Gubin Viktor Egorovich,
associate professor, candidate of economic sciences,
Gubina Oksana Vitalievna,
associate professor, candidate of economic sciences,
Department of Economic Analysis and Statistics OrelGIET

Journal of Financial Analysis, September - October, 2008, No. 43

An organization is considered profitable if income from the sale of goods covers distribution costs and, in addition, generates an amount of profit sufficient for the normal functioning of the organization.

Profitability more fully characterizes the final results of business than profit, because its value shows the relationship between the effect and the available resources or resources used. Profitability is used to evaluate the activities of an organization and as a tool in investment policy and pricing.

Assessing the profitability of an organization allows specialists to identify strengths and weak sides business even before starting work, even at the stage of the idea of ​​​​creating an organization. The commercial activities of any trading organization must be related to the economic principle, which in general view determined by achievement maximum results at minimum costs, or, in other words, the efficiency of financial economic activity should be assessed in terms of the effectiveness of converting resources into results.

An analysis carried out using a number of economic indicators allows one to measure and evaluate the degree of implementation of an economic principle in an organization. At the same time, profit cannot serve as a determining criterion for assessing the effectiveness of a trading organization. Of interest is the comparison of profit with other indicators, that is, a system of profitability indicators calculated in various ways.

Profitability indicators characterize the efficiency of the organization as a whole, the profitability of various areas of activity (production, business, investment), cost recovery, etc. They are used to assess the dynamics of development, in a comparative analysis with the indicators of other organizations.

Profitability is one of the most important assessment indicators of the financial and economic activities of organizations and reflects how effectively the organization uses its funds to generate profit.

Currently no consensus in matters of determining profitability, its analysis and planning. There is no uniform terminology, and the methods for calculating the same indicators are different. This gives rise to discrepancies in the definition economic essence of one or another indicator, which can lead to erroneous conclusions in analytical work. However, the existing diversity in determining profitability only indicates the relevance of the topic under consideration.

Comparing the levels of profitability indicators is an important tool in assessing the performance of an organization and its prospects, although in practice the subjective opinion of a competent analyst, whose professional experience allows him to determine his own standards for certain profitability indicators, may be more significant.

It should be noted that in countries with developed market relations, information on “normal” values ​​of profitability indicators is usually published annually by the chamber of commerce, industry associations or the government. Comparison of your indicators with their acceptable values ​​allows you to draw a conclusion about the condition financial situation organizations. In Russia, this practice is not yet available, so the only basis for comparison is information on the value of indicators in previous years.

From the system of profitability indicators, we single out the profitability of sales as one of the most important indicators for a trade organization.

The return on sales indicator is widely used in a market economy. It characterizes the effectiveness entrepreneurial activity: how much profit an organization has from one ruble of sales. Return on sales is defined as the ratio of profit from sales or net profit to the amount of revenue received, i.e.:

Calculation of return on sales is shown in Table 1.

Table 1

Both in the past and in the reporting years, the organization observed a return on sales in terms of profit from sales of 3.17% and 3.18%, respectively. The increase in profitability of sales is due to an increase in profit from sales in the reporting year by 347 thousand rubles, or 6.1%.

In the reporting year, net profit decreases by 24.4%, so the return on sales on net profit tends to decrease and amounted to 2.42% last year and 1.72 in the reporting year, respectively.

In the practice of economic analysis, the return on sales indicator calculated based on net profit is often used, so we will consider the influence of factors on this indicator.

Cumulative influence of factors: -0.0070.

Thus, it can be seen that the return on sales (based on net profit) has the greatest bad influence(0.0060 units) had a decrease in net profit by 1080 thousand rubles, and an increase in sales revenue by 10266 thousand rubles. also reduced return on sales by 0.0010 units.

Return on sales can also be represented as the following model:

where Rp is return on sales;

N - proceeds from sale;

KR - commercial expenses;

From this factor model, it follows that profitability of sales is influenced by sales revenue, cost of goods sold, selling expenses and administrative expenses.

Let's conduct a factor analysis of the profitability of sales of a trading organization based on data for three years. Since the organization did not have management expenses during the period under study, when conducting a factor analysis of return on sales, the influence of this factor on the performance indicator should not be taken into account. Thus, formula (2) will take next view(formula (3)):

To calculate the influence of factors on the performance indicator, we use formulas (4-7) and the chain substitution method.

1. The impact of changes in sales revenue on sales profitability:

2. The impact of changes in cost of sales on profitability of sales:

3. The impact of changes in business expenses on profitability of sales:

4. Cumulative influence of factors:

We summarize the results of the factor analysis of profitability of sales in Table 2.

Table 2. Factor analysis profitability of sales

Indicators	First year	Second year	Third year
Initial data, thousand rubles.
1.Proceeds from sale	156286	180097	190363
2.Cost of goods sold	121410	137516	141683
3.Business expenses	31668	36879	42631
4. Profit from sales	3208	5702	6049
5. Sales profitability	2,05	3,17	3,18
6.Change in sales profitability to a variable base		+1,12	+0,01
Influence of factors on changes in profitability
7. Sales proceeds		+12,95	+5,22
8.Cost of goods sold		-8,94	-2,19
9.Business expenses		2,89	3,02
10. Cumulative influence of factors		+1,12	+0,01

The data in Table 2 shows that over the course of three years, the trade organization has had a profitability of sales, which increases every year. Over the past two years, the directions of influence of factors have not changed. Thus, profitability was formed only under the influence of increasing sales volume - last year the size of the influence was 12.95%, and in the reporting year it was significantly less - 5.22%. Rising production costs and commercial expenses caused a decline in profitability. As we can see, in the reporting period the influence of sales volume and cost weakened, while commercial expenses increased somewhat.

Return on sales is often used (is one of the factors) in factor analysis of various integral indicators of organizational performance. The profitability of a commercial enterprise is characterized by a system of indicators, between which there is a relationship and interdependence. In turn, each of the profitability indicators is formed under the influence of certain processes occurring in the organization’s activities. To conduct a factor analysis of profitability of sales, let us first summarize the data from the balance sheet (average annual values), profit and loss statement and reference data (Table 3).

Table 3. Initial data of a trade organization

Indicators	Legend	Last year	Reporting year	Changes	In % compared to last year
Fixed and working capital, thousand rubles.	F+E"	40455	53823	+ 13368	133,0
Current assets, thousand rubles.	E	15836	18655	+ 2819	117,8
Inventories, thousand rubles	3	8310	8808	+ 498	106,0
Sales proceeds, thousand rubles.	N	180097	190363	+10266	105,7
Distribution costs, thousand rubles. *	1	36879	42631	+ 5752	115,6
Net profit, thousand rubles.	R,	4352	3272	-1080	75,6
Labor costs, thousand rubles.	And	13256	21072	+ 7816	159,0
Average number of employees, people	I	411	396	15	96,4

We examine the relationships and proportions between the main economic indicators characterizing the economic and financial activities of the organization according to Table 4.

Table 4. Performance indicators of a trade organization

Indicators	Legend	Last year	Reporting year	Deviations	In % compared to last year
1. Profitability of sales proceeds	P/N	0,0242	0,0172	0,0070	71,1
2. Profitability of main and working capital	P/(F+E)	0,1076	0,0608	0,0468	56,5
3. Profitability of distribution costs	R/1	0,1180	0,0768	0,0412	65,1
4. Capital productivity of fixed and working capital rub.	N/F+E	4,4518	3,5368	0,9150	79,4
5. Speed ​​of circulation current assets, revolutions	N/E	11,3726	10,2044	1,1682	89,7
6. Share of current assets in property	E/F+E	0,3914	0,3466	0,0448	88,6
7. Speed ​​of inventory circulation	N/3	21,6723	21,6125	0,0598	99,7
8. Share of inventory in current assets	3/E	0,5248	0,4722	0,0526	90,0
9. Cost intensity of sales revenue	I/N	0,2048	0,2239	+0,0191	109,3
10. Profit per employee	R„/I	10,5888	8,2626	2,3262	78,0
11. Cost intensity of sales proceeds	I/N	0,2048	0,2239	+ 0,0191	109,3
12. Labor productivity	N/R	438,192	480,715	+ 42,523	109,7
13. Capital supply of labor resources	F+E/R	98,431	135,917	+ 37,486	138,1
14. Medium wage	U/R	32,253	53,212	+ 20,959	165,0
15. Salary intensity of sales proceeds	U/N	0,0736	0,1107	+ 0,0371	150,4

It is possible to establish various relationships between profitability of sales and the economic indicators given in Table 4, to identify and measure the influence of factors on changes in its significance.

Profitability of sales depends on the degree of use of fixed and working capital:

The level of efficiency of property use in the reporting year decreased by 0.0468 units, which caused a decrease in profitability of sales by 1.05%. But the speed of property turnover affects, according to the model, in inverse proportion, i.e. a slowdown in capital turnover leads to an increase in profitability of sales. However, this factor did not have a significant effect (0.0035 units or 0.35%).

The return on capital and working capital can be presented in the following form:

The speed of circulation of working capital depends on the turnover of inventory, which is the main element of working capital, and the share of inventory in working capital. Let's express this dependence:

The three inequalities discussed above can be combined:

The presented model of profitability of sales reveals its dependence on the size, structure and turnover of fixed and working capital. Profitability of sales increases to a greater extent if the requirement for the ratio of growth rates of indicators such as the rate of turnover of inventory, the share of inventory in working capital, the share of working capital in property is met, in which the growth rate of the first indicator is higher than the growth rate of the subsequent one and above one hundred.

For this organization, this ratio was: 99.7%, 90.0%, 88.6%, i.e. the first inequality does not hold. The organization is experiencing a slowdown in inventory turnover. Let's see how these factors affected the profitability of sales. To do this, we use the chain substitution method.

Impact of profitability of fixed and working assets:

0,0137-0,0242 = -0,0105.

The influence of the share of working capital in property:

0,0154-0,0137 = + 0,0017.

Impact of inventory turnover rate:

0,0155-0,0154 = +0,0001.

Impact of the share of inventory in current assets:

0,0172-0,0155 = +0,0017.

Cumulative Impact:

0,0105 + 0,0017 + 0,0001 + 0,0017 = -0,0070.

According to the factor model, the last three factors will have the opposite effect on the profitability of sales, i.e. their growth will reduce the effective indicator. This pattern can be seen in our calculations. The slowdown in inventory turnover led to an increase in profitability of sales by 0.01%, and a decrease in the share of working capital in property and inventory in current assets increased profitability of sales by 0.17% and 0.17%.

The profitability of sales also depends on the profitability of distribution costs and the cost intensity of revenue, which can be reflected as follows.

A decrease in cost profitability reduced the profitability of sales by 0.85%, and an increase in cost intensity increased the performance indicator by 0.15%. The growth rate of sales profitability, distribution costs and sales cost intensity amounted to: 71.1%; 65.1%; 109.3%. Consequently, the ratio in which the growth rate of sales profitability is higher than the growth rate of distribution costs and sales cost intensity is not observed.

Replacing the return on sales indicator in equation 12 with the components from equation 11, we obtain, as a result of transformations, an expanded system in which profitability is linked both to the efficiency of use of fixed and working capital, and to distribution costs:

Of the five factors discussed earlier, only a decrease in the profitability of distribution costs had a negative impact.

The next step analysis of profitability of sales is to consider the efficiency of use of fixed and working capital in connection with indicators of the use of labor resources. The capital productivity of fixed and working capital can be represented as the quotient of labor productivity divided by the capitalization of labor:

An increase in labor productivity contributed to an increase in capital productivity of fixed and working assets, and an increase in the capitalization of labor, on the contrary, reduced capital productivity.

Labor productivity can be presented as the quotient of the average salary of one employee divided by the level of the wage fund to sales revenue (salary intensity of revenue):

This influence of factors is explained by the fact that the growth rate of labor costs (159.0%) is significantly higher than the growth rate of sales revenue (105.7%) with a reduction average number workers by 3.6%.

In turn, the average wage per employee can be expressed as the quotient of profit per employee divided by the profitability of labor costs:

This influence of factors is explained by the fact that the growth rate of average wages per employee (165.0%) is more than twice as high as the growth rate of profits per employee (78.0%).

Replacing the labor productivity indicator in formula 15 with the average wage per employee (formula 16) and making the transformation, we obtain the following equation:

Proper Use labor resources implies a faster growth rate of labor productivity compared to the growth rate of average wages per employee.

At the analyzed enterprise, this requirement is not met and the growth rate of labor productivity (109.7%) is significantly lower than the growth rate of average wages per employee (165.0%), i.e. the ratio of these indicators was (0.665%).

By transforming the previously discussed ratios, we will derive the dependence of the profitability of fixed and working capital on a number of indicators:

The profitability of fixed and working assets increases if: the growth rate of the profitability of distribution costs is greater than the growth rate of the cost intensity of sales revenue; the growth rate of labor productivity is greater than the growth rate of capital equipment and average wages per worker. At this enterprise, the growth rates of these indicators were respectively: 65.1%; 109.3%; 109.7%; 138.1%; 165.0%, i.e. proportions are not respected.

From the previously discussed relationships, through transformations, we derive the dependence of the return on sales indicator on the amount of profit, distribution costs, fixed and working capital and their structure, and labor factors:

From this equality it follows that the conditions for increasing profitability of sales are as follows:

1. The growth rate of sales revenue is greater than the growth rate of fixed and working capital, the number of employees, and labor costs.

2. The growth rate of profit is greater than the growth rate of distribution costs, and the profitability of distribution costs is greater than the growth rate of the cost intensity of commodity turnover.

3. The growth rate of inventory turnover is greater than the growth rate of the share of inventory in working capital, the growth rate of the share of inventory is greater than the growth rate of the share of working capital in property.

The above systems allow us to study the relationships and interdependencies between individual profitability indicators. They also allow you to determine the strength of the impact individual elements on a number of qualitative indicators of the organization’s economic activity, such as capitalization of labor, labor productivity, average wages per employee and others.

To determine the influence of individual factors on the increase in return on sales compared to last year by 0.0020%, using the chain substitution method, we will first compile Table 5.

Table 5 Algorithm for calculating profitability of sales at different conditions

Factors	1 Last year	2	3	4	5	6	7	8	9	10 Reporting year
1. Profitability of distribution costs	0,1180	0,0768	0,0768	0,0768	0,0768	0,0768	0,0768	0,0768	0,0768	0,0768
2. Cost intensity of sales revenue	0,2048	0,2048	0,2239	0,2239	0,2239	0,2239	0,2239	0,2239	0,2239	0,2239
3. Profit per employee	10,5888	10,5888	10,5888	8,2626	8,2626	8,2626	8,2626	8,2626	8,2626	8,2626
4. Profitability of labor costs	0,3283	" 0,3283	0,3283	0,3283	0,1553	0,1553	0,1553	0,1553	0,1553	0,1553
5. Salary intensity of sales proceeds	0,0736	0,0736	0,0736	0,0736	0,0736	0,1107	0,1107	0,1107	0,1107	0,1107
6. Labor capitalization	98,431	98,431	98,431	98,431	98,431	98,431	135,917	135,917	135,917	135,917
7. Share of current assets in property	0,3914	0,3914	0,3914	0,3914	0,3914	0,3914	0,3914	0,3466	0,3466	0,3466
8. Speed ​​of inventory circulation	21,6723	21,6723	21,6723	21,6723	21,6723	21,6723	21,6723	21,6723	21,6125	21,6125
9. Share of inventory in current assets	0,5248	0,5248	0,5248	0,5248	0,5248	0,5248	0,5248	0,5248	0,5248	0,4722
10. Sales profitability	0,0242	0,0157	0,0172	0,0134	0,0284	0,0189	0,0137	0,0154	0,0155	0,0172

In the analyzed organization, the ratios of indicator growth rates given in formula 19 are not observed, therefore most of the factors under consideration had a negative impact on the profitability of sales (Table 6).

Table 6. Summary of the influence of factors on profitability of sales

Thus, four out of nine factors influenced the decrease in profitability of sales, and among them, the most significant influence was exerted by the wage intensity of sales revenue and the profitability of distribution costs.

Summarizing the results of the study of profitability of sales, we can note the following. Return on sales, calculated based on net profit, decreased in the reporting year by 0.007 units, or 18.9%, due to a decrease in net profit while a simultaneous increase in sales revenue.

The main reserves for increasing the profitability of sales of the trade organization under study are: reducing production costs, commercial expenses, and cost intensity; growth in sales revenue, gross profit (income); acceleration of property and capital turnover. Management needs to ensure that sales revenue and gross income are consistently higher than prior years. To do this, you need to purchase goods for sale in full accordance with the structure and volume of demand, and increase the trade markup within the limits of the effective demand of buyers.

Literature

1. Analysis of financial statements: tutorial/Ed. O. V. Efimova, M. V. Melnik. - M.: Omega-L, 2004. - 408 p.

2. Dontsova, L. V. Analysis of financial statements: Textbook/L. V. Dontsova, N. A. Nikiforova. - M.: Publishing house "Delo and Service", 2003. -336 p.

3. Comprehensive economic analysis of economic activity: textbook/L.T. Gilyarovskaya [and others].-M.: TKVelbi, Prospekt Publishing House, 2006.-336P.

4. Lyubushin, N. P. Comprehensive economic analysis of economic activity: textbook. allowance. - 2nd ed., revised. and additional / N. P. Lyubushin. - M.: UNITY-DANA, 2005. -448 p.

5. Savitskaya, G.V. Analysis of the economic activity of an enterprise.: textbook, 7th ed. / G.V. Savitskaya. - MN: "New Knowledge", 2002. - 704 p.

6. Sheremet, A. D. Methodology financial analysis activities commercial organizations/ A. D. Sheremet, E. V. Negashev. - M.: INFRA-M, 2003. -237 p.

7. Economic analysis in trade: textbook / Ed. M.I. Bakanova. -M.: Finance and Statistics, 2004. - 400 p. "

Identification and quantitative measurement of the degree of identification of individual factors on changes in economic performance indicators financial activities enterprise is one of the most important tasks of economic analysis.

If the study of a specific set of indicators leads to the identification general pattern, then an assumption is made about the existence of connections between the indicators. The source of occurrence "may be a cause-and-effect relationship between indicators, the dependence of a number of indicators on a common factor, a random coincidence

The influence of factors is reflected in different ways on changes in the performance indicators of economic activity. The classification of factors will allow us to understand the reasons for changes in the phenomena under study and to more accurately assess the place and role of each factor in the formation of the value of effective indicators.

The factors studied in the analysis can be classified according to different criteria.

The purpose of writing this work is to study the methodology for calculating profitability indicators and apply it in practice. To achieve this goal, it is necessary to solve the following range of tasks:

- define the concept of profitability, reveal its significance for financial analysis and characterize the main areas of its application;

- consider the system of profitability indicators in accordance with their classification into indicators of profitability of economic activities, financial profitability and indicators of product profitability;

-  consider general methodology factor analysis of the organization's profitability indicators.

1. Economic content enterprise profitability

1.1 Definition of profitability

To conduct a factor analysis of the profitability of an organization, it is necessary to first determine what exactly is included in the concept of profitability of an organization.

Profitability- this is the degree of profitability, profitability, profitability of a business. If a business makes a profit, it is considered profitable. Profitability indicators used in economic calculations characterize relative profitability.

Profit- this is the monetary expression of the main part of cash savings created by enterprises of any form of ownership. As an economic category, it characterizes the financial result of entrepreneurial activity and is an indicator that most fully reflects production efficiency, the volume and quality of production products, the state of labor productivity, and the level of cost.

Profit is one of the main financial indicators of the plan and assessment of the economic activities of organizations. Profits are used to finance activities for their scientific, technical and socio-economic development, and to increase the wage fund of their employees. Profit is not only a source of meeting the internal business needs of the organization, but is also becoming increasingly important in the formation of budgetary resources, extra-budgetary and charitable funds.

1.2 Profitability indicators

The profitability of an organization is characterized by absolute and relative indicators. The absolute indicator of profitability is the amount of profit (income). The relative indicator is the level of profitability.

Absolute indicators allow you to analyze the dynamics of various profit indicators over a number of years. It should be noted that in order to obtain more objective results, indicators should be calculated taking into account inflationary processes.

Relative indicators are less affected by inflation, because represent various ratios of profit and invested capital, or profit and production costs.

It is not always possible to judge the level of profitability of an enterprise by the absolute amount of profit, since its size is influenced not only by the quality of work, but also by the scale of activity. Therefore, to characterize the efficiency of an enterprise, along with the absolute amount of profit, relative indicators are used, which more fully characterize the final results of business than profit, because their value reflects the ratio of the effect to the capital invested or resources consumed. They are used to assess the performance of an enterprise and as a tool in investment policy and pricing.

Profitability indicators used in economic calculations characterize relative profitability.

1.3 Groups of profitability indicators

Profitability indicators can be combined into several groups:

* indicators based on the cost approach (profitability of products, profitability of activities);

* indicators characterizing the profitability of sales (return on sales);

* indicators based on the resource approach (return on total assets, return on fixed capital, return on working capital, return on equity).

Overall profitability(enterprise profitability) - defined as the ratio of balance sheet profit to the average cost of fixed production assets and standardized working capital. The ratio of the fund to material and equivalent costs reflects the profitability of the enterprise.

Total profitability is determined by the formula:

R o = P b / F * 100%,

where R o is the overall profitability,

P b – total balance sheet profit,

F – average annual cost of fixed production assets, intangible assets and material working capital.

The level of overall profitability is a key indicator when analyzing the profitability of an enterprise. But if you want to more accurately determine the development of an organization based on the level of its overall profitability, it is necessary to additionally calculate two more key indicators: return on turnover and the number of capital turnover.

The overall profitability of an enterprise must be considered as a function of a number of quantitative indicators - factors: structure and capital productivity of fixed production assets, turnover of standardized working capital, profitability of products sold (see diagram 1.2).

Scheme 1.2. Overall profitability of the enterprise

Profitability of turnover reflects the relationship between the gross revenue (turnover) of the enterprise and its costs and is calculated using the formula:

R ob. = P n.p. *100 / V,

where R vol. – profitability of turnover,

P n.p. – profit before interest,

B – gross revenue.

The greater the profit compared to the gross revenue of the enterprise, the greater the profitability of turnover. This indicator is widely used in a market economy. It is calculated for the enterprise as a whole and for individual types of products.

Capital turnover number reflects the ratio of the gross revenue (turnover) of the enterprise to the amount of its capital and is calculated using the formula:

H ob.c. = V / A,

where H ob.c. – number of capital turnover,

B – gross revenue,

A – assets.

The higher the firm's gross revenue, the greater the number of turnover of its capital. As a result, the level of overall profitability is determined by the following formula:

At the o.r. = R ob * H ob.c. ,

where U o.r. – level of overall profitability,

R ob. – profitability of turnover,

H ob.c. – number of capital turnover.

In other words, the level of overall profitability, that is, an indicator reflecting the growth of all invested capital (assets), is equal to earnings before interest multiplied by 100% and divided by assets.

The relationship between the three key indicators is presented in the following diagram:

Figure 1.1 Relationship between three key indicators.

Product profitability indicators reflect the efficiency of current costs (as opposed to the overall profitability indicator, which characterizes the efficiency of advanced capital) and are calculated as the ratio of profit from sales of products to the total cost of products sold:

P rp = P rp / C * 100%,

where P rp – product profitability;

P rp – profit from sales of products;

C is the total cost of goods sold.

The profitability of a particular type of product depends on prices for raw materials, product quality, labor productivity, material and other production costs.

Product profitability shows how much profit is generated per unit of product sold. The growth of this indicator is a consequence of rising prices with constant production costs of sold products (works, services) or a decrease in production costs with constant prices, that is, a decrease in demand for the enterprise’s products, as well as a faster increase in prices than costs.

Return on investment of the enterprise- this is a profitability indicator that shows the efficiency of using all the assets of the enterprise.

Among the indicators of return on investment of an enterprise, there are 5 main ones:

1 Total return on investment, showing what part of the balance sheet profit falls on 1 ruble. assets of the enterprise, that is, how effectively it is used.

2. Return on investment based on net profit;

3.Profitability of own funds, which makes it possible to establish the relationship between the amount of invested own resources and the amount of profit received from their use.

4. Profitability of long-term financial investments, showing the effectiveness of the enterprise’s investments in the activities of other organizations.

5 Return on permanent capital. Shows the efficiency of using capital invested in the activities of a given enterprise at long term.

The growth of any profitability indicator depends on common economic phenomena and processes. This is, first of all, improving the production management system in a market economy based on overcoming the crisis in the financial, credit and monetary systems. This is an increase in the efficiency of use of resources by organizations based on the stabilization of mutual settlements and the system of settlement and payment relations. This is the indexation of working capital and a clear identification of the sources of their formation.

Return on capital is calculated by the ratio of balance sheet (gross, net) profit to the average annual cost of all invested capital or its individual components: own (shareholder), borrowed, fixed, working, production capital, etc.:

P k = BP/SK; P k = P rp / SK; P k = PE/SK

In the process of analysis, it is necessary to study the dynamics of the listed profitability indicators, the implementation of the plan at their level and conduct inter-farm comparisons with competing enterprises.

Profitability (profitability) indicators are general economic indicators. They reflect the final financial result and are reflected in the balance sheet and statements of profit and loss, sales, income and profitability. Profitability can be considered as a result of the influence of technical and economic factors, and therefore as objects of technical and economic analysis, the main goal of which is to identify the quantitative dependence of the final financial results production and economic activities from the main technical and economic factors.

Profitability is the result production process, it is formed under the influence of factors related to increasing the efficiency of working capital, reducing costs and increasing the profitability of products and individual products.

2. Types and tasks of factor analysis

The functioning of any socio-economic system (which includes an operating enterprise) occurs in conditions of complex interaction of a complex of internal and external factors.

Factor- this is the cause, the driving force of a process or phenomenon, determining its character or one of its main features.

Identifying the relationship between indicators, its direction and intensity, as well as the form of dependence between indicators is necessary to understand the patterns of formation of the results of the activities of a business entity. If the study of a specific set of indicators leads to the identification of a general pattern, then an assumption is made about the existence of connections between the indicators. The source of occurrence may be a cause-and-effect relationship between indicators, the dependence of a number of indicators on a common factor, or a random coincidence. Factor analysis consists of identifying the relationship between indicators: measuring the quantitative impact of individual indicators on changes in another, aggregate indicator.

Factor analysis technique– a methodology for a comprehensive and systematic study and measurement of the impact of factors on the value of performance indicators.

2.1 Main tasks of factor analysis

1. Selection of factors determining the performance indicators under study.

2. Classification and systematization of factors in order to provide an integrated and systematic approach to the study of their influence on the results of economic activity.

3. Determination of the form of dependence between factors and performance indicators.

4. Modeling the relationships between factors and performance indicators.

5. Calculation of the influence of factors and assessment of the role of each of them in changing the performance indicator.

6. Working with the factor model. Methodology of factor analysis.

The selection of factors for the analysis of a particular indicator is carried out on the basis of theoretical and practical knowledge in a particular industry. In this case, they usually proceed from the principle: the larger the complex of factors studied, the more accurate the results of the analysis will be. At the same time, it is necessary to keep in mind that if this complex of factors is considered as a mechanical sum, without taking into account their interaction, without identifying the main, determining ones, then the conclusions may be erroneous. In business activity analysis (ABA), an interconnected study of the influence of factors on the value of performance indicators is achieved through their systematization, which is one of the main methodological issues of this science.

An important methodological issue in factor analysis is determining the form of dependence between factors and performance indicators: functional or stochastic, direct or inverse, linear or curvilinear. Here we use theoretical and practical experience, as well as methods for comparing parallel and dynamic series, analytical groupings of initial information, graphical, etc.

Modeling economic indicators is also a complex problem in factor analysis, the solution of which requires special knowledge and skills.

Calculation of the influence of factors is the main thing methodological aspect in AHD. To determine the influence of factors on the final indicators, many methods are used, which will be discussed in more detail below.

Final stage factor analysis - practical use factor model for calculating reserves for growth of the effective indicator, for planning and forecasting its value when the situation changes.

2.2 Types of factor analysis

Depending on the type of factor model, there are two main types of factor analysis - deterministic and stochastic.

Deterministic factor analysis is a technique for studying the influence of factors whose connection with the effective indicator is functional in nature, that is, when the effective indicator of the factor model is presented in the form of a product, quotient or algebraic sum of factors.

This type of factor analysis is the most common, since, being quite simple to use (compared to stochastic analysis), it allows you to understand the logic of the action of the main factors of enterprise development, quantify their influence, understand which factors and in what proportion it is possible and advisable to change to increase production efficiency. We will consider deterministic factor analysis in detail in a separate chapter.

Stochastic Analysis is a methodology for studying factors whose connection with a performance indicator, unlike a functional one, is incomplete and probabilistic (correlation). If with a functional (complete) dependence with a change in the argument there is always a corresponding change in the function, then with a correlation connection a change in the argument can give several values ​​of the increase in the function depending on the combination of other factors that determine this indicator. For example, labor productivity at the same level of capital-labor ratio may be different at different enterprises. This depends on the optimal combination of other factors affecting this indicator.

Stochastic modeling is, to a certain extent, a complement and deepening of deterministic factor analysis. In factor analysis, these models are used for three main reasons:

· it is necessary to study the influence of factors for which it is impossible to build a strictly determined factor model (for example, the level of financial leverage);

· it is necessary to study the influence of complex factors that cannot be combined into one and the same rigid deterministic model;

· it is necessary to study the influence of complex factors that cannot be expressed in one quantitative indicator (for example, the level of scientific and technological progress).

In addition to dividing into deterministic and stochastic, there are following types factor analysis:

o direct and reverse;

o single-stage and multi-stage;

o static and dynamic;

o retrospective and prospective (forecast).

At direct factor analysis The research is conducted in a deductive manner - from the general to the specific. Reverse factor analysis carries out the study of cause-and-effect relationships using the method of logical induction - from particular, individual factors to general ones.

Factor analysis can be single-stage and multi-stage. The first type is used to study factors of only one level (one level) of subordination without detailing them into their component parts. For example, . In multi-stage factor analysis, factors a and b are detailed into their component elements in order to study their behavior. The detailing of factors can be continued further. In this case, the influence of factors is studied different levels subordination.

It is also necessary to distinguish static and dynamic factorial analysis. The first type is used when studying the influence of factors on performance indicators on the corresponding date. Another type is a technique for studying cause-and-effect relationships in dynamics.

Finally, factor analysis can be retrospective, which studies the reasons for the increase in performance indicators over past periods, and promising, which examines the behavior of factors and performance indicators in the future.

3. Methodology for factor analysis of organizational profitability indicators

The level of profitability of certain types of products depends on changes in average selling prices (P) and cost (C) of a unit of production:

Ri = (Сi – Сi) / Сi = Цi / Ci – 1

Factor analysis of the profitability of individual types of products is performed on the basis of the presented data. The form of such data is shown in Table 3.1.

Table 3.1 Factor analysis of the profitability of certain types of products

It is also necessary to study in more detail the reasons for changes in the average price level and, using the method of proportional division, calculate their impact on the level of profitability. This calculation is made according to the data in the following table (Table 3.2.):

Table 3.2 Calculation of the influence of second-order factors on changes in the level of profitability

Next, it is necessary to establish due to what factors the unit cost of production changed and similarly determine their impact on the level of profitability. Such calculations are made for each type of product, which allows a more accurate assessment of the work of a business entity and a more complete identification of intra-farm reserves for profitability growth in the analyzed enterprise.

Factor analysis of profitability of sales is carried out in approximately the same way. The deterministic factor model of this indicator, calculated for the entire enterprise, has the following form:

Rp = Pp / V, where

Rп – return on sales;

Pp – profit from sales.

The influence of individual factors is also calculated using the chain substitution method.

The level of profitability of sales of certain types of products depends on the average price level and cost of the product:

Rp = Pi / Bi = (Ci – Ci) / Ci

Factor analysis of return on total capital is carried out similarly. The balance sheet amount of profit depends on the volume of products sold (VPP), its structure (UDi), the average price level (CI) and financial results from other activities not related to the sale of products and services (VFR).

The average annual amount of fixed and working capital (KL) depends on sales volume and the capital turnover ratio (Kob), which is determined by the ratio of revenue to the average annual amount of fixed and working capital. Here we proceed from the fact that sales volume in itself does not affect the level of profitability, since with its change the amount of profit and the amount of fixed and working capital increase or decrease proportionally, provided that other factors remain unchanged.

To calculate the influence of factors on the level of profitability, the following initial data are used (Table 3.3):

Table 3.3 Initial data.

In an in-depth analysis, it is necessary to study the influence of second-level factors on which changes in average selling prices, production costs and non-operating results depend.

To analyze the profitability of production capital, defined as the ratio of book profit to the average annual cost of fixed assets and material revolving funds, you can use the factor model proposed by M. I. Bakanov and A. D. Sheremet:

P / F + E = P/N / (F/N + E/N) = (1 – S/N) / (F/N + E/N) = / (F/N + E/N), where

P – balance sheet profit;

F – average cost fixed assets;

E – average balances of working capital;

N – revenue from sales of products;

P/N – profitability of sales;

F/N + E/N – capital intensity of products (the inverse indicator of the turnover ratio);

S/N – costs per ruble of products;

U/N, M/N, A/N – salary intensity, material intensity and capital intensity of products, respectively.

By gradually replacing the base level of each factor with the actual one, it is possible to determine how much the level of profitability of production capital has changed due to wage intensity, material intensity, capital intensity, i.e. due to production intensification factors.

3.1 Methodology of factor analysis in the direct costing system

In our country, when analyzing profits, they usually use next model:

P = K (C – C),

Where P is the amount of profit;

K – quantity (weight) of products sold;

C – selling price;

C is the cost per unit of production.

In this case, we proceed from the assumption that all the given factors change on their own, independently of each other. However, the relationship between the volume of production (sales) of products and its cost is not taken into account.

In foreign countries, to ensure a systematic approach to studying the factors of change in profit and profitability and predicting their value, marginal analysis is used, which is based on marginal income.

Marginal income (MI) is the profit in the amount of the enterprise’s fixed costs (N):

P = MD – N

The amount of marginal income can, in turn, be represented as the quantity of products sold (K) and the rate of marginal income per unit of product (D s):

P = K x D s – N, where D s = C – V,

P = K (C – V) – N, where

V – variable costs per unit of production.

Profitability analysis is carried out similarly, which gives more accurate results, because The relationship between the elements of sales volume, costs and profit is taken into account.

Conclusion

Profitability characterizes the performance of an organization. Profitability indicators allow us to evaluate how much profit a company has from each ruble of funds invested in the assets of the enterprise. There are various groupings of the profitability indicator system. We examined one of these classifications, dividing profitability indicators into indicators based on the cost approach (product profitability, operating profitability); indicators characterizing the profitability of sales (sales profitability); indicators based on the resource approach (return on total assets, return on fixed capital, return on working capital, return on equity).

As it turned out during the analysis, the profitability of economic activity reflects the rate of compensation (remuneration) for the entire set of sources that are used by the enterprise to carry out its activities.

Financial profitability characterizes the effectiveness of the investments of the owners of the enterprise, who provide it with resources or leave at its disposal all or part of their profits in order to obtain maximum income in the future.

And finally, product profitability indicators can answer questions related to determining the effectiveness of the enterprise’s core activities in the production and sale of goods, works, and services.

List of used literature

1. Lyubushin N.P., Leshcheva V.B., Dyakova V.G. “Analysis of the financial and economic activity of an enterprise”, M.: UNITI-DANA, 2000.

2. Markin Yu.P. “Theory of analysis of economic activity”, M.: KNORUS, 2006.

3. Savitskaya G.V. “Analysis of the economic activity of an enterprise”, Minsk: LLC “New Knowledge”, 1999.

N.V. Klimova
Doctor of Economic Sciences,
Professor, Head of the Department of Economic Analysis and Taxes,
Academy of Marketing and Social Information Technologies,
Krasnodar city
Economic analysis: theory and practice
20 (227) – 2011

A methodology for calculating profitability indicators is proposed, a factor analysis of profitability according to the Du Pont model and profitability of sales, including for certain types of goods, is disclosed, examples of assessing the influence of tax factors on return on capital are given, patterns of growth of profitability indicators are listed, and proposals for increasing them are given.

Profitability reflects the economic efficiency of the organization's activities; it shows the ratio of results to costs. To calculate the level of profitability, the values ​​of indicators of profit, costs, revenue, assets, and capital are required.

There are quite a lot of profitability indicators; they can be calculated in relation to any type of resource. For example, the profitability of using material resources is determined by dividing profit before tax by the cost of material resources.

The profitability of using working capital is calculated by dividing profit before tax by the amount of current assets. Or if you try the reduction method (divide the numerator and denominator by revenue), then you can use the following factor model: multiply the return on sales by the turnover ratio of current assets. Profit from sale multiplied by the turnover ratio of all assets forms the return on assets indicator.

The profitability of fixed assets is determined by dividing profit before tax by the average annual cost of fixed assets, and the result is multiplied by 100%. If the numerator and denominator are divided by revenue, then the factor model will look like the ratio of return on sales to capital intensity.

The profitability of an organization is calculated by dividing profit before tax or net profit by the full cost (cost combined with commercial and administrative expenses), the result is multiplied by 100%.

The calculated value shows how much profit before tax the company has for each ruble spent on the production and sale of products.

A/K - equity multiplier;

B/A - asset turnover;

P h /B - net margin.

Factor analysis algorithm:

1) increase in return on equity due to the equity multiplier:

where ΔФ is the increase in the multiplier in absolute terms;

Ф 0 - the value of the multiplier in the previous (base) period;

R 0 - return on equity in the previous (base) period;

2) increase in profitability due to turnover:

where Δk is the increase in turnover in absolute terms;

k 0 - turnover in the previous (base) period;

3) Increase in profitability due to net margin:

where ΔM is the increase in margin in absolute terms;

M 0 - margin in the previous (base) period.

The figure shows a diagram of factor analysis of profitability, in which indicators characterizing each area of ​​the organization's activities are organically linked.

The Du Pont methodology allows you to give a comprehensive assessment of the main factors influencing the efficiency of an organization, assessed through return on equity, namely factors such as the equity multiplier, business activity and profit margin. The strategy for increasing profitability due to the three listed factors is closely related to the specifics of the organization’s activities. Therefore, in the process of analyzing the effectiveness of an organization’s management, it is necessary to assess the adequacy of the strategy applied by management to external and internal factors functioning of the organization.

Due to the margin, an organization that produces high-quality products for a segment characterized by fairly high incomes and low price elasticity of demand can increase profitability. At the same time, it is obvious that specific gravity fixed costs should be quite low, since high margins are usually accompanied by low production and sales volumes. In addition, since high margins are always an incentive for competitors to enter the market, the strategy of increasing return on equity through margins is applicable if the market is sufficiently protected from potential producers.

If the direction for increasing return on equity is asset turnover, then the market segment served should be characterized by high price elasticity of demand and low incomes of potential buyers, i.e. in this case we are talking about the mass market. Therefore, production capacity must be sufficient to meet demand.

Increase return on equity due to the multiplier, i.e. by increasing liabilities, is possible only if, firstly, the profitability of the organization’s assets exceeds the cost of the liabilities attracted and, secondly, in the structure of its assets, non-current assets occupy a small share, which allows the organization to have a significant share in the structure of funding sources weight of non-permanent sources.

For factor analysis of margin (return on sales), you can use the following model:

where k pr is the production cost coefficient (the ratio of the cost of goods sold to revenue);

k у - coefficient of management costs (ratio of management costs to revenue);

k k - commercial cost ratio (ratio of commercial costs to revenue).

In the process of interpreting the obtained values ​​and analyzing their dynamics, it is necessary to take into account that an increase in the production cost coefficient indicates a decrease in efficiency in the production sector due to an increase in the resource intensity of products, and which resources are used less efficiently is shown by an analysis of the dependence of the margin on resource intensity indicators:

where ME is material intensity (the ratio of costs for raw materials and supplies to revenue);

WE - salary intensity (the ratio of labor costs with deductions to revenue);

AE - depreciation capacity (the ratio of the amount of depreciation charges to revenue);

RE pr - resource intensity for other costs (the ratio of the value of other costs to revenue).

An increase in the management cost ratio indicates a relative increase in the cost of the management function of organizations; the maximum value is considered to be 0.1-0.15. At the same time, the following pattern exists: the share of management costs in revenue at the stage of growth and development decreases, at the maturity stage it stabilizes, and at the final phase of decline it increases. An increase in the commercial cost ratio indicates a relative increase in marketing expenses, which can be justified if it is accompanied by a noticeable increase in sales revenue, entry into new markets, and promotion of new products on the market.

For a more detailed analysis, the influence of factors on the level of profitability of sales for individual types of products is assessed using a factor model:

where P i is the profit from the sale of the i-th product;

B i - revenue from the sale of the i-th product;

T i is the selling price of the i-th product;

C i is the cost of the i-th product sold.

Algorithm for calculating the quantitative influence of factors on changes in profitability of sales for certain types of goods:

1. The profitability of sales for the base (0) and reporting (1) years is determined.

2. A conditional indicator of return on sales is calculated.

3. The overall change in the level of profitability of sales is determined

4. The change in profitability of sales is determined due to changes in:

Unit prices:

Unit cost of production:

Based on the calculation results, it is possible to identify the degree and direction of influence of factors on the profitability of sales, as well as establish reserves for its increase.

Patterns of growth in profitability indicators:

An increase in sales profitability, subject to an increase in sales volume, indicates an increase in the competitiveness of products, due to factors such as quality, customer service, and not the price factor;

an increase in the profitability of assets is an indicator of an increase in the efficiency of their use; in addition, the return on assets reflects the degree of creditworthiness of the organization: an organization is creditworthy if the profitability of its assets exceeds the percentage of attracted financial resources;

An increase in return on equity reflects an increase in the investment attractiveness of the organization: return on equity should exceed the return on alternative investments with a comparable level of risk. It should be noted that return on capital is an indicator that tends to level out across the entire economy, i.e. a low value of this indicator for a long time can be considered as an indirect sign of reporting distortion;

An increase in return on invested capital reflects an increase in the business's ability to create value, i.e. improve the welfare of owners; the return on invested capital must exceed the weighted average price of the enterprise's capital, calculated taking into account market prices to sources financial resources. Return on capital underlies the rate of sustainable growth of an organization and its ability to develop through internal financing.

When assessing the influence of tax factors on the return on capital indicator Special attention should be paid to income tax. Return on equity can be calculated using both pre-tax profit and net profit. A comparison of the growth rates of these two indicators will allow us to give a preliminary general assessment of the impact of the tax factor.

Example 1.

The amount of planned and actual profit before tax is the same and is according to the data accounting 3,500 thousand rub. Tax base for profit: according to plan - 3,850 thousand. rub., actually -4,200 thousand. rub. The income tax rate is 20%. The average annual value of capital was unchanged and amounted to 24 600 thousand rubles. Let's evaluate the impact of income tax on the level of return on capital.

1. Income tax will be:

According to the plan: 3,850 * 0.24 = 924 thousand rubles;

In fact: 4,200 * 0.24 = 1,008 thousand rubles.

2. Net profit will be equal to:

According to the plan: 3,500 - 924 = 2,576 thousand rubles;

In fact: 3,500 - 1,008 = 2,492 thousand rubles.

3. The deviation of actual profit from its planned value is: ΔP = 2,492 - 2,576 = - 84 thousand rubles.

4. Return on capital will be:

According to plan: 2,576 / 24,600 100%= 10.47%;

Actually: 2,492 / (24,600 - 84) 100% = = 10.16%.

Analysis of the results showed that the increase in actual profit taken as the tax base, compared to its planned value by 9.09% (4,200 / 3,850,100%) led to a decrease in return on capital by 0.31%.

Example 2.

Let us evaluate the impact of reducing tax costs included in the cost of goods sold, as well as commercial and administrative expenses associated with their sale, for the taxpayer organization on the profitability of sales.

The organization's tax costs amounted to 7,537 thousand. rub. and decreased during the analyzed period by 563 thousand rubles.

Revenue (net) from the sale of goods for the analyzed period for this organization is 55,351 thousand rubles. The cost of goods sold without specified taxes is 23,486 thousand. rub., the amount of commercial and administrative expenses (excluding taxes) - 3,935 thousand. rub.

1. Let's determine the planned tax costs: 7,537 - 563 = 6,974 thousand rubles.

2. Total costs of the planning period: 23,486 + 3,935 = 27,421 thousand rubles.

3. Planned profit: 55,351 - 27,421 - 6,974 = 20,956 thousand rubles.

4. Planned return on sales: 20,956 / 55,351 * 100% = 37.86%.

5. Return on sales for the reporting period: (55,351-23,486 - 3,935 - 7,537) / 55,351,100% = 20,393/55,351,100% = 36.84%.

6. Planned increase in profitability: 37.86 -36.84= 1.02%.

Conclusion. As a result of a reduction in tax costs by 563 thousand rubles. return on sales will increase by 1.02%.

To increase profitability indicators, it is possible to propose a reduction in unnecessary costs (excess office space, excess compensation packages, entertainment expenses, reduction in costs for the purchase of furniture, office equipment, Supplies etc.), development of competent pricing policy, assortment differentiation. Equally important is the optimization of business processes (identify and optimize the company’s internal business processes that are key during the crisis; select the best specialists from the labor market, optimize staffing; tighten processes for controlling the expenditure of funds, and stop abuses).

In a post-crisis environment, organizations need an attack strategy that cannot be replaced by long-term planning and cost-saving measures, as they will not lead to success. We need a struggle to win in new markets, a special financing regime, a special marketing plan and enhanced measures to boost sales.

Bibliography

1. Bondarchuk N.V. Financial and economic analysis for tax consulting purposes / N. V. Bondarchuk, M. E. Gracheva, A. F. Ionova, 3. M. Karpasova, N. N. Selezneva. M.: Information Bureau, 2009.

2. Dontsova L.V., Nikiforova N.A. Analysis of financial statements: Textbook / L. V. Dontsova, N. A. Nikiforova. M.: DIS, 2006.

3. Melnik M.V., Kogdenko V.G. Economic analysis in auditing. M.: Unity-Dana, 2007.

The efficiency of an enterprise's economic activities and the economic feasibility of its operation are directly related to its profitability, which can be judged by the profitability or return on capital, resources or products of a business firm. Profitability is a relative indicator of the level of profitability of an enterprise; it characterizes the efficiency of the enterprise as a whole.

Profitability, in contrast to profit, more fully reflects the final results of business, as it shows the ratio of the effect to cash or consumed resources.

Only the ratio of profit and volume of work performed, characterized by the level of profitability, allows one to evaluate the production and economic activities of the enterprise in the reporting year, compare it with the results of the reporting periods, and also determine the place of the analyzed enterprise among others in the industry.

Profitability indicators

Profitability indicators are used to evaluate the activities of an enterprise and as a tool in investment policy and pricing. The profitability of an enterprise can be assessed using the following indicators.

1. Product profitability (Ppr) - is calculated as the ratio of profit from sales of products to the total cost of these products:

Rpr = Pp/Sp*100%,

where Pp is profit from sales of products, goods, works, services;

Cn is the total cost of products sold.

Considering that profit is related to both the cost of the product and the price at which it is sold, product profitability can be calculated as the ratio of profit to the cost of products sold at free or regulated prices, i.e. to sales revenue.

Therefore, the next profitability indicator is called return on sales.

2. Profitability of sales (turnover) - Рп:

Рп = Пп/В*100%,

accounting financial profit

where B is revenue from the sale of products, works, services.

This ratio shows how much profit accrues per unit of products sold.

An increase in the indicator is evidence of either an increase in product prices at constant production costs of sold products, or a decrease in production costs at constant prices.

Indicators of product profitability and profitability of sales are interrelated and characterize changes in the current costs of production and sales of both all products and their individual types.

In this regard, when planning the range of products, it is taken into account how the profitability of individual types will affect the profitability of all products.

• 3. Return on capital indicators:
  • a) return on equity (Rsk):

Rsk = Pch/Ks*100%,

where Pch is net profit;

KS - average value own capital.

This indicator characterizes the efficiency of using equity capital and shows how much profit accrues per unit of equity capital of the enterprise.

b) return on investment (permanent) capital (Pi):

Ri = Pch/Kik*100%,

where Kik is the average amount of investment capital, which is equal to the sum of the average amount of equity capital for the period and the average amount of long-term loans and borrowings for the period.

The indicator characterizes the efficiency of using capital invested for a long time. The amount of investment capital is determined according to the balance sheet as the sum of equity and long-term liabilities.

c) return on total capital of the enterprise (Rock):

Rock = Pp/Bsr*100%,

where Bsr is the average net balance sheet total for the period.

This ratio shows the efficiency of using the entire capital of the enterprise, i.e. An increase in the value of the coefficient indicates an increase in the efficiency of use of the enterprise’s property and vice versa.

A decrease in the profitability of the enterprise's total capital may also be a consequence of a drop in demand for the enterprise's products or an overaccumulation of assets.

4. Return on current assets (Rob):

Rob = Pp/AOsr*100%,

where AOsr is the average value of current assets.

The average amount of capital and assets is determined according to the balance sheet as the arithmetic average of the results at the beginning and end of the periods.

5. Profitability of fixed assets and others non-current assets(Rv):

Rv = Pp/AVsr*100%,

where АВср is the average value of fixed assets and other non-current assets for the period.

The profitability of fixed assets and other non-current assets reflects the efficiency of use of non-current assets, measured by the amount of profit per unit cost of funds. This ratio is interrelated with the return on total capital ratio. Thus, with a decrease in the return on total capital ratio, an increase in the profitability of fixed assets and other non-current assets indicates an excessive increase in mobile assets, which may be a consequence of the formation of excess inventories, overstocking finished products in warehouses due to a drop in demand for it, excessive growth of receivables or cash.

However, it should be noted that of the listed profitability indicators, not all of them are more often used in practice, but only the main ones: return on sales, return on the entire capital of the enterprise, return on fixed assets and other non-current assets, return on equity, return on investment capital.

These indicators are studied in dynamics, and the trend of their changes is used to judge the effectiveness of the enterprise’s business activities.

Let's analyze the profitability indicators for Nadezhda LLC, for which, using Appendices 2, 4, we will compile the following table.

Table 15 Profitability indicators of Nadezhda LLC for 2007 - 2008

Let's calculate profitability indicators for Nadezhda LLC:

1. Product profitability:

Rpr = Pp/Sp*100%

• 2007: Rpr = 125/7732*100% = 1.62%;
• 2008: Rpr = 116/7576*100% = 1.53%.
• 2. Sales profitability:

Рп = Пп/В*100%

• 2007: Рп = 125/7857*100% = 1.59%;
• 2008: Рп = 116/7692*100% = 1.51%.
• 3. Return on equity:

Rsk = Pch/Sk*100%

• 2007: Rsk = 404/8976*100% = 4.50%;
• 2008: Rsk = 487/7421*100% = 6.56%.

From the calculations made it follows that a decrease in profit by 9 thousand rubles. led to a decrease in product profitability by 0.09%. Return on sales in 2008 also decreased by 0.08% compared to 2007, which indicates an increase in production costs at constant product prices. The return on equity in 2008 increased by 2.06% compared to 2007, which indicates the efficiency of the use of equity by the enterprise.

To increase profitability indicators, the management of Nadezhda LLC needs to concentrate its work on resource conservation, which will lead to increased profits.

In conclusion, it should be added that when analyzing profitability indicators, the following must be taken into account: profitability directly depends on the organization’s strategy, or more precisely, on the level of risk in business activities, which “requires” a certain level of profit. The higher the risk, the greater the profit a business organization should receive.

Factor analysis of product profitability

Factor analysis of profitability indicators in the process of financial analysis is carried out on the basis of the profit and loss statement (form No. 2).

Factor analysis of product profitability is carried out based on the following model:

rs = Pp/Srp = (RP - Srp)/Srp,

where Pp is profit from product sales, rub;

RP - sales volume at selling prices (excluding VAT and other indirect taxes), rubles;

CRP - total cost of products sold, rub.

For factor analysis, the chain substitution method is used. In this case, the volume of products sold will be a quantitative indicator, and its cost will be a qualitative indicator. Then the increase in profitability in the reporting period compared to the base period will be determined as follows:

Рс = П№п/С№рп - Пєп/Сєрп = (РП№ - Сєрп)/ С№рп - (РПє - Сєрп)/ Сєрп = РП№/С№рп - РПє/Сєрп = (РПє/ S№рп - РП№/Сєрп) + (РП№/Сєрп - РПє/Сєрп) = ДрсС - ?рсРП.

The ?рСС component characterizes the impact of changes in the cost of goods sold on the dynamics of product profitability, and the ?рсРП component characterizes the impact of changes in sales volume. They are defined respectively as

• ?рсС = РП№/С№рп - РП№/Сєрп;
• ?рсРП = РП№/Сєрп - РПє/Сєрп.
• 1. Full cost of sales of products sold by Nadezhda LLC:

С№рп = 7576;

Sickle = 7732.

• 2. The impact of changes in cost on the dynamics of product profitability:
  • ?рсС = 7692/7576 - 7692/7732 = 1.015 - 0.995 = 0.02.
• 3. The impact of changes in the volume of products sold on the dynamics of product profitability:
  • ?rsRP = 7692/7732 - 7857/7732 = 0.995 - 1.016 = -0.021.
• 4. General change in product profitability:
  • ?рс = 0.02+ (-0.021) = -0.001.

Conclusion: according to the calculations, product profitability compared to 2007 decreased by 0.01 (1.015 - 1.016) under the influence of the following factors:

• 1) due to changes in the cost of goods sold increased by 0.02;
• 2) due to changes in the volume of products sold, selling prices decreased by 0.021.

The reason for the deterioration in product profitability is the decrease in sales revenue. To solve this problem, the management of Nadezhda LLC needs to identify reserves for increasing the volume of product sales and the amount of profit.

In order to ensure stable profit growth, it is necessary to constantly look for reserves to increase it. They are identified both at the planning stage and during the implementation of plans. Determining reserves for profit growth is based on a well-founded methodology for their calculation, mobilization and implementation. There are three stages of this work: analytical, organizational and functional. At the first stage, reserves for increasing profits and profitability are identified and quantified; at the second, a set of organizational, economic and social measures are assessed to ensure the use of the identified reserves. At the third stage, activities are practically implemented and their implementation is monitored.

In addition, the development of reserves for profit growth without increasing production capacity(without additional capital investments) increases not only the profitability of the work, but also its financial strength reserves. The margin of financial strength or safety zone (Zf.u) is determined by the formula:

Zf.y = (Vv - Vb)/Vv;

Vv = Vf + identified growth reserve,

where Вв is the possible sales volume (sales) taking into account reserves for its growth;

Vb - break-even sales volume;

Vf - revenue after the fact (sales volume).

One of the main indicators characterizing the profitability of production is the production profitability ratio.

R ex. = R bal. / Ref.f. * 100%,

Where:

R pr. - production profitability, %,

R ball. - balance sheet profit,

With pr. f.- average cost of production assets.

Factors influencing changes in production profitability include:

1. change in the amount of balance sheet profit;

2. change in the value of fixed assets;

3. change in balances of material current assets (inventories and costs).

However, more detailed information for analysis can be obtained using relative indicators characterizing product profitability, efficiency of use of fixed assets and tangible current assets.

To do this, we use the coefficients:

1. profitability ratio of products sold(Kr):

K r = Balance sheet profit: Sales volume

2. product capital intensity ratio(Kf e):

Kf e = Cost of fixed assets (average): Sales volume

3. working capital consolidation ratio(K z.):

K h. = Material working capital: Sales volume

Methodology for formalized factor analysis of production profitability

1. Calculation of the total change in production profitability:

R pr. = R pr. 1 - R pr. 0,

R ave. 1 and R ave. 0 - profitability of production for the reporting and base periods.

2. Calculation of the impact on production profitability of changes in product profitability:

Rr = (Rr 1 / (R feo + R z.o) * 100%) - R pr, o,

Rr - impact on production profitabilitychanges in product profitability;

Rr 1 - profitability of products of the reporting period;

Rfeo - capital intensity of products of the base period;

R z. o- coefficient of fixation of working capital of the base period.

3. Calculation of the impact on production profitability of changes in the capital intensity of products:

Rfe = -

Rfe - the impact on the profitability of production of changes in the capital intensity of products,

Rfe 1 - capital intensity of products of the reporting period

4. Calculation of the impact on production profitability of changes in the turnover of material working capital:

R z = -

The sum of particular deviations must correspond to the overall change in production profitability:

R pr = Rr + Rfe + R z

Initial data for factor analysis of production profitability.

Table 3.5.

Production profitability analysis

Indicators	Base period	Reporting period
1. Balance sheet profit, thousand rubles.	1073	1128
2. Sales of products at basic prices, thousand rubles.	9150,8	11366
3. Average annual cost of fixed assets, thousand rubles.	8430	8610
4. Average annual cost of working capital, thousand rubles.	780,3	804,9
5. Average annual cost of production assets (item 3 + item 4), thousand rubles.	9210,3	9414,9
6. Product capital intensity ratio (item 3/item 2 * 100%), kopecks. ( Kf e)	92,12	75,75
7. Working capital consolidation coefficient (item 4/item 2*100%), kopecks. ( K h)	8,53	7,08
8. Profit per ruble of sold products (item 1 / item 2* 100%), kopecks. (Kr)	11,73	9,92
9. Profitability of production (item 1/item 5 * 100%), % ( R ex.)	11,65	11,98

Production profitability for the reporting year increased by 0.33% (11.98 - 11.65). Let us determine the influence of factors on the change in the performance indicator:

1. Impact of changes in product profitability:

11,65% = 9,86 - 11,65 = -1,79 %,

Due to a decrease in product profitability, production profitability decreased by 1.79%.

2. Impact of changes in the capital intensity of products:

9,86 = 11,77 - 9,86 = +1,91%

As a result of a decrease in the capital intensity of products and, as a consequence, an increase in capital productivity, production profitability increased by 1.91%.

3. Impact of changes in the fixed assets ratio:

11,77 % = 11,98 - 11,77 = +0,21%,

due to reductionR z.,i.e., accelerating the turnover of material working capital, production profitability increased by 0.21%.

Check: 11.98 - 11.65 = -1.79 + 1.91 + 0.21

or 0.33 = 0.33

Thus, the main reserve for increasing production profitability is product profitability, which decreased by 1.81 (9.92 - 11.73).

The decrease in this ratio was a consequence of a relative decrease in the amount of book profit.

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