To assess the efficiency of using resources consumed in the process of production activities, profitability indicators are used.

Profitability indicators characterize the relative profitability or profitability of various areas of the enterprise's activities. They reflect the final results of business more fully than profit, since their value shows the relationship between the effect and the available or used resources. Indicators are measured in relative values ​​(percentages, coefficients).

Profitability indicators are combined into several groups:

Indicators characterizing the profitability of production costs;

Indicators characterizing profitability of sales;

Indicators characterizing the profitability of capital and its parts.

All these indicators can be calculated on the basis of sales profit, profit before tax, net profit according to Form No. 2 of the financial statements.

1. Cost profitability (R Z) is characterized by the ratio of profit from the sale of products (P P) to the total cost of products sold (C P), %:

R Z = (P R / S P) 100%, or [P r / (C r + R y + R k)] × 100%

The coefficient shows the level of profit per 1 ruble of funds spent. It is calculated for the enterprise as a whole, its individual divisions and types of products (services).

2. Return on sales (R P) is measured by the ratio of profit to sales volume. Sales volume is expressed by revenue from sales of products minus VAT. excise taxes and similar mandatory payments.

Depending on the profit indicator, profitability of sales is distinguished:

· as the ratio of profit from the sale of products (P r) to sales revenue (R pr), %

R pr = (P r / V r) × 100%;

· as the ratio of taxable profit (P n) to revenue from the sale of products (works, services) (R n), %

R n = ( P n / V r ) × 100 %;

· as the ratio of net profit (P h) to revenue from the sale of products (works, services) (R h), %

R h = (R h / V r) × 100%.

Return on sales characterizes the efficiency of business activity: it shows how much profit is received from a ruble of sales. It is calculated for the enterprise as a whole and for individual types of products (services).

3. Return on capital ratios are calculated by the ratio of the amount of profit to the average annual amount of capital and its components.

When calculating the coefficients, taxable profit (P n) and net profit (P h) are used.

Depending on the type of capital, profitability indicators are distinguished:

· Profitability of total property (R and) – as the ratio of the taxable profit of the enterprise to the average annual value of the enterprise’s property, %

R and = (P n / I) × 100%,

where: I is the average annual value of the enterprise’s property, determined from the balance sheet asset data as the arithmetic mean at the beginning and end of the analyzed period, rubles:

I = (VB n + VB k) / 2,

where: VB n, VB k – balance sheet currency (total value of property), respectively, at the beginning and end of the reporting period, which is equal to the sum of the results of sections 1 and 2 of the balance sheet asset.

The coefficient shows how many monetary units of profit the enterprise received from a unit of property (assets) value, regardless of the sources of raising funds.

· Return on equity (R ck) calculated as the ratio of net profit to the average annual value of equity (shareholder) capital, %:

R sk = (P n / SK) × 100%;

where: SC is the average annual cost of equity capital, defined as the arithmetic average of the enterprise’s own sources of funds (total of section 3 of the liabilities side of the balance sheet) at the beginning and end of the analyzed period, rubles:

SK = (SK n + SK k) / 2.

The coefficient plays an important role in assessing the level of quotation of shares of joint-stock companies on the stock exchange.

Return on property differs from return on equity, since in the first case all sources of financing, including external ones, are assessed, and in the second - only own ones.

If borrowed funds generate more profit than paying interest on that borrowed capital, then the difference can be used to increase the return on equity. However, if the return on assets is less than the interest paid on borrowed funds, the impact of borrowed funds on the activities of the enterprise should be assessed negatively.

The analysis of profitability indicators is carried out on the basis of financial reporting data (forms No. 1, 2) using analytical table 4.

The data in Table 4 allows us to draw the following conclusions.

In general, the enterprise has seen an improvement in the use of property. For every ruble invested in assets, the company received more profit in the reporting year than in the previous period. If last year each ruble invested in property brought 0.5 kopecks. profit, then in the reporting year - 1.3 kopecks.

Return on equity for the reporting period decreased by 1.52 percentage points. Almost all indicators of profitability of sales also decreased. The reason for the negative shifts in the level of profitability was the unprofitable activity of the enterprise in the reporting year.

Table 4 – Dynamics of profitability ratios

A decrease in profitability indicators may mean a drop in demand for products and a decrease in their competitiveness.

The level and dynamics of profitability indicators are influenced by factors that form the profit of the enterprise: output volume, price, quality and structure of products, costs of production and sales of products.

Factor analysis of profitability indicators involves the use of various models.

Using the method of chain substitutions, the impact of changes in profitability of sales is determined due to factors of changes in revenue from the sale of products (rendering services) and cost. The initial data for factor analysis of changes in sales profitability are shown in Table 4.

As we can see, the organization’s main activities in the reporting year were profitable. However, compared to last year, the return on sales indicator, calculated by profit from sales, decreased by 0.21 percentage points and amounted to 4.46%. This deviation was influenced by two factors: changes in the volume of services provided and work performed and their cost.

To identify the quantitative influence of each factor on the final result, it is necessary to calculate a conditional profitability indicator based on the reported sales revenue (B p1) and the basic cost (C p0):

R conv. = (B p1 – C p0) / B p1 × 100 = (261586 – 206969) / 261586 ×100 = 20.88%.

1. The influence of the factor of change in sales volume on the level of profitability of sales:

R pr1 = R condition. – R pr0 = 20.88 – 4.67 = 16.21%.

2. The influence of the cost change factor on the level of profitability of sales:

R pr2 = R pr1 - R condition. = 4.46 – 20.88 = - 16.42%.

3. The sum of factor deviations gives the total change in profitability of sales for the period:

R = R pr1 + R pr2 = 16.21 + (- 16.42) = - 0.21%.

The results of factor analysis showed that an increase in the cost per unit of services provided had a greater impact on the level of profitability than an increase in the volume of services provided.

There is a relationship between indicators of return on assets, asset turnover and return on sales, which can be obtained by modeling the property profitability ratio using factor dependencies.

The profitability of property is determined by the formula:

R and = (P n / I) × 100%.

Let's divide the elements of this formula by one value - sales revenue, we get:

R and = /

where: P n / V r × 100% = R pr – return on sales;

B r / I = K and is an indicator characterizing the turnover of property (assets), or the resource productivity coefficient.

We obtain a formula that reflects the relationship between indicators of return on capital and its turnover:

R and = R pr × K and.

In other words, return on capital is equal to the product of return on sales and capital turnover.

The profitability of property can increase with a constant return on sales by accelerating asset turnover (resource productivity). And, conversely, with constant resource productivity, the profitability of the property can increase due to an increase in the profitability of sales.

Thus, the profit of the enterprise received from each ruble of funds invested in assets depends on the speed of turnover of funds and on what is the share of profit in the proceeds from the sale.

The resulting formula directly indicates ways to increase return on capital: with low return on sales, it is necessary to strive to accelerate the turnover of production assets. In turn, asset turnover depends on how rational the property structure is, whether there are excess reserves, overdue receivables and payables, etc.

To assess the factors influencing changes in the profitability of property, the data in Table 5 is used.

Table 5 – Initial data for factor analysis of the organization’s return on assets

Using the method of chain substitutions, the impact of changes in factors on the return on assets is determined.

1. Impact of changes in the profitability of services provided:

R i1 = (R pr1 – R pr0) × K i0 = (1.39 – 0.64) × 0.756 = 0.567%.

2. Impact of changes in property (assets) turnover:

R i2 = (K i1 – K i0) × R pr1 = (0.92 – 0.756) × 1.39 = 0.228%.

The total sum of the influence of the two factors is:

0,567 + 0,228 = 0,79 %

Thus, the profit received as a result of core activities led to an increase in the level of profitability of the property of MUP Engels-Vodokanal by 0.567%. The acceleration of the turnover of all its funds also contributed to an increase in the level of return on assets.

Similar to the calculations performed, the influence of factors on changes in return on equity is established.

To assess the sustainability of economic growth, enterprises compare the rate of change in the amount of profit, sales volume and the value of assets (capital).

The optimal ratio is:

T P > T VR > T I > 100%

where: T P, T BP, T I – respectively, the rate of change in the amount of profit (before tax), proceeds from sale, value of property (assets).

This ratio means:

1. profit increases at a higher rate than the volume of product sales, which indicates a relative reduction in production and distribution costs;

2. sales volume increases at a faster rate than the assets (capital) of the enterprise, that is, the enterprise’s resources are used more efficiently;

3. the economic potential of the enterprise increases compared to the previous period.

The considered relationship in world practice is called the “golden rule of enterprise economics.” However, deviations from this ideal relationship are also possible, in particular if the activity of the enterprise requires significant investments that can pay off and bring benefits only in a more or less long term. Then these deviations should not be considered as negative.

Let's consider the rate of change in these indicators in the reporting year compared to last year according to the data of the Engels-Vodokanal Municipal Unitary Enterprise (Table 6).

Table 6 – Economic indicators and their growth rates

As can be seen from the above data, in the reporting year, compared to the previous year, an increase in profit by 158.8% was accompanied by an increase in sales volume by 20.5% and a decrease in property value by 1.0%.

Thus, the growth rate of accounting profit exceeded the growth rate of revenue from the provision of services. Revenue from the provision of services, in turn, exceeded the growth rate of the value of the enterprise's assets, that is, the optimal ratio (in%) was formed: 258.8 > 120.5 > 99.0 > 100%.

The further development of the enterprise largely depends on updating the material and technical base, which will increase the volume of services provided and improve their quality.

ABSTRACT

Course work: 45 pp., 0 figures, 7 tables, 18 sources.

Profitability, enterprise profitability, types of profitability, factor analysis, profitability analysis.

The object of the study is the activities of the Borisov Crystal Plant PRUE.

The purpose of writing the course work: to study the theoretical and practical aspects of the profitability of an enterprise and ways to increase it using the example of the Borisov Crystal Plant PRUE.

When writing the course work, methods of analysis, comparison, and inference were used.

In the process of writing the course work, the following research was carried out:

1. The features of the profitability of the enterprise have been studied;

2. An analysis of the economic activities of PRUE “Borisov Crystal Plant” was carried out;

3. Ways to increase the profitability of the Borisov Crystal Plant PRUE have been studied.

INTRODUCTION………………………………………………………4

1 ECONOMIC CONTENT OF PRODUCTION PROFITABILITY………………………………………………………………………………..6

1.1 The concept of profitability………………………………………………………6

1.2 Types of profitability……………………………………………………………9

1.3 System of profitability indicators……………………………12

1.4 Analysis of enterprise profitability……………………………15

1.5 Factor analysis of profitability indicators…………………..18

2 ANALYSIS OF PRODUCTION PROFITABILITY INDICATORS IN PRUE “BORISOVSKY CRYSTAL PLANT” FOR 2009-2010……..21

CONCLUSION………………………………………………………..31

LIST OF SOURCES USED……………………….32

INTRODUCTION

The transition to market relations in the economy of the Republic of Belarus poses a new challenge and expands the capabilities of the enterprise as its main link. Under the new conditions, legal, financial, economic and social relations have changed significantly both within the enterprise and in the external environment.

A variety of forms of ownership have emerged, and the relations of enterprises with the state and other market entities have changed significantly. Economic freedom, as a condition and consequence of market relations, places higher demands on the level of management and economic activity of an enterprise.

In modern economic conditions, the activities of each economic entity are the subject of attention of a wide range of market participants interested in the results of its functioning.

To ensure the survival of an enterprise in modern conditions, management personnel must, first of all, be able to realistically assess the financial condition of both their enterprise and existing potential competitors. The most important thing in determining the financial condition of an enterprise is a timely and high-quality analysis of financial and economic activities.

The result of a company's activities is assessed by a system of indicators, the main of which is profitability, defined as the ratio of profit to one of the indicators of the functioning of a trading enterprise. This makes it possible to identify not only the overall economic efficiency of the enterprise, but also to evaluate other aspects of its activities.

Profitability, in a general sense, characterizes the feasibility of expended resources in relation to newly acquired (profit) resources. It should be noted that profitability indicators are important elements that reflect the factor environment for generating enterprise profits. Therefore, they are mandatory when conducting a comparative analysis and assessing the financial condition of an enterprise. In addition, profitability indicators are used in analyzing the efficiency of enterprise management, in determining the long-term well-being of an organization, and are used as a tool for investment policy and pricing.

A high level of profitability gives any enterprise an advantage in attracting investments, obtaining loans, choosing suppliers, etc., which determines competitiveness, as well as the degree of its independence from unexpected changes in market conditions.

In this regard, issues of economic analysis of the level of profitability in trade in order to identify reserves for its increase become extremely important.

Subject of the course work: profitability of an industrial enterprise.

Object of study of the course work: PRUE "Borisov Crystal Plant".

The purpose of the course work research is to analyze the profitability of the Borisov Crystal Plant PRUE and propose ways to increase the profitability of the project.

Coursework objectives:

analyze ways and means of increasing production profitability. Main factors influencing production profitability;

conduct an analysis of production and economic activities and the effectiveness of measures to increase production profitability;

The structure of the course work: introduction, main part (three chapters), conclusion and list of sources used.

1 ECONOMIC CONTENT OF PRODUCTION PROFITABILITY

1.1 Concept of profitability

In the economic literature, several concepts of profitability are given. Thus, one of its definitions is as follows: profitability (from the German rentabel - profitable, profitable) is an indicator of the economic efficiency of production at enterprises, which comprehensively reflects the use of material, labor and monetary resources.

According to other authors, profitability is an indicator that represents the ratio of profit to the amount of production costs, monetary investments in organizing commercial operations, or the amount of company property. Either way, profitability is the ratio of income to the capital invested in creating that income. By relating profit to invested capital, profitability allows one to compare the level of profitability of production with an alternative use of capital or the profitability obtained by the enterprise under similar risk conditions. Riskier investments require higher returns to become profitable. Since capital always brings profit, to measure the level of profitability, profit, as a reward for risk, is compared with the amount of capital that was necessary to generate this profit. Profitability is an indicator that comprehensively characterizes the efficiency of production activities. With its help, you can evaluate the effectiveness of production management, since obtaining high profits and a sufficient level of profitability largely depends on the correctness and rationality of management decisions made. Therefore, profitability can be considered as one of the criteria for management quality.

Based on the level of profitability, one can assess the long-term well-being of the enterprise, i.e. the ability of a business to earn a sufficient return on investment. For long-term creditors of investors who invest money in the equity capital of an enterprise, this indicator is a more reliable indicator than indicators of financial stability and liquidity, determined on the basis of the ratio of individual balance sheet items.

By establishing a connection between the amount of profit and the amount of invested capital, the profitability indicator can be used in the process of forecasting profit. In the forecasting process, the profit expected to be received on these investments is compared with actual and expected investments. The estimate of expected profit is based on the level of profitability for previous periods, taking into account projected changes. In addition, profitability is of great importance for making decisions in the field of investment, planning, budgeting, coordinating, evaluating and monitoring the activities of an enterprise and its results.

Thus, we can conclude that profitability indicators characterize the financial results and efficiency of production activities. They measure the profitability of an enterprise from various positions and are systematized in accordance with the interests of participants in the economic process.

Profitability of production(Rpr) shows the amount of balance sheet (or net) profit (Pb) per 1 ruble. the average annual cost of fixed production assets and the average annual cost of standardized working capital of the enterprise:

OPF - average annual cost of fixed production assets

OS - average annual cost of standardized working capital of the enterprise

Actual total profitability is determined by the ratio of balance sheet profit to the actual average annual cost of production fixed assets and normalized working capital not financed by the bank. The actual balances of normalized working capital are established based on their balance sheet minus the debt to suppliers for accepted payment requests, the payment deadline for which has not come, and to suppliers for uninvoiced supplies, as well as depreciation of low-value and wear-and-tear items and a reserve for compensation of planned losses and upcoming expenses .

The level of profitability depends not only on the amount of profit, but also on the capital intensity of production. In enterprises of heavy industry associations with high capital intensity of production, the level of profitability in relation to production assets is lower than in associations of light and especially food industry enterprises. With an increase in the amount of profit and a decrease in the cost of fixed production assets and normalized working capital, profitability increases, and vice versa.

Estimated profitability represents the ratio of balance sheet profit minus payments for production assets, fixed payments, interest on a bank loan, profit for special purposes (profit from the sale of consumer goods, new household chemicals, etc.), as well as profit received for reasons , independent of the activities of the association, enterprise, to the average annual cost of fixed assets (minus fixed assets for which payment benefits are provided) and standardized working capital.

When analyzing the work of associations and enterprises, especially when planning to assess the profitability of products, profitability is important, defined as the ratio of the amount of profit to the total cost of products sold. The profitability of individual types of products is calculated using the formula:

(O – C) 100

where R is the level of profitability, %

О – enterprise wholesale price for products

C is the total cost of the product.

In mechanical engineering and other manufacturing industries, profitability is defined as the ratio of profit to cost minus the cost of raw materials used, fuel, energy, materials, semi-finished products and components. The following formula can be used:

Rm = C – M (3)

where Rм is the calculated standard of profitability to cost minus material costs

F – production assets of the industry, million rubles

Rf – profitability standard for production assets

C – M - cost of marketable products minus direct material costs, million rubles.

1.2 Types of profitability

The level of profitability of socialist associations, enterprises and industries is not determined by the law of the average rate of profit, but is established by the state in a planned manner, taking into account the price level and cost of production, the need for funds for the development of production, and economic incentives for workers of enterprises and associations.

Under socialist conditions, the profitability of some enterprises, associations and sectors of the economy increases without prejudice to other enterprises, associations and sectors. The pace of development of industries in Belarus, in contrast to capitalist countries, is determined not by the level of their profitability, but by the state plan for economic and social development.

Production profitability is characterized by a system of indicators. National economic profitability is defined as the ratio of the entire amount of cash savings (profit and turnover tax) to the average annual cost of fixed production assets and standardized working capital or to the full cost of production. In 2003, industry profitability, calculated as the ratio of the total amount of cash savings to production assets, was (in prices of the corresponding years) 20.5%.

self-supporting profitability, used in planning, assessing economic activity and economic stimulation of associations and enterprises, is defined as the ratio of the amount of profit to the average annual cost of fixed production assets and standardized working capital. In 2003, it was 12.1% in industry, including: in mechanical engineering and metalworking - 12.2%, in ferrous metallurgy - 10.7%, in oil production - 19.2, in light industry - 23.2, in the food industry - 18.5%. Industry profitability, calculated as the ratio of profit to the total cost of production, in 1984 was 16.2%, including: food industry - 11.8%, light industry - 12.3%.

The level of profitability of industrial sectors is directly dependent on the profitability of associations and enterprises. The higher the profitability of associations and enterprises, the higher the level of profitability of industry and the entire national economy as a whole.

Overall profitability associations and enterprises is determined by the ratio of balance sheet profit to the average annual cost of fixed production assets and standardized working capital and is calculated using the formula

(4)

P - profit;

-average annual cost of fixed production assets;

- average annual cost of standardized working capital.

Actual Total Profitability is determined by the ratio of balance sheet profit to the actual average annual cost of production fixed assets and normalized working capital not financed by the bank. The actual balances of normalized working capital are established based on their balance sheet minus the debt to suppliers for accepted payment requests, the payment deadline for which has not come, and to suppliers for uninvoiced supplies, as well as depreciation of low-value and wear-and-tear items and a reserve for compensation of planned losses and upcoming expenses .

The level of profitability depends not only on the amount of profit, but... and on the capital intensity of production. In enterprises of heavy industry associations with high capital intensity of production, the level of profitability in relation to production assets is lower than in associations of light and especially food industry enterprises. With an increase in the amount of profit and a decrease in the cost of fixed production assets and normalized working capital, profitability increases, and vice versa.

Estimated profitability represents the ratio of balance sheet profit minus payments for production assets, fixed payments, interest on a bank loan, profit for special purposes (profit from the sale of consumer goods, new household chemicals, etc.), as well as profit received for reasons independent of the activities of the association, enterprise, to the average annual cost of fixed assets (minus fixed assets for which payment benefits are provided) and standardized working capital.

When analyzing the work of associations and enterprises, especially when planning to assess the profitability of products, profitability is important, defined as the ratio of the amount of profit to the total cost of products sold. The profitability of certain types of products is calculated using the formula

where P is the level of profitability, %;

О is the enterprise's wholesale price for the product;

C is the total cost of the product.

The profitability indicator for products reflects the efficiency of living and material labor costs for product production.

In mechanical engineering and other manufacturing industries, profitability is defined as the ratio of profit to cost minus the cost of raw materials used, fuel, energy, materials, semi-finished products and components. In this case, the formula can be used

(6)

Where
- calculated standard of profitability to cost minus material costs;

- production assets of the industry (under branches) of industry;

- profitability standard for production assets;

C - M - cost of commercial products minus direct material costs.

The use of the indicator of standard estimated profitability in manufacturing industries is due to the high share of material costs in the cost of production of these industries, their significant fluctuations in the cost of certain types of products and the wide possibilities for technological replacement of the raw materials used.

When determining the standard of estimated profitability to the cost of production minus the cost of the used material costs, only direct cost items are excluded from the cost of production in the calculation section. Thus, in mechanical engineering, cost items are deducted from the cost of production: Raw materials and supplies, “Purchased components, semi-finished products and services of cooperative enterprises,” “Fuel and energy for technological purposes.”

The main ways to increase production profitability are the development of the most progressive industries, rational placement of associations and enterprises, increasing the share of specialized production, the use of modern methods of organizing production and labor in accordance with the requirements of scientific and technological progress, accelerating the introduction and development of new, more progressive technology, increasing labor productivity, reducing the cost of production, improving its quality, strengthening the economy in the expenditure of material, labor and financial resources and increasing the material interest of workers in the results of their work.

1.3 System of profitability indicators

Profitability indicators characterize the financial results and efficiency of the enterprise. They measure the profitability of an enterprise from various positions and are grouped in accordance with the interests of participants in the economic process and market exchange.

Profitability indicators are important characteristics of the factor environment for generating enterprise profits. Therefore, they are mandatory when conducting a comparative analysis and assessing the financial condition of the enterprise. When analyzing production, profitability indicators are used as a tool for investment policy and pricing

The main profitability indicators can be combined into the following groups

1) indicators of return on capital (assets),

2) product profitability indicators;

3) indicators calculated on the basis of cash flows.

First group profitability indicators are formed as the ratio of profit to various indicators of advanced funds, of which the most important are; all assets of the enterprise; investment capital (equity + long-term liabilities); share (equity) capital:

The discrepancy between the levels and profitability of these indicators characterizes the degree to which the enterprise uses financial levers to increase profitability: long-term loans and other borrowed funds.

These indicators are specific in that they meet the interests of all business participants of the enterprise. For example, the administration of an enterprise is interested in the return (profitability) of all assets (total capital); potential investors and creditors - return on invested capital; owners and founders - profitability of shares, etc.

Each of the listed indicators is easily modeled using factor dependencies. Consider the following obvious relationship:

(8)

This formula reveals the relationship between the profitability of all assets. profitability of sales and asset turnover. Economically, the connection is that the formula directly indicates ways to increase profitability when the return on sales is low, it is necessary to strive to accelerate asset turnover.

Let's consider another factor model of profitability.

As we can see, the return on equity (shareholder) capital depends on changes in the level of profitability of products, the rate of turnover of total capital and the ratio of equity and debt capital. Study. Such dependencies are of great importance for assessing the influence of various factors on profitability indicators. From the given dependence. It follows that, other things being equal, the return on equity capital increases with an increase in the share of borrowed funds in the total capital.

Second group indicators are formed on the basis of calculating the levels and profitability of profit indicators reflected in the reporting of enterprises. For example,

These indicators characterize the profitability of basic products ( ) and reporting ( ) periods. For example, product profitability based on sales profit

; (11)

; (13)

; (14)

, (15)

Where -
-profit from sales of the reporting and base periods, million rubles;

- sales of products (works, services) of the reporting and base periods;

- cost of products (works, services) for the reporting and base periods;

- change in profitability in the reporting period compared to the base period.

The influence of the factor of change in sales volume is determined by calculation (using the method of chain substitutions)

(16)

Accordingly, the impact of a change in cost will be

(17)

The sum of factor deviations gives the overall change in profitability in the reporting period compared to the base period;

(18)

The third group of profitability indicators is formed similarly to the first and second groups, however, instead of profit, net cash inflow is taken into account.

NPV - net cash inflow

These indicators give an idea of ​​the extent to which an enterprise can pay creditors, borrowers and shareholders with cash in connection with the use of existing cash inflows. The concept of profitability calculated on the basis of cash flow is widely used in countries with developed market economies. It is a priority because cash flow operations that ensure solvency are an essential sign of the state of the enterprise.

1.4 Enterprise profitability analysis

Indicators of profitability and efficiency of use of property characterize the profitability of the enterprise and are calculated as the ratio of the profit received to various types or items of costs

This is the most important group of indicators, since the results of their analysis will allow you to make decisions on investing your own funds in a particular business, characterizes the feasibility of the company’s activities, and is its resulting price.

Profitability of turnover (sales ), characterizes the efficiency of the operational (production and economic) activities of the enterprise. It is designed to assess the profitability of production as a whole, but can also be used to compare the profitability of individual types of products. It is calculated as the ratio of operating income to gross revenue.

The average level of return on sales varies depending on the industry and therefore does not have any standard. This indicator is important when comparing it with the corresponding indicators of similar enterprises, in dynamics or in comparison with planned indicators.

Return on equity - the most significant indicator in the activities of an enterprise, characterizing the efficiency of use of property owned by it. Based on this indicator, the owner of the assets can choose where to invest them. When calculating, it is not operating income that is taken into account, but the final, net profit, which will be distributed among the owners (shareholders) of the enterprise. It is calculated as the ratio of net profit to the average annual cost of equity capital.

Therefore, to increase the efficiency of your investment, you can act in two main directions:

Increase in net profit - increase in sales volumes and profitability of sales.

Reducing equity capital - effective management of current assets and liabilities, reducing the need for additional financing

In general, to assess the feasibility of investing in a particular business, you should compare the projected return on equity with alternative options for allocating free resources (for example, a deposit), taking into account the risk factor.

In order to understand how and due to what the final return on equity indicator is formed, a number of intermediate indicators should be considered,

Return on net assets - an indicator of the efficiency of the enterprise's operating activities. It is calculated as the ratio of operating income to the average annual net assets where:

Net assets = Own capital + Loans (long-term and short-term)

Return on net assets is used to assess the effectiveness of financial leverage

Financial leverage- The ratio of equity and borrowed funds in the structure of net assets characterizes the impact of lending on the efficiency of the enterprise. The main criterion for assessing the effectiveness of financial leverage is the bank loan rate. If the lending rate is lower than the return on net assets, then an increase in the share of loans will increase the return on equity, and vice versa.

The value of financial leverage shows how much the return on equity will increase/decrease with an increase/decrease in return on net assets.

Financial leverage is calculated using the following formula: = Net assets / Equity (20)

Using the above indicators we can obtain the following formula:

Return on sales * Net asset turnover * Financial leverage = (Operating income / Volume of sales) * (Sales Volume/Net Assets) * (Net assets / Equity) = (Operating income/ Equity) (21)

Now, to obtain the final formula for return on equity, it is necessary to introduce an amendment so that net profit appears in the numerators.

(Operating income/Equity)*

(((OD- I )*(I-T))/OD)=Return on equity, (22)

where, OD - operating income;

I - the amount of interest on loans;

T - income tax rate

The main factors that form private indicators and through them influence return on equity are:

Operating factors:

Sales profitability;

Net asset turnover.

Factors of financial activity:

Financial leverage;

Interest and taxes.

Return on assets shows the profit brought by all funds of the enterprise, without exception, regardless of their type or source of formation. It is calculated as the ratio of net profit to the total amount of actins. Serves to assess the efficiency of the business as a whole (and not just the efficiency of equity capital).

Profit reinvestment ratio - characterizes the dividend policy of the company, shows the share of net profit remaining in the enterprise, and, therefore, serves its further development. It is calculated as the ratio of retained net profit (reinvested profit) to the net profit of the enterprise.

Sometimes, to compare reinvested profits with equity capital, another formula for this indicator is used:

Kg = Reinvested profit / Equity at the beginning of the period

The following indicators of enterprise profitability will be of direct interest to the company’s shareholders:

Return on Equity - the volume of profit (dividends) distributed among shareholders per 1 tenge of share capital.

Net earnings per share - the amount of net profit received by the enterprise per share.

Dividend per share - profit distributed among shareholders per share.

The financial indicators of an enterprise are interrelated and improvement of some of them can cause deterioration of others, for example:

Attracting borrowed capital increases return on equity, but reduces the financial stability of the company:

An increase in turnover entails a reduction in the amount of current assets, and therefore worsens liquidity;

Attracting a long-term loan allows you to abandon short-term lending - liquidity improves due to a decrease in long-term stability.

In general, as a rule, higher profitability of activities implies a greater degree of risk (low liquidity and financial stability).

1.5 Factor analysis of profitability indicators

The level and dynamics of profitability indicators are influenced by the entire set of production and economic factors: the level of organization of production and management; structure of capital and its sources; degree of use of production resources; volume, quality and structure of products; production costs and product costs; profit by type of activity and direction of its use.

The methodology of factor analysis of profitability indicators provides for the decomposition of the initial formulas for calculating the indicator according to all qualitative and quantitative characteristics of intensifying production and increasing the efficiency of economic activity. For example, to analyze overall profitability (return on assets), you can use a three- or five-factor model.

To simplify the model, the costs of production and sales of products are reduced to labor costs, materials costs and depreciation of fixed assets. For the practical application of the model, the costs of materials should be added to the cost of components and semi-finished products, work and services of a production nature (performed by third parties or non-core divisions of the enterprise), fuel, purchased energy, etc. Labor costs should be supplemented with contributions for social needs. In addition, other costs should be taken into account as a separate element or distributed proportionally between the main types of costs.

All models used are based on the following relationship:

(23)

Where R- return on assets (capital);

R - profit from sales;

TO- average value of assets for the period;

F - average value for the period of non-current assets;

E - average balances of current assets;

- costs per 1 ruble of products at full cost;

- wage intensity of products;

material intensity of products;

- depreciation capacity of products;

- capital intensity of products for non-current assets;

capital intensity of products for current assets (coefficient of fixation of current assets).

The higher the return on assets, the higher the profitability of products, the higher the return on non-current assets and the turnover rate of current assets, the lower the total costs per 1 ruble of products and the specific costs of economic elements (equipment, materials, labor). A numerical assessment of the influence of individual factors on the level of profitability is determined by the method of chain substitutions or by the integral method of assessing factor influences.

Three-factor cost-benefit analysis model

, (24)

Where - product profit

- capital intensity (capital intensity) of products in terms of fixed capital:

; (26)

- turnover of current assets (capital intensity for working capital):

. (27)

In this model, the turnover factor of current assets is reflected by the value , inverse to the average number of revolutions.

2. ANALYSIS OF PRODUCTION PROFITABILITY INDICATORS IN PRUE "BORISOVSKY CRYSTAL PLANT" FOR 2009-2010

Profitability indicators characterize the efficiency of the enterprise PRUE "Borisov Crystal Plant" as a whole, the profitability of production, business, investment activities, and cost recovery. They characterize the final results of business more fully than profit, because their value shows the relationship between the effect and the available or used resources.

Let us consider the dynamics of profitability indicators for the three analyzed years, which are presented in Table 1.

Table 1. Dynamics of profitability indicators in PRUE “Borisov Crystal Plant” for 2009 – 2010, %.

As noted above, the profitability of economic activity characterizes the rate of compensation, or remuneration, for the entire set of sources used by the enterprise. Therefore, we will analyze the economic activities of PRUE “Borisov Crystal Plant” by calculating the levels of profitability of production activities.

The profitability of production activities is calculated by the ratio of gross profit to the amount of costs for products sold.

The level of profitability of production activities is calculated as a whole for the enterprise and types of products and depends on three main factors: changes in the structure of products sold, their cost and average selling prices.

Using the method of chain substitutions, we will calculate the influence of these factors on changes in the level of profitability for the enterprise as a whole, and enter the obtained data into Table 2.

Table 2. Results of factor analysis of overall profitability in PRUE "Borisov Crystal Plant" for 2007 - 2009, %.

The data obtained indicate that the plan for the level of profitability in 2007 and 2008 was exceeded, and in 2009, on the contrary, it was not fulfilled by 0.18%. The plan was exceeded in 2006 due to an increase in the average price level by 1.4%, in 2001 – 59.13%. The increase in the cost of goods sold caused an increase in the level of profitability in 2006 by 5.4%, in 2008 by 1.49%. And in 2009, an increase in the cost of goods sold caused a decrease in profitability by 59.32%.

Having analyzed the overall profitability of the production activities of the Borisov Crystal Plant PRUE, we will conduct a factor analysis of profitability for each type of product. The level of profitability of certain types of products depends on changes in average selling prices and unit costs.

The production of this enterprise is aimed mainly at the production of various types of transformers. Therefore, for this analysis we will take three main types, since they occupy the largest share in the output of commercial products.

Having determined the influence of these factors, we will enter the obtained data into Table 3.

Table 3. Profitability of certain types of products of PRUE "Borisov Crystal Plant" for 2007 - 2009.

The data in Table 3 showed that the products manufactured by this enterprise are profitable. The highest level of profitability was in 2009. This suggests that the maximum possible amount of profit was received from the sale of these products, which was reflected in an increase in the level of profitability. The level of profitability in 2008 is higher than in 2007. This suggests that this enterprise allowed an increase in production costs in 2007, which, of course, reduced the profitability of products.

As noted above, financial profitability characterizes the effectiveness of the investments of the owners of the enterprise, who provide resources to the enterprise or leave at its disposal all or part of their profits. Return on capital is calculated by the ratio of book profit to the average annual cost of all invested capital. Balance sheet profit depends on the volume of products sold, its structure, cost, average price level and financial results from other activities.

To calculate the influence of factors on the level of profitability, it is necessary to have the following initial data, which are shown in Table 4.

Table 4. Initial data for factor analysis of the return on invested capital of PRUE “Borisov Crystal Plant” for 2007 – 2009

Using the data in Table 4, we will calculate the influence of factors on the level of return on invested capital of the Borisov Crystal Plant PRUE, and enter the obtained data into Table 5.

Table 5 Results of factor analysis of return on invested capital for 2007 – 2009

These calculations in Table 5 allow us to conclude that only due to the increased acceleration of capital turnover in 2007, the capital level plan was fulfilled. Non-realization financial results also had a positive impact by 0.5% and an increase in prices by 5.54%. The increase in production costs led to a decrease in return on capital by 2.11%. The increase in return on capital in 2008 by 2.22% was positively influenced by all factors - this is the structure of sold products by 0.01%, acceleration of capital turnover by 0.26%, and non-sales financial results by 0.87%. The level of return on capital in 2009 was 1.48%, including due to an increase in prices of commercial products by 0.16%, a decrease in the cost of commercial products by 2.62%, and an acceleration of capital turnover by 0.22%. A decrease in non-realization results by 1.52% had a negative impact on the return on capital.

The variety of profitability indicators determines the alternativeness of searching for ways to improve. Each of the initial indicators is decomposed into a factor system with varying degrees of detail, which sets the boundaries for identifying and assessing production reserves.

When analyzing ways to increase profitability, it is important to separate the influence of external and internal factors. Indicators such as the price of the product and resource, the volume of consumed resources and the volume of production, profit from sales and profitability of sales are in close functional connection with each other. For a mono-product and a mono-resource, the relationship between these indicators can be reflected using the following diagram:

The profitability of product production is considered as the product of the resource productivity coefficient and the ratio of the prices of a unit of product and a unit of resource. The latter ratio is usually called the financial productivity (deflator) of price, because it characterizes the measure of reimbursement of additional costs in the price of products sold as a result of increased costs (resource costs due to rising resource prices).

If we present the relationship between these indicators in index form, then it will be possible to quantify the impact of industrial and financial productivity on the enterprise’s profitability and profit using the usual methods of factor analysis.

(28)

or in expanded form

, (29)

where J is the growth index of the corresponding indicator;

1;0 - means that the indicators were calculated for the reporting and base periods, respectively.

The impact of changes in industrial productivity on profitability is determined by the method of chain substitutions

, (30)

The impact of changes in financial performance is calculated similarly

(31)

In general, the overall change in profitability for the period is balanced with factor deviations

. (32)

Large enterprises pay primary attention to the problems of monitoring changes in industrial productivity and try to reduce the role of external factors (financial productivity). The fact is that one of the conditions for the prosperity of an enterprise is to expand the sales market for products by reducing the price of the goods offered. Since this process is not accompanied by a decrease in prices for consumed resources, the role of the price deflator in the formation of enterprise profitability is reduced. This naturally shifts the scope of management efforts to control changes in industrial productivity, i.e. behind internal factors: reducing material and labor intensity, increasing the return on fixed assets (machinery, equipment, etc.)

A widely used method of enterprise management (or rather its production activities) is break-even analysis. The purpose of a break-even analysis may be to answer the following questions:

What sales volume should be ensured in order not to incur losses?

How much can prices be reduced as volume increases so that profits remain the same?

What is the maximum cost of materials at which it is profitable to produce the product?

Break-even analysis is one of the most important areas of financial analysis of an enterprise. In addition, its use is also necessary when forming a profitable range of products at an enterprise, setting prices and developing an effective pricing policy, which we will consider in relation to the practice of Belarusian enterprises in the second chapter of this work.

So, we will try to highlight the main tasks of financial analysis in relation to the activities of Belarusian enterprises:

Assessment of the current solvency of the company, the ability to repay short-term obligations in a timely manner.

Assessment of financial stability, that is, the ability to repay long-term loans and incur losses without the risk of complete loss of one’s own investments.

Assessing the effectiveness of property and debt capital management.

Assessing profitability from production and physical activities.

Analysis of the efficiency of property use.

Assessing the riskiness of an enterprise's activities.

Assessing the capabilities of an enterprise under the condition and deterioration of certain operating conditions.

Based on the above materials, the following proposals can be developed to increase the profitability of the enterprise.

1. It is necessary to achieve a reduction in the costs associated with the production of beer (raw materials, energy resources, wages). This can be achieved in several ways:

The costs of raw materials are very significant, since a significant part of the purchases are made abroad. But here it is possible to hold tenders among suppliers in order to find the most attractive offers. It is also necessary to pay more attention to Russian suppliers, whose raw materials are of high quality and whose prices are significantly lower than suppliers from Western Europe.

To reduce wage costs, it is necessary to carry out V reorganization of production processes and equipping the enterprise with new technological automated lines.

Re-equipping factories/new equipment will help reduce energy costs.

2. As can be seen from the above materials, the equipment used at the enterprise is very worn out, technically and morally outdated. The service life of most equipment is 15-25 years, which is unacceptable for a modern enterprise. Urgent modernization of production is necessary. The following options are possible here:

Purchase of new technological lines with financing from both the enterprise itself and external sources. It is possible to purchase equipment on lease.

Organization of a joint venture. At the expense of the investor, modernization of production can be carried out.

To attract additional funds, it is possible to issue shares and distribute them both among the company’s employees and external buyers.

The above measures are quite realistic, since the Borisov Crystal Factory PRUE is a reliable enterprise, its products have received numerous awards, and its financial position in recent years should be considered stable.

Modernization will reduce costs both on raw materials, due to more efficient technology, on energy resources, due to the introduction of energy-saving technologies, and on wages, with new equipment, a significant reduction in personnel is possible.

The main obstacle to creating a joint venture may be the state itself.

3. The company needs to develop new channels for selling its products to reduce the costs of transportation and sales of products.

CONCLUSION

The indicator of production profitability is especially important in modern market conditions, when enterprise management is required to constantly make a number of extraordinary decisions to ensure profitability, and, consequently, the financial stability of the enterprise.

The factors influencing the profitability of production are numerous and varied. Some of them depend on the activities of specific teams, others are related to the technology and organization of production, the efficiency of use of production resources, and the introduction of achievements of scientific and technological progress.

As practical calculations have shown, profitability indicators have more or less significant fluctuations from year to year, which is a consequence of changes in sales prices and production costs. The level of selling prices is influenced, first of all, by the quantity and quality of commercial products. Currently, most enterprises are unprofitable (unprofitable) or unprofitable, which is a consequence of the economic crisis in the country.

Profitability indicators are important characteristics of the factor environment for generating enterprise profits. Therefore, they are mandatory when conducting a comparative analysis and assessing the financial condition of the enterprise. When analyzing production, profitability indicators are used as a tool for investment policy and pricing.

LIST OF SOURCES USED

1. Enterprise finance. HELL. Sheremyat, R.S. Saifullin, - M.: INFRA, 2002.

2. Enterprise finance. Edited by prof. Kolchina N.V. - M.: UNIT Publishing House, 2001.

3. Directory of an enterprise financier. - M.: INFRA-M, 1999.

4. Bakanov M.I., Sheremyat A.D. Theory of economic activity analysis. – M.: Finance and Statistics, 1998.

5. Kletsky V.I., Strakh I.V. Profit in the economic mechanism, - Minsk, 1986.

6. Finance (textbook) edited by A.M. Kovalev - M.: Finance and Statistics Publishing House, 1999.

7. Sheremyat A., Saifullin R. Methodology of financial analysis of an enterprise. – M.: UNI-GLOB, 1992.

8. Directory of an enterprise financier.-2nd ed. add. and revised - M.: INFRA - M, 1999.-559 p.

9. Vereshchaka V.V. Economic analysis of the financial situation of an enterprise // Economist.-2000.-No. 12.- 12 p.

10. Savitskaya G.V. Analysis of the economic activity of an enterprise: 3rd edition, - Mn.: IP “Ecoperspective”; “New edition”, 1999.-498 p.

11. Enterprise economics: Textbook for universities / Edited by prof. N.A. Safronova. - M.: Yurist, 1998.-584 p.

12. Bakanov M.I., Sheremyat A.D. Theory of economic activity analysis. – M.: Finance and Statistics, 2001.

13. Kletsky V.I., Strakh I.V. Profit in the economic mechanism, - Minsk, 2004.

14. Finance (textbook) edited by Kovalev A.M. - M.: Publishing House Finance and Statistics 2005.

15. Sheremyat A., Sayfullin R. Methodology of financial analysis of an enterprise. – M.: UNI-GLOB, 2000.

on example ...

Profitability indicators determine the organization’s ability to grow its economic potential through internal sources, reveal the possibilities of attracting and servicing borrowed funds, and characterize the ability to manage assets and the sources of their formation.

The profitability of economic activity, along with indicators of business activity, reveals the effectiveness (effectiveness) of the assets used.

When calculating and studying general and specific profitability indicators, it is important not only their exact value, but also the trends in their change, which make it possible to assess the effectiveness of resource management of the organization. The growth of profitability indicators in dynamics indicates an accelerated growth of the obtained financial result compared to the resources used and the revenue received from the sale of goods, products, works and services.

To assess the profitability of an organization's activities, the following indicators are calculated, in determining which data from the balance sheet (Form 1) and the profit and loss statement (Form 2) are used:

Return on assets is defined as the ratio of profit to the average value of the organization's assets using the following formula 3.27:

Where R A– return on assets (%);

P- profit;

– average asset value.

Return on assets characterizes the amount of profit received from 100 rubles of used assets. The growth of this indicator indicates an increase in the efficiency of use of assets, an accelerated rate of profit growth for the reporting period compared to the rate of change in the organization’s assets.

The profitability of expenses for core activities is determined as the ratio of profit from sales to the total cost of goods, products, works, services sold according to the following formula 3.28:

(3.28)

Where R R– profitability of expenses for core activities (%);

Etc

WITH - cost of goods sold, products, works, services;

RR– sales costs;

UR- administrative expenses...

Return on expenses characterizes the amount of profit from sales received from 100 rubles of expenses incurred related to the production and sale of products (goods, works, services), reveals the return on expenses in the main current activities.

Using a similar algorithm, the profitability of expenses for the entire organization can be calculated using the following formula 3.29:

Where R R total– profitability of expenses for the organization as a whole (%);

OR- operating expenses;

VR– non-operating expenses.

The profitability of expenses for the organization as a whole reveals the amount of profit received for the reporting period from 100 rubles of total expenses of the organization.

Return on sales for core activities is determined as the ratio of profit from sales to revenue from sales of goods, products, works, services according to the following formula 3.30:

(3.30)

Where Rpr– return on sales for core activities (%);

Etc– profit from the sale of goods, products, works, services;

IN– revenue from the sale of goods, products, works, services.

Return on sales for core activities characterizes the share of profit from sales in revenue from sales of goods, products, works, services, and in the selling price. The growth of this indicator indicates a decrease in costs associated with the production and sale of products (goods, works, services).

Return on sales can be calculated for the entire organization using the following formula 3.31:

(3.31)

Where Rpr total– profitability of sales for the organization as a whole (%);

OD– operating income;

VD– non-operating income.

Return on sales for the organization as a whole characterizes the share of profit for the reporting period in the total income of the organization.

During the analysis, profitability indicators are studied in dynamics, and trends in their changes are determined. If the organization is unprofitable, then the level of unprofitability of the organization's assets, expenses or income is determined. Studying the level of unprofitability over a number of years allows us to establish trends in its change (increase or decrease).

The results of calculations of profitability (unprofitability) indicators of the organization’s economic activities should be presented in table 3.8.

Table 3.8 - Data on the dynamics of profitability indicators

activities of the organization

Continuation of Table 3.8

It is advisable to supplement the results of a comparative analysis of profitability (loss) indicators with a study of the influence of factors on their dynamics and thereby establish the reasons for their changes and growth reserves. Tables 3.9 and 3.10 present algorithms for factor analysis of return on assets.

Table 3.9 - Algorithm for calculating the influence of average cost

non-current and current assets, as well as profit

(loss) to change in profitability (loss ratio)

Continued table 3.9

Indicators	Past period	Reporting period	Deviation (+,–)	Calculation of the influence of factors
2. Average value of current assets, million rubles.	0	1
3. Profit (loss), million rubles. Including:	P0	P1	P
3.1. profit (loss) from the sale of goods, products, works, services, million rubles.	Pr0	Pr1	Etc
3.2. profit (loss) from operating income and expenses, million rubles.	PO0	BY 1	BY

Continuation of Table 3.9

The calculation results in Table 3.9 make it possible to establish the influence of non-current and current assets, as well as the components of profit (loss) on changes in the profitability (loss ratio) of assets and, on this basis, to justify management decisions to ensure the balance of income and expenses of the organization.

Table 3.10 - Algorithm for calculating the impact of the return coefficient

assets and profitability (loss ratio) of sales for

change in profitability (unprofitability) of assets

The results of the study of the influence of the return on assets ratio and profitability (unprofitability) of sales on changes in the profitability (unprofitability) of assets make it possible to establish the degree of dependence between the profitability (unprofitability) of the main activity, the intensity of resource use and the financial efficiency of using the economic potential of the organization.

Since the profitability of activities and the financial independence of the organization depend on the effectiveness of management aimed at generating profit and ensuring its growth from core activities, then in the course of analyzing profitability (unprofitability) indicators of sales, it is advisable to determine the influence of the primary factors in the formation of profit (loss) from the sale of goods (products) , works, services). Algorithms for factor analysis of profitability (unprofitability) of sales for the organization’s core activities are presented in tables 3.11 and 3.12.

Table 3.11 - Algorithm for calculating the impact of sales revenue

goods, gross profit levels and conditional

variable expenses, amounts of semi-fixed

expenses for changes in profitability (loss ratio)

sales by core activities of organizations in the field

circulation (trade, catering, procurement)

Indicators	Past period	Reporting period	Deviation, (+; –)	Calculation of the influence of factors
1. Revenue from sales of goods, million rubles.	B 0	IN 1	B 0	· * 100
2. Gross profit level, %	UVP 0	UVP 1	UVP	* 100
3. Level of semi-variable costs for the sale of goods, %	At lane0	At lane 1	At the lane	* 100

Continuation of Table 3.11

The use of the factor analysis methodology proposed in Table 18 allows us to assess the impact of revenue from the sale of goods, levels of gross profit (income) and semi-variable expenses, as well as the amount of semi-fixed expenses on changes in the profitability (unprofitability) of sales in the core activities of organizations in the sphere of circulation .

In diversified organizations that are simultaneously engaged in trade, public catering and procurement, assessment of the influence of factors on changes in the profitability (unprofitability) of sales of the main activity can be supplemented by the influence of the structure of revenue from the sale of goods by industry. In this case, factor analysis of the profitability (unprofitability) of sales will be carried out based on the use of data from Form No. 3 of the internal accounting statements “Report on expenses for the sale of goods” according to formula 3.32:

(3.32)

Where R pr – profitability of sales of core activities for the organization as a whole, %;

IN– revenue from the sale of goods for the organization as a whole, million rubles;

d i– share of revenue from sales of goods in a particular industry, coefficient;

UVP i– level of gross profit in a particular industry, %;

Upper i– the level of semi-variable costs for the sale of goods in a particular industry, %;

Sp– the amount of semi-fixed expenses for the organization as a whole, million rubles.

The factor analysis algorithm presented in Table 3.12 makes it possible to assess the impact of price, structure and physical volume of products sold, as well as semi-variable costs per unit of product and the amount of semi-fixed costs on changes in the profitability (unprofitability) of sales for core activities in production organizations . The results of the study of the influence of factors on the dynamics of profitability (loss ratio) of sales in the main activity are the basis for justifying the pricing and marketing policy of the organization.

Table 3.12 - Algorithm for calculating the influence of physical volume

products sold, sales structure, prices,

conditionally variable costs per unit of production and

amounts of semi-fixed costs for change

Analysis of financial statements solves the following main tasks:

1. assessment of the property and financial condition of the organization;
2. determining the efficiency of resource use, identifying reserves for company growth;
3. property and financial forecast.

Cost-benefit analysis, which will be discussed in this article, belongs to the 2nd group of tasks. Interested in the conduct and results of financial analysis:

• enterprise management;
• relevant services whose competence includes working with financial indicators (planning, economic and even tax);
• owners of the company (founders, shareholders);
• investors (assess financial condition, study the efficiency of resource use);
• commercial banks (assess creditworthiness and determine the degree of risk of issuing a loan);
• counterparties, such as suppliers, who are interested in the risk of non-payment of contracts.

Taking into account the users of financial information and the purposes of analysis, it is usually divided into internal and external.

What is calculated and assessed during the analysis

In practice, the analysis of financial statements is divided into 2 blocks:

1. Assessment and analysis of the economic potential of the enterprise, including:

• assessment of property status;
• construction of an analytical net balance;
• vertical balance sheet analysis;
• horizontal balance sheet analysis;
• analysis of qualitative changes in property status;
• assessment of financial condition;
• assessment of liquidity and financial stability.

Read more in the article .

As you can see, this block is based on balance sheet data.

1. Assessment and analysis of financial results, including:

• sales volume estimation;
• analysis of the organization's income structure;
• analysis of the organization's cost structure;
• profit analysis;
• cost-benefit analysis;
• assessment of financial stability, credit and solvency.

This is where both the balance sheet and the income statement come in handy.

Before we talk about cost-benefit analysis, let us remind you what its essence is and what the calculation procedure is.

Concept and general formula for calculating profitability

We have already said more than once that profitability is a relative indicator of profitability. It shows us how much profit the organization receives from every ruble invested in the business and spent in the process of activity.

Profitability is the ratio of profit to the object whose operating efficiency (return) you want to know. Let us conditionally designate this generalized indicator as X, and then the general profitability formula will appear before us in the following form:

Рх = П/Х x 100%,

where: Рх - profitability of the corresponding type;

P - profit (gross, operating or net);

X is the indicator whose profitability we consider (we’ll look at them in more detail later).

Profitability is expressed as a percentage, therefore, the quotient of the ratio is multiplied by 100.

What types of profitability exist?

There are many profitability indicators. In fact, there are as many as financial indicators, the effectiveness of which may interest users. Mainly for cost-benefit analysis use the following:

1. Return on sales, or overall profitability. It provides information about how many kopecks of profit are included in each ruble of revenue, represents the ratio of profit to sales volume and is calculated using the formula:

Rprod = P / Op x 100%,

where: Rprod - profitability of sales;

P - profit (gross, operating, net);

Op - sales volume (revenue).

Read more about the nuances of calculating profitability of sales in the article .

1. Product profitability. This indicator indicates the effectiveness of the costs incurred by the enterprise and shows the share of profit in each ruble spent on production. The formula for calculating it is as follows:

Rpr = P / Ss x 100,

where: Rpr - product profitability;

P - profit;

CC - cost price.

Taking into account the objectives of the analysis, this profitability is calculated:

• by net profit or profit from sales;
• at the full cost of production or only at production cost.

Read more about the calculation in the article .

1. Return on assets, which will tell us how much profit each ruble invested in the company's property gives. It represents the ratio of profit to assets and is calculated using the formula:

Rakt = P / Ak x 100%,

where: Rakt - return on assets;

P - profit;

Ak is the average value of the organization’s assets for the billing period.

They calculate the profitability of non-current, current or total assets, and sometimes the profitability of individual types of property, such as fixed assets.

You can learn about the features of calculating return on assets from the article .

1. Return on equity, including:

• return on equity, which informs about whether the company's own sources are working effectively, and is calculated by the formula:

Rsk = P / SK x 100,

P - net profit (return on equity is calculated only based on net profit);

SK is the average amount of equity capital for the billing period.

For more details, see the article. .

• return on debt capital is a similar indicator demonstrating the profitability of borrowings:

Rzk = P / (DO + KO) x 100,

where: Рзк - return on equity;

P - net profit;

DO - long-term liabilities;

KO - short-term liabilities of the organization.

We have named the main indicators, now we will tell you how to directly carry out cost-benefit analysis.

How to do a cost-benefit analysis

Obviously, before analyzing profitability, it should be calculated. We described the calculation procedure above.

Then a comparative analysis is carried out. In this case, actual indicators can be compared:

• with the planned indicators of the company itself;
• indicators for previous periods;
• industry average values.

After this, factor analysis is carried out. At the same time, the influence of external and internal factors on profitability is determined, and growth reserves are identified.

As an example of a factor cost-benefit analysis equity capital can be given by Dupont's 3-factor formula:

Rsk = (P / Vyr) x (Vyr / Act) x (Act / SK),

where: Rsk - return on equity;

P - net profit;

Vyr - revenue;

Act - assets;

SK - equity capital.

Using this formula, the impact on the profitability of the insurance company of such significant factors as:

• return on sales based on net profit;
• asset turnover;
• financial leverage, i.e. ratio of equity and debt capital.

If the profitability of the insurance company is low, the specified formula will help to find out which factor is to blame for this to a greater extent.

Note that this factor model demonstrates the presence of an inverse relationship between the profitability of the insurance company and the financial stability of the company: with an increase in equity capital, its profitability decreases, but the financial stability and solvency of the enterprise as a whole increases. So a low return on equity may not be the best outcome for owners, but it's not always a bad thing for the company itself.

Results

Cost-benefit analysis- an important component of assessing the property status and financial condition of a business. Its results are of interest to many users, both internal and external. Analysis methods are different and varied, and their choice depends on what the analyst’s goal is.

Introduction

1. Economic content of enterprise profitability

1.1. Concept of profitability

1.2. System of profitability indicators

2. Analysis of production profitability indicators using the example of OJSC Komsomolets Plant in Tambov for 2001-2003

Conclusion

List of used literature

Introduction

Currently, with the transition of the economy to market relations, the independence of enterprises and their economic and legal responsibility are increasing. The importance of financial stability of business entities is increasing sharply. All this significantly increases the role of analysis of their financial condition: the availability, placement and use of funds.

A general indicator of the economic efficiency of production is the profitability indicator. Profitability means the profitability of an enterprise. It is calculated by comparing gross income or profit with costs or resources used (2, P.78)

Based on the analysis of average profitability levels, it is possible to determine which types of products and which business units provide greater profitability. This becomes especially important in modern market conditions, where the financial stability of an enterprise depends on the specialization and concentration of production.

The object of this study is OJSC Komsomolets Plant.

Subject - assessment of the profitability of OJSC Komsomolets Plant.

The purpose of writing this work is to study profitability indicators and apply them in financial analysis and planning of enterprise activities, using the financial statements of OJSC Komsomolets Plant.

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;

Conduct an analysis of the level and dynamics of profitability of the economic activities of OJSC Komsomolets Plant;

Assess the level and dynamics of profitability of the financial activities of the analyzed enterprise;

Draw the necessary conclusions on the profitability indicators of OJSC Komsomolets Plant.

1. Economic content of enterprise profitability

1.1. Concept of profitability

In the economic literature, several concepts of profitability are given. Thus, one of its definitions is as follows: profitability (from the German rentabel - profitable, profitable) is an indicator of the economic efficiency of production in enterprises, which comprehensively reflects the use of material, labor and monetary resources (8, P.25).

According to other authors, profitability is an indicator that represents the ratio of profit to the amount of production costs, monetary investments in organizing commercial operations, or the amount of company property. Either way, profitability is the ratio of income to the capital invested in creating that income. By relating profit to invested capital, profitability compares the level of profitability of an enterprise with alternative uses of capital or the return obtained by the enterprise under similar risk conditions. Riskier investments require higher returns to become profitable. Since capital always brings profit, to measure the level of profitability, profit, as a reward for risk, is compared with the amount of capital that was necessary to generate this profit. Profitability is an indicator that comprehensively characterizes the efficiency of an enterprise. With its help, you can evaluate the effectiveness of enterprise management, since obtaining high profits and a sufficient level of profitability largely depends on the correctness and rationality of management decisions made. Therefore, profitability can be considered as one of the criteria for management quality.

Based on the level of profitability, one can assess the long-term well-being of the enterprise, i.e. the ability of a business to earn a sufficient return on investment. For long-term creditors of investors who invest money in the equity capital of an enterprise, this indicator is a more reliable indicator than indicators of financial stability and liquidity, determined on the basis of the ratio of individual balance sheet items.

By establishing a connection between the amount of profit and the amount of invested capital, the profitability indicator can be used in the process of forecasting profit. In the forecasting process, the profit expected to be received on these investments is compared with actual and expected investments. The estimate of expected profit is based on the level of profitability for previous periods, taking into account projected changes. In addition, profitability is of great importance for making decisions in the field of investment, planning, budgeting, coordinating, evaluating and monitoring the activities of an enterprise and its results.

Thus, we can conclude that profitability indicators characterize the financial results and efficiency of the enterprise. They measure the profitability of an enterprise from various positions and are systematized in accordance with the interests of participants in the economic process.

Profitability can be of the following types:

a) the overall profitability of associations and enterprises is determined by the ratio of balance sheet profit to the average annual cost of fixed production assets and standardized working capital and is calculated using the formula:

R = P * 100 / OF + ROB (1.3)

P - profit

Of - average annual cost of fixed production assets

About - average annual cost of standardized working capital

b) the actual total profitability is determined by the ratio of book profit to the actual average annual cost of production fixed assets and normalized working capital not financed by the bank. The actual balances of normalized working capital are established based on their balance on the balance sheet minus the debt to suppliers for accepted payment requests, the payment deadline for which has not arrived, and to suppliers for uninvoiced supplies, as well as depreciation of low-value and wear-and-tear items and a reserve for compensation of planned losses and upcoming expenses.

The level of profitability depends not only on the amount of profit, but also on the capital intensity of production. In enterprises of heavy industry associations with high capital intensity of production, the level of profitability in relation to production assets is lower than in associations of light and especially food industry enterprises. With an increase in the amount of profit and a decrease in the cost of fixed production assets and normalized working capital, profitability increases, and vice versa (15, P.98)

c) estimated profitability is the ratio of balance sheet profit minus payment for production assets, fixed payments, interest on a bank loan, profit for special purposes (profit from the sale of consumer goods, new household chemicals, etc. .), as well as profits received for reasons independent of the activities of the association or enterprise, to the average annual cost of fixed assets (minus fixed assets for which payment benefits are provided) and standardized working capital.

When analyzing the work of associations and enterprises, especially when planning to assess the profitability of products, profitability, defined as the ratio of the amount of profit to the total cost of products sold, is important. The profitability of certain types of products is calculated using the formula:

R = (O - C) *100 / C (1.4)

where R is the level of profitability, %

О - enterprise wholesale price for products

C is the total cost of the product.
The profitability indicator for products reflects the efficiency of the costs of living and material labor for the production of products.

In mechanical engineering and other manufacturing industries, profitability is defined as the ratio of profit to cost minus the cost of raw materials used, fuel, energy, materials, semi-finished products and components. The following formula can be used:

Rm = F * Rf / S - M (1.5)

where Rm is the calculated standard of profitability to cost minus material costs

F - industry production assets

Rf - profitability standard for production assets

C - M - cost of commercial products minus direct material costs.

The use of the indicator of standard estimated profitability in manufacturing industries is due to the high share of material costs in the cost of production of these industries, their significant fluctuations in the cost of certain types of products and the wide possibilities for technological replacement of the raw materials used.

If a business makes a profit, it is considered profitable. Profitability indicators used in economic calculations characterize relative profitability (12, P.119)

The effectiveness and economic feasibility of the operation of an enterprise can be assessed using absolute and relative indicators.

Absolute indicators allow you to analyze the dynamics of various profit indicators over a number of years.

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, a relative indicator is used - the level of profitability.

It is most appropriate to consider these characteristics in relation to other time periods. Absolute numbers themselves convey little information. Only knowing the dynamics of their changes can one more reliably judge the work of the enterprise.

In the conditions of market relations, the role of product profitability indicators, characterizing the level of profitability (unprofitability) of its production, is great. Profitability indicators are relative characteristics of the financial results and efficiency of the enterprise. They characterize the relative profitability of the enterprise, measured as a percentage of the cost of funds or capital from various positions.

1.2 System of profitability indicators

Profitability indicators are the most important characteristics of the actual environment for generating profit and income of enterprises. For this reason, they are mandatory elements of comparative analysis and assessment of the financial condition of the enterprise. When analyzing production, profitability indicators are used as a tool for investment policy and pricing.

Profitability indicators characterize the financial results and efficiency of the enterprise. They measure the profitability of an enterprise from various positions and are grouped in accordance with the interests of participants in the economic process and market exchange (15, P.26).

Profitability indicators are important characteristics of the factor environment for generating enterprise profits. Therefore, they are required when conducting a comparative analysis and assessing the financial condition of an enterprise. When analyzing production, profitability indicators are used as a tool for investment policy and pricing

The main profitability indicators can be grouped into the following groups:

1) indicators of return on capital (assets),

2) product profitability indicators;

3) indicators calculated on the basis of cash flows.

The first group of profitability indicators is formed as the ratio of profit to various indicators of advanced funds, of which the most important are; all assets of the enterprise; investment capital (equity + long-term liabilities); share (equity) capital:

The discrepancy between the levels and profitability of these indicators characterizes the degree to which the enterprise uses financial levers to increase profitability: long-term loans and other borrowed funds.

These indicators are specific in that they meet the interests of all business participants of the enterprise. For example, the administration of an enterprise is interested in the return (profitability) of all assets (total capital); potential investors and creditors - return on invested capital; owners and founders - profitability of shares, etc.

Each of the listed indicators can be easily modeled using factor dependencies. Consider the following obvious relationship:

This formula reveals the relationship between the profitability of all assets. profitability of sales and asset turnover. Economically, the connection is that the formula directly indicates ways to increase profitability when the profitability of sales is low, it is necessary to strive to accelerate asset turnover.

Let's consider another factor model of profitability.

As you can see, the return on equity (shareholder) capital depends on changes in the level of profitability of products, the rate of turnover of total capital and the ratio of equity and debt capital. Study. Such dependencies are of great importance for assessing the influence of various factors on profitability indicators. From the given dependence. It follows that, other things being equal, the return on equity capital increases with an increase in the share of borrowed funds in the total capital.

The profitability of an enterprise (total profitability) is defined as the ratio of book profit to average cost. Fixed production assets and standardized working capital. The ratio of the fund to material and equivalent costs reflects the profitability of the enterprise.

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.

Indicators of profitability and profitability have a general economic characteristic; they reflect the final efficiency of the enterprise and its products. The main indicator of the level of profitability is the ratio of the total amount of profit to production assets.

There are many factors that determine the amount of profit and the level of profitability. These factors can be divided into internal and external. External are factors that do not depend on the efforts of a given team, for example, changes in prices for materials, products, transportation tariffs, depreciation rates, etc. Such events are carried out on a general scale and have a strong impact on the general indicators of production and economic activity of enterprises. Structural changes in the product range significantly affect the amount of products sold, cost and profitability of production.

The task of economic analysis of profitability is to identify the influence of external factors, determine the amount of profit received as a result of the action of the main internal factors, reflecting the labor investments of workers and the efficiency of use of production resources.

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 of production and economic activities on the main technical and economic factors.

Profitability is the result of the 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 (9, P.47). 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. This is a different approach to analyzing the profitability of an enterprise. For such an analysis, a modified formula for calculating the overall profitability indicator proposed by A.D. Sheremet is used.

P=(E / 1/UM) + 1/K, where

P - overall profitability of the enterprise %

E - total (balance sheet) profit, % of the volume of sales

products;

Y - the share of the active part in the total cost of the main

production assets, unit shares;

M - capital productivity ratio of the active part of fixed assets

production assets;

K is the turnover ratio of normalized funds.

The second group of indicators is formed on the basis of calculating the levels and profitability of profit indicators reflected in the reporting of enterprises. For example,

These indicators characterize the profitability of products of the base () and reporting () periods. For example, product profitability based on sales profit

where - - profit from sales of the reporting and base periods;

Sales of products (works, services) of the reporting and base periods;

Cost of products (works, services) of the reporting and base periods;

Change in profitability in the reporting period compared to the base period.

The influence of the factor of change in sales volume is determined by calculation (using the method of chain substitutions)

Accordingly, the impact of a change in cost will be

The sum of factor deviations gives the overall change in profitability in the reporting period compared to the base period;

The third group of profitability indicators is formed similarly to the first and second groups, however, instead of profit, net cash inflow is taken into account.

NPV - net cash inflow

These indicators give an idea of ​​the extent to which an enterprise can pay creditors, borrowers and shareholders with cash in connection with the use of existing cash inflows. The concept of profitability calculated on the basis of cash flow is widely used in countries with developed market economies. It is a priority because cash flow operations that ensure solvency are an essential sign of the state of the enterprise.

2. Analysis of production profitability indicators at OJSC Komsomolets Plant for 2002-2004

2.1. Profitability of production activities of OJSC "Komsomolets"

Profitability indicators characterize the operating efficiency of the Komsomolets OJSC enterprise as a whole, the profitability of production, business, investment activities, and cost recovery. They characterize the final results of business more fully than profit, because their value shows the relationship between the effect and the available or used resources.

Let's consider the dynamics of profitability indicators for the three analyzed years, which are presented in Table 1.1.

Table 1.1

Dynamics of profitability indicators in OJSC

"Komsomolets" for 2002 - 2004, %.

As noted above, the profitability of economic activity characterizes the rate of compensation, or remuneration, for the entire set of sources used by the enterprise. Therefore, we will analyze the economic activities of OJSC Komsomolets by calculating the levels of profitability of production activities.

The profitability of production activities is calculated by the ratio of gross profit to the amount of costs for products sold.

The level of profitability of production activities is calculated as a whole for the enterprise and types of products and depends on three main factors: changes in the structure of products sold, their cost and average selling prices.

Using the method of chain substitutions, we will calculate the influence of these factors on changes in the level of profitability for the enterprise as a whole, and enter the data obtained into table 1.2.

Table 1.2

Results of factor analysis of overall profitability in

OJSC "Komsomolets" for 2002 - 2004, %.

The data obtained indicate that the plan for the level of profitability in 2002 and 2003 was exceeded, and in 2004, on the contrary, it was not fulfilled by 0.18%. The plan was exceeded in 2002 due to an increase in the average price level by 1.4%, in 2004 - 59.13%. The increase in the cost of goods sold caused an increase in the level of profitability in 2002 by 5.4%, in 2003 by 1.49%. And in 2004, an increase in the cost of goods sold caused a decrease in profitability by 59.32%.

2.2. Factor analysis of profitability for each type of product of OJSC Komsomolets Plant

Having analyzed the overall profitability of the production activities of OJSC Komsomolets, we will conduct a factor analysis of profitability for each type of product. The level of profitability of certain types of products depends on changes in average selling prices and unit costs.

The production of this enterprise is aimed mainly at the production of various types of transformers. Therefore, for this analysis we will take three main types, since they occupy the largest share in the output of commercial products.

Having determined the influence of these factors, we will enter the data obtained into Table 1.3.

Table 1.3

Profitability of certain types of products

OJSC "Komsomolets" for 2002 - 2004.

The data in Table 1.3 showed that the products manufactured by this enterprise are profitable. The highest level of profitability was in 2004. This suggests that the maximum possible amount of profit was received from the sale of these products, which was reflected in an increase in the level of profitability. The level of profitability in 2003 is higher than in 2002. This suggests that this enterprise allowed an increase in production costs in 2002, which certainly reduced the profitability of products.

As noted above, financial profitability characterizes the effectiveness of the investments of the owners of the enterprise, who provide resources to the enterprise or leave at its disposal all or part of their profits. Return on capital is calculated by the ratio of book profit to the average annual cost of all invested capital. Balance sheet profit depends on the volume of products sold, its structure, cost, average price level and financial results from other activities.

To calculate the influence of factors on the level of profitability, it is necessary to have the following initial data, which are shown in table 1.4.

Table 1.4.

Input data for factor analysis of profitability

invested capital of OJSC Komsomolets for 2002 - 2004

Using the data in Table 1.4, we will calculate the influence of factors on

the level of return on invested capital of OJSC Komsomolets, and the obtained data will be entered into table 1.5.

Table 1.5

Results of factor analysis of the return on investment

capital in OJSC Komsomolets for 2002 - 2004.

These calculations in Table 1.5 allow us to conclude that only thanks to the increased acceleration of capital turnover in 2002, the capital level plan was fulfilled. Non-realization financial results also had a positive impact by 0.5% and an increase in prices by 5.54%. Increased production costs led to a decrease in return on capital by 2.11%. The increase in return on capital in 2003 by 2.22% was positively influenced by all factors - the structure of sold products by 0.01%, the acceleration of capital turnover by 0.26%, and non-sales financial results by 0.87%. The level of return on capital in 2004 was 1.48%, including due to an increase in prices of commercial products by 0.16%, a decrease in the cost of commercial products by 2.62%, and an acceleration of capital turnover by 0.22%. A decrease in non-operating results by 1.52% had a negative impact on the return on capital.

Conclusion

The indicator of production profitability is especially important in modern market conditions, when enterprise management is required to constantly make a number of extraordinary decisions to ensure profitability, and, consequently, the financial stability of the enterprise.

The factors influencing the profitability of production are numerous and varied. Some of them depend on the activities of specific teams, others are related to the technology and organization of production, the efficiency of use of production resources, and the introduction of achievements of scientific and technological progress.

As practical calculations have shown, profitability indicators have more or less significant fluctuations from year to year, which is a consequence of changes in sales prices and production costs. The level of selling prices is influenced, first of all, by the quantity and quality of commercial products.

Profitability indicators are important characteristics of the factor environment for generating enterprise profits. Therefore, they are mandatory when conducting a comparative analysis and assessing the financial condition of an enterprise. When analyzing production, profitability indicators are used as a tool for investment policy and pricing.

As a result of the analysis of the profitability of the Komsomolets Plant OJSC, we received data that indicates that the plan for the level of profitability in 2002 and 2003 was exceeded, and in 2004, on the contrary, it was not fulfilled by 0.18%. The plan was exceeded in 2002 due to an increase in the average price level by 1.4%, in 2004 - 59.13%. The increase in the cost of goods sold caused an increase in the level of profitability in 2002 by 5.4%, in 2003 by 1.49%. And in 2004, an increase in the cost of goods sold caused a decrease in profitability by 59.32%.

We also found out that the products of this enterprise are profitable. The highest level of profitability was in 2004. This suggests that the maximum possible amount of profit was received from the sale of these products, which was reflected in an increase in the level of profitability. The level of profitability in 2003 is higher than in 2002. This suggests that this enterprise allowed an increase in production costs in 2002, which, of course, reduced the profitability of products.

At the same time, thanks to the increased acceleration of capital turnover in 2002, the capital level plan was fulfilled. Non-realization financial results also had a positive impact by 0.5% and an increase in prices by 5.54%. Increased production costs led to a decrease in return on capital by 2.11%. The increase in return on capital in 2003 by 2.22% was positively influenced by all factors - this is the structure of sold products by 0.01%, acceleration of capital turnover by 0.26%, and non-sales financial results by 0.87%. The level of return on capital in 2004 was 1.48%, including due to an increase in prices of commercial products by 0.16%, a decrease in the cost of commercial products by 2.62%, and an acceleration of capital turnover by 0.22%. A decrease in non-operating results by 1.52% had a negative impact on the return on capital.

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