ANALYSIS OF FINANCIAL RESULTS OF ENTERPRISE ACTIVITY, Characteristics...

ANALYSIS OF FINANCIAL RESULTS OF ENTERPRISE ACTIVITY

Characteristics of the composition and structure of financial results

The financial result of the operation of an enterprise in any field of activity in its most general form is the difference between income and expenses for all operations. Depending on how income and expenses are determined, this financial result can characterize the profitability of various aspects of the enterprise, the influence of internal and external factors, the effectiveness of the use of certain resources, the impact of changes in accounting and tax legislation related to the procedure for determining profit in as a taxable base. Differences in the methods for determining the income and expenses of the enterprise and, on this basis, the financial result are mainly related to the specifics of their formation in the systems of accounting (including management) and tax accounting.

For the purposes of forming an information system for internal management of the profitability of the enterprise and assessing its profitability level (from the point of view of the interests of owners and the company's management), the analysis of financial results is mainly based on the data of accounting, operational and management accounting.

The analysis by external entities (potential investors, creditors, business partners and other counterparties) is usually conducted on the basis of official financial reporting data in conditions of restrictions on access to internal information systems. An exception is the commercial banks lending to this or that enterprise that consider the applications of legal entities subject to access to internal accounting data.

The tax accounting data is used to estimate the share of profits attributed to the needs of the state, as well as the impact of changes in the procedure for determining the taxable base (including deferred tax assets and liabilities) and the use (or loss) of the enterprise's right to income tax relief.

The general logic of the formation of the main groups of financial results can be illustrated by the scheme in Fig. 11.1. Understanding the logic of determining the final financial result of an enterprise's operations and the economic content of its individual components allows us to reasonably form the information base for the company. nitration of target indicators and objectively assess the actual relationships between them, i.e. their structure.

Logical scheme for the formation of the final financial result of the enterprise

Fig. 11.1. The logical scheme of formation of the final financial result of the enterprise

The amount of gross profit (modification of marginal revenue), characterizes the profitability of the main activities of the enterprise in absolute terms, reflects the degree of their competitiveness and depends on the market situation (the level of effective demand and competition), as well as on differences in the individual returns of certain activities goods, products, works, services) and from the sales structure. Consequently, gross profit reflects the nature of the enterprise, the product mix (product line) and the effectiveness of measures to ensure their competitiveness, based on the analysis and forecast of market conditions.

Profit from sales is defined as the difference between gross profit and the amount of management and commercial expenses, i.e. is derived from gross profit and reflects the impact of costs associated with the organization of the sale of goods (products, works, services) and the functioning of the enterprise as a single economic entity.

Highlighting the impact on the financial result of general economic and commercial expenses makes it possible to understand what proportion of the gross profit an enterprise spends on maintaining managerial personnel, providing technical conditions for its work, etc. In other words, it makes it possible to assess in general the rationality of the organizational structure of the enterprise, the sales system and advertising costs, the number and level of remuneration of the management personnel and employees of commercial units.

The objective assessment of the achieved financial results in the reporting period implies their comparison not only with the planned (target) indicators, but also with the previous data. Successful implementation of the plan does not yet give grounds to be sure of the full use of the existing opportunities by the enterprise, not to mention the fact that the planned indicators can be set at an underestimate for income and (or) an overestimated level for expenditures. In the latter case, the fulfillment of the planned financial results does not reflect the real effectiveness of using the resources available to the enterprise. Therefore, an analysis of the dynamics of financial results is important. As independent groups of operations it is expedient to allocate the following.

• Interest to pay, the amount of which reflects the level of borrowed financing and the cost of loans received for the enterprise. From the economic and financial point of view, the cost of paying borrowed funds can be quite appropriate, since for a successful enterprise, the benefits of attracted repayable financing are usually in the possibilities of expanding the scale of activity, reducing the weighted average cost and observing certain conditions for improving the return on equity (the so-called " ; financial leverage effect ").

• Financial results from capital investments, including financial assets. This group includes interest receivable for loans and borrowings, bank deposits and balances on bank accounts, as well as income from participation in other organizations - dividend and similar interest income.

• The balance of income and expenses for other operations. This group includes income and expenses from leasing property, if this activity does not belong to the main one under the statute and the amount of income does not exceed 5% of the total proceeds from the sale of goods (products, works, services), from the liquidation and sale of fixed assets or other assets, on operations of purchase and sale of foreign currency and some others in accordance with the rules for the formation of the financial results report.

• The balance of other incomes and expenses not related to production, sales and financial operations (which are non-operating) reflects the difference between the penalties received and paid, penalties for breach of contractual terms, reimbursed to the enterprise and reimbursable losses, the value received from other organizations and the property transferred to them free of charge, the amounts of accounts payable and accounts receivable for which the limitation period has expired, the positive and negative exchange rate differences, profits and losses of previous years, you in the reporting period.

The listed groups of financial results participate in the formation of profit before taxation, so to assess the actual indicators it is important to understand what kind of operations generate profit and which lead to losses, whether additional opportunities to increase the profitability of the enterprise's activity or distraction of financial resources can damage its development. Determination of the nature and degree of influence of these or those groups of operations makes it possible to distinguish those that show:

• on the effective use of temporarily free financial resources (for example, short-term financial investments in liquid securities). The purpose of investments of this kind and their financial consequences should be assessed positively, as they solve the problem of obtaining additional revenues while maintaining the liquidity of the balance;

• about long-term investments in the charter capital of other organizations in order to diversify sources of profit and to organize profitable joint activities with other enterprises. The evaluation of these types of investments depends on the financial results obtained and on the ratio of capital requirements for own development with the size of the diversion of financial resources. If investments in financial assets occupy a noticeable share and increase, it can under certain conditions indicate a negative assessment by management and owners of the prospects for the market position of their enterprise and its future competitiveness or about changing priorities and curtailing activities;

• on measures to increase the return on company assets that are not involved in their own activities; renting them out can solve this problem. If the prospects for leasing out your unused property are too illusive, then a possible option for obtaining income is selling it with a secondary effect from this operation in the form of a lowering of the property tax; Moreover, the sale of unused assets, even at a loss, is beneficial in the sense that proceeds from their sale increase the working capital of the enterprise;

• With regard to non-operating expenses, the conclusion can be unambiguously negative, as they reduce the profit received from the core activities (except for negative exchange rate differences - they are practically outside the field of influence of the company's management). As for non-operating incomes, the increase in their profits before taxation is hardly worth appraising from the point of view of increasing the efficiency of the enterprise's operations; often - this is compensation for the costs incurred in the payment of penalties, and at the most that can be attributed to the enterprise - a well-recorded record and professional actions of the legal service. Gratuitously received property and written-off income receivables also do not indicate improvement in the performance of the enterprise.

The characteristics of the composition of financial results in accordance with the economic content and regularity (renewability) of sources of receipt allows you to more objectively evaluate their current structure and forecast profit targets when developing business plans. To analyze the structure of the financial results of operating activities, you should calculate the proportion of indicators as a percentage of revenue, as it allows you to visualize the distribution of revenues from the sale of products (goods, services) in dynamics and assess the financial consequences of its change.

At the same time, it becomes possible to assess the dynamics of both absolute and relative indicators of the profitability of the operating activity of enterprises: the level of gross profit and the profitability of sales.

Example

Table 11.1. Structure of financial results of operations

Metric

Previous

Reporting year

Year

Plan

fact

ths. RUR.

%

ths. RUR.

%

ths. RUR.

%

Revenue from the sale of goods

202 127

100.00

206 159

100.00

228 282

100.00

Cost of goods

-165 122

81.69

-168,088

-81.53

-188,032

-82.37

Gross Profit

37 005

18.31

38,071

18.47

40 250

17.63

Business Costs

-15 038

7.44

-15 196

7.37

-16 059

-7.03

Managerial expenses

-8019

3.97

-8005

-3.88

-8382

-3.67

Profit from passing;

13,948

6.90

14,870

7.21

15,809

6.92

Analytical data of Table. 11.1 show an increase in absolute values ​​and gross profit, and profit from sales both in comparison with the plan and in relation to the previous year, but the actual structure of financial results has somewhat deteriorated, although the plan provided for an increase in the relative levels of both indicators. The level of gross profit (marginal revenue) decreased by 0.68 percentage points (from 18.31 to 17.63%) due to the increase in the cost of sales. The actual decrease in the level of commercial and administrative expenses turned out to be insufficient and the profitability of sales decreased by 0.29 percentage points compared to the plan, although it slightly exceeded the result of the previous year (by 0.02 percentage points). In order to compensate for the increase in the production cost of products sold and to prevent a decrease in the profitability of sales compared to the plan, the enterprise had to reduce actual commercial and administrative expenses by 1552 thousand rubles.

Other indicators of profit or loss (see Figure 11.1) - from other operations, profit before tax and net profit to compare with the proceeds from the sale of products is incorrect from a methodical point of view. They do not directly relate to operating activities and, therefore, are not comparable to economic activity.

thematic pictures

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