Relative quantities have the following properties:
There is a basic calculation scheme: according to it, the numerator must always contain the profit value, and the denominator - the indicator whose profitability we are determining. As a rule, these are assets, equity, revenue. Sometimes other indicators are also put in the denominator. Specific names come from what is in the denominator - return on assets, equity, sales, production, etc.
Analysts decide for themselves what profit to put in the numerator.
If the denominator contains a balance sheet indicator, then it is necessary to take its average value for the year, and not the current one at the time of the calculation. This is due to the fact that the numerator contains the profit value for the reporting period.
Most often, profitability the benefit of using our student database is measured in percentages, but sometimes you can also find fractions of units. In isolated situations - rubles per ruble. Example: if the return on assets, calculated based on the net profit indicator, is 10%, then this has the following interpretation: for every ruble invested in assets, a profit of 10 kopecks was received.
Indicators that show negative values, i.e. losses, cannot be considered profitability. There is a more appropriate term for them – unprofitability.
The table lists the relative indicators used to evaluate financial results.
Indicator Formula
by net profit by sales profit
Return on assets PE ÷ Asv. × 100% PP ÷ Asv. × 100%
Return on equity PE ÷ SKsr. × 100% PP ÷ SCav. × 100%
Return on debt capital PE ÷ ZKsr. × 100% PP ÷ ZKsr. × 100%
Return on sales PE ÷ B × 100% PP ÷ B × 100%
Note:
NP – net profit (line 2400 of the Financial Performance Report (here – FPR));
PP – profit from sales (2200 OFR);
Аср. – average annual value of assets (½ A at the beginning of the year + ½ A at the end of the year) (line 1600 of the balance sheet (here – BB));
СКср. – average annual value of equity capital (the calculation of the average value is done by analogy with assets. The basis is the data of line 1300 ББ);
ЗКср. – average annual value of borrowed capital (based on the sum of 1400 BB and 1500 BB);
B – revenue (2110 OFR)
Stage 4. Evaluation