How to calculate the profitability of primary activities

Using the calculation of several financial indicators based on the analysis of balance sheet data you can partially assess the financial condition of the company. On the other hand, using the calculations presented below, any company can assess the financial condition of partial private contractors, which involves the delivery of products.

Instruction

1. 
   One of the key business indicators, which shows the success and efficiency of any company is profitability of its core activities. The profitability ratios characterize the profitability of the company. Along with other factors of financial analysis, profitability indicators are calculated based on financial statement data. These include the balance sheet (form №1), profit and loss statement (form №2) and a number of other documents. However, for calculating the profitability of core activities is enough of these two.
2. The coefficient of profitability of primary activity (OD) shows the amount of net profit received by the company from 1 ruble spent on production. When efficiently organized business process, this indicator should over time grow. To calculate it, divide the profit from the implementation of statement of profit and loss in the value of the cost of production. For convenience, use the formula bound to the form №2:
   
   
   
   The profitability ratio of OD = profit from sales / costs of production.
   The profitability ratio of OD = p. 050 / (line 020 + line 030 + line 040).
3. Another important indicator of the financial condition of the company is the ratio of return on sales. In contrast to the ratio of the OD it shows the amount of net profit, which brings the company for every 1 ruble of revenues. The increase of this ratio reflects the increase in the profitability of the core activities and means to improve the financial condition of the company. To calculate the ratio of return on sales, use the formula (based on the form № 2):
   
   
   
   The ratio of return on sales = profit from sales / revenue from sales.
   The profitability ratio of sales = p. 050. 010.
4. Along with the profitability indicators in the financial analysis are applied, and other factors. For example, the efficiency ratios that reflect efficiency of use company's own funds. These include turnover ratios (an indicator of efficiency of use of all the available enterprise assets), inventory turnover (rate of implementation of inventory in days) and other indicators.