How to conduct a profitability analysis
Profitability is an indicator of the profitability of the enterprise. Also, it is profitability that implies the use of certain means in which an organization can cover its own costs with income and make a profit.
Instruction manual
1
Conduct a profitability analysis of the company according to its activities for the year, and then by quarter. Compare the actual profitability indicators (of products, property, equity) for the required period with the calculated (planned) indicators and with the values for previous periods. At the same time, bring the values for previous periods to a comparable form using the price index.
2
Examine the impact of internal and external factors of production on profitability. Then determine the reserves for the growth of profitability indicators. In turn, to ensure an increase in profitability, the rate of increase in profits should be greater than the growth rate of the materials used or the results of operations, that is, income from sales of goods.
3
Analyze the stability of the enterprise, which is characterized by many different indicators that reflect the stability of its finances, the optimal level of liquidity and solvency. The purpose of the financial analysis is to assess the state of the company in the previous period, conduct an assessment of its state at the moment and assess the future position of the company.
4
The financial analysis itself is carried out in several stages: determine the approach or direction of this analysis, evaluate the quality of the source information and perform the analysis using the basic methods. These methods include: horizontal - a comparison of each individual balance sheet item or other reporting document with data for the previous period; vertical - the definition of the system of all the components of the indicator, as well as the influence of each position as a whole on the result itself; Trend - an analysis of an indicator made over several periods of time and determining a trend using mathematical processing of a certain series of dynamics.
