Efficiency of the enterprise: profit from sales and other indicators.

For the study of anything, it is always necessary to have information that will allow you to make the necessary calculations, as well as to formulate certain conclusions. Naturally, this applies to the financial diagnosis of the enterprise. In this aspect, the most important source of information, as you probably already guessed, is the accounting statements of the company. It consists of a number of forms, which provide various data characterizing the financial situation of the firm. Now I would like to dwell on what can be "fished out" from the profit and loss statement.

This form of reporting, as can be judged by the name, characterizes the enterprise from the point of view of the final financial result - profit. What is characteristic, this indicator can not be called fully objective and unambiguous. This is evidenced by the fact that only within the framework of this report can be found as many as four different indicators of profit, namely: sales profit, gross profit, as well as profit before tax and cleared of taxes, that is, net. But it is not right to call all these indicators a profit. The indicator of gross profit is much more correct to be called a margin, since not all expenses are deducted from the amount of income.

The very structure of the reporting form in question makes it very easy to determine the course of revealing the financial result of the firm's functioning. Let's consider, for example, how to calculate the profit from sales. A simple look at the report is enough to understand that the following simple calculations are necessary: sales revenue must first be reduced by the cost of this product, and then it should be cleared of commercial and management costs. In a similar way, you can calculate both taxable and net profit. Of course, for this, it is necessary to take into account more indicators, which are given in the report below.

Very important is the fact that this report provides a tremendous scope for analysis. The simplest methods are vertical and horizontal analysis. The essence of the first is to study the structure by determining the relative weights. The basis of comparison is usually revenue. Carrying out this analysis allows, for example, to determine what share in the revenue is the profit from sales.

During the horizontal analysis, the dynamics of the indicators are studied over time. Using information for several periods, calculate absolute and relative changes in indicators. Conducting this type of analysis helps to identify trends in the financial result, as well as indicators that affect it.

The last kind of analysis, on which we will stop, is factor analysis. Studying this way is usually subject to profit from sales, as well as net profit. In this case, it is quite easy to carry out factor analysis, since the factors whose influence is to be assessed have already been determined and presented in the report. However, you should pay attention to the fact that revenue is affected by the price and volume of sales. These factors are so important that their influence must be taken into account and analyzed separately.

After calculating the profit indicators and conducting the necessary analytical procedures, it is necessary to formulate conclusions. They should be recommendations for increasing profits in one way or another, be it revenue growth, cost reduction or anything else. However, most likely, it will be necessary to study other performance indicators of the enterprise using various sources of information, so that the solutions are most effective.