It manifests itself primarily in speed. How to determine working capital turnover ratios

The business activity of an enterprise in the financial aspect is manifested primarily in the speed of turnover of its funds. The profitability of an enterprise reflects the degree of profitability of its activities. Analysis of business activity and profitability consists of studying the levels and dynamics of various financial turnover and profitability ratios, which are relative indicators of the financial performance of an enterprise.

Business activity analysis reveals how effectively an enterprise uses its funds. As already mentioned, we include turnover and profitability ratios as indicators characterizing business activity.

These two types of coefficients affect the business activity of an enterprise as follows. Let's assume that working capital (without short-term investments) turns over once a quarter with a profitability of core activities of 25%, then the business activity index for this quarter will be equal to 0.25 or the same 25%. If, with the same profitability, the turnover of working capital increases by 2 times, then, accordingly, the business activity index also increases by 2 times, and then the enterprise for two turnovers of the same volume of working capital for the same time period will receive 50 kopecks of book profit from each ruble of working capital.

Similar conclusions are drawn with an increase (decrease) in profitability. That is, if turnover has slowed down, then it is necessary to compensate for it with greater profitability - reduce costs, reduce costs, etc. If it is not possible to increase profitability, it is necessary to “take it” by turnover, i.e. produce and sell more products.

2.Turnover

Turnover ratios are of great importance for assessing the financial condition of an enterprise, since the speed of capital turnover, that is, the speed of its conversion into cash, has a direct impact on the solvency of the enterprise. In addition, an increase in the rate of capital turnover reflects, other things being equal, an increase in the production and technical potential of the enterprise. For this purpose, 8 turnover indicators and one complex indicator - the “business activity index” are calculated, giving the most generalized idea of ​​​​the economic activity of the enterprise.

1. The total asset turnover ratio shows how many times during a period the full cycle of production and circulation is completed, generating the corresponding income. It is calculated by dividing the volume of net sales revenue by the average value of assets for the period.

2. Fixed asset turnover represents capital productivity, i.e., characterizes the efficiency of using fixed production assets (funds) of an enterprise for a period. It is calculated by dividing the volume of net sales revenue by the average value of fixed assets for the period at their residual value.

An increase in the capital productivity ratio can be achieved both due to the relatively low share of fixed assets and due to their high technical level. Of course, its value varies significantly depending on the industry and its capital intensity. However, the general patterns here are such that the higher the coefficient, the lower the costs of the reporting period. A low ratio indicates either insufficient sales volume or too high level of investment in these types of assets.

3. An important indicator for analysis is the turnover ratio of material working capital, that is, the speed of their implementation. In general, the higher the value of this ratio, the less funds are tied up in this least liquid item, the more liquid the working capital structure is, and the more stable the financial condition of the enterprise. And, conversely, overstocking, other things being equal, has a negative impact on the business activity of the enterprise. The coefficient is calculated using the formula, where the numerator is the volume of net sales revenue, and the denominator is the average value of the cost of inventories and costs for the period.

4. The working capital turnover ratio shows the rate of turnover of the enterprise’s material and monetary resources for the period and is calculated as the ratio of the volume of net sales revenue to the average working capital for the period.

There is a certain relationship between working capital and sales volume. Too small a volume of working capital limits sales, while too much indicates an insufficiently efficient use of working capital. How to determine the optimal ratio of working capital and sales volume? This ratio helps to find the working capital turnover ratio. For each enterprise it is individual and, if it is determined, then it is necessary to maintain its value at the optimal level. Finding it is quite simple - if an enterprise, at a given value of the ratio, constantly resorts to the use of borrowed capital, it means that this working capital turnover rate generates an insufficient amount of cash to cover costs and expand activities. Conversely, if, with a constant sales volume or its increase, the enterprise receives sufficient income, then it is considered that an effective rate of working capital turnover has been achieved.

5. The equity capital turnover ratio is calculated using the formula, where the numerator is net sales revenue, the denominator is the average amount of equity capital for the period.

This indicator characterizes various aspects of activity: from a commercial point of view, it determines either a surplus of sales or a lack thereof; from financial - the rate of turnover of invested equity capital; from the economic side - the activity of funds at risk to the owners of the enterprise (shareholders, the state or other owners). If the ratio is too high, which means a significant excess of sales over invested capital, then this entails an increase in credit resources and the possibility of reaching the limit where creditors are more involved in the business than owners. In this case, the ratio of liabilities to equity increases, the security of creditors decreases, and the company may have serious difficulties associated with a decrease in income. On the contrary, a low ratio means the inactivity of part of one's own funds. In this case, the coefficient indicates the need to invest one’s own funds in another source of income that is more appropriate to the given conditions.

6. Turnover of invested capital - shows the rate of turnover of long-term and short-term investments of the enterprise, including investments in its own development. The numerator is net sales revenue, the denominator is the average amount of invested capital for the period.

It is useful to compare the values ​​of this ratio with the values ​​for the same period of the operating capital turnover ratio. When analyzing these coefficients in dynamics, you can see how much faster or slower the capital that is temporarily withdrawn from production activities turns in comparison with the capital involved in production. In a more detailed analysis, it is necessary to take into account the structure of invested capital.

7. The turnover rate of permanent capital is determined by the coefficient obtained by dividing the volume of net sales revenue by the average value of permanent capital for the period.

This ratio shows how quickly the capital in long-term use of the enterprise turns over. The essence of the values ​​of this coefficient is similar to the indicator of equity capital turnover with the only difference being that when analyzing this coefficient it is necessary to take into account the influence of the enterprise's long-term liabilities.

8. The turnover of operating capital is calculated using the formula, where the numerator is net sales revenue, the denominator is the average value of operating capital for the period.

By analyzing the values ​​of this coefficient, you can see a slowdown or acceleration in the turnover of capital directly involved in production activities. The resulting values ​​of this coefficient are cleared, in comparison with the indicator of total asset turnover, from the influence of enterprise investments that do not have a direct impact on sales volume, with the exception of investments in their own development.

9. The business activity index characterizes the efficiency of entrepreneurship in the main activities of the enterprise for the period in the field of working capital management. It is calculated by multiplying the values ​​for the analyzed period of working capital turnover (excluding short-term investments) by the profitability of core activities.

The values ​​of this coefficient in dynamics reflect the growth or decline of the enterprise’s business activity in entrepreneurial (core) activities.

The business activity of an organization in the financial aspect is manifested, first of all, in the speed of turnover of its funds.

Working capital turnover ratio - shows how effectively an organization uses investments in working capital and how this affects sales volume. (Proceeds from sales \ Net b working capital)

Equity turnover ratio - shows the rate of turnover of equity capital. ( Revenue then sales \ Own capital)

Turnover ratio of total invested capital - characterizes the efficiency of using all resources available to the enterprise, regardless of the sources of their attraction. ( Sales proceeds \ Balance sheet currency)

DZ turnover- shows a forced or voluntary expansion or reduction of commercial credit provided by the enterprise. ( Sales proceeds\DZ)

Distribution turnover period - the average period for which loan repayments occur. ( 360 \DZ turnover)

Inventory turnover- characterizes the mobility of funds that an enterprise invests in creating inventories: the faster the funds invested in inventories are returned to the enterprise in the form of revenue from the sale of finished products, the higher the business activity of the organization. ( Cost of sales\Inventories)

Inventory turnover period- reflects the duration of the period (in days) during which money is “tied up” in this type of asset. ( 360\Inventory turnover)

Short circuit turnover - shows the expansion or reduction of commercial credit provided to the enterprise. A decrease in the ratio means an increase in purchases on credit. ( Cost of sales \ KZ)

Short circuit turnover period - The turnover period of accounts payable reflects the average repayment period of a commercial loan of an enterprise. ( 360 \ Short circuit turnover)

Organizational profitability reflects the degree of profitability of its production and economic activities.

Product profitability– shows how much profit is generated per ruble of products sold. A low ratio indicates a decrease in demand for the company’s products and services and, as a result, financial problems in the company and a drop in profits from product sales.

K = profit from sales (net) \ revenue from sales

OS profitability– shows how much profit each ruble invested in the operating system brings.

K = profit from sales \ average annual cost of fixed assets

Return on current assets c – shows how much profit each ruble invested in current assets brings.

K = net profit \ average annual value of current assets

Return on equity of the enterprise– shows the efficiency of using equity capital. The dynamics of the coefficient influences the level of quotation of the company's shares: a decrease in the coefficient lowers the quotation.

K = net profit \ equity

Return on total invested capital-provides efficient use of all property of the enterprise. A low ratio indicates a drop in demand for products and an overaccumulation of assets.

K = net profit \ balance sheet currency

1.Equity turnover ratio

(rate of equity turnover)

K1= p.2110/p.1300

K1= 1.05 K1 = 1.06

2.Asset turnover ratio

(shows how many times during the period under review the full cycle of production and circulation occurs, or how many monetary units of sold products each unit of assets brought))

K2= s.2110/s.1600

K2= 0.59 K2 =0.53

3. Working capital turnover ratio

(turnover speed characterizes the amount of revenue from sales of products by the average cost of working capital.)

K3 = s.2110/s.1200

K3 = 3.27 K3 =3.08

4. Accounts receivable turnover ratio

(represents the ratio of sales revenue received during the analyzed period minus indirect taxes to the average annual amount of receivables)

K4= p.2110/p.1230

5.Receivables turnover period

(represents the duration of receivables turnover in calendar days)

6. Accounts payable turnover ratio

(reflects the enterprise’s ability to repay accounts payable, and also shows the cost of products sold per 1 ruble of accounts payable)

K6= p.2110/p.1520

7.Receivables turnover period

(reflects accounts payable turnover in calendar days)

8. Inventory turnover ratio

(shows how many times on average a company's inventory is sold over a certain period of time)

K8 = p.2120/p.1210

9. Inventory turnover period

(time in days during which inventory is converted into goods sold)

10.Fixed asset turnover ratio

(characterizes the efficiency of the enterprise's use of fixed assets)

The effectiveness of the financial and economic activities of a corporation is characterized by business activity, economic effect and an indicator of economic efficiency.

Business activity is manifested in the dynamism of the corporation’s development, in achieving its goals and is determined on the basis of absolute and relative indicators. Business activity in the financial aspect is manifested, first of all, in the speed of working capital.

Analysis of business activity consists of studying the levels and dynamics of turnover indicators.

The volume of sales depends on the speed of working capital. In addition, with an increase in sales volume and acceleration of turnover, the level of distribution costs decreases. The financial position of a corporation and its solvency also depend on how quickly funds invested in assets turn into real money.

To analyze the business activity of corporations, they use 2 groups of indicators:

General turnover indicators;

Asset management indicators.

The turnover of funds invested in property can be assessed:

- turnover rate- the number of turnovers that the corporation’s capital or its components make during the analyzed period.

- turnover period– the average period during which the funds invested in production and commercial operations are returned to the corporation’s economic activities.

In the process of analysis, it is necessary to study capital turnover not only as a whole, but also by individual types. This will allow us to trace at what stages of the circulation of funds the acceleration of capital turnover occurred.

General turnover indicators:

1. Asset turnover ratio(capital productivity ratio) (Cob.assets) characterizes the efficiency of use of the corporation’s property and shows how many times per year the full cycle of asset circulation will be completed.

where Вр – revenue from sales of goods, – average annual value of assets.

The upward trend in the asset turnover ratio is positive, as this indicates an acceleration in the turnover of the enterprise's funds.

2. Turnover ratio of working (mobile) assets (Cob.current assets) shows the turnover rate of all current assets of the corporation.

(2)

where is the average annual cost of working capital.

3. Turnover ratio (return) of intangible assets(Cob. foreign assets):

(3)

where is the average annual value of non-current assets.

4. Capital productivity (fixed asset turnover) (FO) shows the amount of revenue per 1 ruble of fixed assets, characterizes the efficiency of using only fixed assets.

where are fixed assets.

5. Return (turnover) coefficient of equity capital (Cob.equity capital) shows the rate of turnover of equity capital, that is, how many rubles of turnover account for 1 ruble of invested equity capital.

(5)

where is the average annual cost of equity capital.

6. Speed ​​of goods turnover shows how many times the inventory was updated during the period.

(6)

where is the average annual cost of inventories.

Asset management indicators:

1. Material turnover(inventory) shows how many times the inventory has been updated.

(7)

where Вр – revenue from sales of goods, – average annual cost of inventories.

Turnover in days shows how many days the inventory turns over in the analyzed period.

The higher the inventory turnover rate, the less money is invested in this least liquid part of current assets, the more liquid they are and the more stable the financial condition of the corporation. The higher the inventory turnover, the less overstocking, the faster you can pay off debts. According to some authors, in a normally functioning market economy, the amount of inventory turnover should be 4-8 times.

2. Cash turnover shows the number of cash turnovers for the analyzed period or the average number of days for cash turnover. It is found as the ratio of revenue to the average annual cost of funds.

3. Funds coverage ratio in calculations shows the number of turnovers of funds in accounts receivable for the reporting period.

(8)

4. Receivables maturity date shows how many days on average a corporation's accounts receivable are collected. It is defined as the ratio of the average annual value of accounts receivable to the one-day amount of revenue.

5. Accounts payable turnover ratio indicates the expansion or contraction of commercial credit provided to a corporation.

(9)

where is the average annual value of accounts receivable.

6. Deadline for repayment of accounts payable shows the average period of repayment of the corporation's debts for current obligations. Defined as the ratio of the average annual value of accounts payable to one-day sales revenue.

7. Period of debt repayment to suppliers characterizes the average period of repayment of debts to suppliers and contractors. It is defined as the ratio of the average annual cost to suppliers to the one-day amount of revenue.

Table 8.1

Indicators of business activity of OJSC "Megatrading" for 2006 - 2007.

In educational literature there are various definitions of the concept business activity of the enterprise.

So, V.V. Kovalev defines business activity in a broad sense as the entire range of efforts aimed at promoting a company in the product, labor, and capital markets. In the context of analyzing financial and economic activities, this term is understood in a narrower sense - as the current production and commercial activities of the company. At the same time, the business activity of a commercial organization is manifested in the dynamism of its development, the achievement of its goals, the effective use of economic potential, and the expansion of markets for its products.

L.V. Dontsova and N.A. Nikiforova note that business activity in the financial aspect is manifested, first of all, in the speed of turnover of funds. Some authors replace the essence of business activity with indicators that characterize it. So, O.V. Efimova and M.V. Melnik illustrates the operating cycle of an economic entity as an analysis of business activity.

A comparative analysis of other domestic and foreign approaches to determining business activity is given in the table

To summarize, let us formulate a generalized definition of the concept of business activity of an enterprise.

Business activity of the enterprise- this is the effectiveness and efficiency of the production and commercial activities of the enterprise (the turnover rate of its funds).

The business activity of an enterprise in the financial aspect is manifested, first of all, in the speed of turnover of its funds.

The information base for analyzing business activity is traditionally the accounting (financial) statements of the organization. For the purposes of internal analysis, synthetic and analytical accounting data can also be used.

Analysis of business activity of an enterprise is to study the levels and dynamics of various financial turnover ratios (indicators).

Turnover ratios (indicators) show how many times certain assets of the enterprise are turned over during the analyzed period. The reciprocal value multiplied by 360 days (or the number of days in the analyzed period) indicates the duration of one turnover of these assets. Turnover indicators are of great importance for assessing the financial position of an enterprise, since the speed of turnover of funds has a direct impact on the solvency of the enterprise. And an increase in the rate of turnover of funds reflects an increase in the production and technical potential of the enterprise.

Turnover ratios are of great importance for assessing the financial condition of an enterprise, since the speed of capital turnover, that is, the speed of its conversion into cash, has a direct impact on the solvency of the enterprise. In addition, an increase in the rate of capital turnover reflects, other things being equal, an increase in the production and technical potential of the enterprise. To do this, turnover indicators are calculated, giving the most generalized idea of ​​the economic activity of the analyzed enterprise.

Business activity has a close relationship with other important characteristics of the enterprise. First of all, we are talking about the impact of business activity on investment attractiveness, financial stability, and creditworthiness. High business activity of an economic entity motivates potential investors to carry out transactions with the assets of this company and invest funds.

The business activity of an organization is quite sensitive to changes and fluctuations in various factors and conditions. Macroeconomic factors have a fundamental influence on the business activity of economic entities, under the influence of which either a favorable “entrepreneurial climate” can be formed, stimulating conditions for the active behavior of an economic entity, or vice versa - prerequisites for the curtailment and attenuation of business activity. Factors of an internal nature, which are, in principle, controlled by the management of organizations, are also of fairly high importance. In addition, the level and nature of business activity ultimately determine the capital structure, solvency, liquidity of the organization, etc.

Being the most important characteristic of the functioning of a commercial organization, business activity can be assessed using a number of indicators, and, therefore, is the object of economic analysis within the framework of business activity analysis. A general assessment of business activity can be presented in the form of a diagram:

Analysis and assessment of business activity is carried out at qualitative and quantitative levels. Analysis at a qualitative level involves assessing the activities of an enterprise according to informal criteria: the breadth of sales markets (domestic and external), the business reputation of the enterprise, its competitiveness, the presence of regular suppliers and buyers, long-term sales contracts, image, trademark, etc. These criteria are appropriate compare with similar parameters of other economic entities operating in a given industry or business area. Quantitative criteria for business activity are characterized by a system of absolute and relative indicators. Among the absolute indicators, it is necessary to highlight the volume of sold products, goods, works, services, profit, the amount of advanced capital, working capital, cash flows, etc. It is advisable to compare these parameters over a number of periods (months, quarters, years).

Information base for analyzing business performance indicators

The well-being of an enterprise depends on the efficiency of conducting its main economic activities; this is an important condition for its continuous functioning, which in modern conditions serves as a guarantee of survival and the basis for a stable position of the enterprise.

Assessing business performance has an impact on the economic, investment and production activities of an enterprise, so it is necessary to analyze indicators for assessing business performance.

In this regard, we will consider the methodology for analyzing indicators for assessing business performance and determine the information base for conducting such an assessment.

The main information base for assessing business performance is financial reporting. The purpose of financial statements is to present information about the financial position, results of operations and changes in the financial position of a company. This information is needed by a wide range of users to make economic decisions.

The balance sheet is a document that reflects the results of the calculation and double decomposition of the company's capital as of the reporting date. Capital is the only independent and system-forming indicator of the balance sheet, determining the composition and grouping of all its articles and total indicators. Therefore, it would be more correct to say that the balance sheet reflects the state of capital, and not a certain financial state.

Financial results are the main criterion for business performance. In addition, a company's net income as shown on the income statement is the upper limit on the funds that can be distributed as dividends to shareholders.

Assessing the performance of the business as a whole over the past period is the most important task, which can be solved by using data from the income statement.

This provides information about past transactions and other events that is extremely important to users when making economic decisions.

Enterprise efficiency assessment based on information from the financial statements of the enterprise, it should help in determining the criterion aspects on the basis of which it is possible to draw conclusions regarding the objective efficiency of the economic activity of the enterprise.

“Reporting is based on facts that have already happened and reflects the state of capital as of the reporting (already past) date and its changes for the reporting (already past) period.” Consequently, the forecast function of reporting is not the main one, but a secondary one. Forecasts, among other things, are based on events that have already happened and on already accumulated resources.

In the context of assessing the performance of an enterprise, the purpose of accounting reports is to provide useful information to users. Currently, almost all enterprises have recognized the feasibility and need to satisfy the information needs of numerous users, who can be grouped into three main groups:

1. Those working directly at this enterprise;
2. Those located outside the enterprise, but having a direct financial interest in the business;
3. Having an indirect interest in business.

Information about the financial position of the enterprise is presented in the form of a balance sheet or balance sheet. This report shows the assets i.e. what the business owns and its sources of financing from accounts payable or equity. The balance sheet serves as an indicator to assess the financial condition of the enterprise. It is intended to assist the user in assessing the ability of an enterprise to meet its obligations.

Assets include equipment, long-term accounts receivable, current accounts receivable, inventories, cash and bank balances, and prepaid expenses. Liabilities (liabilities) include equity, short-term loans and liabilities, accounts payable, debt to the budget and personnel of the enterprise.

Assets give a certain idea of ​​the economic potential of the enterprise, liabilities show the amount of funds received by the enterprise and their sources. The structure of a balance sheet asset can be represented in the form of a diagram shown in Fig. 1.

Rice. 1. Balance sheet asset structure

The liabilities of the balance sheet reflect the sources of funds of the enterprise as of a certain date. They are divided into sources of equity (capital and reserves), long-term liabilities (loans and borrowings) and short-term liabilities (credits, borrowings, settlements and other liabilities).

Sources of own funds include: authorized capital, additional capital, reserve capital, accumulation and social funds, targeted financing and retained earnings from previous years. Borrowed funds include: long-term and short-term loans and borrowings, accounts payable, and other liabilities.

The structure of the balance sheet liability can be represented in the form of a diagram shown in Fig. 2.

Rice. 2. Structure of balance sheet liabilities

Reporting is a set of information about the results and operating conditions of an enterprise over the past period of time, presented by the relevant economic entity for the purpose of analysis, control and management of activities. Accounting statements contain information about sold products, works and services, the costs of their production, the state of economic assets and the sources of their formation, and the financial results of work.

Methodology for analyzing indicators for assessing the efficiency of an enterprise

The assessment of business performance is based on data from the balance sheet and income statement, which present the most important results of the business entity's activities. However, depending on the purpose of the assessment, different users are interested in certain indicators of financial performance. The main managers of the enterprise are interested in the volume of profit received and its structure, as well as the factors influencing its value. Tax Inspectorate – the amount of taxable profit. Shareholders - net profit and the amount of dividends paid per share, the possibility of making a profit in the near and foreseeable future. However, regardless of the purpose of the assessment, the performance indicators of the enterprise's economic activities are a criterion aspect of the company's effectiveness.

To assess the performance of a commercial enterprise, it is not enough to use an analysis of absolute profit values, since the presence of profit does not mean that the enterprise is working well. The absolute amount of profit does not allow one to judge the degree of profitability of a particular enterprise, transaction, or idea. Many commercial enterprises that have received the same amount of profit have different sales volumes and different costs.

“To determine the effectiveness of costs incurred, to assess the effectiveness and economic feasibility of an enterprise’s activities, it is not enough just to determine absolute indicators; it is necessary to use a relative indicator.” Therefore, to assess the level of operational efficiency, the resulting result - profit - is compared with the costs or resources used, which allows us to obtain a more objective picture. The comparison of profits with costs or resources is characterized by profitability indicators. "Profitability is a relative indicator of economic efficiency that shows the efficiency, profitability, profitability of an enterprise or business activity. This indicator characterizes the level of return on costs and the degree of use of funds." Thus, profitability indicators are relative characteristics of the financial results and efficiency of the enterprise.

There are profitability indicators used to assess the effectiveness of advanced resources and costs used in business activities, and indicators on the basis of which the profitability and efficiency of capital use are determined.

Return on capital characterizes the amount of profit from each ruble invested in the company's funds.

The main indicators of return on capital are:

• return on assets (property);
• return on current assets;
• return on equity.
• return on investment.

The return on property is calculated as follows:

P property = Profit at the disposal of the enterprise / Average value of assets * 100%

This indicator reflects how many units of profit are received per unit of asset value, regardless of the source of funds raised. This indicator serves to determine the efficiency of using capital of different organizations and industries, since it gives a general assessment of the profitability of capital invested in production, both own and borrowed, attracted on a long-term basis.

Profit at the disposal of an enterprise is understood as the profit remaining after paying taxes and paying off expenses attributable to net profit.

Return on current assets can be determined by the formula:

P current assets = Profit at the disposal of the enterprise / Average value of current assets * 100%

An indicator for assessing the degree of return on invested capital is return on equity. Return on equity capital is expressed by the ratio of net profit (Pch) to sources of equity capital (Is). This indicator characterizes the amount of profit per ruble of equity capital. The return on equity ratio also plays an important role in assessing the level of quotation of an enterprise's shares on the stock exchange.

Return on equity (Rsk) is expressed by the formula:

Rsk = Pch / Is * 100%

If an enterprise focuses its activities on the future, it needs to develop an investment policy. In this case, investment means long-term financing. Information about funds invested in an enterprise can be calculated from balance sheet data as the sum of own sources of funds and long-term liabilities or as the difference between the total amount of assets and short-term liabilities. Return on investment (Ri) is calculated as follows:

Ri = Pdn / (B - Ok) * 100%

where Pdn is profit before tax,

B – balance currency,

Ok – short-term liabilities.

The return on investment indicator is considered in the practice of financial analysis as a way to assess the “skill” of financial managers in managing investments. Since the company's management cannot influence the amount of taxes paid, for a more accurate calculation of the indicator, the amount of profit before income taxes is used in the numerator.

The difference between the profitability indicators of all assets and equity capital is due to the attraction of external sources of financing. If borrowed funds generate higher returns than paying interest on this borrowed capital, then the difference can be used to increase the return on equity capital. However, if the return on assets is less than the interest paid on borrowed funds, the impact of borrowed funds on the activities of the enterprise should be assessed negatively.

Return on sales and return on costs indicators are also calculated. Return on sales (RP) characterizes the ratio of net profit (Pch) to the amount of sales revenue (VR), expressed as a percentage:

Рп = Пч / Вр * 100%

Return on sales is an estimated indicator of the production and economic activity of a business entity. It reflects the level of demand for products, works and services, how correctly the business entity determines the product range and product strategy.

Cost profitability (Рз) characterizes the ratio of net profit to the amount of production and sales costs (З), expressed as a percentage:

Rz = Pch / Z * 100%

Return on costs demonstrates the efficiency of economic activity as a whole; the calculation takes into account production costs, commercial and administrative expenses. The cost return indicator shows how many kopecks of profit are per ruble of expenses.

The dynamics of changes in profitability indicators depends, on the one hand, on factors influencing the value of the numerator of the profit indicator on the basis of which it is calculated: sales profit, taxable, net. On the other hand, it depends on the factors influencing the value of the denominator: the amount of assets, investments, sales, total cost. The main factors for increasing profitability are the implementation of measures to improve the efficiency of the enterprise's economic activities.

Practical aspects of analyzing business performance indicators

Let's look at a practical example of a methodology for assessing the efficiency of an enterprise. To do this, we will analyze the profit indicators of a conditional enterprise in order to estimate the income received by the enterprise, reduced by the amount of expenses incurred, in the context of reporting and analytical data. An assessment of the business efficiency of an enterprise will be carried out on the basis that the dynamics of the profit indicators of an economic entity characterizes its business activity and financial independence. The positive dynamics of absolute profit indicators creates the basis for self-financing of the economic activities of an enterprise on the principles of economic calculation.

The summary analytical table shows the dynamics of the enterprise's profit indicators over 3 years.

Now let's analyze business performance indicators for this fictitious enterprise.

Analyzing the table data, it should be noted that the company demonstrated an improvement in key profit indicators over a three-year period. The exception was gross profit, since, starting from 2014, administrative expenses are partially taken into account as part of the cost price and partially transferred to selling expenses. The result was a significant cost growth rate, which exceeded the revenue growth rate, and a decrease in gross profit.

The increase in revenue in 2015 compared to 2013 amounted to almost 1.8 billion rubles, the growth rate reached 34.62%. Cost increased by more than 2 billion rubles, the growth rate was 43.5%. However, taking into account the internal reasons for the increase in costs, one can judge that there is no negative structural influence of this factor. At the same time, it is not possible to objectively assess the relationship between the dynamics of sales profit, the growth of which was 21.28%, an increase of 93.7 million rubles, compared to commercial and administrative expenses, for the same internal reasons. However, taking into account the lag in the growth rate of profit from sales from the growth rate of revenue, it can be judged that the company has not used internal reserves to increase the final financial result, relative reduction in costs, as well as rational optimization of commercial and administrative expenses.

During the analyzed period, other expenses and income showed a strong decrease, but other expenses in 2015 almost doubled other income, which affected the slowdown in the growth rate of profit before tax, which amounted to only 11.38%.

It should also be noted that the net profit of the enterprise for the analyzed period increased by 57 million rubles, the growth rate was 19.75%, which, against the backdrop of a decrease in tax payments, indicates the successful application of preferential mechanisms to reduce tax payments and increase the efficiency of the enterprise’s financial discipline.

For the period from 2013 to 2015, there are no fluctuations of a probabilistic or stochastic nature in relation to sales profit, profit before tax and net profit. This indicates the effective economic activity of the enterprise as a whole and the implementation of a consistent policy regarding economic development as an independent economic entity. In addition, during this period there is no stable negative dynamics for all profit indicators, which characterizes the maintenance of the enterprise’s profitability by the presence of prospects for carrying out economic activities in the future.

Next, it is necessary, taking into account the specifics of the enterprise’s activities, its scope of economic activity and the characteristics of the indicators, to assess the effectiveness of the business, taking into account the factors of increasing sales volumes and net profit and the factors that prevented a more significant increase in profit volumes. If enterprise efficiency assessment showed the unsatisfactory state of the business, appropriate conclusions should be drawn about the unfavorable prospects of the organization.

As an example of factors for increasing or decreasing sales volumes and net profit, we give the following:

• significant expansion or contraction of activities;
• changes in the structure of income and expenses;
• change in the financial policy of the enterprise;
• increasing costs or reducing them.

Profitability indicators characterize the efficiency of an enterprise. Profitability is a relative indicator of the level of profitability of production activities. Unlike profit, which characterizes the absolute results of operations, profitability shows the relationship between the effect and the amount of costs incurred, thereby determining the level of financial security and strength of position.

Using formulas (1), (2), (3), (4), (5) and (6), we calculate profitability indicators based on the data above and present the results in the table.

Analyzing the results of the calculations made, it should be noted that there was a negative change in all profitability indicators in 2015, both compared to 2014 and compared to 2013. Consequently, business performance assessment shows the unsatisfactory state of the enterprise’s economic activity.

When assessing business efficiency, it should be taken into account that the level and dynamics of profitability indicators at an enterprise are objectively influenced by the entire set of internal production and economic factors:

• level of organization of economic activity;
• structure of capital and its sources;
• degree of use of available resources;
• volume of sales;
• the amount of costs incurred.

Return on property, which characterizes the return on every ruble invested in the assets of an enterprise, allows us to judge the decrease in the operating efficiency of the enterprise. In addition, it is necessary to take into account the extremely low value of the indicator, which indicates an insufficient level of rationalization of the financial and economic activities of the enterprise, since the overall assessment of the return on capital invested in production, both own and borrowed, attracted on a long-term basis, is slightly more than 6 kopecks for every ruble invested.

The profitability of current assets, demonstrating the enterprise’s ability to provide a sufficient amount of profit in relation to the working capital used, allows us to conclude that the return on the use of current assets is relatively low.

Return on equity, which makes it possible to determine the real efficiency of using capital invested by the owners of the enterprise, indicates a fairly high return on equity compared to other indicators. It should be noted that the observed negative dynamics of changes in this indicator in the long term can significantly complicate the financial and economic activities of the enterprise.

Return on investment, which characterizes the profitability of capital investments and is a financial and economic reflection of the competitiveness of the enterprise, in connection with the observed dynamics of the decline in the indicator, allows us to judge the decrease in the potential level of competitiveness of the enterprise. At the same time, the long-term nature of the enterprise’s activities partly explains the long periods of negative dynamics, but is not a factor that levels out the unfavorable prospects.

The dynamics of return on sales, which characterizes the economic efficiency of the enterprise's core activities, indicates a slight decrease in demand for the results of economic activities. Despite a slight increase in sales profitability in 2014, in 2015 this figure decreased, which suggests insufficient objectification of the enterprise’s economic activities and the need to revise the strategy for further development.

The dynamics of cost profitability, which determines the efficiency of business activities as a whole, shows a similar trend as profitability of sales. It should be noted that the reduction in the value of this indicator is a consequence of a decrease in the efficiency of using own and borrowed funds to carry out the main economic activities of the enterprise.

Thus, it can be judged that a decrease in profitability indicates that the enterprise has difficulties that the enterprise is experiencing in relation to the effective implementation of its main economic activities. It can be judged that there is an objective need for the enterprise to revise its policy regarding basic commercial issues in order to increase the amount of profit received.

Based on the results of the assessment of indicators, in order to improve business efficiency, the enterprise needs to find possible areas for increasing the efficiency of using net profit.

conclusions

Analysis of indicators for assessing business performance as part of the analysis of financial statements is necessary for managing the main economic activities of an enterprise on the basis of making informed management decisions.

Information base for analyzing indicators business performance assessments serves as financial statements that provide information about the financial position, results of operations and changes in the financial position of the company. The balance sheet shows the assets, i.e. what the business owns and its sources of financing from accounts payable or equity. The balance sheet serves as an indicator to assess the financial condition of the enterprise. For the purpose of assessing business performance, financial statements are the main source of information, which contains the entire set of information about the results and operating conditions of the enterprise over the past period of time.

Business performance assessment according to financial statements, it is used to analyze, control and manage the economic activities of the enterprise.

Analyzing business performance indicators is not an end in itself.

Based on the results of the analysis, conclusions are drawn about possible ways to increase the efficiency of the economic activity of the enterprise. The methodology for analyzing indicators for assessing business performance allows us to identify possible directions, ways of developing and improving the economic activity of an enterprise in accordance with the results obtained.

Literature

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