net profit is thus an indicator of the effectiveness of the company, which on one side has been influenced by the greatest number of factors compared to other types of income, and on the other - is the most accurate and "honest" indicator.It is for these reasons that this value requires close attention and should be subjected to detailed study.One of the most popular and commonly used method is the factor analysis of net profit.As the name implies, a study came in this way involves determining the factors that in the greatest measure her impact as well as the definition of a particular magnitude of this impact.
Before considering the factor analysis of the net profit, it is necessary to examine how it is formed.Analysis of the formation of net income held by the profit and loss account.This is understandable, since it is this form of reporting reflects the order, which is the financial result of the company operation.In the study of the formation of profit is useful to make vertical analysis of this form of reporting.It involves finding the specific weight of each of the indicators included in the report and subsequent study of its dynamics.Typically, as a basis of comparison selected revenue, which is considered equal to one hundred percent.
Factor Analysis of the net profit is also advisable to carry out on the profit and loss account.This is due to the fact that this form of reporting allows you to easily create a mathematical model that would include factors affecting profit margins.The factors with the greatest impact, should be placed in front of the model factors whose influence is less significant.Profit and loss account reflects the amount of revenue, but gives an indication of its changes under the influence of prices and sales volumes.These factors are extremely important, so they must also be taken into account in the model, the effect of dividing the profit on revenues of two related parts.After compiling a mathematical model must be directly subjected to its analysis on a particular technique.More often resorted to the use of the method of chain substitutions or modifications, such as the method of absolute differences.This choice is due to its ease of use and accuracy of results.
After studying the formation and dynamics of the process is necessary to analyze the use of net profit.Logical and easiest way to study the process will be through a vertical analysis that has already been mentioned above.Obviously, in this case, the base should take profit margins.Then you need to determine the share of each area of spending this income: dividends, to reserve funds, investment and so on.Naturally, it is necessary to examine the change in the dynamics of the structure.
It is obvious that for any of the above types of analysis requires information for several periods, at least for two years.This is due to the fact that on the basis of one period is simply not possible to draw any conclusions about these or other changes.However, it should be borne in mind that indicators should be comparable, it is necessary to make corrections in case of changes in accounting policies or any other.
Whether it is a factor analysis of net income, or any other, it must end with the formulation of specific conclusions and recommendations.On the basis of the profit you can make a lot of conclusions and pricing policy, and the management of costs, and much more.Conclusions and recommendations are the basis for management decisions, which are vital to the firm.
