/ How to determine the profitability of non-current assets?

How to determine the profitability of non-current assets?


Every financial manager should evaluateresults of the enterprise. This will help to draw conclusions not only about the effectiveness of its work, but also about the effectiveness of the firm, which is useful in making subsequent management decisions. Perhaps, one of the most convenient and easiest ways to evaluate the effectiveness is the calculation and analysis of profitability indicators. Due to the fact that the enterprise is characterized by a huge number of parameters, these indicators are also quite a lot: the profitability of assets, the profitability of sales and, probably, a couple of dozen.

If we open the balance sheet, then in the firstThe same section will see non-current assets. As a rule, in this section the major part is occupied by fixed assets, that is, the property that serves the firm's activities for a long period of time. The remaining articles of this section are also important, and therefore important is the measurement of the effectiveness of the use of this property. The profitability of non-current assets will help us in this. This indicator is calculated similarly to all other indicators of profitability: it is necessary to make a fraction, in the numerator of which there will be profit, and in the denominator - the value of non-current assets.

The simplest and most commonly used calculationis built on the basis of net profit. As you know, this indicator is shown in the income statement. The peculiarity of this form of reporting, and therefore of all indicators, is that the information there is cumulative, that is, the values ​​for a certain period are presented. This fact is not very consistent with the fact that the denominator is the value of assets listed on a certain date. Such a discrepancy can lead to some errors in the calculations, which can prove to be very significant. In order to determine the profitability of non-current assets most accurately, it is required to establish their average cost over the period, and it is to use it in the calculations. If there is no information to determine the average, then the value of these assets can be used at the end of the period, but the accuracy of such a calculation, again, will be lower.

Now it's time to talk about the economicsense of this indicator. The profitability of non-current assets shows how much profit each ruble of their value brings. In other words, this indicator allows us to evaluate the effectiveness of using the property that the firm intends to exploit for a sufficiently long period of time.

Obviously, in addition to non-current assets, the balance sheetcontains and negotiable. Their profitability can also be easily determined, and the difficulties in calculating it are similar to those we have already considered. After calculating the profitability of each part of the assets separately, it makes sense to determine the overall profitability of the entire property of the firm, that is, the effectiveness of its use.

As for the analysis of these indicators,most often resort to the use of the method of comparisons. Comparisons can be made with the values ​​of previous periods to determine trends. In addition, often compare the profitability of one firm with similar indicators of competitors or just similar enterprises, as well as with industry-average levels. It is worth noting that normative comparisons are not applied to the analysis of this group of indicators due to the fact that the norms for them have not been established.

By elementary transformations of formulacalculation, that is, a mathematical model, you can determine those factors that affect a certain indicator of profitability. After this, the individual effect of each factor should be calculated. This procedure is called factor analysis and it can be subjected to both the profitability of non-current assets, and negotiable, and all in aggregate.

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