To determine the profitability of sales, use the following formula. What is return on sales and the formulas for calculating it. How to interpret the calculated values

Profitability indicators characterize the financial results and efficiency of the enterprise. They measure the profitability of an enterprise from various positions and are grouped according to the interests of the participants. economic process, market exchange.

Profitability indicators are important characteristics of the factorial environment for the formation of enterprises' profits. Therefore, they are mandatory for comparative analysis and assessment. financial condition enterprises. When analyzing production, profitability indicators are used as a tool for investment policy and pricing.

To determine the efficiency of the enterprise, three indicators of profitability will be considered: return on sales, return on assets and return on equity.

Return on sales ratio (ROS). This indicator reflects the efficiency of the enterprise and shows the share (in percentage) of net profit in the total revenue of the enterprise. In Western sources, the return on sales ratio is called - ROS ( return on sales).

It is advisable to start the study of any coefficient with its economic meaning. Return on sales reflects the business activity of an enterprise and determines how efficiently the enterprise is operating. The coefficient shows how much Money from the products sold is the profit of the enterprise. The important thing is not how many products the company sold, but how much net profit it earned in net money from these sales.

The ratio of return on sales describes the efficiency of the sale of the main products of the enterprise, and also allows you to determine the share of the cost in sales.

The formula for the profitability of sales according to the Russian accounting system is as follows:

Coef. return on sales = Net profit / Revenue * 100%,% (1)

It should be clarified that when calculating the ratio, instead of net profit, the numerator can be used: gross profit, profit before taxes and interest (EBIT), profit before taxes (EBI). Accordingly, the following coefficients will appear:

Coef. rent. sales by shaft. profit = Shaft. profit / Revenue * 100%,% (2) Coef. operating profitability = EBIT / Revenue * 100%,% (3) Coef. rent. sales on profit before taxes = EBI / Revenue * 100%,% (4)

To calculate all the above indicators of profitability, the data contained in the 2nd form of financial statements - "Statement of financial results" is sufficient.

In foreign sources, the return on sales ratio is calculated using the following formula:

ROS = EBIT / Revenue * 100%,% (5)

The standard value for this ROS coefficient is> 0. If the return on sales is less than zero, then you should seriously think about the efficiency of enterprise management.

- mining operations - 26% - Agriculture- 11% - construction - 7% - wholesale and retail – 8%

Return on assets ratio (ROA). It shows how much money falls on the unit of assets available to the enterprise. Allows you to assess the quality of the work of its financial managers.

This ratio shows the financial return on the use of the assets of the enterprise. The purpose of its use is to increase its value (taking into account the liquidity of the enterprise), that is, with the help of it, a financial analyst can quickly analyze the composition of the company's assets and evaluate them as a treasure in the generation of total income. If any asset does not contribute to the income of the enterprise, then it is advisable to refuse it (sell, remove from the balance sheet). In other words, return on assets is an excellent indicator of the overall profitability and efficiency of an enterprise.

The return on assets is calculated using the following formula:

Return on assets ratio = Net profit / Assets * 100%,% (6)

The result of the calculation is the amount of net profit from each ruble invested in the assets of the organization. The indicator can also be interpreted as "how many kopecks each ruble invested in the assets of the organization brings."

The net profit of the organization is taken according to the "Statement of financial results", assets - according to the balance sheet.

In Western literature, the formula for calculating the return on assets (ROA, Return of assets) is as follows:

ROA = NI / TA * 100%,% (7)

where: NI - Net Income TA - Total Assets

An alternative option for calculating the indicator is as follows:

ROA = EBI / TA * 100%,% (8)

where: EBI is the net income received by the shareholders.

The standard for the return on assets ratio, as well as for all return on assets, ROA> 0. If the value is less than zero, this is a reason to seriously think about the efficiency of the enterprise. This will be caused by the fact that the company is operating at a loss.

Coefficientprofitabilityequity capital(return on equity, ROE). This is an indicator of the net profit compared to the equity of the organization. This is the most important financial indicator of return for any investor, business owner, showing how effectively the capital invested in the business was used. In contrast to the similar indicator "return on assets", this indicator characterizes the efficiency of using not all the capital (or assets) of the organization, but only that part of it that belongs to the owners of the enterprise.

The return on equity is calculated by dividing the net profit (usually, for the year) by the organization's equity:

Rent. own cap. = Net profit / Equity * 100%,% (9)

A more accurate calculation involves the use of the arithmetic average of equity for the period for which the net profit is taken (as a rule, for a year) - equity at the beginning of the period is added to equity at the end of the period and divided by 2.

The net profit of the organization is taken according to the "Statement of financial results", equity capital - according to the balance sheet liabilities.

A special approach to calculating the return on equity is to use the Du Pont formula. Dupont's formula breaks down the indicator into three components, or factors, allowing a deeper understanding of the result obtained:

Return on equity (Dupont Formula) = (Net Income / Revenue) * (Revenue / Assets) * (Assets / Equity) = Net Income Return * Asset Turnover * Financial Leverage (10)

According to the average statistical data, the return on equity is approximately 10-12% (in the USA and Great Britain). For inflationary economies such as Russia, the indicator should be higher. The main comparative criterion in analyzing the return on equity is the percentage of alternative return that the owner could receive by investing his money in another business. For example, if a bank deposit can bring 10% per annum, and a business brings only 5%, then the question may arise about the advisability of further conducting such a business.

The higher the return on equity, the better. However, as can be seen from the Du Pont formula, a high value of the indicator may result from too high financial leverage, i.e. a large share of borrowed capital and a small share of equity, which negatively affects the financial stability of the organization. This reflects the main law of business - more profit, more risk.

The calculation of the return on equity ratio makes sense only if the organization has equity capital (i.e. positive net assets). Otherwise, the calculation gives a negative value that is of little use for analysis.

Standard value of return on sales by industry

Calculation of the normative value of the return on sales for industrial enterprises and other organizations is extremely important in the management of the company. Knowing these indicators, you can conduct a qualitative economic analysis and improve the efficiency of the enterprise. If a company wants to maintain its position in the market or even improve it, then it is very important to carry out such calculations in short periods. This will allow not only better management of the organization, but also provide an opportunity to respond in a timely manner to any changes in the market.

Basic concepts

Before you understand what the normative value of the return on sales is, you need to understand what it is. In accounting, this concept means an economic indicator, by determining which you can find out the level of efficiency in the use of certain resources at the enterprise. Moreover, not only tangible assets are taken into account, but also natural ones, labor resources, investments, capital, sales and more. Speaking more in simple words, then profitability means the level of profitability of the business, its efficiency from the economic side and the benefits that it brings.

Thus, it turns out that if the profitability indicator is below zero, then such a business is unprofitable, and an urgent need to increase this indicator, find out what influenced the occurrence of such a situation and eliminate the causes of the problem. The level of profitability is usually expressed in ratios, but relative indicators are expressed for the profitability of sales as a percentage. The normative value can also indicate the efficiency of exploiting the resources of the enterprise; at normal values, the organization will not only cover costs, but also make a profit.

Profitability indicators

When calculating all indicators, it is very important to pay attention to such a concept as the profitability threshold. This indicator, or more precisely, the point, actually stands on the separation of the unprofitable and effective state of the company. It serves as a comparison to the break-even point, reflecting at what point a loss-making business became effective. To analyze the efficiency of the company, it is necessary to compare the actual indicators of profitability with the planned ones. In addition, historical data and indicators of competing companies are used in comparison. But the coefficients, or, as they are also called, sales indices, are determined by calculating the ratio of total income to main assets and flows.

Main groups of standards

The normative value of the return on sales and profitability can be divided into certain groups, namely:

Return on sales (profitability of the enterprise).
Return on non-current assets.
Profitability of current assets.
Personal capital return.
Product profitability.
Profitability production assets and the cost-effectiveness of their use.

Using these indicators, taking into account the scope of the company, you can determine its overall profitability. To determine the profitability of assets, it is necessary to determine the efficiency of exploiting the firm's equity capital or its investment funds: it all depends on how the company's assets bring it profit, how much of it, taking into account the resources spent on production. To calculate the return on assets, the ratio of profit for a specific period of time to the size of the company's assets for the same period is used. The formula looks like this:

R assets = P (profit) / A (size of assets).

The same indicators are used in the economy to calculate the profitability of the operation of production assets, investment investments and equity capital. For example, by calculating the return on equity of a joint-stock company, you can find out how effective the investments of shareholders in this industry are.

Calculation of profitability

Return on sales (standard value) is an indicator of profitability, which is expressed in ratios and is a display of the share of income for each cash equivalent spent. To calculate the profitability of the company's sales, the ratio of net profit to the amount of proceeds is calculated. Calculations are carried out according to the formula:

R prod. = P (net income) / V (revenue).

This indicator is directly influenced by the organization's pricing policy, as well as its flexibility in the market segment where its products are involved. Many firms use various external and internal strategies to increase their own profits, as well as analyze the activities of competitors, the range of products they offer, and so on. There are no clear schemes, norms, designations of profitability. This directly depends on the fact that the normative value of the profitability of sales is directly related to the specifics of the organization's activities. All indicators can only reflect the overall performance of the company for a specific period.

Basic formulas

In order to effectively manage sales and monitor the performance of the organization, calculations of the company's profitability are carried out. For this, it is customary to use certain indicators, namely: gross and operating EBIT profit, balance sheet data, net profitability of sales. The calculation of profit taking into account the indicator of gross income shows a coefficient that indicates the proportion of the increase from each earned cash equivalent. To calculate this indicator, they take the ratio of net income after payment of tax taxes to the total amount of funds for a specific period of operation of the organization. In other words, operating profitability is equal to gross income divided by sales revenue.

It should be noted that this ratio must be entered in the financial statements. But operating profit EBIT is equal to the ratio of EBIT to total revenue. However, this indicator reflects the total income before all interest and taxes are deducted from it. It is by this formula that the operating profitability of sales, the standard value in production, and other important values are calculated. It is believed that this ratio is between the general data on profit and the net earnings of the organization.

Profitability ratios

But the profitability of sales on the balance sheet is a coefficient, the calculation of which is carried out on the basis of data from accounting reports and is a characteristic of the share of profit from the total revenue of the organization. The calculation of this ratio is carried out according to the formula of the ratio of total income or loss from sales of products to the volume of proceeds. To get the result, you just need to use ready-made data from the company's balance sheet.

The calculation of the net profitability of sales is carried out by means of the ratio of net profit after all payments to the total volume of proceeds. To carry out independent calculations of the normative value of the profitability of sales in trade, you need to find out how many products were sold and what income the organization received from this sale after it paid all taxes, taking into account other expenses related to operating activities, but without affecting not operating expenses ...

Analysis of results

Thanks to all these formulas, the company's specialists can calculate the most diverse types of profit relative to the total amount of revenue. But all the same, the dependence on the peculiarities of the main direction of the enterprise's work remains quite significant. If the profitability of sales, the standard value and other coefficients were calculated for several periods of the organization's activity, then the employees of the enterprise will be able to make a qualitative economic analysis. That is, these indicators will help to conduct operational management economic activity of the enterprise. In addition, it will allow you to quickly respond to fluctuations and changes in the market, which will undoubtedly help improve performance and provide the company with a constant income.

Indicators reflecting the standard value of the profitability of sales are used in the calculations of operational activities. But it is not worth using them for long-term periods, since changes in the market occur quite often, and with such calculations it will not be possible to respond to them in a timely manner. They will help solve daily and monthly tasks, helping to make plans for the sale of manufactured products.

Increased profitability

There are ways to improve your ROI target. Among them, the following are considered the most common: reducing the cost of production by reducing the cost of producing goods and increasing the volume of goods produced, which will increase gross revenue. But in order to effectively use these methods, the organization must have sufficient labor and material resources... Again, to conduct such events, you need to work with highly qualified employees or raise the level of professionalism of your personnel through various trainings and using new methods and practices of the world economy that improve the skills of employees.

To increase the normative value of the return on sales in terms of net profit, it is important to study where the competitors of the organization are, what their pricing policy is, whether there are promotions or other enticing events. And already having this data, you can analyze what factors are advisable to use to reduce the cost of production. Moreover, for analytical activities, one should use not only data on competitors in the region, but also use information about the leaders of this market segment.

Conclusion

To increase the indicators of profitability of sales, the normative value by industry should be calculated using all the necessary formulas and the analysis of the data obtained should be carried out. It should be borne in mind that increasing the efficiency of an enterprise is influenced not only by its pricing policy, but also by the range that it can offer to its consumers.

Most often, the best solution to reduce the cost of production is to implement modern technologies into production. To understand whether this method will improve production, it is imperative to conduct an economic analysis and find out what costs are needed for this, how long it will take for employees to master new technology and after what period this investment will pay off.

Profitability indicators

Profitability is a measure of the effectiveness of one-time and recurring costs. IN general view profitability is determined by the ratio of profit to the one-time or current costs due to which this profit is obtained.

Dynamics of profitability indicators of ojsc "umz" for 31.12.2009 - 31.12.2014 G.G. Presented in table 5.

Table 5

The values of the profitability indicators of umz for the entire period under consideration are presented in table 5a.

Table 5a

Considering the indicators of profitability, first of all, it should be noted that both at the beginning and at the end of the analyzed period the amount of profit before tax divided by the proceeds from sales (the indicator of the total profitability) is below the industry average value of UMP LLC, which was established at the level of 10.0 %. At the beginning of the period, the indicator of total profitability at the enterprise was 4.1%, and at the end of the period -88.3% (change in absolute terms for the period - (-92.5%)). This should be viewed as a negative point and seek ways to improve the efficiency of the organization.

The increase in the return on equity from 0.50% to 3.63% for the analyzed period was caused by an increase in the company's net profit for the analyzed period by 35591.3 thousand rubles.

As can be seen from table 5, during the analyzed period the values of most profitability indicators increased, which should rather be regarded as a positive trend.

Financial stability analysis

Analysis of changes in indicators financial sustainability JSC "UMP" in absolute terms for the entire period under consideration is presented in table 6.

Table 6

The analysis of financial stability indicators for the entire period under review is presented in table 6a.

Table 6a

The analysis of changes in the financial stability indicators of UMP OJSC in relative terms for the entire period under review is presented in Table 7.

Table 7

The analysis of financial stability indicators for the entire period under review is presented in table 7a.

Table 7a

Analyzing the type of financial stability of an enterprise in absolute terms, based on a three-complex indicator of financial stability, the dynamics of a noticeable stagnation of the financial stability of the enterprise.

As can be seen from Table 6, both at the end of December 31, 2009 and at the end of December 31, 2014, the financial stability of UMP LLC by 3 complex indicators can be characterized as "Absolute financial stability", since the enterprise has enough own funds to form stocks and costs.

The analysis of financial stability in terms of relative indicators, presented in table 6a, suggests that compared to the base period (December 31, 2009), the situation at UMP LLC remained generally at the same level.

The indicator "Coefficient of autonomy" for the analyzed period increased by 0.06 and at the end of December 31, 2014 amounted to 1.02. This is higher than the standard value (0.5) at which the borrowed capital can be compensated by the property of the enterprise.

The indicator "Ratio of debt and equity (financial leverage)" for the analyzed period decreased by -0.06 and at the end of December 31, 2014 amounted to -0.02. The more this ratio exceeds 1, the greater the dependence of the company on borrowed funds. The permissible level is often determined by the operating conditions of each enterprise, first of all, by the rate of turnover working capital... Therefore, it is additionally necessary to determine the rate of turnover of material circulating assets and accounts receivable for the analyzed period. If accounts receivable turnover faster than current assets, which means a rather high intensity of cash flow to the enterprise, i.e. as a result - an increase in own funds. Therefore, with a high turnover of material working capital and an even higher turnover of accounts receivable, the ratio of the ratio of own and borrowed funds can much exceed 1.

The indicator "Ratio of mobile and immobilized funds" for the analyzed period decreased by -0.14 and at the end of December 31, 2014 was -0.04. The ratio is defined as the ratio of mobile funds (total for the second section) and long-term receivables to immobilized funds (non-current assets adjusted for long-term receivables). The normative value is specific to each a separate industry, but other things being equal, an increase in the ratio is a positive trend.

The indicator "Coefficient of maneuverability" for the analyzed period decreased by -0.07 and at the end of December 31, 2014 amounted to -0.02. This is below the standard value (0.5). The coefficient of maneuverability characterizes what proportion of sources of own funds is in mobile form. The normative value of the indicator depends on the nature of the enterprise's activity: in capital-intensive industries, its normal level should be lower than in material-intensive ones. At the end of the analyzed period, UMP LLC has a light asset structure. The share of fixed assets in the balance sheet total is less than 40.0%. Thus, the enterprise cannot be classified as a capital-intensive production.

The indicator "Coefficient of supply of stocks and costs own funds", for the analyzed period decreased by -0.50 and at the end of December 31, 2014 amounted to 0.90. This is higher than the standard value (0.6-0.8). The coefficient is equal to the ratio of the difference between the sum of sources of own circulating assets, long-term loans and borrowings and non-current assets to the amount of stocks and costs.

31. Analysis of indicators of profitability.

Profitability - it is a relative indicator of production efficiency, characterizing the level of return on costs and the degree of use of capital, resources, which is a measure of the profitability of an enterprise in the long run. The construction of profitability ratios is based on the ratio of profit (most often, net profit is included in the calculation of profitability indicators) either to funds spent, or to sales proceeds, or to other assets of the enterprise. Profitability indicators can be calculated as ratios and then presented as a decimal fraction or in the form of profitability indicators and then presented as percentages.

Profitability indicators are calculated on the basis of the balance sheet f.1 and the statement of financial results of the enterprise f.2. The basis for calculating profitability indicators can be based on various values of the company's profit: margin profit, operating profit, profit before interest and income tax (EBIT), profit before income tax (EBT), net profit. Most often, to calculate profitability ratios, net income or profit before interest and income tax is used.

The factors affecting profitability are, on the one hand, capital used, providing the opportunity for productive activities and making a profit , with another - proceeds from the sale of manufactured products, property, etc. . (turnover), as a source of income funds for the enterprise and the formation of profits. Based on the purposes of the analysis, various combinations of profit are used in relation to the indicators for which their return (efficiency of use) is studied, which allows us to construct many different indicators (Table 15.1): 1) economic profitability (assets), return on equity, profitability capital production, return on current assets, return on net assets, etc. (resource approach); 2) profitability of turnover (sales); 3) profitability of products sold, profitability certain types or product groups, ROI, etc. (costly approach).

Profitability indicators	Calculation formulas	Appointment
Profitability economic (assets)	, where - net profit taxation; enterprise assets.	It characterizes the economic profitability of all capital used at the enterprise, i.e. the amount of own and borrowed funds, the return that falls on the ruble of assets
Return on equity	, where SK is the amount of the company's equity capital.	It characterizes the efficiency of the company's equity capital, how successfully it is used. The increase in this indicator corresponds to the goal of growth in the company's profit. They rely on it when comparing and assessing the benefits of alternative investments and when making decisions about investments and disinvestment in the enterprise.
Return on current assets Return on net assets	, where - current assets.	The indicators characterize the return that falls on the ruble of the corresponding assets
Profitability sales (turnover)	, where In about - proceeds from ordinary activities; , where B is revenue from ordinary activities + operating and non-operating income and expenses	Characterizes the profit that the company receives from each ruble of sales
Product profitability	, where WITH- production cost	Characterizes the profitability of costs, is used in on-farm analytical calculations, control over the profitability (unprofitability) of production
The profitability of certain types of products	, where - product profit i; - product cost i;	It characterizes the profitability of various types of products. It is used as a basis for calculating profit when determining prices and for analytical purposes when monitoring the profitability (unprofitableness) of products, decisions on ineffective products
Return on investment (Return On Investment - ROI) or estimated (average) rate of return (accounting rate of return - ARR method).	where is the amount of profit after tax; - the book value of assets at the beginning of the period; - the book value of assets at the end of the period; , where - average annual net income (profit after taxes + depreciation); –Initial investment.	Applies when choosing best option investing. Investments are made in the project with the highest profitability. Shows the degree of capital increase as a result of the main production and non-production activities.

Let's consider the analysis scheme using the example of one of the profitability indicators (profitability of sales).

To analyze the factors influencing the profitability of the turnover, we will use the method of chain substitutions. The change in profitable is influenced by two factors: profit after tax (depending on the purposes of the analysis, the profit of the reporting period, profit before tax, profit from ordinary activities can be used) and proceeds from sales

. In turn, it is affected by changes in the volume of sales and the structure, cost and price of products sold. The magnitude is also influenced by these factors. Therefore, when analyzing the profitability of sales (turnover), the influence of these factors on the change in both is investigated.

The first step is to calculate the planned profitability of turnover at planned profit

and planned revenue

(15.1):

, (15.1)

The second step is calculating the profitability of the turnover

provided that the profit

and the proceeds of the reporting period from the sale (turnover) of products

recalculated to the sales volume of the reporting period

without changing the price and cost of production (15.2):

(15.2)

The third step is the calculation of the profitability of the turnover

subject to the impact of changes in profit due to changes in the factor "average price at which products are sold" Calculations begin with determining the amount of profit

and the proceeds of the reporting period from the sale (turnover) of products

, which the company could receive at the actual values of the volume of sales; structures marketable products, actual prices, and the base (planned) value of costs (the influence of this factor is excluded). Carrying out a similar calculation from the volume of sales for the reporting period, deduct the cost of production (cost) of products of the base period, recalculated to the volume of sales of the reporting period (fact)

, (15.3)

due to changes in profit

and revenue

under the influence of the factor "costs of production (cost) of products", we proceed from the assumption that when comparing profits in actual volumes, with the actual structure of products sold, with actual prices and actual costs, with the profit that the enterprise could have received with the base (planned) the value of costs and the actual values of other factors, the impact on profit of changes in the costs of its production was reflected (under the influence of an increase / decrease in the volume of products sold of those products that have a higher / lower cost price). For this, it is necessary from the profit of the reporting period

deduct the amount of profit that the company could receive at the base (planned) amount of costs, but with the actual values of all other factors. The calculation is performed according to the formula (15.4):

, (15.4)

When analyzing the impact of changes in the profitability of turnover

due to the actual change in profit and revenue of the reporting period from sales in the formula (15.4) instead of the planned value

substitute its actual value (15.5):

, (15.5)

The assessment of profitability indicators gives an idea of how efficiently the company operates, controls the costs of production and sales of products, and what kind of net profit it receives. Standard value for profitability ratios does not exist, but there is general rule: the value of profitability should be at such a level that the liquidity of the enterprise is ensured. This does not mean that the higher the coefficient value, the better. A significant increase in profitability during the reporting period could lead to a significant decrease in liquidity. When planning profitability ratios, an enterprise always needs to decide what is more important at this stage: profitability or liquidity.

By themselves, all metrics can be useful to compare:

their change in time;

actual results with forecast;

business units among themselves;

with industry-average indicators, which makes it possible to determine the place of the enterprise among other enterprises in the industry.

Indicators of profitability of the enterprise

Profitability- the ability of the enterprise to generate profit.

Indicator name	Economic essence	Calculation method	Project 67n/	Calculation formula based on accounting (financial) reporting data / Project 66n/	Normative value
Economic profitability (return on assets)	Shows the efficiency of property use	Net profit x 100% Period average asset value	Page 190 f. 2 x 100% P. (300 - 216) f.1 (beginning + end / 2)	P. 2400 x 100% Page (1600 - RBP) (column 4 + column 3)	The bigger, the better
Return on equity (financial return)	Shows the efficiency of equity capital. The dynamics of this indicator affects the level of stock quotes	Net profit x 100%	P. 190 ft. 2 x 100%	P. 2400 x 100% Page (1300 + 1530 + 1540-RBP) (column 4 + column 3)	The bigger, the better
Return on Sales (Commercial ROI)	Shows how much profit falls on 1 ruble. products sold	Profit from sales x 100% Revenue - net from sales	Page 050 f.2 x 100% P. 010 f.2	P. 2200 x 100%	The bigger, the better
Return on operating costs (return on investment)	Shows how much profit falls on 1 ruble of costs	Profit from sales x 100% Production and sales costs	Page 050 f.2 x 100% Page (020 + 030 +040) f.2	P. 2200 x 100% Page (2120 + 2210 + 2200)	The bigger, the better
Net profitability	Shows how much net profit falls on 1 ruble. proceeds	Net profit x 100% Revenue - net from sales	Page 190 f. 2 x 100% P. 010 f.2	P. 2400 x 100%	The bigger, the better
Gross profitability	Shows how much gross profit is accounted for per unit of revenue	Gross profit x 100% Revenue - net from sales	Page 029 f.2 x 100% P. 010 f.2	P. 2100 x 100%	The bigger, the better
Return on invested (permanent) capital	Shows the effectiveness of the use of capital invested in the organization's activities for a long time	Net profit x 100% Average cost of equity + average cost of long-term liabilities	Page 190 f. 2 x 100% P. (490 + 590 + 640 + 650-216) f. 1 (beginning + end / 2)	P. 2400 x 100% Page (1300 + 1400 + 1530 + 1540-RBP) (column 4 + column 3)	The bigger, the better
ROI (specific)	Shows what is the profitability of a particular investment project	Net profit from a specific investment project x 100% The amount of funds invested in this project	According to analytical data		The bigger, the better
Economic growth sustainability coefficient	Shows the rate at which equity capital increases at the expense of the enterprise's FHD	(Net profit - Dividends, paid to shareholders) x 100% Average cost of equity for the period	Str (190f.2 - dividends) x100% P. (490 + 640 + 650-216) f. 1 (beginning + end / 2)	P. (2400 - dividends) * 100% Page (1300 + 1530 + 1540-RBP) (column 4 + column 3)	The bigger, the better

Received by dividing the profit from the sale of products by the amount of proceeds received. The initial data for its calculation is the balance sheet.

It is calculated in the FinEkAnaliz program in the Profitability Analysis block as Sales Profitability.

Return on sales - what it shows

Shows how much profit the company receives from each ruble of products sold.

Return on Sales - Formula

General formula for calculating the coefficient:

Calculation formula according to the old balance sheet:

K рп =	page 050	*100%
	page 010

where p.050 and p. 010 of the profit and loss statement (form No. 2).

Calculation formula according to the new balance sheet:

Return on sales - value

Used as the main assessment indicator financial efficiency companies with relatively small amounts of fixed assets and equity. Evaluating the profitability of sales makes it possible to objectively look at the state of affairs.

The return on sales indicator characterizes the main aspect of the company's work - the sale of its main products.

Return on Sales - Scheme

1. Increase in the indicator.

a) Revenue growth rates outstrip cost growth rates. Possible reasons:

growth in sales volumes,
change in the assortment of sales.

With an increase in the number of products sold in in kind revenue grows faster than costs as a result of production leverage.

The constituent elements of the cost of production are variable and fixed costs. Changes in the cost structure can greatly affect the amount of profit. Investment in fixed assets is accompanied by an increase in fixed costs and, in theory, a decrease in variable costs. At the same time, the dependence is non-linear, so it is not easy to find the optimal combination of fixed and variable costs.

In addition to simply raising the prices of its products, a company can increase its revenue by changing its product mix. This development trend of the enterprise is favorable.

b) Cost reduction rates outpace revenue decline rates. Possible reasons:

rise in prices for products (works, services),
change in the assortment structure.

In this case, there is a formal improvement in the profitability indicator, but the volume of proceeds decreases, the trend cannot be called unambiguously favorable. For the correct conclusions, they analyze the pricing policy and the assortment policy of the enterprise.

c) Revenue increases, costs decrease. Possible reasons:

price increase,
change in the assortment of sales,
change in cost rates.

This trend is favorable and further analysis is being carried out to assess the sustainability of the company's position.

2. Decrease in the indicator.

a) Cost growth rates outstrip revenue growth rates. Possible reasons:

inflationary growth of costs outstrips revenue,
price reduction,
changing the structure of the assortment of sales,
increase in cost rates.

This is an unfavorable trend. To remedy the situation, they analyze the pricing issues at the enterprise, the assortment policy, the cost control system.

b) The rate of decline in revenue is faster than the rate of decline in costs. Possible reasons:

reduction in sales.

This situation is common when an enterprise is reducing its activity in the market. Revenue decreases faster than costs as a result of the action production leverage... An analysis of the company's marketing policy should be done.

c) Revenue decreases, costs increase. Possible reasons:

price reduction,
increase in cost rates,
change in the structure of the assortment of sales.

An analysis of pricing, cost control systems, assortment policies is required.

In normal (stable) market conditions, the dynamics of revenue changes faster than costs only under the influence of production leverage. The rest of the cases are associated either with a change in the external and internal conditions of the enterprise's functioning (inflation, competition, demand, cost structure), or with an ineffective system of accounting and control in production.

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Synonyms

More found about ROI

Analysis of the profitability of the main activity of a trade organization It characterizes the efficiency entrepreneurial activity how much profit does the organization have from one ruble of sales Profitability of sales is defined as the ratio of profit from sales or net profit to the amount received
Analysis of the current level, features and trends of profitability indicators of Russian joint-stock companies Profitability of costs Profitability of products - the ratio of profit from sales to cost of sales Product profitability shows the profit that the company received per 1 ruble of current costs Imagine the percentage
Profit on sales before tax Profit on sales Profit on sales before tax - as shown in Profit on sales before tax
Profitability ratio Synonyms profitability of sales profitability of products sold profitability of sales by profit before tax is calculated in the FinEkAnalysis program in
Assessment of the influence of factors on profitability indicators Or if you try on the reduction method, the numerator and denominator are divided by the revenue, then you can use the following factor model to multiply the profitability of sales by the turnover ratio of current assets Profit from sales multiplied by the turnover ratio
Overall return on sales Overall return on sales Overall return on sales - definition Overall return on sales - ratio equal to the ratio of the balance sheet profit
Low threshold of profitability and on-site inspections Profitability indicators can be roughly divided into two groups profitability of sales return on assets Return on sales is a ratio of profitability that shows the share of profit in each
Profitability of sold products Synonyms profitability of sales ratio of profitability of sales profitability of sales by profit before tax is calculated in the FinEkAnalysis program in the Profitability analysis block
Analysis of financial assets according to the consolidated statements of NROSEBIFA - net profitability of sales on profit before interest and before taking into account income and expenses from financial assets
Formation of a scoring model for assessing the creditworthiness of a corporate borrower EBIT Interest 0.0790 4> 1.5 4 1.3-1.5 3 1-1.3 2< 1 0 Рентабельность продаж ROS 0,1256 6 > 0,025 6 0,02-0,025 5 0,015-0,02 3 < 0,015 0
Pre-verification analysis as a tool for forecasting an on-site tax audit of penal institutions and its improvement Profitability of sales% Return on assets% Return on sales% Return on assets% Sewing production 7.1 3.5
Factor analysis of the formation and use of the company's profit Profitability of products sold profitability of sales is calculated by the formula Reduction of the level of profitability ratio is a negative trend.
Factor analysis of the financial results of agricultural producers' activity The influence of factors on the profitability of sales or the profitability of the main activity can be assessed by the method of chain substitutions Substitutions Factor rub Product profitability
Features of the financial policy of companies during the crisis ROS - net profitability of sales by profit before interest
Anti-crisis management of the financial and economic stability of an industrial enterprise Reasons for a decrease in profitability of sales; an increase in production costs; a drop in sales volumes.
Key Aspects of Organization's Profit Management The following groups of profitability indicators can be distinguished; return on assets with a breakdown into non-current circulating and net assets; return on equity of total own debt; return on sales; return on expenses
Forecast balance taking into account current trends, forecasted volumes and profitability of sales, changes in non-current assets FinEkAnaliz, you can quickly build a forecast balance taking into account the current trends in forecast volumes and profitability of sales changes in non-current assets Example of a report automatically generated by the program FinEkAnaliz Forecast balance taking into account

To assess the performance of any enterprise, it is necessary to conduct regular analysis based on the results of activities for a certain period of time. In this article, we will talk about the formulas for the profitability of sales and assessing the efficiency of an enterprise based on these indicators.

Definition and explanation

Return on sales is important economic indicator for any enterprise. In general terms, the profitability of sales shows what percentage of the net profit the organization receives from the proceeds, or rather, what proportion of the income is contained in one ruble from the products sold. In fact, the level of return on sales, expressed as a percentage, makes it possible to estimate how much revenue covers expenses and what income the company receives from the sale of a product or service.

Many aspiring entrepreneurs are wondering whether it is necessary to calculate the profitability of sales at all and what does it give? Return on sales is an indicator of success financial activities enterprises, especially for companies with a small production volume.

With the help of various formulas and indicators of profitability of sales, you can clearly see how efficiently the capital and resources of the enterprise are used, whether the market strategy and pricing policy are correctly built. The profitability of the sales volume characterizes the efficiency of the main aspect of the enterprise's activity - the sale of the main products.

For example, if, when calculating the profitability of the company's sales, the figure was 25%, this means that from each ruble of revenue the company received 25 kopecks of profit. Comparative analysis of indicators for different reporting periods is no less indicative tool. If the level of profitability of sales has fallen, it means that the rate of growth of costs outstripped the rate of growth of revenue. That is, production costs have increased, while revenues have decreased or remained at the same level. We need to look for solutions:

increase sales;
change pricing policy;
reduce the cost of production;
change or expand the range;
look for new ways of selling products and markets;
increase demand (advertising, marketing).

That is, a regular analysis of the profitability of profit from sales makes it possible to assess the degree of financial growth or decline of the company. With a more detailed analysis, you can identify strong and weaknesses production and financial policy of the enterprise and, based on the analysis, create an effective strategy for the growth of profitability.

If a company produces several types of products, sells different groups of goods or offers different types of services, you can calculate the profitability of sales for each a separate category... Based on the results of the calculations, the type of product that is most beneficial for the enterprise is determined.

Formula for return on sales

Several formulas are used to determine the profitability of sales volume. Let's take a look at the two most commonly used ones:

the classic formula of return on sales from sales profit;
algorithm for calculating the profitability of sales by gross profit.

Where is applied

The results of calculating the return on sales are used for various purposes:

for comparative analysis the work of the enterprise for a certain period;
for pricing for one of the types of products;
to study the demand for the assortment.

An example of the application of profitability in the table.

After a comparative analysis of the company's activities with these indicators, we can draw conclusions:

In 2018, the profitability indicator decreased by 3.6% percent.
Profit from sales of products decreased by 23%.
Revenue also decreased, but not as much as other indicators

Conclusion - the fall in profitability of sales and income of the enterprise is due to an increase in production costs. Once the cost has increased, it means you need to raise the unit price or increase the sales volume. Depending on the specific business of the company, it may be worth exploring the possibility of reducing production or management costs.

Return on sales rates

There are no precisely established indicators of profitability of sales, since a lot is determined by the field of activity, the size and stage of development of the organization. In various industries and economic activity there are some averages that indicate the effectiveness of the organization.

In general, in economic activity It is believed that the return on sales from 1 to 5% is low, from 5 to 20% is medium and stable, from 20-30% is a highly profitable indicator. A return on sales of over 30% equates to a super efficient and profitable business.

Business project managers are interested in the profitability of their business, since the initial purpose of its creation is enrichment. The correspondence of the resources expended for production support expressed in monetary terms and the result obtained determines the effectiveness of the functioning of the subject. The main indicator that makes it possible to make a decision on the expediency of further work in the previous mode, or in the need to adjust it, is the profitability of the enterprise. In economic calculations, the parameter is displayed as coefficients.

Profitability parameters

About the parameter of the enterprise efficiency

Profitability is an indicator to assess economic efficiency subject of entrepreneurial activity. It determines the degree of effectiveness of the use of the company's resources. For the analysis, it is necessary to separately take into account investments in the business for the selected period, which have the character:

labor;
production;
material;
cash.

Gross profitability

Sales performance allows you to evaluate specific gravity profit in the proceeds received from the sale of labor results.

Another name for the indicator is known as the rate of return. According to the standard methodology, the parameter is determined by calculation based on net profitability in revenue. If it is necessary to identify the weaknesses of the business, it is recommended to divide the income into gross, balance sheet and operating components.

Types of profitability

Gross profitability is the rate of efficiency of the enterprise, calculated using the parameter of gross profitability. It allows you to determine the profitability of sales by gross margin. The parameter is determined by the quotient of gross profit and revenue. It allows you to determine the number of gross profit kopecks in the ruble of revenue.

Gross profitability, the formula takes into account the specific nature of profitability, allows you to determine the indicator of gross profit displayed in the financial statements of results of activities. Its value corresponds to the difference between revenue and total cost. Revenue in this formula is interpreted as the product of sales and selling prices.

Operating profit margin

Operating profit is positioned as an intermediate value of profitability from sales and net profit. It allows you to define the Return on Sales ratio as a quotient of the parameter and revenue.

Profit types

Operating profitability is the second name for the operating profit margin indicator. It reflects the number of ruble kopecks per ruble of revenue. The data of the components of the formula are determined on the basis of the items reflected in the financial report.

Read also: Average headcount workers: calculation formula

Parameter analysis

A decrease in the economic indicator indicates a drop in demand for the result of labor of a business entity and a decrease in the competitiveness of its products. To stabilize the situation, the head of the enterprise needs to initiate activities that stimulate demand and improve the quality of the goods produced. Alternatively, it is possible to consider the option to engage in activities from a new market niche.

The trend of changes in the indicator of sales efficiency is assessed in the dynamics of the base and reporting periods. The base period is the previous time period in which the indicator showed high marks. It is necessary to ensure the possibility of comparing a parameter with an indicator taken as a standard.

Defined in relation to net income an economic indicator of the efficiency of an entity's activities is calculated by the quotient of net profit and revenue, determined by the volume of sales in monetary terms. Net profit is calculated as the product of the unit price by the volume of production, expressed in units of output. The net profit margin shows how many kopecks of net profit are in the proceeds from the sale of the results of labor.

Profitability ratio

One of the main indicators of the organization's performance is the return on sales in terms of net profit. What characterizes this indicator? How is it calculated? All the details are below.

What is net profit margin?

The concept of profitability is directly related to the success, that is, the profitability of any business. This financial indicator can be calculated for the enterprise as a whole or separately for its divisions (types of activities). In the process of calculations, it is easy to determine the return on assets, fixed assets (fixed assets), sales, goods, capital, etc. First of all, the calculation is based on the analysis of income accounting data for a certain time period.

The analysis of profitability values allows you to find out how effective is the management of the funds invested in the creation and further development of the company. Since the calculations are carried out as a percentage or as a coefficient, the higher the results obtained, the more profitable the business is. The profitability calculation is used in the following situations:

With short and long term profit forecasting.
When receiving loans and borrowings.
When exploring new directions and analyzing already existing species commercial activities.
During the benchmarking industry.
In order to justify the upcoming investments and investments.
To establish the real market price of a business, etc.

The return on sales indicator indicates how much component part the company's revenue is taken by profit. In other words, how much income each ruble of sold products (works or services) brought. By controlling this ratio, the head of the firm can adjust the pricing policy, as well as current and future costs.

Return on sales by net profit - formula

When calculating the indicator, the accounting data of the organization for a given period of time are used. In particular, to determine the profitability of sales, you need information about the net profit, which is indicated on p. 2400 p. 2 "Reports on financial results" (the current form was approved by the Ministry of Finance in Order No. 66n dated 02.07.10).

The formula looks like this:

RP = private enterprise / B, where:

RP is the value of the return on sales,

PE - the amount of net profit (p. 2400 f. 2),

B - the amount of revenue (line 2110 f. 2).

Additionally, to detail the indicators, you can calculate the profitability by gross profit or operating profitability... Formulas change in accordance with the given goals:

RP for VP = VP of the firm / V, where:

RP by VP - gross profit margin,

VP of the firm - the firm's gross profit (p. 2100 f. 2),

B - the amount of revenue.

RP operating = Profit before taxation (p. 2300 f. 2) / V.

What is the rate of return on sales considered the norm?

We have already found out that RP shows the level of profit for a certain period. In dynamics, this ratio helps to establish how the profitability of a business changes over time. For this, data analysis is carried out for several periods - basic and reporting. It is then easy to calculate the profit margin by performing factor calculations.

What is the norm for profitability? There is no definite answer to this question. Optimal indicators depend on the type and specifics of the enterprise or its subdivision. Of course, the higher the value obtained, the better, but the results can also be influenced by such signs as the duration production cycle, availability of investments, etc.

The average indicator of good profitability is recognized as a coefficient in the range of 20-30%, average - 5-20%, low 1-5%.