An example of an event to improve the profitability of an enterprise. Assessment of the profitability of a construction enterprise and the main directions for increasing it. main methods of profit planning

Financial stability is a consequence of the manifestation of various factors, the systematization of which is necessary for making rational management decisions. According to the influence of the managing subject, all factors can be divided into external and internal.

Financial stability is closely related to the capital structure, and many researchers reduce its essence solely to this. Another part of the researchers considers the structure of sources of asset coverage as the essence of an organization’s financial stability. To combine existing approaches to defining the essence, we proposed to conditionally consider these concepts, respectively, as the external and internal aspects of the essence of financial stability, since the first characteristic reflects how independent (or dependent) the enterprise is of external creditors, and the second - the organization of the organization’s finances, enhancing or strengthening its financial stability from the inside .

Let us determine the following ways to optimize the financial condition of GeoStroyProekt LLP - optimization of operating results (the company must earn more profits) and rational management of operating results.

The basis for a stable financial position of an organization over a long period of time is the profit received. When optimizing the financial condition of GeoStroyProekt LLP, it is necessary to strive, first of all, to ensure the profitability of the activity.

Since the profit of GeoStroyProekt LLP is small and the reserves for optimizing working capital are almost exhausted, the company should pay special attention to costs. In conditions of falling sales volumes, sometimes it is advisable to outsource part of the technological operations, reducing part of your production assets.

Economic analysis of financial stability as a management function allows us to determine development trends and is the basis for planning and formulating a financial strategy. It also allows you to identify and measure the influence of factors on the financial condition of the organization. The results of the analysis are important in justifying optimal management decisions to regulate production processes and increase financial stability.

As the analysis showed, despite the fact that the organization operates profitably in 2014, the liquidity of its assets is quite low. Financial difficulties at GeoStroyProekt LLP arise due to irrational management of working capital.

Working capital management involves material and technical supply, sales, establishment and control of the terms of mutual settlements with buyers and suppliers.

If we consider material and technical supplies, then based on the results of the analysis of the balance sheet structure, it was established that the amount of reserves at GeoStroyProekt LLP in 2014 increased significantly and amounted to 6,693,008 thousand tenge at the end of 2014 . The company GeoStroyProekt LLP needs some reduction in inventories without damaging the economic activities of the organization. To increase the liquidity of assets, the management of GeoStroyProekt LLP needs to take inventory of inventories and get rid of illiquid assets, and it is also necessary to sell part of the inventories, which divert significant funds from turnover.

Of course, it is very difficult to determine the ideal level of inventory that reconciles the minimization of storage costs with reducing the probability of an “inventory gap” to an insignificant value. But the management of the GeoStroyProekt LLP organization needs to develop a reasonable policy for the purchase of inventories, which would allow optimizing the volume of inventories, eliminating ill-conceived purchases for future use.

To optimize accounts receivable, the company GeoStroyProekt LLP can apply various measures:

carry out factoring transactions with the bank;

transfer rights under an assignment agreement;

carry out the procedure for monitoring issued invoices;

if possible, focus on increasing the number of orders in order to reduce the scale of the risk of non-payment, which is significant when there is a monopoly customer;

control the status of settlements on overdue debts;

promptly identify unacceptable types of receivables, which, first of all, include overdue debts from customers for more than three months.

All this contributes to the fact that accounts receivable are reduced and funds are received on time.

In 2014, the main negative factor in the financial position of GeoStroyProekt LLP is the trend of a slight increase in absolute liquidity. The reason for this is the significant amount of accounts payable, which the organization is not able to cover with its own funds. Analysis of this debt suggests that a significant part of it is debt to suppliers and contractors. An increase in accounts payable, as noted earlier, leads to a decrease in balance sheet liquidity.

To increase the liquidity of current assets, the company "GeoStroyProekt" LLP needs to increase the amount of funds of the organization, since an optimal cash reserve is required, which will ensure the process of self-financing of the organization, in the event that the current receipts of customers' funds are delayed. Analyzing the movement of cash flows can be noted that the organization "GeoStroyProekt" LLP receives the main volume of cash receipts from current activities, this is a positive point because only a further increase in revenue from sales of goods (works, services) can have a positive impact on the financial condition of the organization, since in terms of investment and financial there is practically no income from activities.

Increasing the volume of revenue is extremely necessary for the organization of GeoStroyProekt LLP, since the cash flows currently received from core activities can only cover those cash outflows that are associated with this activity.

Therefore, the management of GeoStroyProekt LLP needs to organize the work of the sales department in order to expand the sales market for its services. As a result of the growth in cash receipts, the GeoStroyProekt LLP organization will be able to increase profitability and increase the amount of cash. Its growth against the backdrop of revenue growth will indicate an expansion of production volumes. All this will contribute to an increase in liquidity ratios, and, consequently, an increase in the liquidity of the current assets of GeoStroyProekt LLP.

An important component in improving the solvency of the GeoStroyProekt LLP organization is the structure of its assets. After analyzing the organization, the following measures can be proposed to management.

Restore solvency, since according to the results of the analysis, there are prerequisites for this. The only acceptable means of restoring solvency is to increase the short-term assets of the organization through the results of economic activities.

In modern conditions, the structure of aggregate sources is the factor that has a direct impact on the financial condition of the organization.

The least risky way to replenish sources of reserves is to increase capital (net assets) by increasing profits.

Let's take a closer look at the organization's own sources. Analysis of the capital structure showed that its main share falls on issued capital. Financing from capital at GeoStroyProekt LLP can be carried out by reinvesting profits.

The main form of increasing the organization's capital should be the distribution of net profit to reserve funds formed in accordance with the constituent documents, and the conservation of retained earnings for the purposes of core activities with a significant limitation on its use for non-productive purposes.

Thus, GeoStroyProekt LLP should increase profits due to the growth of business activity indicators and the profitability of production and economic activities.

The most radical direction of financial recovery for the organization of GeoStroyProekt LLP is the search for internal reserves to increase the profitability of production through more complete use of production capacity, improving the quality of the product and services produced, reducing its cost, rational use of material, labor and financial resources, reduction of unproductive expenses and losses.

These measures help accelerate capital turnover by reducing excess reserves and the collection period for accounts receivable of GeoStroyProekt LLP. All this will increase the profit of GeoStroyProekt LLP, obtain capital and achieve an optimal financial balance sheet structure and financial stability.

The most significant factor in increasing the financial stability of GeoStroyProekt LLP is the replenishment of its real capital.

The main form of increasing the capital of the GeoStroyProekt LLP organization is the distribution of net profit to reserve funds formed in accordance with the constituent documents, and accumulation funds or conservation of retained earnings for the purposes of core activities with a significant limitation on its use for non-productive purposes.

The proposed activities are largely determined by the planning of the listed proportions. Analysis of the quality of planning (implementation of the plan) comes down to comparing the planned and actual values ​​of the proportions and determining the factors that caused the deviation of the fact from the plan.

An important problem is determining the required amounts and rates of capital accumulation. These indicators can be determined, in particular, based on the goals of ensuring normal minimum levels of financial ratios that characterize the financial stability and solvency of the organization.

This requires a significant increase in profit itself. It is impossible to achieve this only by increasing sales volumes. To do this, it is necessary to improve the material and technical base, which requires additional investments, and the organization lacks its own funds.

It is possible to receive government financial support from budgets of various levels, sectoral and inter-sectoral extra-budgetary funds. However, the organization to a greater extent should make up for the lack of its own funds on its own.

Attracting long-term loans for profitable projects that can bring high income to the organization is also one of the reserves for increasing the financial stability of GeoStroyProekt LLP.

Also, one of the measures to increase the profitability of the GeoStroyProekt LLP organization is to conduct marketing events and develop a marketing program.

By conducting marketing activities, research into the prevailing opinion of consumers will allow the construction company to create a position in the market that would provide it with a competitive advantage over its competitors in this segment of the target market.

When developing marketing programs, various conditions are taken into account, the state and prospects for the development of a construction organization in the market, as well as the effect of direct and feedback links with the market, the need to quickly respond to the constantly changing environmental conditions of the organization and actively influence the formation and expansion of market demand.

The development of marketing programs for GeoStroyProekt LLP can be carried out in the following sequence:

the goals and objectives of the trade organization and the realistic time frame for their achievement are determined;

by analyzing and forecasting market conditions, realistically achievable indicators for the corresponding period are assessed;

indicators that are desirable for a trading organization are compared with the indicators that are most realistic from the standpoint of qualified accounting of development trends in specific markets and the actions of competitors;

an analysis of the main reasons that caused their differences is carried out;

management policy tools are developed and analyzed that can minimize the resulting difference between the desired and actual levels of development;

the order and priority of applying the most effective measures to achieve the desired results are established;

the main goals of the program, adjusted on a realistic basis, are formulated and specific measures of management policy are given, in particular measures of integrated marketing, i.e. the entire marketing program is brought together.

The effectiveness of the results from the implementation of the measures indicated in Figure 16 can hardly be overestimated. After all, the key to the success of this construction company, GeoStroyProekt LLP, is constant study of consumer demand, because the main profit comes from trading building materials and providing construction services. Expensive building materials should also be included in demonstrations, since building materials are part of a building supply store.

According to the reports of sales managers of GeoStroyProekt LLP, it is clear that competitors do not prefer to sell foreign brands, but, on the contrary, look for less popular brands of manufacturers. They are the ones that will be of interest to a buyer with an average income who wants to purchase building materials and products of foreign models, but also not spend much of the family budget.

The implementation of these measures before the end of the year will bring tangible profits in 2014, but in 2013 there will be an increase in cash flows, which will contribute to the gradual improvement of business activity indicators and profitability of GeoStroyProekt LLP. At the same time, it will be possible to systematically develop the goals set to strengthen the financial stability of the company. The level of qualifications of the marketer is of great importance for the organization. The effectiveness of the final result will be higher in those organizations where there is greater mutual assistance and understanding between all divisions of the organization and where management groups and executive groups are clearly separated. One of the major problems with any planning in our sales organizations is the lack of strategic marketing.

Most domestic enterprises have realized the need to use marketing in a market economy. But in the vast majority of cases, marketing is used not as an integral system for managing production and sales activities, but in the form of individual marketing activities aimed at achieving specific goals. This is due to the lack of specialists in this field, lack of funds, and lack of experience.

Therefore, for the organization of GeoStroyProekt LLP, the issue of determining the effectiveness of marketing activities in conditions of uncertainty and a highly changing external environment is relevant.

Thus, the considered measures, which the management of GeoStroyProekt LLP can apply in practice, will help to increase the financial stability of the organization in the market and will lead to an improvement in the structure of current assets and increased liquidity and solvency.

In the future, GeoStroyProekt LLP should promptly respond to market conditions, changing the quality of services provided and pricing policy in accordance with its requirements.

For any enterprise, the main goal is to maximize profits, increase the market value of the enterprise in the interests of their owners. Adapting an enterprise to market conditions requires both a change in the functions performed and internal organizational restructuring, primarily the addition of new links to the organizational structure, a revision of the entire system of distribution of rights, powers and responsibilities.

Today, the company needs both low costs and differentiation aimed at increasing utility. Low costs help a firm create a differentiating advantage, either by lowering prices to consumers or by investing in products, services, personnel, or image enhancement.

When analyzing ways to increase profitability, it is important to separate the influence of external and internal factors. Indicators such as the price of a product and resource, the volume of consumed resources and the volume of production, profit from sales and profitability of sales are in close functional connection with each other. The main ways to increase the profitability of a product are usually considered as alternative to each other. Thus, efforts to increase sales volumes require investment, and efforts to increase efficiency precisely contribute to the receipt of funds.

As a result of the current economic crisis, most sectors of the world economy are in a very deplorable state. This crisis has hit the construction and manufacturing sectors especially hard.

Profitability indicators in a construction organization show the level of efficiency of a given company. Profitability shows whether a firm's operations are profitable.

Profitability in construction production is divided into three levels: estimated, actual and planned.

Depending on what goals were set, a number of profitability indicators are used in the practice of construction enterprises.

To determine the main directions for searching for reserves for increasing profits and increasing profitability, the factors influencing them are classified according to various criteria (Figure 33).

Figure 33 - Factors influencing the amount of profitability

External factors include natural conditions, government regulation of prices, tariffs, interest, tax benefits, penalties, inflation, etc. These factors do not depend on the activities of enterprises, but can have a significant impact on profit and profitability.

Internal factors are divided into production and non-production. Production factors characterize the availability and use of means and objects of labor, labor and financial resources and, in turn, can be divided into extensive and intensive.

Extensive factors influence the process of making a profit through quantitative changes: the volume of means and objects of labor, financial resources, operating time of equipment, number of personnel, working hours, etc. Intensive factors influence the formation and increase of profit, increasing profitability through “qualitative” changes: increasing equipment productivity and its quality, using advanced materials, improving processing technology, accelerating the turnover of working capital, increasing the qualifications and productivity of personnel, reducing the labor intensity and material intensity of products, improving labor organization and more efficient use of financial resources, etc. Non-production factors include, for example, supply, sales and environmental activities, social working and living conditions, etc.

In recent years, construction and installation organizations have experienced very low profitability. The average profitability does not exceed 6.5%. And for normal operation, the profitability of construction organizations should be at least 10 - 15%. Of this, 3-6% goes only to paying taxes and maintaining the social sphere. Low profitability and unprofitability of construction organizations could arise for various reasons. In most construction organizations, overhead costs are 30-40% higher than the amounts they receive from customers for these purposes. Therefore, this business became unprofitable.

Why is this happening? Why did profitability in construction begin to decline? Overhead costs have remained unchanged for decades. But the volume of construction and installation work is growing, and wages have also increased. The cost of operating machinery and other equipment has also increased. But the amount remained the same as before.

The level of profitability is also affected by construction time. Due to lack of funds from customers, construction time is increasing.

The financial crisis also affected the decline in profitability. The demand for construction has greatly decreased and therefore, in order to interest the buyer, as well as in order to be in demand in the market, construction companies are forced to offer the best possible conditions for clients. Construction companies offer all kinds of discounts and various gifts. They also offer apartments with finished finishing.

To increase profitability and for the construction business to flourish, construction organizations need to try to reduce production costs and improve the organization of production and labor. And also try to use materials as economically as possible.

For a successful project, you need to draw up a business plan correctly. It must correctly set the tasks, provide for all risks, and also meet construction deadlines. It is necessary to correctly calculate all the costs of this construction.

And most importantly, profitability in construction will increase if there is demand! And in order for there to be demand, you need to build what the consumer needs, and choose the right place for construction. These will be the first steps on the path to a successful business.

Increasing the level of profitability requires mobilizing internal production reserves, consistently carrying out work aimed at improving the use of all types of resources, thereby reducing the cost of work performed, and increasing the amount of profit received.

Each construction organization needs to formulate targeted programs aimed at increasing production profitability. They should provide for specific measures to reduce production costs, introduce resource-saving equipment and technology for performing work, improve the organization of production and labor, more productive use of transport and machinery, increase the shift of work of the most productive equipment, and economical consumption of materials.

DEVELOPMENT OF MEASURES TO INCREASE THE PROFITABILITY OF THE ENTERPRISE

Brezhneva Yulia Sergeevna

4th year student, Institute of Economics and Industrial Enterprise Management,NUST MISIS,RF, Moscow

E- mail: brejnewa 93@ yandex . ru

Eliseeva Evgenia Nikolaevna

scientific supervisor, Ph.D. econ. Sciences, Associate ProfessorNUST MISIS, RF, Moscow

The operating efficiency of an enterprise is determined by its ability to make a profit. The amount of profit is formed under the influence of many external and internal factors, so profit can be considered as a manageable object that can be subject to planning and forecasting, accounting and analysis, regulation and control. The scheme for generating the enterprise's profit is presented in Figure 1.

Figure 1. Scheme of enterprise profit formation

Profit, being the most important indicator, summarizes the results of economic activity and depends on many factors in its formation.

To assess the level of profit of an enterprise, it is advisable to analyze the profit structure, as well as calculate, analyze and monitor the main indicators of profitability of the enterprise, presented in Figure 2.

Figure 2. Factors generating enterprise profit

The role of the above indicators is undeniably high for determining real capital gains, assessing the quality of management decisions of the enterprise management, and predicting changes in financial results.

The study of the enterprise's profit was carried out on the basis of the financial statements of one of the large enterprises of the metallurgical complex, the aggregate balance of which is presented in Table 1.

Table 1.

Aggregated Balance Sheet

Assets				Passive
I.NON-CURRENT ASSETS(F)				III. CAPITAL AND RESERVES
II. CURRENT ASSETS:				IV. LONG TERM DUTIES
				V. SHORT-TERM LIABILITIES:
Cash, settlements and other assets (R a)				Including short-term loans and credits
Including accounts receivable and other current assets (r a)				Accounts payable and other short-term liabilities
Short-term financial investments (d 1)
Cash (d 2)

In order to identify trends in the dynamics of the volume of capital, its composition and the impact of capital on financial stability, an analysis of the dynamics of the capital structure of the enterprise was carried out. The analysis of the dynamics of the enterprise’s capital structure was carried out in 2 stages:

Stage 1 - consideration of the dynamics of the volume of the main components of capital in comparison with the dynamics of product sales and production volume; determination of the ratio of debt and equity capital and its trends; studying the ratio of short-term and long-term financial liabilities; determining the size of overdue financial obligations and finding out the reasons for this delay;

Stage 2 - consideration of the system of coefficients for the financial stability of an enterprise, determined by its capital structure in dynamics: the autonomy coefficient, the ratio of short-term and long-term debt, the coefficient of long-term financial independence, the financial leverage coefficient and other coefficients.

The main problem of the enterprise under consideration has been identified - the high share of borrowed sources of financing in the capital of the enterprise. This is evidenced by the shares of borrowed funds in the total value of sources at the beginning of 2012, 2013, 2014, which are equal to 77.15%, 77.78%, 74.02%, respectively, while the shares of equity funds are 22. 85%, 22.22%, 25.98%, which in turn has a negative impact on the financial stability of the enterprise (Figure 3).

Figure 3. Change in the share of borrowed and equity funds

Having studied the financial and economic indicators of the enterprise, it was established that it has an unstable financial condition and is characterized by a violation of solvency. The enterprise is forced to attract additional sources to cover inventories and costs, and there is a decrease in production profitability. This is evidenced by the coefficient of financial independence of capitalized sources, which was equal at the beginning of 2012, 2013, 2014 - 0.27, 0.29, 0.29, respectively, the coefficient of financial leverage - 3.39, 3.51 and 2.86, respectively, as well as the current liquidity ratio for 2013 and 2014 - 2.44 and 1.21 (Figure 4).

Figure 4. Changes in financial stability ratios

A factor influencing the reduction of the enterprise’s costs, and therefore the increase in profitability, is the optimization of the enterprise’s capital structure, equity and borrowed funds, thus, it is advisable to propose measures to increase the enterprise’s equity capital, first of all, through the rational distribution of profits:

1. in order to ensure effective capital management in an enterprise, it is necessary to prepare a financial policy that will be aimed at attracting its own financial resources from various sources in accordance with the needs of its development in the coming period.

You can increase your own capital either by issuing shares or additional contributions from the founders, or through profits.

The source of increase in equity capital is also retained earnings. All funds that remain after distributing profits for dividends and taxes are reinvested in the enterprise. You can increase the share of equity capital: by accumulating and conserving retained earnings for the purposes of core activities while reducing its use for non-productive purposes; by distributing net profit to reserve funds, which are formed in accordance with the constituent documents;

2. A change in the capital structure can be carried out by attracting additional funds to increase a certain part of the assets, or by removing from the assets the part that is too large. For example, the profitability of an enterprise's fixed assets will increase if the passive part of fixed capital has been reduced;

3. When implementing activities, it is necessary to be guided by the rule of operating leverage: a larger share of the enterprise’s fixed costs provides a greater impact on profit when sales volume changes.

There are two ways to increase the profit of an enterprise: increase the revenue from sales of the enterprise and reduce the expenses of the enterprise.

To increase the positive result, it is necessary to develop measures that help ensure the main sources of increased profit:

· increase the efficiency of the enterprise's sales activities;

· improve the quality of commercial products and work performed, which will lead to increased competitiveness and interest in choosing this enterprise by customers;

· reduce production costs and manufacturing defects.

A detailed analysis of the profitability of the enterprise in question revealed that the structure of the asset (Table 1) has a high share of receivables, which indicates the enterprise’s widespread use of commercial (commodity) credit for advance payments to its customers. We can assume that the company, by lending to them, actually shares part of its income with them. And if payments are delayed, the company will need to take out loans to ensure current business activities, thus increasing its own accounts payable.

In order to effectively manage accounts receivable at an enterprise, a special financial policy for managing accounts receivable or a credit policy in relation to product buyers must be developed and implemented, which could:

· control settlements with debtors for deferred and overdue debts;

· reduce accounts receivable by the amount of bad debts;

· constantly monitor the ratio of receivables and payables;

· evaluate the possibilities of factoring, that is, the sale of receivables.

It is advisable to propose the following measures to improve the accounts receivable management system:

· exclude high-risk enterprises from the list of partners;

· use the possibility of paying receivables with bills of exchange, as well as with securities;

· periodically review loan limits;

· formulate the principles of settlements between the enterprise and its counterparties for future periods;

· identify the financial possibilities of providing an enterprise with a commodity (commercial) loan;

· determine the possible amounts of current assets diverted into accounts receivable for trade credit, as well as for advances issued;

· diversify clients in order to reduce the risk of non-payment.

The analyzed enterprise is faced with the task of accelerating the collection period of receivables, which becomes possible through the use of various forms of refinancing. It is necessary to find the possibility of providing discounts and determine their size for faster payment, as well as analyze the cost-benefit ratio for different discount sizes. However, the size of discounts should be carefully calculated and not assigned arbitrarily.

In connection with the above, in order to increase profit indicators, it is recommended:

· conduct marketing research of the metallurgical products sales market,

· consider the features of the metallurgical services market in order to identify the possibility of cooperation with large metallurgical companies;

· analyze customer needs and preferences,

· analyze the pricing policy of the enterprise relative to the policies of competitors.

Thus, the study of profitability allows us to determine the main factors influencing the financial and economic results of the enterprise. As a result of the analysis of the enterprise in question, it was found that it has opportunities to improve the situation, and the prerequisites for restoring balance by replenishing sources of its own funds remain.

Bibliography:

1. Abryutina M.S., Grachev A.V. Analysis of the financial and economic activities of an enterprise: Educational and practical manual. 2nd ed., rev. M.: Publishing house "Business and Service", 2010 - p. 256.

2.Bocharov V.V. Comprehensive financial analysis. Peter, 2010. - 429 p.

3. Vinogradskaya N.A. Diagnostics and optimization of the financial and economic condition of an enterprise: financial analysis: Workshop. M.: Publishing house. MISiS House, 2011

4. Mikhailushkin A.I. Economy. Workshop: Textbook / A.I. Mikhailushkin, P.D. Shimko. M.: Higher School, 2010. - 311 pp.; ill.

5. Rozhkov I.M., Vinogradskaya N.A., Larionova I.A. Financial management: analysis of the financial and economic condition and calculation of cash flows of an enterprise: Workshop. M.: Publishing house. MISiS House, 2011

6. Yuzov O.V. Enterprise economics: textbook: textbook for students of higher educational institutions studying in the field of Metallurgy / O.V. Yuzov, T.M. Petrakova, I.P. Ilyichev; Federal state educational institution of higher education. prof. education "National Research Technological University "MISiS". M.: MISIS, 2009. - 519 pp.: ill. table; 21.

Methodology for determining planned profit using the simple counting method and the analytical method

Algorithm for profit planning and search for reserves for its growth

Profit is the most important indicator of the final financial results of an enterprise. It is defined as the difference between revenue from sales of products and its cost.

Profit planning is the process of developing a system of measures to ensure its formation in the required volume and effective use in accordance with the goals and objectives of the development of the enterprise.

It is necessary to plan profit in order to:

• the owners of the enterprise could make decisions regarding dividend and investment policies;
• effectively distribute funds, direct them to update production assets;
• identify on-farm production reserves, rationally use production assets, material, labor and financial resources of the enterprise.

Profit is planned separately for all types of activities of the enterprise. Planning objects are elements of profit before tax. In this case, special attention is paid to planning profit from sales.

In a steadily developing economy, profits are planned for a period of 3 to 5 years; with relatively stable prices and predictable business conditions, current planning within 1 year is common. In an unstable economic and political situation, planning is possible for a short period - a quarter, a half-year.

3 main methods of profit planning:

1) direct counting method;

2) method of relationship between revenue, costs and profit (direct costing method);

3) analytical method.

Direct counting method

The direct counting method is most common in enterprises. It is used, as a rule, when there is a small range of products, when justifying the creation of a new or expansion of an existing enterprise, when implementing an investment project.

The direct counting method determines the planned profit in the upcoming period according to the following stages (Fig. 1).

Rice. 1. Determination of planned profit using the direct counting method

The essence of the direct counting method is that profit is calculated as the difference between revenue from sales of products (at appropriate prices, minus VAT and excise taxes) and its full cost,

Planned profit (P) is calculated using the formula:

P = (O × C) - (O × C),

where O is the volume of production in the planned period in physical terms;

P — price per unit of production (minus VAT and excise taxes);

C is the total cost per unit of production.

Profit on commodity output (P t) is planned on the basis of cost estimates for production and sales of products, which determines the cost of commodity output for the planned period:

P t = C t - C t,

where Ct is the cost of commodity output of the planned period in current selling prices (excluding VAT, excise taxes, trade and sales discounts);

St - the total cost of marketable products of the planned period.

Note!

It is necessary to distinguish the planned amount of profit per commodity output from the profit planned per volume of products sold.

Profit on products sold (Pr) is generally calculated using the formula:

P r = B r - C r,

where B p is the planned revenue from product sales at current prices (excluding VAT, excise taxes, trade and sales discounts);

C p is the full cost of products sold in the coming period.

In more detail, profit from the volume of products sold in the planning period is determined by the formula:

P r = P he + P t - P ok,

where P it is the sum of the profit of the balances of unsold products at the beginning of the planning period;

P t - profit from the volume of output of commercial products in the planning period;

P ok - profit from the balance of unsold products at the end of the planning period.

For your information

This calculation method is applicable for the enlarged direct method of profit planning, when it is easy to determine the volume of products sold in prices and at cost.

Analytical method

The analytical method of profit planning is used for a large range of products, and also as an addition to the direct method for the purpose of its verification and control (Fig. 2). Profit is determined not for each type of product produced in the coming year, but for all comparable products as a whole. Profit on incomparable products is determined separately.

Rice. 2. Determination of planned profit using the analytical method

Note!

The advantage of this method is that it allows you to determine the influence of individual factors on planned profit.

Direct costing method

The basis of the direct costing method is the grouping of costs into variable and semi-fixed. The relationship between sales volume (thousand rubles) and cost structure (thousand rubles) is presented in Fig. 3.

Rice. 3. Relationship between sales volume and cost structure

The company will make a profit if the volume of product sales exceeds a certain critical amount of revenue.

Planning profit

Let's look at how to plan profit using the example of a conditional enterprise.

ABC LLC plans its production activities on the basis of agreements concluded with consumers of products and services, as well as suppliers of material, technical and other resources.

The purpose of the organization is to satisfy the need for its products, works, services and make a profit.

Main activities: construction, decoration and renovation of offices and apartments; electric installation work; roofing; carpentry work; installation of steel structures; stone works; implementation of design projects; preparation of the construction site.

The organization specializes in the construction of large buildings, so its business partners are mainly private individuals.

The dynamics of profit are presented in table. 1.

Table 1

Profit dynamics of ABC LLC

Indicators	Unit change	Values		Changes
		2014	2015	absolute	relative, %
Revenue from works, services
Cost of work, services
Business expenses
Revenue from sales
Other income
other expenses
Gross profit
Income tax
Net profit
Return on sales
Product profitability

Analyzing the data in table. 1, we see that sales profit increased by 16.4%. This was facilitated by an increase in revenue from work by 8.4% and a decrease in commercial expenses by 25.6%. Net profit also increased by 23.9%. Sales and product profitability increased by 2.5 and 4.0%, respectively.

Let's consider the main ways of planning profit from the sale of commercial products.

As mentioned earlier, ABC LLC specializes in the construction of prefabricated frame houses. Income from this type of service is about 50% of the total profit of the enterprise. The price of one house is 1,694,915 rubles, the production cost according to the report for the past year is 1,303,781 rubles.

In 2014, 15 houses were built, in 2015 - 18.

Let's calculate the planned profit using the direct counting method.

Let’s say that 20 houses will be built next year, the reduction in production costs will be 5%, the cost of selling products will be 0.5% of the products sold at production costs.

The production cost per unit of production in the planning year will be:

1,303,781 × 95 / 100 = 1,238,591.95 rubles,

volume of marketable products in the planning year at production cost:

1,238,591.95 × 20 = 24,771,839 rubles.

In order to determine the full cost of production, we calculate the cost of selling products:

24,771,839 ×0.5 / 100 = 123,859.2 rubles.

Therefore, the volume of product sales at full cost will be:

24,771,839 + 123,859.2 = 24,895,698.2 rub.

The sales volume in physical terms is 20 units, and in wholesale prices - 33,898,300 rubles. (20 × 1,694,915).

Under these conditions, profit from sales of products in the planning year will be:

33,898,300 - 24,895,698.2 = 9,002,601.8 rubles.

Calculating profit using the direct counting method is simple and accessible. However, it does not allow us to identify the influence of individual factors on the planned profit and, with a large range of products, is very labor-intensive.

Let's calculate profit using the analytical method:

1. We determine the basic profitability, i.e. the ratio of the expected profit to the total cost of comparable commercial products (Table 2).

table 2

Calculation of basic profitability

Indicators	Unit change	Results for 9 months	IV quarter plan	Expected performance for the current year
Quantity of commercial products
Comparable products for the past year:
at current prices (excluding VAT, excise taxes and sales tax)
at full cost
Profit per volume of comparable products
Adjustments to the amount of profit in connection with price changes that occurred during the year (+/-) from the beginning of the year to the date of change
Basic profitability

2. Since the planned year provides for an increase in comparable marketable products by 11.5%, its output at the cost of the reporting year will be:

22,895,562 × 111.5 / 100 = 25,528,551.6 rubles.

Profit on comparable products in the planning year, based on the basic level of profitability, will be equal to:

25,528,551.6 × 29.4 / 100 = 7,505,394.2 rub.

3. We take into account the influence of individual factors on the amount of planned profit.

The output of comparable commercial products in the planning year at last year’s cost is RUB 25,528,551.6. The same comparable products, but at the full cost of the coming year - 26,075,620 rubles. (20 × 1,303,781). The increase in the cost of comparable commercial products amounted to RUB 547,068.4. (26,075,620 - 25,528,551.6), and this will entail a decrease in planned profit.

The planned change in the product range causes an increase or decrease in planned profit. But ABC LLC does not plan changes in the assortment, so we are skipping this stage of calculations.

The size of the planned profit is also affected by price changes in the planning period. If prices decrease or increase, the estimated percentage of decrease or increase should be calculated based on the volume of the relevant product. The amount received from a decrease or increase in prices will affect the decrease or increase in planned profit.

Let’s say that prices for all marketable products sold are expected to increase in the planning year by 6.03%. If the planned output of commercial products, calculated in prices, is 33,898,300 rubles, then only due to this factor a profit will be received in the amount of:

33,898,300 × 6.03 / 100 = 2,044,067.5 rubles.

Let's make a summary calculation of profit from product sales (Table 3).

Table 3

Summary calculation of profit calculated by the analytical method

Indicators	Amount, rub.
Marketable products in the planned year:
comparable commercial products at full cost in the reporting year
comparable commercial products at full cost in the planning year
decrease in profit from increased costs of comparable products
Profit on comparable products based on underlying profitability
Increased profits due to rising prices
Total planned profit

Note!

Despite the fact that the direct planning method is simpler and more accessible, profit in it is determined as a total amount, without identifying specific reasons that influence its value. The analytical method is more complex, but it allows you to identify both positive and negative factors affecting profit.

The final planned profit of ABC LLC from the construction of prefabricated frame houses next year will be 9,002,393.3 rubles, which is certainly a positive factor. At the same time, the planned profit is significantly reduced by an increase in cost by 547,068.4 rubles, which is explained by an increase in prices for consumed inventory, an increase in wages due to an increase in the minimum monthly wage and other factors.

Profit growth by RUB 2,044,067.5. planned in connection with the expected increase in prices for products sold, taking into account inflation. This factor also cannot be considered as positive, since it is impossible to predict buyer behavior when the price of a product increases.

To predict the maximum possible profit in the planned year, it is advisable to compare revenue from product sales with the total amount of costs, divided into variable, constant and mixed (Fig. 4).

Rice. 4. Composition of costs

Due to the small share of mixed costs, we will not take them into account in the calculation. The increase in profit depends on the relative decrease in variable or fixed costs.

The following calculations allow us to determine the so-called production leverage effect - a phenomenon when, with a change in revenue from product sales, a more intense change in profit occurs in one direction or another.

To calculate the effect or force of a lever, a number of indicators are used:

• gross margin = sales profit + fixed costs;
• contribution (coverage amount) = sales revenue - variable costs;
• leverage effect = (sales revenue - variable costs) / profit.

Revenue from sales of products in 2014 amounted to 29,591,430 rubles, including variable costs - 18,944,482 rubles, fixed costs - 3,951,080 rubles.

Thus, with total costs of 22,895,562 rubles. profit is equal to:

29,591,430 - 22,895,562 = 6,695,868 rubles.

If in 2015 revenue increases by 10%, which will amount to RUB 32,550,573. (29,591,430 × 110/100), then variable costs will also increase by 10% and will be equal to 20,838,930.2 rubles. (18,944,482 × 110 / 100). Fixed costs remain unchanged, i.e. 3,951,080 rubles.

In this case, the total costs will be:

20,838,930.2 + 3,951,080 = 24,790,010.2 rub.,

32,550,573 - 24,790,010.2 = 7,760,562.8 rub.

At the same time, profit will increase by 15.9% compared to last year (7,760,562.8 × 100 / 6,695,868 - 100).

Consequently, with an increase in revenue from product sales by 10%, profit will increase by 15.9%.

When looking for opportunities to increase profits, it is advisable to check the impact on its growth not only of variable, but also of fixed costs. So, if variable costs increase by 10% - 20,838,930.2 rubles, and fixed costs - by 2% - 4,030,101.6 rubles. (3,951,080 × 102 / 100), the total amount of all costs will be:

20,838,930.2 + 4,030,101.6 = 24,869,031.8 rub.

The company will make a profit:

32,550,573 - 24,869,031.8 = 7,681,541.2 rubles,

which will increase by 14.7% compared to last year (7,681,541.2 × 100 / 6,695,868), rather than by 15.9%.

20,838,930.2 + 4,109,123.2 = 24,948,053.4 rubles.

Profit in this case is reduced to the amount of 7,602,519.6 rubles. (32,550,573 - 24,948,053.4), i.e. it increases by only 13.5% (7,602,519.6 × 100 / 6,695,868 - 100).

Based on the above calculations, we can draw the following conclusion: as fixed costs increase, ceteris paribus, the rate of profit growth decreases.

Next, we calculate the force of influence of the production lever

To do this, we exclude variable costs from the total revenue from product sales and divide the result by the amount of profit.

Economists call the difference between sales and variable costs the cost contribution.

The quantitative impact of operating leverage on profit can be expressed by the formula:

where O is the operating lever;

B - contribution to coverage;

P - profit.

Let us determine the strength of the production lever in 2015:

29 591 430 - 18 944 482 / 6 695 868= 1,6.

The indicator of the production leverage effect has important practical significance. If revenue from product sales increases, for example, by 4%, then, using the indicator of the strength of the production lever, we can determine in advance that profit will increase by 6.4% (4% × 1.6).

Based on the strength of the impact of the production lever, we can conclude: the higher the share of fixed costs and, accordingly, the lower the share of variable costs with a constant amount of revenue from product sales, the stronger the impact of the production lever.

For your information

This does not mean that fixed costs can be increased uncontrollably, since if this reduces revenue from sales of products, the enterprise will suffer large losses in profit.

When studying the relationship between fixed and variable costs and profit, production break-even analysis plays an important role. Let's determine the so-called break-even point for production and sales of products.

The break-even point corresponds to the sales volume at which the company covers all fixed and variable costs without making a profit. Using the break-even point, the threshold is determined beyond which the sales volume ensures profitability, i.e., the profitability of the product.

The sales volume corresponding to the break-even point (B) is defined as the ratio of fixed costs (Zpost) to the difference between the unit and the quotient of variable costs (Zper) divided by sales volume in value terms (P):

B = W post / (1 - W lane / P).

The sales volume of ABC LLC in 2014 was RUB 29,591,430, including:

• variable costs - 18,944,482 rubles;
• fixed costs - RUB 3,851,080;
• profit - 6,695,868 rubles.

18 units sold. products, unit costs - 1,643,968.3 rubles. (29 591 430 / 18). Sales volume in monetary terms at the break-even point will be:

3,851,080 / (1- 18,944,482 / 29,591,430) = 10,697,444.4 rubles.

In physical terms, the quantity of products sold at the break-even point is 6 units. (10,697,444.4 / 1,643,968.3).

This means that the proceeds from the sale are 6 units. products cover all costs without generating profit. The sale of each additional unit above 6, i.e. above the break-even point, will generate a profit.

Such calculations make it possible to predict break-even activities in advance.

Also, when determining a strategy, an enterprise must take into account the margin of financial strength (F), i.e., estimate the sales volume above the break-even level. To do this, the sales volume (P), excluding the sales volume at the break-even point (B), should be divided by the total sales volume:

Ф = (P - B) / P × 100.

Let's determine the financial strength of ABC LLC:

(29,591,430 - 10,697,444.4) / 29,591,430 × 100 = 63.8%.

Therefore, the business can reduce production and sales by 63.8% before reaching the break-even point. Such a high margin of financial strength must be taken into account in the process of forming the company's strategy.

For your information

Having a large margin of financial strength, an enterprise can develop new markets, invest funds both in securities and in production development.

So, factor analysis made it possible to identify reserves that will help increase the net profit of the enterprise. This is a reduction in costs and a change in the structure of products sold.

As for the organizational structure of the enterprise, it is advisable to make some changes to it (Fig. 5).

Rice. 5. Proposals for changing the organizational structure of ABC LLC

Currently, ABC LLC does not have a planning department, which every enterprise that wants to be competitive should have.

Let's calculate the effectiveness of the implementation of the planning department. To do this, we first determine the amount of costs that will be needed to implement the planning department:

• wages to be paid to employees:

3 people × 42 thousand rubles. = 126 thousand rubles;

• deductions from the payroll fund:

126 thousand rubles. × 34% / 100% = 43 thousand rubles.

The total wage costs will be:

126 thousand rubles. + 43 thousand rub. = 169 thousand rubles.

Now let’s calculate the economic indicators (in value terms) of the department’s work. The increase in the volume of sales of products and services (sales volume; V) is determined by the formula:

V = V Wed days × β × D,

Where V Wed days — average daily revenue, thousand rubles;

β - relative increase in average daily revenue, %;

D - number of days of accounting for revenue volume.

The increase in profit (P pr) is determined by the formula:

P pr = V × P r,

where P r is profit per 1 ruble of revenue from sales of products and services, rub.

Now let’s calculate the current (annual) economic effect (E) from the implementation of the department:

E = P - Z r,

where 3 r is the current costs of holding events, thousand rubles.

Let's calculate the planned revenue from the work of this department (Table 4).

Table 4

Calculation of the effect of implementing the planning department

Index	Unit change	The value of the indicator
Average daily revenue before the implementation of the planning department (RUB 29,591,430 thousand / 365 days)
Relative percentage increase in average daily revenue
Number of days of revenue accounting after the implementation of the planning department
Profit per 1 rub. sales of products
Costs of implementing a planning department
Additional revenue volume
Profit increase
Current (annual) economic effect

conclusions

The result of the financial and economic activities of the enterprise depends on how reliably the planned profit is determined.

Based on the results of calculating the planned profit using the analytical method, the following conclusions can be drawn:

• the final planned profit of ABC LLC for the construction of prefabricated frame houses next year will be 9,002,393.3 rubles;
• planned profit will decrease due to an increase in cost by RUB 547,068.4;
• profit growth by RUB 2,044,067.5 planned in connection with the expected increase in prices for products sold.

Increasing production costs and increasing prices for these products are factors that will negatively affect the financial condition of the organization in the future.

To maximize profits, the share of variable and fixed costs was changed.

This method allows the enterprise to plan for the future the size of the increase in profit depending on the results of production and take measures in advance to change in one direction or another the value of variable and fixed costs.

Based on the analysis, taking into account the found reserves for profit growth of ABC LLC, recommendations were developed to increase the company’s profit for the next year. It was proposed to create a planning department, and the economic effect of implementing this proposal was calculated.

Approximate calculations of the planned profit of an organization are important not only for the enterprises and organizations themselves that produce and sell products (services), but also for shareholders, investors, suppliers, creditors, banks associated with the activities of this enterprise, participating with their own funds in the formation of its authorized capital. Therefore, planning the optimal profit margin in modern conditions is the most important factor in the successful operation of enterprises and organizations.

K. V. Salnikova,
Ph.D. Econ., Associate Professor

Introduction

Deep economic changes are taking place in Russia, due to the country's return to the mainstream of general economic processes of world development. A radical restructuring of the previous economic management mechanism is underway, replacing it with market methods of management.

Currently, in the context of the existence of various forms of ownership in Russia, the study of issues of the formation, functioning and reproduction of entrepreneurial capital is becoming especially relevant. The possibilities for the establishment of entrepreneurial activity and its further development can only be realized if the owner wisely manages the capital invested in the enterprise.

Often, in practice, the capital of an enterprise is considered as something derivative, as an indicator that plays a secondary role, while the first place, as a rule, is taken directly by the process of the enterprise's activity. In this regard, the role of capital is downplayed, although it is capital that is the objective basis for the emergence and further activities of an enterprise. Since income, profit, is brought by the use of capital, and not by the activity of the enterprise as such. All this makes the process of competent capital management of an enterprise at various stages of its existence particularly important.

The market economy, with all the diversity of its models known in world practice, is characterized by the fact that it is a socially oriented economy, supplemented by government regulation. Finance plays a huge role both in the very structure of market relations and in the mechanism of their regulation by the state. They are an integral part of market relations and at the same time an important tool for implementing government policy. That is why today, more than ever, it is important to know the nature of finance well, to deeply understand the conditions of its functioning, and to see ways of using it most fully in the interests of the effective development of social production.

The need to study the nature, content, conditions and principles of the formation of financial resources directly follows from the reform of enterprises in Russia that has been ongoing for several years. The concept of reforming enterprises and other commercial organizations provides for the development of a strategy for the development of enterprises, which cannot be done without the formation of financial resources.

Formation mechanisms, methods of using financial resources and the results of the financial strategy of business entities should be considered as one of the most pressing problems of financial relations during the development of market structures.

Fundamentally important in modern conditions are the analysis and planning of cash flows at enterprises, the search for effective sources of financing, as well as profitable investment decisions, competent monitoring of receivables and payables, the development of rational accounting, tax, and other policies related to various areas of company activity.

The problems of forming a company's development strategy have been studied in some detail by foreign and domestic scientists and specialists. At the same time, aspects of the formation and implementation of financial strategies of companies have not received adequate coverage in the scientific literature, especially in relation to the conditions of an unstable transition economy.

The purpose of the work is to assess the impact of the financial structure of capital on the profitability of the company.

The object of research in this work is Stroykomplekt LLC. The subject of the study is the financial and economic activities of the enterprise LLC "Stroykomplekt" according to the financial statements for the period 2007-2009. (the research period was the processes of financial activity for three years).

The information base for this work was research and methodological developments by domestic and foreign authors, materials from Stroykomplekt LLC and the author’s independent research.

As part of the stated goal, the following tasks were set:

Study and generalization of theoretical concepts and approaches to determining the essence of an enterprise's capital;

Analysis of the process of formation and use of capital of the enterprise Stroykomplekt LLC;

Analysis of the financial situation of the enterprise in question and drawing conclusions on the financial situation;

Development of proposals for the effective formation and use of capital of Stroykomplekt LLC in order to increase the profitability of the enterprise.

1. Chapter 1. Theoretical foundations for managing the capital structure and profitability of an enterprise

1.1 Review of approaches to determining the essence of capital, classical models of the capital structure of an enterprise

Capital is a certain amount of goods in the form of material, monetary and intellectual assets used as a resource in further production. Therefore, capital is the sum of so-called capital goods, i.e. goods for the production of other goods. A capital good can be considered bricks (they will be used to build a house), machine tools (they will be used to make parts of future passenger cars), a TV (it will reproduce a TV show), etc.

Real capital is divided into fixed and working capital. Fixed capital usually includes property that has been in use for more than one year. In Russia, fixed capital is called fixed assets.

Real working capital should include only tangible working capital, i.e. manufacturing inventories, work in progress, finished goods inventories and goods for resale. This is the economic definition of working capital.

Capital is often divided according to the areas of its application: production (industrial), commercial, financial (loan), etc.

Owners of capital receive income from its use. In the case of loan capital, income takes the form of interest. In other cases (these are other types of money capital or not all real capital), income takes the form of profit. It can be in different versions: company profit, dividends from the owner of shares, royalties from the owner of intellectual capital, for example, the owner of a patent), etc.

Classification of organization property

By composition and functional role

1) Non-current assets: fixed assets, capital investments, long-term financial investments, intangible assets;

2) Current assets: inventories, cash, short-term financial investments, funds in settlements

By source of education and target area

1) own funds (authorized capital, reserve capital, profit);

2) borrowed funds (credits and loans, accounts payable)

Intangible assets of the organization

Their appearance is associated with the development of market relations and the need to get closer to the world practice of market management.

These are long-term investments of enterprises in the acquisition of rights to property that does not have a material form, but brings a certain income to the enterprise.

Intangible assets are included in the assets of the enterprise as long as they generate income. During the estimated period, they must be depreciated, i.e. transfer your cost to the cost of manufactured products.

The cost of intangible assets includes the costs of acquiring them and bringing them to a state where they can be used to the benefit of the enterprise. They are accounted for according to the new chart of accounts on account 04 - Intangible assets, and depreciation is accounted for on account 05.

Fixed assets as part of the enterprise's property

Fixed capital (fixed assets) is the main component of the capital of firms in most industries, primarily in the real sector. For example, in Russia in 2009, the ratio between fixed and working capital in industry as a whole was 9:1.

Fixed assets are represented primarily by buildings and structures, transmission devices, machinery, equipment and instruments, vehicles, tools, livestock, household durable goods (household property), as well as intangible assets (patents, trademarks, copyrights and other rights) .

Fixed assets largely determine the production potential of a company (industry, entire country), i.e. the ability to produce (release) over a certain period of time a certain amount of products of the required range and quality. In relation to enterprises (firms) in the sphere of material production, they often talk about their production capacity (production capacity). For example, in Russia the production capacity for passenger cars is about 1.2 million cars per year. Production capacity is often underutilized; Some of them are being modernized, some are being repaired, some are idle due to strikes or lack of demand for the products produced at these facilities.

Fixed assets are taken into account in statistics using the fixed capital balance sheet. It is a statistical table, the data of which characterize the volume, structure, reproduction and use of fixed assets

Fixed assets are the monetary expression of fixed assets as material assets that have a long period of operation.

Fixed assets:

1. By functional purpose

a) Production