprofitable transactions. If there were unprofitable transactions, then it is necessary to find out who initiated them and for what reason the losses arose, whether it is possible to cover the losses at the expense of the guilty parties.
The costs of writing off debts and losses of previous years, fines, penalties and penalties paid must be carefully studied. For all types of losses, it is advisable to identify the perpetrators, try to bring claims against them, and also outline organizational and technical measures to prevent such losses in the future.
7.4. Analysis of net profit formation
Net profit is the part of accounting profit remaining at the disposal of a commercial organization after the current income tax has been calculated, as well as taking into account deferred tax assets and deferred tax liabilities, i.e. in accordance with PBU 18/02 “Accounting for profit tax calculations” . It is reflected in form No. 2 on line 190.
Net profit in Form No. 2 of the financial statements is determined by the formula:
PE = BP + SHE – ONO – TNP, where PE is net profit;
BP – profit before tax; OTA – deferred tax assets;
IT – deferred tax obligations; TNP – current income tax.
In our example, net profit = 56,000 + 480 –280 – 13,760 = 42,440 thousand rubles.
Factor analysis of net profit allows us to answer the question of why the amount of net profit differs from the amount of accounting profit.
The list of factors determining changes in net profit is determined by the methodology for its calculation:
1) the amount of accounting profit;
2) the amount of current income tax;
3) change in the amount of deferred tax assets for the reporting period (account 09);
4) change in the amount of deferred tax liabilities for the reporting period (account 77).
The influence of these factors can be seen directly from the data in Form No. 2 “Profit and Loss Statement”. This information can be presented more clearly in the form of a table. 7.4.1.
Table 7.4.1 Analysis of the formation of net profit for the reporting year
Forming factors | In %% of the amount |
||
net profit | arrived before |
||
taxation |
|||
Profit before tax | |||
Current income tax (TNP)* | |||
Change in deferred tax assets | |||
Change in the amount of deferred tax liabilities | |||
statements | |||
Net profit (item 1 – item 2 + item 3 – item 4) |
* consumer goods = 56000 0.24 + 120 + 480 – 280 = 13760 thousand rubles.
120 thousand rubles. – the amount of permanent tax liability (line 200 f. 2).
For the reporting year, net profit amounted to about 76% of the accounting profit. The main factor that determined the lower net profit compared to accounting profit was the amount of current income tax. Deferred tax assets and deferred tax liabilities had a minor impact.
An analysis of the dynamics of net profit is presented in table. 7.4.2.
Table 7.4.2
Analysis of the dynamics of net profit thousand rubles.
Factors of change | Reporting | Influence at |
|||
net profit | pure |
||||
similar | |||||
Profit before tax | |||||
Current income tax | |||||
Changing the amount deferred | |||||
tax assets | |||||
Changing the amount deferred | |||||
tax obligations | |||||
Net profit | |||||
(clause 1 – clause 2 + clause 3 – clause 4) |
In our example, the amount of accounting profit in the reporting period increased compared to the previous period by 16,000 thousand rubles, and
the amount of net profit is only 12,040 thousand rubles. It was mainly influenced by one factor, namely the increase in the amount of current income tax, which reduced the growth of net profit by 4,160 thousand rubles. The influence of the other two factors is insignificant.
Since net profit is part of accounting profit, it is possible to calculate the impact on net profit of the factors that caused the change in accounting profit using the proportion method (Table 7.4.3).
Table 7.4.3 Calculation of the influence of factors on changes in net profit
Accounting components | Impact on accounting | Impact on net |
|
profit (+,–), % * | profit (+,–), thousand rubles. |
||
Revenue from sales | |||
Interest on receipt | |||
Percentage to be paid | |||
Other income | |||
other expenses | |||
* Data from table 7.3.1.
+ 40.0% - + 12,040 thousand rubles.
31.5% - x 1
x1 =31.5% 40.0% 12,040 = + 9482 thousand rubles. + 40.0% ― + 12,040 thousand rubles.
4.0% - x2
4.0% x2 =40.0% 12,040 = + 1204 thousand rubles. etc.
7.5. Methodology for factor analysis of sales profit
Profit from sales is the most important component profit before tax.
Profit from sales depends on three main factors:
1) on the quantity of products sold for each item in the nomenclature (assortment);
2) on the level of unit cost of production for each item in the nomenclature (assortment). In conditions of inflation, the cost price changes repeatedly during the reporting period, therefore, when planning and economic analysis it is necessary to use average unit costs;
3) on the price level at which specific types of products are sold. Average unit prices must be used in planning and economic analysis.
In the economic literature, numerous variants of methods for factor analysis of profit from sales have been proposed (V.V. Kovalev, E.V. Negashev, G.V. Savitskaya, A.P. Checheta, A.D. Sheremet), the study of which allowed us to identify two main approach to factor analysis sales profit:
1) the analysis involves direct calculations of the influence of factors - sales volume, cost and unit price - for individual items of the nomenclature (assortment);
2) the analysis is based on the information contained in Form No. 2 “Profit and Loss Statement”, the so-called"express analysis".
For the operational management of an organization, the first approach is preferable, since it allows you to make reasonable decisions. management decisions regarding sales volumes, cost and price of products for individual items of the nomenclature (assortment). At the same time, express analysis is also necessary when the manager has at his disposal the financial statements of his organization and competing organizations.
Let's consider the first version of the analysis using an example (Table 7.5.1).
Table 7.5.1 Calculation of revenue and profit from sales for specific items
product range
Average price | Quantity | Full se- | ||||
per units | full se- | (net) from | from sales, |
|||
products from | ||||||
manufacture | most of the units | products, | ||||
For the previous period | ||||||
reporting period | ||||||
Methodology for calculating the indicators given in table 7.5.1: Revenue (net) from sales:
basic version: Σq0 ×p0 = 251,000 thousand rubles, reporting version: Σq1 ×p1 = 331,800 thousand rubles. Total cost of products sold: base case: Σq0 × s0 = 214,500 thousand rubles, reporting version: Σq1 × s1 = 282,700 thousand rubles. Revenue from sales:
base option: Σq0 ×p0 – Σq0 × s0 = Σq0 × (p0 – s0) = 36,500 thousand rubles, reporting option: Σq1 ×p1 – Σq1 × s1 = Σq1 × (p1 – s1) = 49,100 thousand rubles .
Legend:
q0 ; q1 – quantity of products sold in the basic and reporting versions, thousand units;
p0 ; p1 – price of a unit of production in the basic and reporting versions, rub.; s0 ; s1 – total cost per unit of production in the base and reporting
options, rub.; P0 ; P1 – profit from sales in the basic and reporting versions.
In our example, the profit from sales in the reporting period is 12,600 thousand rubles more than the profit of the previous period.
For analysis we use the method of absolute deviations - a modified version of chain substitutions.
Let's calculate the influence of three main factors:
1. The impact on profit of changes in the quantity of products sold. The influence of a quantitative (primary) factor is calculated using the basic values of two qualitative factors (price and cost).
∆П (q) = (q1 – q0) × (p0 – s0):
for products of group “A” = (3500 – 3000) × (10 – 8) = + 1000 thousand rubles;
for products of group “B”, the quantity of products sold has not changed;
for products of group “B” = (900 – 800) × (60 – 55) = + 500 thousand rubles;
for products of group “G” quantity sold oh products has not changed. Total for the first factor = +1500 thousand rubles.
2. Profit impact of change full cost units of production.
This is a qualitative (secondary) factor, its influence using the method of chain substitutions is calculated based on the reported value of the quantitative factor.
∆П (s) = - (s1 – s0) × q1:
for products of group “A” = - (12-8) ×3500 = -14,000 thousand rubles, for products of group “B” = - (22-16) × 6000 = - 36,000 thousand rubles, for products group “B” = - (60-55) × 900 = - 4500 thousand rubles,