Sales profitability ratio. Coefficients of financial indicators of the enterprise. Main groups of standards

Return on Sales - Definition

Return on sales is a coefficient equal to the ratio of profit from sales of products to the amount of revenue received. The data for its calculation is the balance sheet.

Return on sales - what it shows

Return on sales 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 based on balance sheet data:

Where page 050 And page 010 profit and loss statement (form No. 2).

Return on sales - meaning

Return on sales is used as the main indicator to assess the financial performance of companies that have relatively small amounts of fixed assets and equity capital. Assessing the profitability of sales allows you to take a more objective look at the state of affairs.

The return on sales indicator characterizes most important aspect the company's activities - sales of main products.

Below are options for changing sales profitability under the influence of various factors.

1. Increase in profitability of sales.

a) The rate of revenue growth is faster than the rate of cost growth.

Possible reasons:

• sales growth
• change in sales mix

With an increase in the number of products sold (in physical terms), revenue increases faster than costs as a result of the so-called production leverage.

The main elements of product costs are variable and fixed costs. Changing the cost structure can significantly affect profit margins. Investment in fixed assets is accompanied by an increase fixed costs and theoretically, a reduction in variable costs. However, the relationship is nonlinear, so finding the optimal combination of fixed and variable costs is not easy.

In addition to simply increasing prices on an existing range of products, a company can achieve revenue growth by changing the range of products sold. This trend in the development of the enterprise is favorable.

b) The rate of cost reduction is faster than the rate of revenue decline.

Possible reasons:

• increase in prices for products (works, services)
• change in the structure of the sales range

In this case, there is a formal improvement in the profitability indicator, but the volume of revenue decreases; the trend cannot be called unambiguously favorable. To draw correct conclusions, it is necessary to analyze the pricing policy and assortment policy of the enterprise.

c) Revenue increases, costs decrease.

Possible reasons:

price increase
change in sales mix
change in cost standards

This trend is favorable, and further analysis should be carried out to assess the sustainability of this position of the company.

2. Decrease in profitability of sales.

a) Cost growth rates outpace revenue growth rates.

Possible reasons:

• inflationary growth in costs outpaces revenues
• price reduction
• increase in cost standards

Is an unfavorable trend. To correct the situation, it is necessary to analyze pricing issues at the enterprise, assortment policy, and the existing cost control system.

b) The rate of revenue decline is faster than the rate of cost reduction.

Possible reasons:

• reduction in sales volumes

This situation is common when an enterprise reduces its activities in a given market for some reason. Revenue declines faster than costs as a result of operating leverage. It is necessary to analyze the company's marketing policy.

c) Revenue decreases, costs increase.

Possible reasons:

• price reduction
• increase in cost standards
• change in the structure of the sales range

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

In normal (stable) market conditions, the dynamics of changes in revenue and costs correspond to situations where revenue changes faster than costs only under the influence of production leverage. The remaining cases are associated either with changes in the external and internal conditions of the enterprise’s functioning (inflation, competition, demand, cost structure), or with bad system accounting and control in production.

Performance indicators can be divided into direct and inverse. Direct efficiency indicators are return coefficients, which show what standard unit of result is obtained from a standard unit of costs for its production. Inverse efficiency indicators are capacity coefficients, which illustrate how many conventional units of input are needed to obtain a conventional unit of result.

One of the main performance indicators economic activity the enterprise is profitability. Profitability indicators are less susceptible to the influence of inflation and are expressed by different ratios of profit and costs. Profitability indicators are mainly measured in the form of ratios.

Profitability

Profitability can be defined as an indicator economic efficiency, reflecting the degree of efficiency in the use of material, monetary, production, labor and other resources.

Profitability indicators are divided into different groups and are calculated as the ratio of the selected meters.

The main types of profitability are the following indicators:

1. Return on assets.
2. Profitability of main production assets.
3. Sales profitability.

Return on assets

Return on assets is financial ratio, showing the profitability and efficiency of the enterprise. Return on assets shows how much profit an organization receives from each ruble spent. Return on assets is calculated as the quotient of net profit divided by average value assets multiplied by 100%.

Return on assets = (Net profit / Average annual assets) x 100%

The values ​​for calculating return on assets can be taken from financial statements. Net profit is indicated in Form No. 2 “Profit and Loss Statement” (new name “Income Statement”), and the average value of assets can be obtained from Form No. 1 “ Balance sheet" For accurate calculations, the arithmetic average of assets is calculated as the sum of assets at the beginning of the year and the end of the year, divided by two.

Using the return on assets indicator, you can identify the discrepancies between the predicted level of profitability and the actual indicator, and also understand what factors influenced the deviations.

Return on assets can be used to compare the performance of companies in the same industry.

For example, the value of the enterprise’s assets in 2011 amounted to 2,698,000 rubles, in 2012 – 3,986,000 rubles. Net profit for 2012 is 1,983,000 rubles.

The average annual value of assets is equal to 3,342,000 rubles (arithmetic average between the indicators of the value of assets for 2011 and 2012)

Return on assets in 2012 was 49.7%.

Analyzing the obtained indicator, we can conclude that for each ruble spent the organization received a profit of 49.7%. Thus, the profitability of the enterprise is 49.7%.

Profitability of fixed production assets

Profitability of fixed production assets or profitability of fixed assets is the quotient of net profit divided by the cost of fixed assets, multiplied by 100%.

Profitability of OPF = (Net profit / Average annual cost of fixed assets) x 100%

The indicator shows the real profitability from the use of fixed assets in the production process. Indicators for calculating the profitability of fixed production assets are taken from financial statements. Net profit is indicated in Form No. 2 “Profit and Loss Statement” (new name “Statement of Financial Results”), and the average value of fixed assets can be obtained from Form No. 1 “Balance Sheet”.

For example, the value of the enterprise's fixed production assets in 2011 amounted to 1,056,000 rubles, in 2012 - 1,632,000 rubles. Net profit for 2012 is 1,983,000 rubles.

The average annual cost of fixed assets is equal to 1,344,000 rubles (arithmetic average of the cost of fixed assets for 2011 and 2012)

The profitability of fixed production assets is 147.5%.

Thus, the real return on the use of fixed assets in 2012 was 147.5%.

Return on sales

Return on sales shows what portion of an organization's revenue is profit. In other words, return on sales is a coefficient that illustrates what share of profit is contained in each ruble earned. Return on sales is calculated for a given period of time and expressed as a percentage. With the help of sales profitability, an enterprise can optimize costs associated with commercial activities.

Return on Sales = (Profit / Revenue) x 100%

Return on sales values ​​are specific to each organization, which can be explained by the difference competitive strategies companies and their product range.

Can be used to calculate return on sales different kinds profit, which causes the existence of different variations of this coefficient. The most commonly used are return on sales calculated based on gross profit, operating return on sales, and return on sales calculated based on net profit.

Return on sales by gross profit = (Gross profit / Revenue) x 100%

Return on sales based on gross profit is calculated as the quotient obtained by dividing gross profit by revenue multiplied by 100%.

Gross profit is determined by subtracting cost of sales from revenue. These indicators are contained in Form No. 2 “Profit and Loss Statement” (new name “Statement of Financial Results”).

For example, the gross profit of the enterprise in 2012 was 2,112,000 rubles. Revenue in 2012 was 4,019,000 rubles.

The gross profit margin on sales is 52.6%.

Thus, we can conclude that each ruble earned contains 52.6% of the gross profit.

Operating return on sales = (Profit before tax / Revenue) x 100%

Operating return on sales is the ratio of profit before taxes to revenue, expressed as a percentage.

Indicators for calculating operating profitability are also taken from Form No. 2 “Profit and Loss Statement”.

Operating return on sales shows what part of the profit is contained in each ruble of revenue received minus interest and taxes paid.

For example, profit before tax in 2012 is 2,001,000 rubles. Revenue in the same period amounted to 4,019,000 rubles.

Operating return on sales is 49.8%.

This means that after deducting taxes and interest paid, each ruble of proceeds contains 49.8% of profit.

Return on sales by net profit = (Net profit / Revenue) x 100%

Return on sales based on net profit is calculated as the quotient of net profit divided by revenue, multiplied by 100%.

Indicators for calculating return on sales based on net profit are contained in Form No. 2 “Profit and Loss Statement” (new name “Financial Results Statement”).

For example, Net profit in 2012 is equal to 1,983,000 rubles. Revenue in the same period amounted to 4,019,000 rubles.

Return on sales based on net profit is 49.3%. This means that in the end, after paying all taxes and interest, 49.3% of profit remained in each ruble earned.

Cost-benefit analysis

Return on sales is sometimes called profitability ratio because return on sales shows specific gravity profit in revenue from the sale of goods, works, services.

To analyze the coefficient characterizing the profitability of sales, you need to understand that if the profitability of sales decreases, this indicates a decrease in the competitiveness of the product and a drop in demand for it. In this case, the enterprise should think about carrying out activities to stimulate demand, improving the quality of the product offered, or conquering a new market niche.

Within the framework of factor analysis of profitability of sales, the influence of profitability on changes in prices for goods, works, services and changes in their costs is considered.

To identify trends in changes in sales profitability over time, you need to distinguish the base and reporting periods. As a base period, you can use the indicators of the previous year or the period in which the company made the greatest profit. The base period is needed to compare the obtained return on sales ratio for the reporting period with the ratio taken as a basis.

Profitability of sales can be increased by increasing prices for the range offered or reducing costs. For acceptance the right decision the organization should focus on such factors as: the dynamics of market conditions, fluctuations in consumer demand, the possibility of saving internal resources, assessment of the activities of competitors and others. For these purposes, tools of product, pricing, sales and communication policies are used.

The following main directions for increasing profits can be identified:

1. Increase in production capacity.

Using the achievements of scientific progress requires capital investment, but allows you to reduce costs manufacturing process. Existing equipment can be upgraded, which will lead to resource savings and increased operational efficiency.

2. Product quality management.

High-quality products are always in demand, so when insufficient level indicator of return on sales, the company should take measures to improve the quality of the products offered.

3. Development of marketing policy.

Marketing strategies are focused on product promotion based on market research and consumer preferences. Large companies create entire marketing departments. Some enterprises have a separate specialist who is involved in the development and implementation of marketing activities. In small organizations, the responsibilities of a marketer are assigned to managers and other specialists in management departments. requires significant costs, but its successful implementation leads to excellent financial results.

4. Cost reduction.

The cost of the proposed product range can be reduced by finding suppliers who offer products and services cheaper than others. Also, while saving on the price of materials, you need to ensure that the quality of the final product offered for sale remains at the proper level.

5. Staff motivation.

Personnel management is a separate sector of management activity. The production of quality products, the reduction of defective products, and the sale of the final product to a certain extent depend on the responsibility of employees. In order for employees to perform their job duties efficiently and promptly, there are various motivational and incentive strategies. For example, bonuses best workers, holding corporate events, organizing corporate press, etc.

Summarizing the above, readers of MirSovetov can conclude that profit and profitability indicators are the main criteria for determining the effectiveness of the financial and economic activities of an enterprise. In order to improve the financial result, it is necessary to evaluate it, and based on the information received, analyze which factors are hindering the development of the organization as a whole. Once the existing problems have been identified, you can move on to formulating the main directions and activities in order to increase the company's profits.

Return on sales can say what the organization’s activities in selling its products are: profitable or unprofitable.

The concept of return on sales (RP or ROM)

• RP– an indicator reflecting the ability of the organization’s managers to control all kinds of costs. This indicator is expressed as a percentage of income and revenue.
• RP coefficient– shows what part of the profit falls on one earned conventional unit.

Let us assume that the financial efficiency of enterprises is almost the same. Enterprises with the shortest production cycle will have a lower return on sales than enterprises with a long-term cycle.

• If the RP is less than zero, then we can conclude that the enterprise is operating at a loss, since in this case the cost exceeds the revenue.
• Zero profitability is a sign that the organization spends exactly the same amount on production as it acquires after sale.
• A positive return on sales means that the project is profitable. The higher the indicator, the better for the enterprise.

It is clear that the profitability indicator is very dependent on the field of activity of the enterprise. For example, in banking this figure can reach 100%, and in heavy industry – even 3%.

Increased profitability of sales

An increase in RP is undoubtedly a positive factor for any company.

You can talk about increasing profitability if:

• The analysis revealed that the growth rate of income is greater than the growth rate of costs.

This could be affected by the following:

• Sales volume has increased.
• The range of products produced has changed.

With an increase in demand for goods from buyers, an increase in the number of products sold is later observed. Consequently, due to the work of the production lever, income grows faster than costs. The company's management is able to achieve revenue growth by raising prices for a certain product or completely reducing its range.

• The analysis revealed that the rate of decline in income is much less than the rate of decline in costs.

This can usually lead to:

• raising prices for manufactured products;
• making changes to the structure of the sales range.

These events are considered not entirely positive for the enterprise, and management must be aware of this. After all, profitability indicators look better, but the amount of income decreases.

Revenue growth and cost reduction. This is achieved if:

• changes were made in the sales range;
• cost levels were changed;
• prices increased.

This situation is undoubtedly positive for the organization.

Its reduction

We can talk about reducing RP in the following cases.

Cost growth rate is greater than revenue growth rate

This may be due to the following reasons:

• price reduction;
• changes in the direction of increasing cost levels;
• changes in the structure of the product range.

This situation is not a positive trend. To improve the situation, it is important to think about the organization's pricing as well as how costs are controlled.

The rate of revenue decline is faster than the rate of cost reduction

This situation usually occurs for only one reason:

• Decrease in sales volumes. It is quite normal if an organization, for one reason or another, decides to reduce its production in a certain market. Costs fall much more slowly than revenues due to production leverage.

Increased costs and decreased revenue

Reasons that could influence this fact:

• prices were reduced;
• it was decided to make changes to the structure of the product range;
• cost standards have been increased.

In this situation, it is also advisable to analyze the formation of prices at the enterprise and pay attention to cost control.

Note: If the market is stable, then income, as a rule, changes faster than costs only under the influence of the production lever.

Formula

In fact, RP is easy to calculate using numbers that you already know. To do this, you will need to select the appropriate formula from the three listed below and substitute your values. If you do not have specific numbers, you can always find them in the balance sheet.

Calculation of the formula for return on sales

IN general view The RP formula is as follows:

RP = profit (loss) from sales / sales revenue * 100%

However, it is also common to calculate gross, operating and net RP. All calculation methods will differ in the numerator, but the denominator always remains the same.

Formula 1: calculation of gross RP

RP = gross profit: sales revenue * 100%

This indicator reflects the share of profit in each monetary unit earned by the enterprise.

Formula 2: calculation of operating profitability (return on sales based on EBIT)

RP = profit (loss) from taxation: sales revenue * 100%

The indicator reflects the share of profit from sales before taxes and interest in each monetary unit earned by the enterprise.

Balance formula

According to the new balance sheet form, the above formulas for return on sales will look like this:

General formula:

RP = p.2200: p.2110 * 100%,

Formula 1:

RP = p.2100: p.2110 * 100%,

Formula 2:

RP = p.2300: p.2110 * 100%,

Formula 3:

RP = p.2400: p.2110 * 100%.

According to the old balance sheet form, these same formulas look different:

General formula:

RP = p.050: p.010 * 100%,

Formula 1:

RP = p.029: p.010 * 100%,

Formula 2:

RP = p.140: p.010 * 100%,

Formula 3:

RP = p.190: p.010 * 100%,

where: RP – return on sales;

Important! The current (new) reporting form was approved by Order of the Ministry of Finance of the Russian Federation dated July 2, 2010 No. 66n.

Note: From 01/01/2013, the profit and loss statement is called the financial performance statement.

RP coefficient and its formula

As mentioned above, the profitability ratio reflects the share of the organization’s profit attributable to each conventional unit of earnings. This, in general, is profitability. The coefficient is calculated using the formulas already presented, but not in percentage terms.

How should you calculate the return on sales ratio:

K RP = profit (loss) from sales / sales revenue

The mentioned coefficient can also be calculated using the balance. It can also be calculated not only in general, but also for each individual product or service. This makes sense if it is necessary to analyze the economic activities of any enterprise.

How to interpret the calculated values

For example, the calculated profitability of RP is 25%. This means that for every 100 monetary units of the enterprise, there are 25 units of profit. You can also explain the answer as follows: for every ruble there are 25 kopecks of profit.

Note: By calculating the profitability ratio, we get facts. But having received specific meaning, we will never be able to say whether this or that investment of capital is profitable or not. For these purposes, for example, asset indicators are calculated.

Calculation example

Sales revenue of the enterprise OJSC "Ivolga" for 2013 amounted to 10 million rubles, and in 2014 it increased to 12 million. Operating profit (before tax) in 2013 was 3 million rubles, and in 2014 it increased to 3 .8 million. How has the operating RP changed?

Solution:

Let's calculate the operating profitability of sales in 2013:

RP 2013 = 3 million/10 million * 100% = 30%.

Let's calculate the same figure for 2014:

RP 2014 = 3.8 million/12 million * 100% = 31.7%.

Let's calculate the change in profitability of sales:

∆ RP = 31.7% – 30% = 1.7%.

Conclusion: In 2014, sales profitability before tax increased by 1.7%, which is undoubtedly a positive trend for the Ivolga OJSC enterprise.

Comment: The return on sales ratio is calculated based on the indicators of the reporting year. Accordingly, it cannot reflect the planned effect of long-term capital investments.

There is nothing more important for a company's management than maximizing revenue. In this regard, it is recommended to periodically carry out calculations and analyze the profitability of sales, and then compare the indicators with previous periods, identify significant factors and draw meaningful conclusions for the future.

What does the concept of profitability mean? This is a relative value that reflects the performance indicator of the enterprise.

Calculation of the formula for return on sales.

Return on sales is a kind of indicator of pricing policy. Alternatively, it is considered as an indicator of cost control.

For example, in competitive companies, net return on sales and formula display performance based on strategy and product line mix.

Often this data is used to evaluate operational efficiency. One caveat: subject to the same revenue, costs and relatively equal indicators profit (before taxes), the return on sales of similar companies can vary dramatically.

This may be due to the influence of the volume of interest payments on the size of the PE (net profit).

What is the essence of the return on sales ratio? This indicator is characterizing in determining the efficiency of production activities.

That is, the level of profitability of sales and the formula that clearly displays the calculations actually shows the size of the PE (net profit) per currency unit of sales.

That is, how much remains with the company after the costs of the cost of products are covered, interest payments on existing this moment loans and corresponding tax deductions. In other words, this indicator reflects the share of cost in sales.

The PIC is determined primarily by the performance indicators of a certain reporting period. It is important to know: the PIC does not reflect the intended effect of long-term investments.

For example, an enterprise is switching to new technologies, or, alternatively, planning to release new products, which may require additional investments. In such cases, the CRP may decrease.

However, provided the strategy is correct, this cannot be considered an indicator of low efficiency of the company, since the costs pay off quite quickly.

How to find the formula for return on sales?

RP (return on sales) is an indicator of pricing policy that reflects the ability of company management to keep possible costs under control.

For example, Gross Profit Margin - RP for marginal income.

The indicator is expressed in percentage marginal income to revenue received from the sale of goods/services.

For example, Gross Profit Margi: how to calculate return on sales, formula:

GPM = (sales revenue, taking into account the deduction of variable costs / sales revenue) x 100%

Formula for return on sales on balance sheet.

The profitability ratio, which reflects the share of profit received in each currency unit earned, is actually profitability. The calculation is not complicated: the ratio of profit after tax (net profit) to sales volume (in monetary terms) for a certain period.

That is, the profitability of sales is determined by the formula:

PE/V;

where: PE – net profit, B – revenue.

Formula for return on sales ratio.

KRP shows the share of PE (net profit) in the company's total sales. This is the main indicator that is used most often to display the profitability of an enterprise.

Accordingly, the indicator should not be negative and correspond to the current inflation rate. Alternatively, for enterprises in highly developed economies, the EIC is correlated by industry.

The calculation is made as follows: return on sales - formula, example:

ROS = NI/NS

Explanation:

ROS: Return on Sales – actual profitability of sales;
NI: Net Income – net profit in a certain currency;
NS: Net Sales – revenue or net sales in general.

Important! KRP is the most important indicator that allows you to determine the profitability of an enterprise from each currency unit due to the sale of goods/services.

The return on sales ratio can be calculated both for individual items of goods/services and as a whole. This is especially important for analyzing the economic activity of an enterprise.

This economic category was introduced to describe how efficiently an enterprise's operations are conducted overall. , or by individual components. For example, according to working capital. It helps you understand how many kopecks you can get by investing one ruble in a particular business. If we talk about sales efficiency, then profitability shows the share of profit in revenue.

To determine the indicator you need to use . The main thing is to remember that there are several of them, one for each type of indicator:

• The general level of the indicator is calculated as follows. All income received, constituting balance sheet profit, is divided by the result of adding the average price for current assets and the average price category of the main part in production. We multiply the result of previous actions by one hundred percent.
• Selling profitability is highlighted separately.
  PP = dividing income from the sale of goods by net profit after all operations. It is impossible to do without introducing a standardized average value bar. It will help summarize many calculations that have already been made. This produces a special number with an average result.
• By assets. To determine net production income, divide it by the value of assets in a given time period.
• By investment. V pure form is divided into reserves of equity capital, to which are added liabilities designed for a long time.
• In terms of capital available to the enterprise. To calculate the net profit, divide it by the entire amount of savings.

Definition of Negative Profitability

For managers negative indicator profitability is an important signal. It shows how unprofitable the production turned out to be in a particular case. Or a negative result on sales of a certain product. Negative profitability occurs with higher production compared to a decrease in operating profit. And the total price is not enough to cover all production costs.

The greater the negative profitability according to absolute data, the greater the deviation of the price level from the equilibrium value that could be considered effective.

Negative profitability shows that management is not effectively using available funds.

What indicators are considered acceptable?

To protect itself, each enterprise must conduct inspections of its main facilities and types of products in advance. Implementing the following recommendations will have a positive impact:

• Calculation of the total tax burden and comparison with similar data related to a particular activity.
• Calculation of burdens associated with income tax. For enterprises production sector low rate – 3% or less. Trade organizations are considered unprofitable at less than 1%.
• The next step should be the value of the share of deductions in the amount of tax, which is calculated from the tax base. This figure should not exceed 98%.

Specific data on areas of activity

There is no single indicator; in each industry it is calculated separately for each year. Profitability in the mining industry is considered normal at 50%. For the woodworking sector it does not even reach 1%. For services, a level of 12-20% is considered acceptable.

Conducting cost-benefit analysis

The profitable parameter is also called the profitable rate. Because the indicator reflects how much profit there was after the sale of services and goods with work.

If parameters in this direction fall, it means that the demand for products and the level of their competitiveness decreases. Then we need to think about additional measures to stimulate demand. There is a need to develop new market niches, or to increase quality characteristics products.

When is it carried out? factor analysis In terms of profitability of sales, the impact of figures on how prices change in goods and services with work and how it affects the cost level deserves special consideration.

Identification of the reporting period and reference time is required to identify trends in changes in profitability in sales. The base period allows you to use for:

• last year
• time when the company makes the greatest profit

The base period is needed in order to compare the indicators with what was taken as a basis during the calculations.

Reducing costs or increasing prices for the range offered helps increase profitability. An organization must focus on several parameters at once in order to make the right decision. We are talking about competitive activity and its assessment, the possibility of saving internal resources, fluctuations in consumer demand. The dynamics of market conditions are also studied separately.

It is planned to use tools that have become an integral part of the policy on goods and prices, sales, and communications.

Profits are also being increased in several directions at once:

1. Motivation for staff. It becomes a separate sector in management activities proper organization personnel labor. Sales of the final product, reduction of defects in products, production of products with more high quality. Incentive and motivational strategies will improve the quality of work performed by employees. For example, holding events and so on.
2. Cost reduction. To do this, you need to identify suppliers whose prices are much lower than those of competitors. Despite the savings on materials, it is necessary to ensure that the final quality of the product does not decrease.
3. Creation of a new marketing policy. Product promotion should be based on research of market conditions and consumer preferences. Large companies create entire departments that deal specifically with marketing. Or they hire a separate specialist responsible for carrying out marketing activities. This policy is not complete without financial investments, but the results are fully justified.
4. Determination of acceptable quality. Demand is increasing only for quality items. An enterprise should take all measures to increase it if profitability indicators noticeably decrease.