To develop a profitability management strategy equity and a comprehensive assessment of the main factors influencing it, the DuPont model6 is used. This model allows you to assess the impact on the return on equity of such factors as the equity multiplier, business activity and return on sales.

The DuPont model aggregates the most important absolute and relative financial indicators of the organization's activities (Fig.

The strategy of increasing profitability due to the above three factors largely depends on the specifics of the organization's activities. Therefore, in the process of developing financial policy, it is necessary to evaluate the internal and external factors of the functioning of the business. Due to the margin, an organization that produces high-quality products for a segment characterized by fairly high incomes and low price elasticity demand for price. Wherein specific gravity fixed costs should be fairly low, since high margins are usually accompanied by low production and sales. In addition, since high margins are always an incentive for competitors to enter the market, the strategy of increasing the return on equity through margin is applicable when the market is sufficiently protected from potential producers. If the direction of increasing the return on equity is asset turnover, then the serviced market segment should be characterized by high price elasticity of demand and low incomes of potential buyers. In this case, we are talking about the mass market, and therefore, production capacity should be sufficient to meet demand. Increase the return on equity due to the multiplier, i.e. by increasing liabilities, it is possible only if, firstly, the profitability of the organization's assets is significantly higher than the cost of attracted liabilities and, secondly, non-current assets occupy a small share in the structure of its assets, which allows the organization to have a significant proportion of non-permanent sources. Own

capital - Multiplier

own

capital 1 i/*

K Assets Coefficient

turnover

assets 1 Revenue Return on sales (margin) Net income Return on equity

Rice. 8.1. dupont model

DuPont's three-factor model has the form:

Pk \u003d - B - -100 \u003d M k0 t,

where M is the equity multiplier, calculated as the ratio of adjusted assets (assets minus

accounts payable, in terms of liabilities are equal to invested capital) to equity;

ko - asset turnover ratio;

m- net profit sales (net margin).

There are modifications of the DuPont model that allow you to more fully explore the influence of individual factors on the return on equity. For example, a five-factor model that additionally takes into account the factor of interest burden and the effectiveness of other activities. The "interest burden" indicator is calculated as the ratio of net profit to net operating profit and allows assessing the effectiveness of borrowing; the indicator "efficiency of other activities" is defined as the ratio of net operating profit to net sales profit and allows assessing the impact of the result from other operations on the final business performance.

The five-factor model has the form:

Rk = - ? - ?Pchpr? -Po- ?P^ 100 = M? k0 ? what? uh? bp, k Ks A V FCpr FCo 0 40 e p

where Pcho - net operating profit;

Pnpr - net profit from sales, calculated as profit

from sales net of income tax;

tcho - net operating margin;

bpr - percentage burden, calculated as the ratio of net

profit to net operating income;

ke - coefficient of efficiency of other activities.

ke The DuPont five-factor model allows us to give comprehensive assessment activities of the organization, including an assessment of the financing strategy (through the equity multiplier and the percentage burden indicator), management effectiveness (through asset turnover and the efficiency ratio of other activities), product competitiveness (through margin).

Analysis of the situation. The results of calculating the return on equity of JSC "XYZ" according to the three-factor DuPont model are presented in Table. 8.7.

Evaluating the results of the analysis, it can be argued that the decrease in return on equity from 38.21 to 37.24% was predetermined by two factors: turnover (contribution to the decrease in profitability of 8.28 percentage points), as well as net margin (6.06 points), positively the return on equity was affected only by the multiplier (13.37 points). As a result, there was a partial compensation for the decrease in operating efficiency by an increase in financial activity. Thus, the methodology captures the following trends that took place in the analyzed period - a decrease in operating efficiency, manifested in a decrease in margin from 14.46 to 12.31% and a decrease in asset turnover from 2.47 to 1.99, as well as an increase in financial activity , which manifested itself in an increase in the multiplier from 1.07 to 1.52.

Table 8.7. Results of analysis of return on equity based on the DuPont model Indicator Previous year Fiscal year Influence of factors Rank

own

assets 2.47 1.99 (8.28) (847.10) 2 Net margin, % 14.46 12.31 (6.06) (620.06) 3 Return on equity, % 38.21 37.24 (0.98) (100.00) At the next stage of calculations, a five-factor model is studied, obtained by expanding the DuPont model and introducing two more factors into it - the percentage burden indicator and the indicator of the effectiveness of other activities. The calculation results are presented in Table. 8.8.

The calculation results make it possible to significantly specify the previously drawn conclusions. The decrease in net margin, which was noted earlier, is not due to a decrease in the efficiency of core activities, but to the inefficiency of other operations, the contribution of which to the decrease in profitability amounted to 5.55 points. If the efficiency of other operations had not decreased from 0.95 to 0.82, then the return on equity would have been 42.82%.

Borrowing efficiency was strong as the increase in the interest burden, which led to a 0.48 percentage point decline in profitability, was offset many times over by an increase in the multiplier, which led to a 13.37 percentage point increase in profitability.

Table 8.8. Results of the analysis of return on equity based on the five-factor model Indicator Previous year Reporting

year Influence of factors Rank

Factor Points % Multiplier

own

capital 1.07 1.52 13.37 1367.17 1 Turnover

assets 2.47 1.99 (8.28) (847.10) 2 Net return on sales 15.35 15.34 (0.03) (2.64) 5 Efficiency of other activities 0.95 0.82 (5, 55) (567.98) 3 Interest burden 1.00 0.98 (0.48) (49.45) 4 Return on equity 38.21 37.24 (0.98) (100.00) return on equity should be: further raising debt capital and increasing the equity multiplier, increasing asset turnover by strengthening control over the use of newly acquired property, increasing margins by strengthening the marketing mix and increasing the efficiency of spending policies, increasing the efficiency of other activities due to reducing losses from other operations. 8.3.

To manage profitability, you can use such an indicator as the level of direct costs as a percentage of the sales volume, because the lower it is, the higher the profitability and vice versa. Read about other ways to manage profitability, as well as how to control their execution, in the interview.

– Alexey, please tell us what tools your company uses to manage profitability?

– To manage profitability, our company uses several tools that I can recommend to everyone:

1. Setting an annual target for overall business profitability
2. Approval of target indicators of the company's performance that affect the formation of profitability.
3. Monitoring and analysis of the dynamics of profitability of individual areas and major projects of the company's business.
4. Development and implementation of an annual action plan to increase the profitability of the company's business.
5. Inclusion in the employee remuneration system of motivation to achieve target indicators and achieve the annual goal of the company's business profitability.

– What targets do you use to manage profitabilitybusiness?

– The main target indicators that our company uses to manage business profitability are:

• the level of direct costs as a percentage of the volume of sales;
• level marginal income for each of the lines of business;
• production for one production employee in hours;
• the cost of one actual hour of work at the customer.

– What is the rationale for choosing these indicators?

– The choice is justified both by the degree of their influence on the level of profitability of the company, and by the specifics of its business. So, for example, the level of direct costs directly affects the profitability indicator: the lower it is, the higher the profitability and vice versa. And the indicator of output per production employee is an important indicator for the specifics consulting companies, since in this business the main source of profit is the time employees work with project customers.

– How do you control their implementation?

– The implementation of target indicators is controlled, firstly, through on the basis of the results of each month, and secondly, with the help of a quarterly analysis of the results of the company's work. operational control carried out on a weekly basis in the management database, where employees plan their weekly work and report daily on the actual work performed.

– What problems arise when consolidating financial statements, and how do you solve them?

– When consolidating management reporting, the main problems, of course, are the need to combine data from various reporting forms into the general consolidated reporting of a group of companies and ensuring the relevance of indicators throughout the reporting year.

The first problem is caused by the fact that the group of companies does not use a single accounting base, and therefore there is no unified directories for the formation of consolidated reporting. We solve it by unifying the directories and data analytics of the accounting databases of the group companies. For example, companies may have different expense items, but the first three levels of expense analytics will be common to all companies. This approach makes it possible to quickly form and compare the performance of each company.

The second problem is well known, since in the course of any company's activity, the accounting department inevitably makes adjustments to business operations, and these adjustments must be tracked and reflected in management reporting as well. We solve this problem by regulating the adjustment of business transactions, for which the group of companies approved instructions for closing the reporting period in the databases of the group companies. Accordingly, the instruction clearly defines the procedure for adjusting operations and their reflection in the management database, as well as the personal responsibility of employees for compliance with this procedure.

– Please name your favorite and least favorite duty.

My favorite duty is probably the development of the annual financial plan, because in the process of working on it, a vision of the future of the company is built, it becomes possible to identify negative trends in its activities and suggest ways to eliminate them. I am sure that this work is similar to the work of a sculptor who creates a work of art from a shapeless block (see photo). ).

I can say that I don't like checking the validity of credentials, since this is a rather monotonous job that takes a lot of time and attention. But, unfortunately, no automation tools can eliminate human errors, so the manager financial service will always be obliged to do this work.

– How do you motivate yourself?

Motivation can be different. As a rule, it depends on the complexity and duration of the task being solved. For example, if you need to focus on a task that is not urgent, but important enough, then you can set yourself a restrictive motivation. For example, do not go to your favorite cafe until some kind of regulatory document is developed.

If a long-term project is being decided (for example, ), then incentive motivation works best. Let's say after each completed stage of the project, plan to buy a new thing or go out into nature. And of course, for successful self-motivation, sufficient willpower is needed so as not to violate the installation given to oneself.

- Once I noticed that the accountant incorrectly reflected in the program the operations for the markdown of goods. Wrote instructions, had a conversation. The accountant said that now she understands everything. After a while, I checked - now the operations are reflected neither as it was before, nor as indicated in the instructions, but according to the third option. He asked why. The answer struck me: “I couldn’t understand the instructions, I was embarrassed to tell you about it, I asked Elena Ivanovna (colleagues) how to do it.

I was on a business trip, I observed this situation at breakfast at the hotel. The customer says to the waitress: "Now the service is much better, before they only offered sausages for breakfast, and now we have a choice of three breakfast options." She asks - "What do you choose?". Client - "I choose breakfast number 2." Waitress - "So these are sausages!?". Client - "I know, but now I have a choice!"

financial revenue sales profitability

Introduction

Conclusion

List of used literature

Introduction

Under these conditions, an important factor in the further development of any enterprise is the excess of cash receipts in comparison with payments. From the presence or absence of income will ultimately depend on the possibility of the functioning of the company, its competitiveness and financial condition.

In turn, the most important factors in income growth are an increase in the volume of production and sales, the introduction of scientific and technical developments, and, consequently, an increase in labor productivity, a reduction in costs, and an improvement in product quality. In the context of development entrepreneurial activity objective prerequisites for the real implementation of these factors are being created.

Untimely receipt of revenue entails interruptions in activities, reduced profits, violation of contractual obligations, and penalties.

The purpose of this work is to improve the financial condition of the enterprise under consideration (on the example of CJSC "Wild Orchid"). To achieve this goal, the following tasks were set:

Evaluation of the financial and economic activities of the enterprise;

Identification of problems related to the formation and management of sales proceeds;

Consideration modern methods sales revenue management;

The subject of the study is methodical formalized approaches to the system of formation and management of sales proceeds and profitability of sales of CJSC "Wild Orchid".

The object of this work is the financial and economic activity of the enterprise.

Chapter 1. Theoretical basis management of sales revenue and profitability of sales

1.1 The concept of the revenue of a trading enterprise and its determining factors

The socio-economic development of Russia in the period of the development of market relations is accompanied by qualitative structural shifts towards the intensification of production.

Under these conditions, an important factor in the further development of any enterprise is the excess of cash receipts in comparison with payments. The possibility of the company's functioning, its competitiveness and financial condition will ultimately depend on the presence or absence of income.

In turn, the most important factors in income growth are an increase in the volume of production and sales of products, the introduction of scientific and technical developments, and, consequently, an increase in labor productivity, a reduction in cost, and an improvement in product quality. In the conditions of the development of entrepreneurial activity, objective prerequisites for the real implementation of these factors are created.

The main source of the company's income is the proceeds from the sale of products, namely that part of it that remains minus material, labor and monetary costs for the production and sale of products. Therefore, an important task of each business entity is to get more profit when lowest cost by observing a strict regime of economy in the expenditure of funds and the most efficient use of them.

Revenue from the sale of products is calculated at current prices. Under the conditions of a radical change in the management of the economy, the volume of proceeds from the sale of products becomes one of the most important indicators of economic entities. This indicator creates interest labor collectives not so much in the growth of the quantitative volume of output, but in the increase in the volume products sold(taking into account the decrease in the balance of unsold products).

This means that such products and goods should be produced that meet the requirements of consumers and are in great demand. For this it is necessary to study market conditions management and the possibility of introducing manufactured products to the market by expanding the volume of its implementation. With the development of entrepreneurship and increased competition, the responsibility of enterprises for the fulfillment of their obligations increases. Thus, the indicator of proceeds from the sale of products meets the requirements of commercial calculation and, in turn, contributes to the development of entrepreneurial activity.

The interest of enterprises in the production and sale of high-quality products that are in demand on the market is reflected in the amount of profit, which, with other equal conditions is directly dependent on the volume of sales of this product.

The proceeds from the sale of products at appropriate prices depend on market conditions for managing, the presence or absence of contracts, ways to introduce goods to the market, etc.

Sales proceeds include all receipts for sold goods (works, services), as well as other property (including securities), property rights in cash or in kind.

The definition of revenue from sales depends on how income is recognized: on an accrual basis or on a cash basis.

Under the accrual method, sales proceeds are calculated as products (works, services) are shipped to the buyer and payment documents are presented to him, regardless of the actual receipt of funds. In this case, the date of receipt of income is the day of shipment of goods (works, services, property rights).

Under the cash method, sales revenue is determined as payment for products and receipt of money either to the company's bank account or in cash to the cashier. However, organizations have the right to determine income on a cash basis only if for the previous four quarters the average amount of proceeds from the sale of products (works, services) excluding value added tax and sales tax did not exceed 1 million rubles. for every quarter.

In addition to proceeds from the sale of goods (works, services), property and property rights, firms have non-operating income. The main ones are: income from equity participation in the activities of other organizations; from transactions of purchase and sale of foreign currency; fines, penalties, forfeits received in case of violation of contractual obligations; income from the lease of property, as well as from the provision of rights to the results of intellectual activity for use; interest received under loan, credit, bank account, bank deposit agreements, as well as on securities; the value of property or property rights received free of charge, except for goods received in advance payment or in the form of a pledge; income of previous years, but identified in the reporting period; positive difference from the revaluation of property (except for depreciable property, valuable papers); the cost of materials received during the dismantling of fixed assets; amounts of accounts payable written off due to the expiration of the limitation period or on other grounds, except for amounts written off in accordance with the legislation of the Russian Federation; the cost of surplus inventory items identified as a result of the inventory and other types of non-operating income.

As a result of the main activity, in addition to proceeds from the sale of products and non-operating income, advances from buyers, amounts in repayment of receivables and other receipts can act as sources of income.

Along with the main activity, the company is engaged in investment and financial activities, as a result of which the corresponding types of income are also formed. So, from investment activity incomes can come from the sale of fixed assets, intangible assets; dividends, interest on long-term financial investments, from the repayment of previously issued loans and other types of investment income. As a result of financial activities, income is received from the issuance and sale of shares, bonds and other securities.

All cash flows in the three areas of the company's activities are interconnected and, as necessary, can flow from one area to another. In the Russian economy in transition, there is a movement of funds from all types of activities, mainly to the main activity. This is due to the unstable financial situation of enterprises in the this stage. And since all types of income of the company are concentrated mainly in the main activity, the investment field of activity does not have a sufficient amount of cash.

So, income from the sale of products (works, services) is the main type of income of the company.

The volume of income from the sale of products and, accordingly, profits depends not only on the quantity and quality of manufactured and sold products, but also on the level of prices applied.

The problem of pricing occupies a key place in the system of market relations. The price liberalization carried out in Russia in the late 1980s led to a sharp reduction in the influence of the state on the process of price regulation. Since 1992, the pricing system has essentially been reduced to the use of free, i.e. market prices, the value of which is determined by supply and demand. State regulation prices are applied to a narrow range of goods produced by monopoly enterprises.

Both free and regulated prices can be wholesale (release) and retail. Consider their composition and structure.

The wholesale price of the enterprise includes the full cost of production and the profit of the enterprise. At wholesale prices of the enterprise, products are sold to other enterprises or trade and marketing organizations.

The wholesale price of the industry includes the wholesale price of the enterprise, value added tax (VAT), excise taxes, and sales tax. At the wholesale price of the industry, products are sold outside the industry. If products are sold through sales organizations and wholesale trade depots, then a mark-up is included in the wholesale price of the industry to cover the costs and generate profits for these organizations.

It is advisable to set wholesale prices, as before, using free prices. The concept of "free" means to which point in the promotion of goods the buyer is free from shipping costs.

Thus, at wholesale prices ex-station of departure, all shipping costs to the station of departure are included in the wholesale price, and all subsequent transport costs are borne by the buyer. Prices ex-station of departure were previously most common in material-intensive industries, and prices ex-station of destination - in industries served by centralized system marketing of mass products, the cost of transportation of which accounted for a significant proportion of the cost. However, the economic feasibility of franking wholesale prices in the context of the development of entrepreneurship should be determined not by the forms of supply and marketing, but by the impact on commercial activity enterprises of mutually beneficial relations between the manufacturer and the consumer of products. The retail price includes the wholesale price of the industry and the trade cape (discount). If wholesale prices are used mainly in on-farm turnover, then at retail prices, goods are sold to the final consumer - the population. The structure of the retail price is shown in the figure:

The level of free and regulated prices is the most important factor influencing the income from the sale of products, and, consequently, the amount of profit.

Establishing the optimal price level, which ensures the profitability of all activities, is of key importance in the work of the company. There are two possible pricing methods. This is the traditional so-called cost method and market.

The cost method assumes that the price level must cover all the costs of production and sale of products and ensure profit. This method was widely used by domestic enterprises in the pre-reform period. The amount of costs for the planned output was taken into account, and a certain percentage of the allowance was added to ensure the profitable, cost-effective operation of the enterprise. At the same time, the competitive demand for these products and the possibility of their sale were not taken into account. The relationship between this price and sales volume, between supply and demand, was not taken into account.

The transition to market economic conditions predetermined a different approach to pricing. The price level began to be determined not so much by the costs of the enterprise itself, as by the market principles of implementation, the requirements of buyers. They began to take into account competition, sales volumes, the elasticity of demand for a given product, and the break-even level.

So, the amount of income of the company depends not only on the amount of revenue from the sale of products at installation prices, but also on the costs of production and sale of these products.

With the development of market relations, more and more people began to talk about other situations of the origin of revenue growth: this is profit earned thanks to the initiative of the entrepreneur, profit received under favorable circumstances, unexpectedly allowed and recognized by the authorities state power(relevant legislation).

All sources are interconnected, and it is often impossible to single out their pure content. The most important factors determining profit are: the introduction of innovations, the absence of fear of risks (risk as a source of profit), rational use means, achievement of optimum volumes of activity (ie a choice of such scale of the enterprise which allows to provide optimum profitability). It has been proven that in terms of profit large enterprises not always the best). Profit grows as long as the interest rate on bank loans is below the rate of return on invested capital; the presence of debt is thus acceptable, even in many cases it contributes to profit (the so-called leverage effect). Many small and medium enterprises are afraid of debt, which is not always justified. However, when using the strategy of voluntary debt, one must be wary of low profitability, because it will force the enterprise to resort to additional loans in order to update the equipment (assortment). And this can lead to a state of reduced solvency and even bankruptcy.

The introduction of innovations as a source of profit involves the production (sale) of a new product (service) High Quality, development of a new market, organizational and managerial innovations, development of new sources of goods.

The duration of the inflow of profit from the introduction of innovations is determined by the following factors: the importance of the invention, the significance and constancy of the needs satisfied by this product (service), the nature of the activity, the patent and licensing legislation in the country, the introduction of innovations; the overall strategy pursued by the company in the market, the state of the competitive environment in the industry.

There are situations when the role of the entrepreneur in the occurrence of profit or loss is passive. Such situations are generated by: the nature of the activity, existing structure market, general economic conditions, the presence of inflation (very beneficial for enterprises that have debts and received non-indexed loans and credits).

The main factors characterizing the specifics of the activity: capital-labor ratio, cost level, demand dynamics, market structure.

1.2 Profitability of sales and factors determining it

Typically, until recently, the financial analysis company did not exist in full, and the management of many Russian companies was built primarily on trust, but in the difficult financial and economic situation of the country, many companies, namely the owners of companies, felt the management of their business was not effective. As you know, there have been large personnel changes in the top management of companies and many of which were headed directly by the owners (direct beneficial owners). If earlier, it seemed to the business owner that his business was flourishing and producing certain results and making a profit, then after a thorough analysis of the company's activities, many owners were somewhat confused by what was actually happening and happening in their company. Those people whom they trusted completely, and their business as a whole, did not justify their hopes and trust.

As practice shows, any owner should be wary if everything happens smoothly in his company, without ups and downs, as the popular proverb says: “Devil lives in still waters,” and this is exactly so. The owners, the top management of companies, are given only the information that they really want to hear, and it is very far from reality and reality.

But again, the owner, having stood at the "helm" of the control of his sinking ship, is unable to cope on his own and direct the ship in the right direction. Perhaps he will know where he wants to go and what result to get, but another question arises: “How”? Some business owners do not quite clearly understand the system of business processes in their offspring.

In this difficult situation, one has to either resort to independent consultants or recruit a new management team with certain work experience and competencies. World financial crisis benefited many companies in order to identify unscrupulous managers, carry out a certain purge of personnel and rebuild all business management processes and reengineer the company as a whole. It is for this reason and many others that any business owner wants to know the profitability of his investments, performance efficiency, solvency, whether the tactics and strategy of doing business are chosen correctly, whether financial resources are used correctly, etc. As you know, many companies have taken the path of increasing liquidity, not profitability, in order to stay afloat.

For the purposes of market relations, the role of financial analysis is obviously great. This is due to the fact that enterprises acquire independence, bear full responsibility for the results of its production, economic and financial activities.

Modern financial analysis has certain differences from traditional analysis financial and economic activities. First of all, this is due to the growing influence external environment for the work of enterprises. In particular, the dependence of the financial condition of economic entities on inflationary processes, the reliability of counterparties (suppliers and buyers), and the increasingly complex organizational and legal forms of functioning has increased.

Almost every company has an economic or financial department, but due to lack of knowledge and experience, competent financial analysis cannot be entrusted to anyone, the result is important and this is not the case where errors and deviations are acceptable. A selective approach is important. In theory, any economist or financier can do financial analysis, but in practice this is far from the case. Plus, the employee must have certain information and be in control of the situation.

There are a huge number of methods for conducting financial analysis, which each company chooses to use for itself, from my own experience, I can note the following, here again an integrated approach is important, thus, it will be correct to use the combined method. For clearer and more accurate readings. Each of the methods has its advantages and disadvantages, first of all, it is important to determine what is the main thing and what the result should be in the end.

Comprehensive assessment financial position is carried out using indicators that characterize the potential and actual ability of the enterprise to pay off current liabilities, as well as its financial stability in the long term. The performance of the company is considered as from the standpoint of the efficiency of use certain types resources such as labor, material and financial.

The purpose of such an assessment is a more detailed description of the property and financial situation, performance results in the reporting period, as well as development opportunities in the future.

Everyone knows that you can not rely on the "naked" financial statements and draw conclusions on the activities and condition of the company, there are many other evaluation tools. Formally and traditionally, financial analysis can act in accordance with accounting requirements and reporting, but it actually creates a misleading picture of financial well-being. This is due to the fact that managers, taking advantage of the considerable freedom provided by accounting principles, manipulate data on financial results in order to inflate estimates, on the basis of which strategic decisions cannot be made.

Currently, in the world accounting and analytical practice, there are dozens of indicators used to assess the state of a company: return on sales, return on assets and equity, asset turnover, company value, etc. All indicators can be objects of management and characterize the course of a particular process of the company.

Thus, the goal of the company is its efficiency, that is, the ratio between the result obtained and the costs, or the excess of income over expenses. Nested cash should work efficiently.

How can you measure business performance. In order to assess whether a business is moving in the right direction or needs to be adjusted, a set of performance indicators is used.

To reduce costs and manage the company, traditional profitability indicators are the most effective, allowing you to dissect the balance of the enterprise from the standpoint of the relationship between its constituent parts with a profit.

Profitability is a relative indicator that characterizes the profitability of a business. AT English language It is customary to use the term return on investment. Return on sales is more correctly called profitability, usually it is denoted by the term margin, i.e. the difference between the selling price and the cost price (Margin), which is understood as a profitability ratio, sales profitability, but the Return on Sales option is also acceptable.

One of effective indicators factor analysis is the so-called DuPont model. This model was proposed by DuPont (The DuPont System of Analysis) in 1919. By this time, indicators of profitability of sales and asset turnover were widely used. In the DuPont model, for the first time, several indicators were linked together and presented in the form of a triangular structure, at the top of which is the return on assets (ROA) ratio, as the main indicator characterizing the return received from funds invested in the company's activities, and at the base two factor indicators - return on sales (profit margin) NPM (Net Profit Margin) and asset turnover TAT (Total Assets Turnover).

Later, this model was developed into a modified factorial model. The main difference between these models is the fractional selection of factors and the change of priorities relative to the effective indicator.

The purpose of the DuPont model is to identify the factors that determine the effectiveness of the business, to assess the degree of their influence and emerging trends in their change and significance. The DuPont model is used both for a comparative assessment of the risks of investing and investing in a company.

Main indicators of the DuPont model

ROE - Return on Equity

Owners receive a return on their investment in the form of contributions to authorized capital. They donate the funds that form the equity capital of the organization and receive in return the rights to a corresponding share of the profits. From the owner's point of view, profitability the best way displayed in the form of return on equity and is the most important for the shareholders of the company. Since it characterizes the profit that the owner will receive from the ruble of funds invested in the enterprise

ROE = Net Income / Equity

The use of ROE has certain limitations. Real income comes not from assets, but from sales. Based on ROE, it is impossible to evaluate the effectiveness of a company's business units. In addition, in most cases, companies have a significant share of debt capital. For example, in the banking sector, borrowed capital is generally the basis of all business. Virtually all operating activities bank is based on attracted deposits, and its own capital acts only as a reserve, a guarantor of solvency and financial stability jar. One way or another, as an accounting ROE gives an indication of the income that a company earns for its shareholders.

TAT - asset turnover

Asset turnover reflects how many times during the period the capital invested in the assets of the enterprise is turned over, that is, it evaluates the intensity of the use of all assets, regardless of the sources of their formation. On the other hand, it shows what part of the company's revenue comes from the funds invested in assets. The growth of this indicator indicates an increase in the efficiency of their use.

ROS - Return on Sales

It is used as the main indicator for assessing the financial performance of companies that have relatively small amounts of fixed assets and equity.

Indeed, too low a denominator value when calculating profitability leads to the fact that the return on equity indicators are too high, and, therefore, overestimate the actual financial potential of the organization. Estimating the profitability of sales in this case allows you to take a more objective look at the state of affairs.

Shows how much net profit the company receives from each ruble of products sold. In other words, how much money remains with the company after covering the cost of production, paying interest on loans and paying taxes. The profitability of sales indicator characterizes the most important aspect of the company's activity - the sale of the main products, and also allows you to estimate the share of the cost in sales.

ROA - Return on Assets

Return on assets is an indicator of the effectiveness of the operational activities of the enterprise. It is the main production indicator, reflects the efficiency of the use of invested capital.

ROA = Net Income / Total Assets

ROA=Net Income / Total Assets x Sales/Sales = Net Income/Sales x Sales / Total assets

Thus, the return on total assets is determined by two factors: sales profitability and asset turnover. Both of these factors form a multiplicative model. This model clearly reflects the financial statements, the first indicator reflects the "profit and loss statement", the second - the balance sheet asset and, accordingly, the third - the balance sheet liability.

Leverage: The ratio of debt to equity of a company and the impact of this ratio on net income. The higher the share of borrowed capital, the lower the net profit, due to the increase in interest costs. A highly leveraged company is called a financially dependent company. A company that finances its activities with only its own capital is called a financially independent company.

Level financial leverage can be interpreted, on the one hand, as a characteristic of the financial stability and riskiness of the business, and on the other hand, as an assessment of the effectiveness of the use by the enterprise borrowed money.

Leverage = Debt/Equity

Leverage = Assets/Equity

Return on equity depends on financial leverage. The financial leverage differential is the difference between the return on total assets and the cost of borrowed capital. In turn, the cost of borrowed capital is defined as the ratio of interest expenses to the amount of borrowed capital, taking into account the effect of the tax shield.

Leverage = Debt/Equity

Leverage Effect = (ROA - CDC) x Debt/Equity

CDC = (Iut + It(1-T))/D

CDC is the cost of borrowed capital,

Iut is the part of interest expenses not subject to income tax,

It - interest expense subject to income tax.

In general, if all interest expenses are taxable (this assumption greatly simplifies the calculation), the cost of debt is calculated as:

CDC = I/D x (1-T)

LE can be expressed:

LE = (ROA - I/D x (1-T)) x D/NW

The part (ROA - CDC) is called the financial leverage differential.

Financial leverage increases the return on equity. Therefore, the higher the leverage, the greater the shareholder value. This is very important for optimizing the asset structure (unless, of course, you doubt the Merton-Miller theory, which claims that the capital structure does not matter at all). Additional capital should be increased as long as the effect of financial leverage is positive. If the cost of borrowed capital exceeds the return on assets, the leverage effect will be negative. In addition, financial sustainability considerations need to be taken into account. A build-up of debt can put the company at risk of bankruptcy.

The simplest way to determine the capital adequacy limit is that the equity must cover the amount of fixed and illiquid assets. In other words, borrowed capital should not exceed the amount of liquid assets of the company, through which it can be repaid.

The obtained values ​​can be used as initial data and guidelines for building an enterprise policy in the main areas of activity:

Profitability of sales

· price policy

Management of permanent and variable costs

selection of the optimal sales volume

control over the ratio of operating and non-operating expenses

· other

Asset turnover

· asset Management

credit policy

Inventory management system

· other

Capital structure

· choice capital structures,

cost of capital

· tax policy

The ratio of long-term to short-term debt

· other

The main stages of analysis using the DuPont model:

General assessment of the effectiveness of managing the company's financial resources.

An indicator of the effectiveness of managing the company's financial resources is the return on equity. Its value depends on the decisions made in the main areas of the enterprise's activity (financial, investment and core).

A change in this indicator indicates a general trend of increasing or decreasing business efficiency.

The return on assets reflects the efficiency of the use of invested capital, and connects the main and investment activities of the enterprise, which are characterized by profitability of sales and asset turnover.

Evaluation of the effectiveness of core business management

Return on sales indicator (management of production costs, sales volume and selling prices).

The change in this indicator can be caused as external factors(inflation, competition, legislation, etc.) and internal (quality control, cost structure, management accounting, etc.).

Consider possible options for changing the profitability of sales under the influence of various factors

1. Increasing the profitability of sales.

Revenue growth is outpacing cost growth.

Possible reasons:

Growth in sales volumes;

Changing the range of sales.

With an increase in the number of products sold (in physical terms), revenue increases faster than costs as a result of the so-called production leverage.

The main elements of the cost of production are variable and fixed costs. Changing the cost structure can significantly affect the amount of profit. Investing in fixed assets is accompanied by an increase in fixed costs and, theoretically, a decrease in variable costs. However, the dependence is non-linear, so finding the optimal combination of fixed and variable costs is not easy.

In addition to simply raising the price of an existing range of products, a company can achieve revenue growth by changing the range of products sold. This development trend of the enterprise is favorable.

The rate of cost reduction is outpacing the rate of revenue decline.

Possible reasons:

Rising prices for products (works, services);

Changing the structure of the sales assortment.

In this case, there is a formal improvement in the profitability indicator, but the volume of revenue decreases, the trend cannot be called unambiguously favorable. For correctly drawn conclusions, it is necessary to analyze the pricing policy and assortment policy of the enterprise.

Revenue increases, costs decrease.

Possible reasons:

Increasing prices changing the range of sales;

Change in cost rates.

This trend is favorable, and further analysis should be carried out in order to assess the sustainability of this position of the company.

2. Decrease in profitability of sales.

Cost growth is outpacing revenue growth.

Possible reasons:

Inflationary cost growth outpaces revenue;

Price reduction;

Changing the structure of the sales assortment;

Increase in cost rates.

It is an unfavorable trend. To correct the situation, it is necessary to analyze the pricing issues at the enterprise, the assortment policy, existing system cost control.

The rate of revenue decline outpaces the rate of cost reduction.

Possible reasons:

Decrease in sales volumes.

This situation is common when an enterprise reduces its activities for some reason. this market. Revenue declines faster than costs as a result of operating leverage. It is necessary to analyze the marketing policy of the company.

Revenue goes down, costs go up.

Possible reasons:

Price reduction;

Increase in cost rates;

Changing the structure of the sales assortment.

It is necessary to analyze pricing, cost control systems, assortment policy.

Under normal (stable) market conditions, the dynamics of changes in revenue and costs corresponds to situations where revenue changes faster than costs only under the influence of production leverage. The remaining cases are associated either with changes in the external and internal conditions of the enterprise (inflation, competition, demand, cost structure), or with a poor system of accounting and control in production. In addition, the profitability of sales when using this calculation formula is affected by financial results from operating and non-operating activities. As a rule, their impact on the indicator is short-term, therefore, when drawing conclusions about the effectiveness of the company's core business, these factors should be excluded, or considered separately.

Evaluation of the effectiveness of enterprise asset management (investment activities)

Investments are the main driving force behind any business. Investments should ensure uninterrupted current activities and production, and ensure the further development of the company (market expansion, diversification, quality improvement).

Main investment areas:

Working capital (short-term investments that support current activities).

Fixed assets, capital construction (long-term investments associated with long-term development).

Intangible assets (long-term investments associated with long-term development).

The growth of this indicator indicates an increase in the efficiency of the use of the company's assets and is regarded as a positive trend, a decrease indicates the presence of problems in management. If the turnover of assets decreases, then in the process of analysis it is necessary to study the indicators of capital turnover in more detail and establish at what stages of the circulation there was a slowdown (or acceleration) in the movement of funds.

It should be borne in mind that the turnover of assets also depends on the organic composition of capital: the larger the share of fixed capital, which turns over slowly, the lower the turnover ratio and the longer the duration of the turnover of the total capital.

Evaluation of the effectiveness of financial management.

To characterize the financial activity of the enterprise in the DuPont model, the main indicator is used - Financial leverage. Characterizes the ratio between borrowed and own capital.

The greater the relative amount of borrowed funds attracted by the enterprise, the greater the amount of interest paid on them, and the higher the level of financial leverage. Therefore, this indicator also allows you to estimate how many times the company's gross income (from which interest is paid on a loan) exceeds taxable income.

Systems approach. general description method

This approach is based on simple idea that any business can be represented as an interconnected system of movements financial resources caused by managerial decisions. Each of these decisions ultimately has a positive or negative economic impact on the company. In essence, the process of managing any enterprise is a series of economic decisions that cause the movement of financial resources that ensure the activities of the company.

In the interests of business owners, the company's management makes decisions on the use of various resources to obtain the expected economic benefits.

The main economic components of the business:

investment activity (management of investments in non-current and current assets);

main activity (production, trade, services) through the use of these resources (management of costs, volumes and prices);

· financial activity (selection of sources of financing that ensure the effective operation of the enterprise).

The relationship between the main, investment and financial activities of the enterprise.

Relationship:

1. High rates of investment in non-current assets for industrial enterprises may lead to a shortage of working capital, decrease in solvency and decrease in the efficiency of the main activity (decrease in volumes, increase in costs). On the other hand, refusing to invest can lead to a halt in production, a decrease in product quality and a loss of competitiveness.

2. When attracting additional sources of financing, in a limited market, it will not be possible to effectively invest in the company, get additional profit and repay interest. In this case, the company receives a loss. If the market grows, the lack of additional sources of financing will lead to lost profits.

3. Increasing the efficiency of core activities should also be consistent with investment and financial activities (the amount of working capital, whether additional capacities are needed, sources of financing).

The art of managing a company and business is to find a balance between the main components of the business (investment, core and financial activities).

IN ADDITION

ROI - Return on investment.

Return on investment.

The ROI ratio is calculated as the product of return on sales and asset turnover. Each of these two indicators, in turn, is decomposed into groups of factors, the combined action of which affects the specific values ​​of the indicators.

ROI calculation scheme:

The multifactor nature of the ROI coefficient makes it a convenient tool for predictive modeling: by changing the value of one or another factor, you can observe how the final result changes, or, conversely, by fixing the required ROI value, you can see within what limits it is permissible to vary the factor components.

FINANCIAL RATIO

PROFITABILITY RATIO

SHARE CAPITAL IN THE FORM OF ORDINARY SHARES (ROSF)

Return on ordinary shareholders funds - measures the amount of profit for the period to be distributed among the owners of ordinary shares, with the amount of their investments in the company's capital.

INVESTED CAPITAL (ROCE)

Return on capital employed is a ratio that expresses the ratio between the profit generated by the company and long-term investments (capital). The data measures the total return on all investments that provide long-term business financing, before paying interest to creditors and paying dividends to shareholders.

RETURN ON SALES (ROS) BASED ON OPERATING PROFIT

Net profit margin - the ratio of profit for the period to sales. The operating efficiency ratio used for comparison purposes, since the difference caused by the methods of financing a particular enterprise does not affect its value.

BASED ON GROSS PROFIT

Gross profit margin - the ratio of the company's gross profit to the sales volume achieved over the same period. Gross profit is the difference between sales and cost of goods sold. This ratio measures the profitability of purchasing (or producing) and then selling goods before any other costs are taken into account. Because cost of goods sold represents a major cost share for retailers and wholesale trade, as well as manufacturing enterprises, the dynamics of this indicator can seriously affect net profit.

EFFICIENCY COEFFICIENTS

AVERAGE INVENTORY TURNOVER

Measures the average number of days.

AVERAGE PERIOD OF SETTLEMENTS WITH DEBTORS

Average settlement period for debtors - the period of time during which receivables are paid off.

AVERAGE PERIOD OF SETTLEMENTS WITH CREDITORS

Average settlement period for creditors - the period of time during which accounts payable are paid.

RELATIONSHIP BETWEEN PROFITABILITY AND EFFICIENCY

Ratio of sales to capital employed. The total return on equity is determined by both the return on sales and the efficiency of capital use.

LIQUIDITY RATIO

CURRENT LIQUIDITY RATIO

RATIO OF CURRENT ASSETS TO CURRENT LIABILITIES

Current ratio - the ratio of liquid assets (cash and assets) of a company with short-term liabilities (up to a year).

FINANCIAL LEVERAGE RATIO

The share of long-term liabilities in the total amount of applied capital of the company.

1.3 Methods of managing revenue and profitability of sales

The economic effect of the activity of an economic entity is expressed as an absolute indicator of profit. Economic efficiency the work of the organization is characterized by relative indicators - a system of indicators of profitability, or profitability (profitability) of the organization.

Profitability indicators measure the profitability of an organization from various positions in accordance with the interests of the participants in the functioning of the business. In foreign and domestic literature, a wide range of profitability indicators is considered, the method of calculating which differs depending on the analytical and management tasks set.

Profitability ratios measure profitability from different perspectives. General formula for calculating profitability:

The numerator can be:

Profit from the sale of products;

Profit before tax;

Profit before interest and taxes (economic profit);

Net profit.

The denominator can be:

The assets (or capital) of the organization;

Equity;

Permanent capital (the sum of own capital and long-term borrowed funds);

Current assets:

Basic production facilities;

Production assets (sum of fixed production means and production working capital);

Revenue from product sales; cost of goods sold.

The use of such a wide range of indicators and their combinations for calculating profitability in practical and analytical work is, on the one hand, a consequence of the complexity of financial and economic activities, and on the other hand, it makes it difficult to adequately interpret the results obtained.

In practice, the following group of profitability indicators has been identified, calculated on the basis of financial statements:

Return on total capital (total assets) in terms of accounting profit (profit before tax) is equal to the ratio of profit before tax to average annual cost assets;

The total return on equity in terms of accounting profit (profit before tax) is equal to the ratio of profit before tax to the average annual cost of equity;

Profitability of sales in terms of net profit - equal to the ratio of net profit to sales revenue;

Profitability of sales by profit from sales - equal to the ratio of profit from sales to revenue from sales of products;

Return on equity in terms of net profit is equal to the ratio of net profit to the average annual cost of equity.

The considered profitability indicators, if necessary, can be calculated at the beginning or end of the reporting period. In such cases, the denominator of the fraction shows the indicators at the beginning or end of the period, respectively.

In foreign literature (and in recent times and domestic) profitability indicators are used, calculated in other ways and used to solve special problems. These include, in particular, the so-called gross profit ratio, determined by the ratio of gross profit or marginal income (the excess of sales over variable costs) to the volume of sales. This indicator is used in the break-even analysis.

When evaluating the effectiveness and making long-term investment decisions, the profitability indicator calculated on the basis of net cash flow (cash flow) is used.

The decomposition of the profit of the organization and its total capital into separate various components (or combinations thereof) and the determination of the ratio between the corresponding indicators of profit and capital reflect the private profitability of certain types of production, investment and financial activities of the organization, various resources and sources of their financing.

As shown, a typical situation in the practice of domestic companies is the presence a large number calculated profitability ratios, combined with very modest conclusions about the causes of the economic difficulties of the organization or, conversely, about its reserves and advantages. This determines the inadequacy of management information, the limited use of the results of extensive calculations for decision-making.

At the same time, acceptance management decisions should be based on the use of a small number of key parameters (relative financial and economic indicators) that characterize the main blocks of the organization's activities in the current context and the expected future.

The effectiveness of management decisions made on the basis of the use of profitability indicators can be achieved if a number of conditions are met:

The correct choice of the control object and a clear statement of the goal of the problem being solved;

Substantiation of the method for calculating the analyzed indicators;

Identification of a quantitative and qualitative assessment of the relationship between the factors that determine the level of the parameters under consideration;

Economic interpretation of the results obtained, comparing them in dynamics with similar indicators of other companies, the industry average level, adopted "safe" standards;

Formulation of conclusions highlighting strengths and weaknesses, zones of "risk and well-being", identification and ranking of factors that create the possibility of achieving the goal;

Decision making based on the use of the findings and the impact on the level of profitability through control factors.

If we take into account that the goal of management is the profit of the organization as a whole, then it is necessary and sufficient to use the following profitability indicators as financial and economic indicators (Table 1).

Table 1. Algorithms for calculating profitability indicators

Most general indicator in the group of indicators of return on capital is the return on assets. This indicator is also called the rate of return.

The level and dynamics of the return on assets indicator are the main object of attention of company managers, since the return on total capital accumulates the structure and movement of all types of production and financial resources of the organization, production and distribution costs, size, structure and compliance market demand manufactured products or performed works (services). The return on assets indicator reflects the balance of economic interests of internal and external business participants achieved in the company. The use of net profit for calculating the profitability of assets seems inadequate, since assets must generate a profit sufficient not only to solve internal problems, but also to fulfill the obligations of the organization to the state.

At the same time, the return on assets indicator, calculated on the basis of net profit, can be used in addition to the main one to assess such an important aspect. management activities like tax policy (tax planning).

The indicator of return on equity is important for the owners (shareholders) of the company, who invest their funds in the business in order to obtain a return on invested capital.

The return on equity is compared with the opportunities to generate income from investing these funds in alternative business options, including investments in financial assets. In countries with developed market economy this indicator serves as an important criterion in the evaluation (quotation) of shares on the stock exchange.

The profitability indicators discussed above characterize quite certain aspects of the organization's activities, at the same time they are interconnected, which reflects the objective links between various aspects of production, financial and management processes. Balance, and hence the validity of managerial decisions largely depend on the degree and method of accounting for such relationships. The design and use of models that reflect these relationships significantly increases the level of management in certain areas of production and financial activities and in the whole company.

Chapter 2. Analysis of the financial and economic activities of CJSC "Wild Orchid"

2.1 Analysis of the financial condition of CJSC Wild Orchid

The group of companies "Wild Orchid" was founded in 1993, now it is the largest network of multi-brand stores in Russia for lingerie, home and beachwear. According to the results of 2010 CJSC "Wild Orchid" is a major distributor of international brands of lingerie and accessories in Russia and Ukraine, about 95% of which are in exclusive use. The assortment includes such lingerie brands as Millesia, Nina Ricci, Cotton Club, Christian Dior, GianfrancoFerre, Givenchy, ChristianLacroix, RobertoCavalli, AlbertaFerretti, Dolce & Gabbana and others. ”, which are manufactured in Russia and Southeast Asia.

The mission of the Society is to provide an opportunity for convenient and pleasant purchase of underwear, including for home and beach use, that meets the most modern requirements of fashion, style and quality for all segments of the population.

CJSC "Wild Orchid" is represented in the lingerie market by the following retail chains:

Retail network "Wild Orchid". The concept of the stores is to present the best brands of lingerie and swimwear with the characteristics of "fashion", "season", "luxury", "brand". The style and design of this lingerie is mainly of European origin. Currently, the brand is the most popular among lingerie stores. Due to this CJSC "Wild Orchid" is a direct client, in most cases the exclusive distributor of the best European and world brands of underwear in the territory Russian Federation. In addition, this allows us to maintain the required level of prices, quality and customer loyalty.

Retail network "Bustier". The concept of the stores is the presentation of lingerie and swimwear brands that have the characteristics of "fashion", "season", "brand", "democratic", "energetic", "youthful". The style and design of Bustier lingerie is mainly of European origin. Bustier's target clientele is middle class and high income consumers. Since the end of 2004, underwear under its own brand "Vendetta" has been presented in stores.

At the end of 2005 CJSC "Wild Orchid" entered the Ukrainian lingerie market with the networks "Wild Orchid" and "Bustier".

The Bustier network is developing rapidly for two reasons: firstly, the Bustier brand is positioned in a democratic format that is more in demand today, and secondly, it is a distribution channel for its own trademark"Vendetta".

Shops "Linen Bazaar" - discount stores that allow you to eliminate seasonal leftovers.

Shops "VI Legion" - shops for men's underwear, home and beachwear. The stores carry the best European brands.

Two online stores (Russia, Ukraine) sell goods from the Wild Orchid and Bustier stores of the current season, as well as goods of past seasons with discounts.

The first online store was opened in 2003 (Russia). And at the beginning of 2007, the second online store in Ukraine began its work. Given the rapid development of the Internet in Russia and Ukraine, as well as the growth in turnover e-commerce CJSC "Wild Orchid" plans to increase the volume of trade in online stores by 40-50% per year.

"Mezzanine" - wholesale division. Clients are independent retailers.

The Defile retail network consists of mono-brand lingerie stores, which present the Defile brand of the same name. In addition to the low price, the competitive advantage of the new brand is a wide range of sizes. About 30 lingerie collections are constantly presented in the store, collections are updated every two weeks.

The opening of Defile stores allowed the Company to enter the mass market segment.

The group "Wild Orchid" includes:

Retail chain "Wild Orchid" - 64 stores

Retail network "Bustier" - 186 stores

Retail network "VILegion" - 10 stores

Retail network "Defile" - 44 stores

The network of discounters "Linen Bazaar" - 4 stores

Online storewww.wildorchid.ru

Sewing factory in Gagarin (Smolensk region)

Sewing shop in Moscow

Thus, Wild Orchid CJSC operates in two price segments: high (Wild Orchid, VI Legion stores) and medium (Bustier stores).

In the upper price segment, the Wild Orchid and Estel Adoni retail chains compete.

Competing in the middle price segment are Bustier, Golden Dragonfly (Estelle Adoni), DIM (Eurogroup), Anzhelika, Cocoon (Lediva Rosa), Mia-mia, Women`Secret , Etam, Intimissimi.

Every year the company holds a "Grand Defile" - a show of new collections of underwear and beachwear. Every year, the Wild Orchid show gathers about 5,000 guests, including representatives of Russian show business and the business world.

Retail today is at a stage where retail space is still scarce and is located mainly in the central region. In this regard, retail trade is developing at a high pace and this period, according to the forecasts of Wild Orchid CJSC, will last for quite a long time. The population's need for retail space high, and the market is far from saturation.

The number of brands represented on the Russian market increases several times every year. In addition to well-known countries - suppliers of luxury underwear, such as Italy (IdeaStella, LaPerla), France (LadydeParis, ChristianLacroix), Germany (NINAVON, Felina,), Spain (OtHaik "a, PRINCESA) and the USA (Playtex, Wonderbra), on Russian market manufacturers of mid-price brands from Denmark (ARDI), Poland (Key), Czech Republic (Pelican), Latvia (Lauma, Roksa), Serbia and Montenegro (Vis-a-Vis) enter. But the niche of inexpensive underwear has not been developed to date. It is formed mainly by "nameless" underwear from Asian countries. Products from China and Korea account for 95% of the total volume of the inexpensive lingerie market segment in the unorganized trade market. The remaining 5% are accounted for by Russian and Belarusian manufacturers (Cheryomushki, Krasnaya Zarya, Milavitsa, etc.).

In the coming years, new brands (local, less famous) will appear on the market, the range of products will increase, and the geography of sales will expand. More recently, lingerie stores offering quality goods were located only in Moscow and St. Petersburg. General range goods in stores in other cities of Russia was small. And only in the last three or four years, retail chains have begun to explore the regions. The range of regional products has become more diverse, in particular, increased the lineup and offering related products (homewear, accessories, etc.).

The analysis of the financial condition of CJSC "Wild Orchid" presented in this report was carried out for the period from 01/01/2009 to 12/31/2009. Qualitative assessment of the values financial indicators CJSC "Wild Orchid" was carried out taking into account the industry specifics of the organization's activities (industry - "Textile and clothing production").

Table 1. Structure of property and sources of its formation

*Immobilized funds include non-current assets and long-term receivables (ie the least liquid assets).

**Current assets are current assets, excluding long-term receivables.

From the data presented in the first part of the table, it can be seen that on the last day of the analyzed period (December 31, 2009), the share of immobilized funds in the organization's assets is one third, and current assets - two thirds. The assets of the organization for the period under review increased by 552,963 thousand rubles. (by 12.4%). Although there was an increase in assets, equity capital decreased by 187.1%, which negatively characterizes the dynamics of changes in the property status of the organization.

The diagram below clearly shows the ratio of the main groups of the organization's assets:

The growth in the value of the organization's assets is mainly due to the growth of the following positions of the balance sheet asset (in parentheses is the share of changes in this article in the total amount of all positively changed articles):

· accounts receivable (payments for which are expected within 12 months after the reporting date) - 1,430,335 thousand rubles. (59.5%)

· long-term financial investments - 814,751 thousand rubles. (33.9%)

At the same time, in the liabilities side of the balance sheet, the largest increase is observed in the lines:

· long-term loans and credits - 1,017,266 thousand rubles. (69.9%)

· accounts payable: suppliers and contractors - 407,855 thousand rubles. (28%)

Among the negatively changed balance sheet items, one can distinguish "inventory: finished products and goods for resale" in the asset and "retained earnings (uncovered loss)" in the liability (-1,101,073 thousand rubles and -611,731 thousand rubles, respectively).

As of December 31, 2009, the value of the organization's own capital amounted to -284,710.0 thousand rubles. For the analyzed period, the decrease in the equity capital of the organization amounted to 611,731.0 thousand rubles.

The organization's autonomy coefficient on the last day of the analyzed period (December 31, 2009) was -0.06. This coefficient characterizes the degree of dependence of the organization on borrowed capital. The value obtained here indicates the total dependence of the organization on borrowed capital. During the analyzed period, the autonomy coefficient decreased sharply (-0.13).

The diagram below clearly shows the ratio of the organization's own and borrowed capital: It should be noted that the equity capital is not reflected in the diagram, since it is completely absent.

During the analyzed period, the coefficient of provision with own working capital decreased very much - from -0.09 to -0.47 (by 0.38). As of December 31, 2009, the value of the coefficient does not meet the standard and is in the region of critical values.

During the period under review (January 1-December 31, 2009) there was a slight increase in the investment coverage ratio from 0.6 to 0.61. The value of the coefficient on the last day of the analyzed period (December 31, 2009) is below the norm (the share of equity and long-term liabilities in the total capital of CJSC "Wild Orchid" is only 61%).

The ratio of material reserves for the period under review (2009) rapidly decreased by 1.22 and amounted to -1.36. As of December 31, 2009, the inventory ratio is critical.

According to the coefficient of short-term debt, it can be seen that as of December 31, 2009, the share of short-term debt in the total debts of CJSC "Wild Orchid" is 36.5%. At the same time, for the analyzed period, the share of short-term debt decreased by 6.7%.

Table 3. Analysis of financial stability in terms of the surplus (shortage) of own working capital

* Surplus (deficiency) SOS is calculated as the difference between own working capital and the amount of stocks and costs.

Since as of December 31, 2009 there is a shortage of only own working capital calculated according to the 1st option (SOS 1), the financial position of the organization on this basis can be characterized as normal. Moreover, two of the three indicators of the coverage of inventories and costs by own working capital improved their values ​​over the year.

Table 4. Analysis of the ratio of assets by liquidity and liabilities by maturity

Of the four ratios that characterize the ratio of assets in terms of liquidity and liabilities in terms of maturity, only one is fulfilled. CJSC "Wild Orchid" does not have enough cash and short-term financial investments (highly liquid assets) to pay off the most urgent liabilities (the difference is 1,465,788 thousand rubles). In accordance with the principles of the optimal structure of assets by the degree of liquidity, short-term receivables should be sufficient to cover medium-term liabilities (short-term loans and borrowings). In this case, this ratio is fulfilled - CJSC "Wild Orchid" has enough short-term receivables to pay off medium-term obligations (more than 5 times).

The main financial results of CJSC "Wild Orchid" for the last year are given in the table below.

From the "Profit and Loss Statement" it follows that for the period under review (01.01-31.12.2009) the organization received a loss on sales in the amount of 138,660 thousand rubles, which is equal to 11.3% of revenue. This result is fundamentally different from the same period last year, when there was a profit of 29,412 thousand rubles.

Compared to the previous period, in the current period, both sales proceeds and expenses for ordinary activities decreased (by 1,986,357 and 1,818,285 thousand rubles, respectively). Moreover, in percentage terms, the change in revenue (-61.8%) is ahead of the change in expenses (-57.1%)

Paying attention to line 040 of form No. 2, it can be noted that the organization, as in the past year, took into account general business (management) expenses as conditionally fixed, attributing them to the sales account at the end of the reporting period.

The loss from other operations during the entire analyzed period amounted to 521,671 thousand rubles, which is 194,258 thousand rubles. (59.3%) more than the loss for the same period last year. At the same time, the amount of loss from other operations is 376.2% of the absolute value of the loss from sales for the analyzed period.

The equality of the indicators in the last two rows of the table above indicates that the organization has not repaid the loss of previous years in the last year.

The change in deferred tax assets reflected in Form No. 2 "Profit and Loss Statement" (p. 141) for the reporting period does not correspond to the change in data on line 145 "Deferred tax assets" of the Balance. The identified inaccuracy is also confirmed by the fact that even in the balanced form, deferred tax assets and liabilities in Form No. 1 and Form No. 2 for the reporting period do not match.

The graph below clearly shows the change in revenue and profit of CJSC "Wild Orchid" during the entire analyzed period.

In addition, there is a negative trend in return on sales compared to this indicator for the same period last year.

Further in the table, the turnover indicators of a number of assets are calculated, characterizing the rate of return of funds advanced for business activities, as well as the turnover rate of accounts payable in settlements with suppliers and contractors.

Asset turnover data for the last year indicates that the organization receives revenue equal to the sum of all available assets for 1410 calendar days (ie 4 years). At the same time, it takes 561 days to receive revenue equal to the average annual balance of inventories.

2.2 Factor analysis of revenue and profitability

The total number of financial indicators used to analyze the activities of the enterprise is very large. In this paper, only the main coefficients and indicators will be considered and, accordingly, the main conclusions that can be drawn on their basis. For the purpose of a more streamlined consideration and analysis, financial indicators will be considered in the following order:

1. Operational analysis.

2. Analysis of operating costs.

3. Asset management.

4. Liquidity indicators.

5. Indicators of profitability.

6. Indicators of the capital structure.

The balance sheets and profit and loss statements of Wild Orchid CJSC for 2007-2009 were used as initial data.

Operational analysis.

The ratios of these coefficients of change in gross sales clearly indicate that the company had a very significant increase in sales in 2007 compared to the previous year. At the same time, the growth rate of sales volumes in 2008 decreased significantly, and already in 2009 they decreased by 61.82%.

If we take into account that the average annual growth rate of the underwear market is 7-8% per year, then we can conclude that in 2007 CJSC "Wild Orchid" expanded its market segment, displacing its competitors, but already in 2009 the company lost a number of its market positions. The fundamentally changed situation in the world economy in the second half of 2008, the global financial and economic crisis, a sharp slowdown in economic growth led to a reduction in effective demand for consumer goods, which naturally led to a drop in demand for underwear and related products, and as a result - a sharp decline in revenue in the period under review.

From these gross income ratios, it follows that the indicators have deteriorated. It is obvious that the company could not keep the cost of goods sold at a constant level. In the structure of sales, imported goods dominate, and since September 2008, as a result of the deterioration of the macroeconomic situation, in the context of the global financial crisis, the ratio of financial flows has changed dramatically.

In this situation, the ruble exchange rate was subjected to serious pressure, which led to an increase in the cost of goods and materials purchased abroad.

Profitability of services calculated under various conditions

Gradually replacing the base level of each factor with the actual one, we determined how much the level of profitability of production capital has changed due to wage intensity, material intensity, capital intensity, i.e. due to production intensification factors. In our case, the level of influence of factors on profitability is 7.224%.

Over the past year, the organization received a loss both from sales and, in general, from financial and economic activities, which led to the negative values ​​of all three profitability indicators presented in the table for this period.

The calculated values ​​of operating profit indicators allow us to conclude that the company's performance in 2008 in terms of operating profit decreased even more significantly compared to gross income, which indicates excessive selling and administrative expenses. In 2009, the situation improved relatively due to a reduction in selling expenses, but this did not affect the rate of decline in the operating profit ratio.

The resulting decrease in net profit by elements has already been explained above in the analysis of previous indicators. It should also be added that the relative decline in this indicator for 2009 is more significant compared to the decline in operating profit. This suggests that the debt burden has worsened the company's position, reducing net profit.

One of the indicators of the probability of an imminent bankruptcy of an organization is Altman's Z-score, which is calculated using the following formula:

Z-score \u003d 1.2K 1 + 1.4K 2 + 3.3K 3 + 0.6K 4 + K 5

The implied probability of bankruptcy, depending on the value of Altman's Z-score, is:

1.8 or less - very high;

· from 1.81 to 2.7 - high;

· from 2.71 to 2.9 - there is a possibility;

3.0 and above - very low.

According to the results of calculations based on the reporting data of CJSC Wild Orchid, the value of the Z-score as of December 31, 2009 was 0.75. This suggests that there is a very high probability of the imminent bankruptcy of CJSC Wild Orchid. At the same time, it is necessary to note the serious shortcomings of using the Altman Z-score in the conditions of the Russian economy, which do not allow unconditional trust in the conclusions obtained on its basis.

Chapter 3. Measures to improve the management of revenue and profitability of sales

Based on the results of the analysis, the main indicators of the financial position (as of December 31, 2009) and the performance of CJSC "Wild Orchid" for the period from 01.01.2009 to 12.31.2009 were identified and grouped according to their qualitative characteristics, which are given below.

An indicator that has an exceptionally good value is the following - the quick (intermediate) liquidity ratio fully complies with the normative value.

The positive financial position of the organization is characterized by the following indicator - normal financial stability in terms of the amount of own working capital.

The indicator that is important at the boundary of the norm is the following - the normal ratio of assets in terms of liquidity and liabilities in terms of maturity is not fully observed.

The following 3 indicators of the financial position of the organization have unsatisfactory values:

· lower than the accepted norm current (total) liquidity ratio;

· negative dynamics of changes in the organization's own capital, despite the fact that the assets of CJSC "Wild Orchid" increased by 552,963 thousand rubles. (by 12.4%);

· the investment coverage ratio is below the norm (the share of equity capital and long-term liabilities in the total capital of CJSC "Wild Orchid" is only 61%).

From the critical point of view, the financial position and results of activities of CJSC "Wild Orchid" are characterized by the following indicators:

· the coefficient of autonomy has a critical value - -0.06 (there is no own capital);

· net assets are less than the authorized capital, while during the period there was a decrease in the value of net assets;

· As of December 31, 2009, the ratio of own working capital is extremely unsatisfactory, equal to -0.47;

The absolute liquidity ratio is significantly below the normal value;

· for the analyzed period there was a loss from sales (-138,660 thousand rubles), and there was a negative trend compared to the same period last year (-168,072 thousand rubles);

· loss from financial and economic activities during the entire analyzed period amounted to -611,731 thousand rubles;

· negative dynamics of the financial result before interest payable and taxation (EBIT) per ruble of the organization's revenue (-XX.X kopecks from the same indicator for the same period last year (01.01-31.12.2008)).

Rating assessment of the financial position and performance of CJSC "Wild Orchid"

According to the results of the analysis, the financial position of CJSC "Wild Orchid" was assessed on a point system, which corresponds to the rating of CC (poor position). The financial results of the organization's activities for the period under review correspond to the rating D (critical results). It should be noted that the final estimates were obtained taking into account both the values ​​of the indicators at the end of the analyzed period and the dynamics of the indicators, including their predicted values ​​for the next year.

The following table calculates the indicators recommended in the methodology of the Federal Office for Insolvency (Bankruptcy) (Decree N 31-r of 12.08.1994).

Since both coefficients on the last day of the analyzed period turned out to be less than the norm, the solvency recovery coefficient was calculated as the third indicator. This coefficient serves to assess the prospects for restoring the normal structure of the balance sheet (solvency) by the enterprise within six months, while maintaining the trend of change in current liquidity and equity that took place in the analyzed period. The value of the solvency recovery ratio (0.87) indicates the absence of a real opportunity to restore normal solvency in the near future. At the same time, it should be noted that these indicators of an unsatisfactory balance sheet structure are quite strict, therefore, conclusions based on them should be made only in conjunction with other indicators of the financial position of the organization. In addition, industry specifics are not taken into account in the calculation.

One of the significant methods for improving the position of our company is the assortment policy management system. Before proceeding to the description of the technology, I would like to note one important aspect of assortment management. For the majority of Russian enterprises, the main reserve for optimizing the assortment is still based on a significant reduction in the assortment range. In addition to the impact on the economy of the enterprise, a large assortment disperses the strength of the company, makes it difficult to competently offer goods to customers (even sales department employees are not always able to explain the difference between one or another position or name), and disperses the attention of end consumers.

When optimizing the assortment, it is first necessary to calculate all of the above indicators: revenue, profitability, contribution ratio for coverage, operating leverage, break-even point, financial safety margin for each product name. The starting points for such calculations are prices and sales volumes for each item, as well as the cost of production and its division into variable and fixed costs.

1. First of all, you should pay attention to the profitability indicator of each position. If there are positions with negative profitability among the assortment, then in order to increase their profitability, you can raise the price to a level that does not exceed market indicators. It is not possible to further increase the volume of output for market reasons. As a result, profitability has become positive.

2. Next, we consider those positions that have the lowest contribution to coverage. KVP is the ratio of the contribution to cover fixed costs to sales revenue. It shows how much of the proceeds from sales can be used to cover fixed costs and generate profits. The higher this indicator, the more attractive from a financial point of view the production of this type of product. Therefore, our task is to increase the coefficient of contribution to coverage. This can be achieved by raising the price within the limits of the market. As a result, the KVP also rises to 0.1459 and 0.1433.

3. Next, we consider positions with the highest KVP. These are the most advantageous positions, so it makes sense to increase the volume of sales for them to the maximum possible (both in terms of production capacity and in terms of demand).

4. Next, we analyze the operating leverage indicator. This means that this is the position with the greatest risk, since if the break-even point is not reached, the losses will be greater than for other items that also did not reach this point. In addition, this position has the lowest margin of financial safety, therefore, it is necessary to increase production volumes in order to increase the margin of financial safety and reduce the likelihood of losses. Competitive analysis shows that the price can also be increased from $3.0 to $3.05. These measures will increase the financial safety margin from 15.8% to 23.0%. And also reduce the operating leverage from 6.32 to 4.34 and increase profitability from 3.1 to 4.9%.

5. In conclusion, we consider the position with the maximum profitability. This position also has a high CVP, so you can increase its planned production volume. This will lead to a slight decrease in profitability from 15.6% to 14.8%, but will allow to ensure the planned sales volume.

As a result of the adjustments made, we ensured an increase in the average level of profitability from 6.37% to 8.02%. In addition, the margin of financial safety increased, the average level of operating leverage and, consequently, the risk decreased, and the average KVP increased.

Also, in addition to the analysis shown in the example analysis, the following questions can be used as control questions:

Is the sales volume higher than the break-even level in general;

· what goods are unprofitable, but have a high coefficient of contribution to cover, - for these items it is necessary to increase production volumes;

Which products are leaders in terms of share in revenue and profit. These positions are given special attention, as changes in their price or volume will be more reflected in the final figures than others.

So, the main principles of assortment optimization are as follows:

1. It is necessary to reduce positions (names of products):

· with negative profitability, low coverage contribution and low or falling demand;

· with negative profitability, high contribution to coverage and low demand (if this is due to general market trends and there is no possibility to independently influence demand using marketing tools), which does not allow increasing the volume of sales to the breakeven point.

2. Increase planned sales volumes by positions:

· having negative profitability, high contribution to coverage and stable or growing demand (as well as fluctuating demand, which can be influenced using sales promotion methods) to the level of the break-even point;

· having a positive profitability, a high contribution to coverage, a high level of operating leverage to the maximum possible level, determined by demand.

3. Reduce production volumes by items:

· with a clear trend towards a drop in demand to the level of average profitability.

4. Increase the price by position:

· having negative profitability, a low contribution to coverage and growing demand until the break-even point is reached;

· having a low contribution to cover and a negative price elasticity of demand (when the price decreases, demand decreases).

5. Reduce the price of items:

· having a positive profitability and a good level of demand with a downward trend in the presence of a stable price elasticity of demand (price rises - demand decreases).

In addition, in order for the assortment to be truly optimal, one should take into account the limitations associated with production capacities, available working capital, and the market demand for each product. It is not enough to focus only on economic indicators, but at the same time it is impossible to make decisions based solely on marketing information. Only considering all the factors in the system will allow you to make an informed decision. Therefore, before making changes to the production program, it makes sense not only to carry out all the calculations (ideally in several versions), but also to discuss innovations with all interested parties in the enterprise - the heads of the sales, marketing, chief engineer, chief technologist and other employees. Also, customers can be involved in the discussion, using, for example, surveys about their needs.

Conclusion

The presented analysis allows us to draw the following conclusions:

1. The total amount of the company's assets increased by 2,769,970 thousand rubles. (123.4 1%).

2. The increase in the total amount of assets occurred solely due to a significant increase in debt by 3,540,328 thousand rubles. (201.28%).

3. The amount of working capital of the enterprise increased by 1,603,768 thousand rubles. (79.91%). This increase was mainly due to accounts receivable, with the main increase occurring in the 2009 financial year. At the same time, the total amount of reserves decreased by 94,585 thousand rubles. (7.08%).

4. The amount of non-current assets of the enterprise increased by 1,166,202 thousand rubles. (490.61%). This growth is due to a sharp increase in long-term financial investments by 825,754 thousand rubles, as well as an increase in investments in fixed assets by 180,583 thousand rubles.

5. During the period under review, the value of equity capital decreased significantly by 770,357 thousand rubles. (158.62%). This decline came at the expense of uncovered loss, with most of the decline occurring in fiscal year 2009.

The analysis made on the basis of profit and loss statements of the enterprise CJSC "Wild Orchid" for the period from 2007 to 2009 reporting year allowed us to draw the following conclusions:

1. The company's revenue decreased by 59.84%, while gross profit decreased by 78.18%. Such ratio, undesirable for the enterprise, was a consequence of the fact that the cost of goods sold decreased at a slower rate.

2. Profit from sales of the enterprise has significantly decreased by 162.69%. The decrease in selling and administrative expenses could not compensate for the strong decrease in this indicator.

3. Taking into account the strong decline in revenue and the marked undesirable growth in costs, the company's net profit decreased by 1123.95%, despite a significant increase in other income and interest receivable.

The conclusions based on the results of the vertical analysis are as follows:

1. The share of working capital of the company is 72% of the total assets of the company, and every year it decreases.

2. The share of fixed assets is decreasing despite the acquisition of new equipment.

3. The share of short-term debts of the company has increased significantly and is at the level of one third of the value of the company's assets.

4. The share of long-term debts of the company is increasing and at the end of 2009 is 67.06%.

5. The equity capital of the company has a negative value and is

- 5.68% of the total amount of its liabilities, which indicates a very high level of riskiness of the company to become bankrupt.

Analyzing these data, we can come to the following conclusions:

1. The share of the cost of goods sold, products, works and services in 2009 is 70.41%, which is more than in 2007 (45.52%).

2. The share of commercial expenses in 2009 is 40.65%, which is slightly lower than in 2007. At the same time, the share of administrative expenses increased from 0.22% to 0.25%.

3. The noted changes caused the share of profit from sales to decrease from 7.24% to - 11.30%. This, of course, indicates a decrease in the efficiency of the enterprise's operating activities.

4. The final result of the change in the cost structure of the enterprise is a significant decrease in the share of net profit in revenue. In 2009 it was 49.86% against 1.64% in 2007.

According to the results of calculations based on the reporting data of CJSC Wild Orchid, the value of the Z-score as of December 31, 2009 was 0.75. This suggests that there is a very high probability of the imminent bankruptcy of CJSC Wild Orchid.

List of used literature:

1. Analysis of economic activity: Textbook / V.I. Strazhev [i dr.]. – Mn.: Vysh. school, 2008.

2. Bakanov, M.I. Theory of economic activity analysis: Textbook / M.I. Bakanov, A.D. Sheremet. - M.: Finance and statistics, 2002.

3. Bukhalkov, I.M. Intra-firm planning: Textbook / I.M. Bukhalkov. – M.: INFRA-M, 2000.

4. Golovachev, A.S. Labour Organization. / A.S. Golovachev, N.S. Berezina, N.Ch. Bokun. - Mn.: MIU Publishing House, 2004.

5. Gruzinov, V.P. Enterprise Economics: Textbook / V.P. Georgians. – M.: UNITI, 2006.

6. Ershov, V.A. Legal regulation of labor protection. / V.A. Ershov. – M.: GrossMedia, 2009.

7. Kobets, E.A. Enterprise planning. / E.A. Kobets. - Taganrog: TRTU, 2006.

8. Kovalev, V.V. Analysis of the economic activity of the enterprise: Textbook / V.V. Kovalev, O.N. Volkov. – M.: TK Velby, 2002.

9. Kovaleva, A.M. Finance. / A.M. Kovalev. - M.: Finance and statistics, 2003.

10. Litvak, B.G. Development of a management decision: Textbook / B.G. Litvak. – M.: Delo, 2003.

11. McConnell, K.R. Economics: principles, problems and politics. / K.R. McConnell, S.L. Bru. – M.: INFARMA-M, 1999.

12. Novitsky, N.I. Organization of production at enterprises / N.I. Novitsky. - M.: Finance and statistics, 2002.

13. Pashuto, V.P. Organization, regulation and remuneration of labor at the enterprise. / V.P. Pashuto. – M.: KNORUS, 2005.

14. Rebrin, Yu.I. Quality control. / Yu.I. Rebrin. - Taganrog: TRTU, 2004

15. Savitskaya, G.V. Theory of analysis of economic activity. / G.V. Savitskaya. – M.: New knowledge, 2007.

16. Savitskaya, G.V. Economic Analysis: Textbook / G.V. Savitskaya. – M.: New knowledge, 2004.

17. Sio, K.K. managerial economics. / K.K. Sio. – M.: INFARMA-M, 2000.

18. Sklyarenko, V.K. Enterprise Economics: Textbook / V.K. Sklyarenko, V.M. Prudnikov. – M.: INFARMA-M, 2006.

19. Theory of analysis of economic activity: Textbook / V.V. Osmolovsky, [and others] - Minsk: New knowledge, 2001.

20. Labor Code of the Republic of Belarus with additions and amendments, 2008.

21. Fedenya, A.K. Management. / A.K. Fedenya. - Minsk: TetraSystems, 2008.

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27. Electronic resource - Electronic data. – Access mode: http://www.pravo.by/.

For reference: Gradations of a qualitative assessment of the financial condition

Managing the profitability of production is of a strategic nature. A modern tool for managing the development of an organization in the face of increasing changes in the external environment and the associated uncertainty is the methodology of strategic management.

Practice shows that those organizations that carry out complex strategic planning and management work more successfully and make profits that are significantly higher than the industry average. In other words: who plans his strategy better, he achieves success faster.

Methods for managing the profitability of production follow from a set of indicators that affect its change. If profit is expressed in an absolute amount, then profitability is a relative indicator. The profitability indicator is a relative characteristic of the financial results and efficiency of the enterprise, that is, it characterizes the relative profitability of this enterprise. The performance of an enterprise can be measured by indicators such as sales, costs and profits. Describing the financial or production result, the listed indicators are not able to assess the effectiveness of the enterprise. First of all, this is due to the fact that these indicators are absolute characteristics of the enterprise's activities, and their correct interpretation in terms of performance evaluation can be carried out in conjunction with other indicators that characterize the funds invested in the enterprise. Indicators characterizing the efficiency of the enterprise, are indicators of profitability (profitability). Thus, for competent management of production profitability, it is necessary to manage the indicators that affect its change. Describing the stages of profitability management, it should be noted that, first of all, it is necessary to conduct a component analysis of this indicator. It will allow you to consider the entire group of indicators that affect profitability, and take measures to optimize them in order to increase profitability. The components of profitability are shown in Figure 1.1

Figure 1.1 Components of profitability

It is important to pay attention to each of these components, because any of them can affect profitability. It is very important for the manufacturer to choose the most profitable sales channel in order to increase revenue. Moreover, the benefit should not consist in increasing the volume of products sold, but in increasing its cost, and reducing the cost of storage and transportation.

The product range is also of great importance in the formation of the profitability indicator, because. it is he who determines the place of the commodity producer in the market of agricultural products. It is very important to produce the types of products that are most in demand in order to obtain greater benefits.

Also, great attention should be paid to such interconnected indicators as equipment and technology, because they play a very important role in this dependency chain. The enterprise should monitor the technology and continuously improve it, while it is important to keep track of the renewal of machinery and equipment. It makes no sense to develop technology in the presence of outdated technology. Thus, if these measures are observed, there is a possibility of reducing production costs.

Undoubtedly, the main indicators affecting profitability are profit and capital directly invested in production.

Either way, profitability is the ratio of income to the capital invested in generating that income. By linking profits to capital invested, profitability compares the rate of return of an enterprise with alternative uses of capital or the return received by the enterprise under similar risk conditions. Riskier investments require higher returns to be profitable. Since capital always makes a profit, in order to measure the level of return, the profit, as a reward for risk, is compared with the amount of capital that was needed to generate this profit. Profitability is an indicator that comprehensively characterizes the efficiency of the enterprise. By establishing a relationship between the amount of profit and the amount of invested capital, the profitability indicator can be used in the process of forecasting profit and thereby manage it.

Profitability characterizes the performance of the organization. Profitability indicators allow you to evaluate how much profit an enterprise has from each ruble of funds invested in its assets.

Thus, profitability is of great importance for making decisions in the field of investment, planning, budgeting, coordinating, evaluating and monitoring the activities of the enterprise and its results. And the management of this indicator in the production process is simply necessary.

Profitability indicators characterize the financial results and efficiency of the enterprise. They measure the profitability of the enterprise from various positions and are systematized in accordance with the interests of the participants in the economic process. Thus, we can conclude that profitability indicators characterize the financial results and performance of the enterprise. They measure the profitability of the enterprise from various positions and are systematized in accordance with the interests of the participants in the economic process. As we found out, the profitability of economic activity reflects the rate of compensation (remuneration) for the entire set of sources that are used by the enterprise to carry out its activities. It is also necessary to pay great attention to the development strategy of the enterprise, since agricultural production is a seasonal industry and it is important to make decisions on changing this or that indicator in time. Subject to all the above steps and methods, the manager will be able to easily create optimal conditions in production to achieve greater efficiency.

And for the most correct and accurate management of profitability, it is necessary to optimize all indicators, even those that do not directly affect it.

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