important indicator of how efficiently the company operates are the margins.The profitability of the organization is not determined by a single factor, but a whole set of them.This is due to the fact that the diverse activities of the company, it can be described from different points of view, and when it is administered using a variety of nature resources.To highlight all the indicators is almost impossible, so just consider a couple of factors that are extremely important.
first indicator, which we will focus, will return on their own funds.As you can tell by the title, this figure describes the efficiency with which capital is used, the company invested in its owners.This figure, like all the profitability ratios, determined by dividing the profit by the amount of margin that is determined.Often, there is a problem, what kind of earnings included in the calculation.However, in this case, everything is easy, as the return on own funds is determined based on the net profit.Also worth noting is the fact that the figures for the numerator and denominator are taken from different forms of accountability, and it characterizes the fundamental differences between them.Profit is the amount accumulated in the period, and the amount of capital is reflected on a specific date.The problem is that during the period the amount of capital may vary, but it is very rare.If such a change has occurred, it can be taken into account by the use in calculating the average capital for the period.
determining the profitability of own funds, we have learned that no matter how effective the firm in terms of ownership.And how effective is the direct production activities of the company?Make a conclusion about it to help return on assets.Obviously, these figures will be calculated in the same way: profit in the numerator and assets - in the denominator.The calculation is also usually based on net income, but sometimes used and the profits not stripped of taxes.Usually calculated three indicators that characterize the total return on assets and return on capital assets and current assets separately.The assets represent a more dynamic figure, which means that in the calculation of the average of their best play value for the period that is analyzed.Of course, you might not be enough information to determine the average.In this case, you can use the value of assets at the end of the period, but such payment will be less accurate.
and profitability of own funds, and all other profitability indicators most often studied in dynamics.This is due to the fact that this group of indicators have not been established normative values.In addition to studying the dynamics within an enterprise, it is possible to make comparisons with similar ratios of other companies, as well as the values that are specific to a particular industry.
Special mention deserves the fact that the return on assets and equity are usually subjected to another kind of analysis - factorial.Its essence lies in the definition of an isolated effect on each of these factors certain factors.By simple transformations we can conclude that the efficient use of assets depends on their turnover and profitability of sales, and return on equity of the owner is also experiencing the impact of the level of leverage ratio.
