The effect of the enterprise’s activity in absolutevalue is expressed as the sum of profit or loss. However, the use of absolute values for the analysis is not very convenient; therefore, they often resort to the calculation of relative indicators. From the standpoint of efficiency, the most popular indicators are profitability indicators. In more detail, I would like to dwell on those of them that characterize the profitability of the company's assets. The particular importance of this group of indicators is that all the activities of an enterprise are primarily related to the interaction with the property, which is represented in the assets. Thus, determining the degree of effectiveness of this interaction is extremely important.
Calculation of profitability occurs bythe relationship of profit to the sum of the profitability of which is determined, in this case - assets. As for profits, everything is not so simple. There are many different indicators that can be used in the calculations. Most often, the return on assets is calculated on the basis of net profit, pre-tax profit, or profit from sales. Determined by the sum of net profit return on assets shows what value of this profit falls on each unit of the value of the organization's assets. Net profit is influenced by a variety of factors, so it will not always be correct to use it in the calculations, if a comparison between the performance of different enterprises is expected. The use of profit before tax will allow one to eliminate the influence of specific features in taxation, and only the effectiveness of the main type of activity can be taken into account by calculating profit from sales.
As mentioned above, return on assetsshows the degree of efficiency of use of its property by the firm. It is clear that this property is not uniform, and it is customary to classify it. In this regard, it will not be superfluous to determine the profitability of the separately circulating and non-current assets of the company. The calculated coefficients will characterize the efficiency of using each of these parts separately.
It is necessary to pay attention to the fact thatAccounting principles for profit and assets are somewhat different. The profit presented in the statements reflects the amount accumulated over the period, and the assets show the value as of a specific date. To smooth out these differences somewhat and take into account possible changes in the value of assets, it is customary to use their average cost per period in the calculations.
Return on assets shows the levelefficiency in and of itself, but it is simply impossible to draw any conclusions from a single indicator. It is necessary to have a number of indicators to compare them with each other. Most often resort to the use of comparisons in time, which consist in the study of the dynamics of indicators. To do this, determine the relative and absolute changes, which allows to judge the presence of a trend. In addition, comparisons are often made with the profitability levels of other similar enterprises or with the profitability typical for the industry as a whole. Another popular method of analysis is factorial, which is carried out according to traditional methods developed long ago and allows you to evaluate the effect of certain factors.
As you can see, the definition of effectivenessproperty use is a very important aspect of the study of the enterprise. The profitability of assets shows, depending on the indicators used, and the profitability of the main activity, and the functioning of the enterprise in general. However, it should be remembered that a simple calculation is not enough, and it is necessary to analyze the results obtained.
