The financial result from the conduct of business by an enterprise should be subjected not only to the strictest accounting, but also to a detailed analysis. As you know, the financial result is profit or loss, and the factor analysis of the company's profit is seen as the most effective method of studying. Let us dwell in more detail on the main aspects of this technique.
Information on profit or loss of a commercial company is reflected in the accounting form of the same name. In addition to simply determining the amount of profit from this report, you can trace the order of its formation, as well as factors that somehow affect its value. Based on the statement of profit and loss, a mathematical model is constructed using which a factor analysis of the company's profit is carried out. If you include in this model all the data presented in the report, then the analysis of the net profit of the enterprise will be carried out.
Particular attention must be paid to the fact that the report allows you to evaluate only the total change in revenue. The problem is that this indicator, in turn, changes under the influence of two factors: price and sales volumes. The influence of each of them should be taken into account and reflected separately. For this, during the calculation, it will be necessary to use information that is not presented in the study report. This refers to information about ongoing changes in the prices of the company's products (price index). After accounting for the change in revenue under the influence of prices, its change is determined under the influence of the dynamics of sales. Subsequent multiplication by the sales profitability of the base period allows you to evaluate the change in profit.
The impact on the value of profit cost, as well as commercial and administrative expenses is determined by studying the changes in their level. This level represents the ratio of certain expenses to the amount of revenue for the corresponding period. This level can be expressed as a percentage or as a coefficient. In the future, it is necessary to multiply the revenue for the reporting period by the difference in the calculated levels for each of the indicators. The result of the calculations will be the specific quantitative influence of one or another factor. If the level was presented as a percentage, then the result will need to be divided by 100.
A factor analysis of an enterprise’s profit in terms of studying its change under the influence of other income and expenses, as well as income tax, can be carried out by determining the absolute change in these factors.
Analysis of the balance sheet profit of the enterprise can be carried out in a similar way. Obviously, due to the characteristics of this indicator, a significantly smaller number of factors will be included in its factor model. In addition, this model can be represented in another way, for example, as a product of the volume of production and sale by the difference in price and the cost of a unit of production. This model can be analyzed by any suitable method. Most often resort to the use of the method of chain substitutions, as well as its modifications.
Factor analysis of enterprise profits is not the only methodology that allows us to study this most important indicator. In respect of the income statement, traditionally produce vertical and horizontal analysis. The first is to study the structure of this report. As a comparison base, it is usually customary to use revenue, studying the specific gravities of all other indicators involved in profit formation. Horizontal analysis is a time analysis, that is, the study of dynamics. Determining the absolute and relative changes in indicators allows you to identify trends and formulate the most useful management decisions.