Profitability is a measure of the profitability of an enterprise. Also, it is profitability that implies the use of certain means, in which the organization can cover its own costs with income and make a profit.
Instructions
Step 1
Analyze the company's profitability by year-by-year data and then by quarter. Compare the actual indicators of profitability (products, property, own funds) for the required period with the calculated (planned) indicators and with the values for previous periods. At the same time, bring the values for previous periods to a comparable form using the price index.
Step 2
Examine the influence of internal and external factors of production on profitability indicators. Then determine the reserves for the growth of profitability indicators. In turn, to ensure an increase in profitability, the rate of increase in profits should be greater than the growth rate of the materials used or the results of activities, that is, income from the sale of goods.
Step 3
Analyze the stability of the enterprise, which is characterized by many different indicators that reflect the stability of the state of its finances, the optimal level of liquidity and solvency. The purpose of financial analysis is to assess the state of the company in the previous period, to assess its state at the moment and to assess the future position of the company.
Step 4
Perform the financial analysis itself in several stages: determine the approach or direction of this analysis, assess the quality of the initial information and perform the analysis using the basic methods. These methods include: horizontal - comparison of each individual balance sheet item or other reporting document with data for the previous period; vertical - determination of the system of all terms of the indicator, as well as the influence of each position as a whole on the result itself trend - an analysis of an indicator made over several periods of time and determining a trend using mathematical processing of a certain series of dynamics.
