Sufficient quantity of products soldon the market, covers the costs spent on its production, in other words, its absolute cost price. Subsequent sales will be profitable. The size of the profit will depend on the ratio in which (on the basis of the analysis) the conditional-constant costs, and the variable conditional variables, in the composition of the full cost price. When the sold quantity of products reaches a minimum margin sufficient to cover the cost price, then the profit will start to grow faster than the amount of costs and the opportunity for development and investment.
Constant analysis and certain basicthe performance indicators of the enterprise give a true idea of its profitability or loss. If an enterprise reduces its economic activities, the profit is reduced, and losses increase with the speed of the decrease in sales.
The main indicators of the company's performance are its effectiveness. You can calculate using the following formula:
Пр = Впр - Зпр
In this calculation: Pr - profit obtained from the sale of products.
Впр - the gain received from realization of production.
Зпр - the sum of the costs spent for sale and manufacture of production.
According to the calculation indices, the economicthe effect that characterizes the business, as making profit and exceeding expenses. The indicator of the economic effect compares the level of costs and resources expended on its achievement. However, such an indicator as profitability is beyond the scope of this analysis and performance evaluation.
Profitability, net profit,recoupment of costs, economic efficiency are the main indicators of the activity of a particular business. Profitability gives an idea of how quickly the costs will be repaid and the enterprise will make a profit.
Calculation of profitability:
Key performance indicators of the enterpriseform a "break-even point of operation", which can be reduced to the answer to the question: how many products must be sold to cover the costs of its production and reimbursement of conditional variable costs. Based on the analysis, the unit price is set in accordance with all the conditionally variable costs in order to fully cover them and receive a stable profit.
The indicators, in accordance with the requirements of the market, can be correlated with two groups:
• Estimated, which characterize the results of this or that activity and the level of development achieved.
• Cost, which reflect the costs of the implementation of types of production and activities.
The division is rather conditional and characterizesrelative performance of the enterprise. The type and direction of the analysis depends on the goals that are set before it. Thus, production costs can be considered as an estimate of the achieved level of costs, but the level can become a quantity when it is planned to produce not units of output but to provide services. The same can be said about the indicator, such as profit, which for the lessor is not in the first place, for him the movement and the liquidity statistics of the company are more important.
Therefore, the estimation of total sales, grossprofit and net profit (after taxes and interest on loans and borrowings have been paid), economic efficiency, and capital turnover are the main indicators of the enterprise's performance that characterize its position for the reporting period.
