The activities of the enterprise should be subjected to continuous and comprehensive study and monitoring. This can be called a necessary condition for making the right and effective managerial decisions. The closest attention should be paid to the profit that the company receives, since it is the most important absolute indicator characterizing the effect of the functioning of the company. In this regard, I would like to consider exactly how it is possible to analyze profit from sales of products and other indicators of profit.
Analysis of profit from sales, and any other type of profit, it is advisable to conduct data that can be easily found in the income statement. This is due to the fact that this particular reporting form contains information on factors affecting the amount of profit, and also reflects the process of its formation. There are several types of analysis that allow you to comprehensively study the profits made by the company.
First of all, it is necessary to study the specified reporting form “up and down”, that is, to conduct horizontal and vertical analysis. The so-called horizontal analysis allows you to study the dynamics of the indicators presented in the report. By calculating the absolute and relative changes, it is possible to identify trends characteristic of a particular type of income or expense, or for profit as a whole. Thus, it is possible to analyze the profit from the sale of products, if we take into account the dynamics of only part of the factors, or net profit, if we study the report in full. Most often, the entire report is examined.
Vertical analysis is a study of structure. In the process of its implementation, the specific gravity of each of the indicators is determined, as well as the change in this specific gravity by periods. Obviously, to determine the specific gravity, it is necessary to choose a certain indicator, which will be the basis of comparison. Typically, such an indicator is sales revenue, and it is it that is taken equal to one hundred percent.
The next methodology that we will consider will be the analysis of profit from product sales and the net profit indicator, called factor. This analysis is based on the same report. The factors that affect a particular type of profit are completely obvious. It is clear that profit from sales most directly depends on revenue and cost, as well as on realized business and management expenses. It should be noted that revenue is determined by the price and volume of sales. These factors must be considered separately. The influence of the factors that represent costs is determined by studying the changes in their specific gravity. The net profit is affected by several more factors, since it is necessary to take into account the result from other activities, as well as the income tax. The influence of these factors is taken into account by calculating their absolute change. In the general case, such a methodology will be sufficient, however, if possible, it is advisable to take into account industry specifics or the specifics of a particular enterprise. Thus, an analysis of the profit of a trading company should be carried out with a more detailed account of changes in business expenses, since their value is likely to be significant.
As you can see, the analysis of profit from sales of products, the amount of net profit and other similar indicators is a very important aspect of studying the activities of the company. However, it should be borne in mind that studying profits is not enough to make the right decisions. It is very important to have an idea about other aspects of the enterprise. It is necessary to study the financial stability of the organization, its liquidity, as well as the degree of business activity. In addition, you should study the activities of the enterprise not only from a financial point of view, but also from others, attracting the necessary specialists.