To assess the economic efficiency of a company, an indicator called profitability is used. It in a comprehensive manner reflects the completeness of the use of monetary, material and labor resources of the enterprise. When conducting a profitability analysis, one should take into account the costs of production, the company's income, as well as losses from the chosen method of management.
Instructions
Step 1
Select the period for which you will conduct a profitability analysis of the company. It can be a calendar year, quarter, or half year. For a comparative analysis, prepare data on the profitability of the enterprise for the past period. Align the values of the previous periods with the current data using the price index.
Step 2
Calculate individual profitability indicators: profitability of products, fixed assets, assets, sales, personnel, and so on. Compare them with data from previous periods. Establish how much the compared parameters differ from each other. If necessary, set the amount of growth or decline in profitability for individual items, converting the indicators into percentages.
Step 3
Evaluate how external and internal factors affect the profitability indicators. Determine what are the reserves for the growth of profitability indicators. Map out ways to improve performance, define ways to manage the company's profitability. To ensure growth in profitability, it is required that net profit grows faster than income from the sale of goods or services.
Step 4
Determine how stable the company was in the analyzed period. Here, pay attention to the stability of the financial condition, the level of liquidity, the stability of solvency. Compare the data with the characteristics describing the previous period.
Step 5
Break the financial analysis of the company into a series of steps. First, determine the methodological approach, then evaluate the baseline data in terms of their completeness and reliability. When choosing a methodology, determine whether you will be using horizontal analysis or vertical analysis. The first involves comparing the positions of the reporting document with the same data from the previous period. In the second case, the behavior of the system of all terms of profitability and the influence of each position on the final result are determined.
Step 6
Summarize the summarized data of the analysis of profitability for all positions in the table and present the results in a visual graphical form. Map out ways to improve profitability in the future.
