Analysis of profit from sales of products

The activity of the enterprise must be subjected to constant and comprehensive study and control. This can be called a necessary condition for making correct and effective management decisions. The most close attention should be paid to the profit that the enterprise receives, since it is the most important absolute indicator characterizing the effect of the functioning of the firm. In this regard, I would like to consider exactly how you can analyze the profit from the sale of products and other indicators of profit.

Analyzing the profit from sales, and any other kind of profit, it is advisable to conduct on data that can be easily found in the income statement. This is due to the fact that this particular form of reporting contains information about factors affecting the amount of profit, and also reflects the process of its formation. There are several types of analysis that make it possible to comprehensively study the profits received by the firm.

First of all, it is necessary "along and across" to study this form of reporting, that is, to carry out a horizontal and vertical analysis. The so-called horizontal analysis allows you to study the dynamics of the indicators presented in the report. By calculating absolute and relative changes, it is possible to identify trends characteristic of a particular type of income or expenditure, or for profit in general. Thus, it is possible to analyze the profit from the sale of products, if we take into account the dynamics of only a part of the factors, or net profit, if we study the report completely. Most often, it is the entire report that is examined.

Vertical analysis is the study of structure. In the process of its implementation, the specific weight of each of the indicators is determined, as well as the change in this specific weight by period. Obviously, in order to determine the specific gravity, it is necessary to choose a certain indicator, which will be the basis of comparison. Usually such an indicator is sales revenue, and it is taken equal to one hundred percent.

The next technique, which we will consider, will be the analysis of the profit from the sale of products and the net profit indicator, called the factorial profit. This analysis is based on the same report. The factors that affect this or that kind of profit are quite obvious. It is clear that the profit from sales directly depends on revenue and cost, as well as on commercial and administrative expenses. It should be noted that revenue is determined by the price and volume of sales. These factors should be taken into account separately. The influence of the factors that represent expenditures is determined by studying the change in their specific gravity. The net profit is affected by several more factors, since it is necessary to take into account the result from other activities, as well as the profit tax. The influence of these factors is taken into account by calculating their absolute variation. In general, such a technique will be sufficient, however, if possible, it is advisable to take into account industry specific features or specific features of a particular enterprise. Thus, the analysis of the profit of a trading enterprise should be carried out with a more detailed account of changes in commercial expenses, since their value is likely to be significant.

As you can see, the analysis of the profit from the sale of products, the amount of net profit received and other similar indicators is a very important aspect of the study of the firm's activities. However, it should be borne in mind that studying profits is not enough to make the right decisions. It is very important to have an idea about other aspects of the enterprise's activities. It is necessary to study the financial stability of the organization, its liquidity, as well as the degree of business activity. In addition, it is necessary to study the activities of the enterprise not only from a financial point of view, but also from others, attracting the necessary specialists.