By calculating 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 below, any company can assess the partial financial condition of its own counterparties to whom the products are supplied.
Instructions
Step 1
One of the key business indicators that shows the success and efficiency of any company is an indicator of the profitability of its core business. Profitability ratios characterize the profitability of a company. Along with other financial analysis ratios, profitability ratios are calculated based on balance sheet data. These include the balance sheet (form No. 1), the income statement (form No. 2) and a number of other documents. However, these two are quite enough to calculate the profitability of the main activity.
Step 2
The profitability ratio of the main activity (OD) shows the amount of net profit received by the company from 1 ruble spent on production. With an effectively organized business process, this indicator should grow over time. To calculate it, divide the profit from sales from the income statement by the cost of production. For convenience, use the formula linked to form # 2:
Profitability ratio OD = profit from sales / production costs.
Profitability ratio OD = line. 050 / (line. 020 + line. 030 + line. 040).
Step 3
Another important indicator of a company's financial condition is the return on sales ratio. Unlike the OD ratio, it shows the amount of net profit that each 1 ruble of revenue brings to the company. The growth of this ratio reflects an increase in the profitability of the main activity and means an improvement in the financial condition of the enterprise. To calculate the return on sales ratio, use the formula (based on Form # 2):
Return on sales ratio = profit from sales / sales revenue.
Return on sales ratio = p. 050 / p. 010.
Step 4
Along with the indicators of profitability in financial analysis, other factors are used. For example, business activity ratios that reflect the efficiency of a company using its own funds. These include the turnover ratio (an indicator of the efficiency of using all the funds at the disposal of the enterprise), inventory turnover (the rate of sale of inventory items in days) and other indicators.
