Ratio of income and expenses. Evaluation of the effectiveness of income and expense management

Based on the data of Form No. 2 “Profit and Loss Statement”, we will compile an analytical table that allows us to characterize the main ratios of income, expenses, financial results and their dynamics.

table 2

Dynamics of the ratio of income, expenses and financial results

1. The ratio of gross profit to sales proceeds characterizes the share of each ruble from the sale, which can be used to cover management and commercial expenses, as well as profit from the sale.

In the process of analysis, it is necessary to pay attention to the change in both the percentage value of the indicator and the absolute value of gross profit. In the event of an increase in sales revenue, even if the percentage value of the indicator under consideration has decreased, the required amount of gross profit can be ensured, and vice versa, a downward trend in the percentage value of the indicator with the same sales volume may lead to a reduction in profit from the sale of products and its insufficiency in the future.

At the analyzed enterprise, the ratio of gross profit to sales proceeds decreased by 0.03 in the reporting period compared to the previous one. Let us carry out a factorial analysis of the change in the ratio of gross profit to sales proceeds by the method of chain substitutions, using the following calculation formula:

Kv \u003d Pv / N, (8.3)

where N - proceeds from the sale of goods, products, works, services (line 010 of Form No. 2 "Profit and Loss Statement");

Рв - gross profit (line 029 of Form No. 2 "Profit and Loss Statement").

) Кв0=Рв0/N0=800/3500=0.23

) Qwsl.=Рв1/N0=900/3500=0.26

DKv \u003d Kvusl.- Kv0 \u003d 0.26-0.23 \u003d 0.03 - the effect of changing the amount of gross

) Kv1=Pv1/N1=900/4500=0.20

Dkv \u003d Kv1 - Kvusl. \u003d 0.20-0.26 \u003d -0.06 - the impact of changes in revenue from

sale of goods, products, works, services.

Let's make a balance of factors:

20-0,23=0,03+(-0,06) -0,03=-0,03

To quantify the dependence of gross profit on sales volume and gross profit margin, the following formula is used:

Рв = N * Рв / N (8.4)

Change in gross profit under the influence of changes in sales volume:

∆Рв = (N1 -N0) * Рв0 / N0 = (4500 - 3500) * 800 /3500 = 228.57 thousand rubles.

Change in gross profit due to a decrease in profit margin:

∆Рв=N1*(Рв1/N1-Рв0/N0)=4500*(900/4500-800/3500)=4500*(0.2-0.2285) =

128.57 thousand rubles

Balance of factors:

57 + (-128.57) \u003d 100 thousand rubles.

Calculations show that the amount of gross profit under the influence of changes in sales increased by 228.57 thousand rubles, and as a result of a decrease in the gross profit margin, there was a decrease in the amount of gross profit by 128.57 thousand rubles. The total change in gross profit amounted to 100 thousand rubles.

The ratio of profit from the sale to the proceeds from the sale characterizes the actual profitability of sales. Unlike other measures, it is not affected by non-sales items, such as those included in other income and expenses. From this point of view, this indicator allows you to most accurately assess the effectiveness of sales management in the process of the main activity of the enterprise. The table shows that the profitability of sales decreased by 0.01, which is negative.

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The Company incurs operating costs for its own operations, which include equipment maintenance costs, marketing and sales costs, R&D costs, license costs, insurance costs, statutory costs, management costs, travel costs, utility costs, IT costs. support, etc.

All these costs are called operating expenses (OPEX) and represent all the funds that are spent on maintaining the daily production activities of the company. It follows that the lower the company's operating costs, the more profitable it is.

The key question this metric helps answer is how well are we managing our operating expenses?

Operating expenses are one of the main expenses of the company along with capital expenses (investments in physical assets).

An analysis of operating costs and their relationship to sales revenue gives companies an idea of ​​the high cost of their operation and existence. The ratio of operating expenses to sales revenue is called operating expense ratio(operating expense ratio, OER) and reflects the percentage of income that goes to maintain current production activities.

The change in the indicator over time can serve as an indicator of the company's ability to increase sales volumes without a proportional increase in operating costs. For example, if sales volume is increasing year on year and OER is decreasing, this may indicate that sales revenue is increasing while operating expenses are decreasing at an increasing rate. In terms of net income, this is a great situation.

OER is often viewed as a measure of the effectiveness of a company's management, as managers usually have more control over operating costs than revenue or capital expenditures.

How to take measurements

Information collection method

The data for the Key Performance Indicator (KPI) under consideration is taken from financial reports and accounting systems.

Formula

OER = (Operating expenses for period t / Sales revenue for period t) × 100%.

The numerator is the sum of all operating expenses.

This indicator is calculated monthly or quarterly.

The data for the KPI under consideration is taken directly from the income statement, where operating expenses are summarized for a certain period of time - a month or a year.

If information on operating costs is readily available, then the cost of measuring the indicator is relatively small. Otherwise, with the manual method of calculating operating expenses, the costs increase significantly.

Target values

The value of the target value of the indicator depends on the industry in which the company operates. In industries with high R&D spending, such as the pharmaceutical industry, operating costs are traditionally higher.

Example. Let's look at an example of calculating the operating expense ratio.

First of all, we must calculate the amount of operating expenses, having determined all the costs of conducting the company's operating activities. Administrative expenses and salaries, equipment maintenance expenses, travel expenses, marketing and insurance expenses and other overhead expenses for the rental of buildings and equipment are all included in operating expenses. Operating expenses for a certain period can be taken directly from the income statement, which includes all expenses related to the day-to-day operations of the company (excluding capital expenses).

If a company has the following cost structure: R&D $1,000, sales and marketing $4,000, administrative expenses $2,000, lease payments $500, depreciation and amortization $150 over a given period, and sales revenue - $40,000, then the calculations will be as follows:

OPEX = 1000 + 4000 + 2000 + 500 + 150 = $7650

OER = (7650 / 40,000) × 100% = 19.13%.

Remarks

Remember that OER is only useful as a comparative indicator for companies in the same industry.

Also keep in mind that large expenditures (such as a large research and development project) incurred in the period for which the OER is calculated and not capable of generating revenue in the coming years may skew the value of the OPEX and the operating expense ratio.

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The ratio of all income and expenses is determined by the formula:

KS = (sum of lines 010,060,080,090,120 of form No. 2) / (sum of lines 020,030,040,070,100,130,150 of form No. 2)

As you can see from the table, the ratio of income and expenses in 2000 decreased compared to 1999 by 0.098 percentage points. This was due to rising costs.

Net current assets - characterize that part of their volume, which is formed at the expense of own and long-term borrowed capital. The formula for net working capital is presented as:

CHOA \u003d OA - CFD, where

NVA - the amount of net current assets of the organization;

OA - the amount of gross current assets of the organization;

KFO - short-term current financial obligations of the organization.

Let's present the data in the form of a table.

The value of net current assets in 2000 turned out to be negative. This is due to the growth of short-term liabilities of the organization.

Determination of the financial stability of the insurer,

Dealing with property insurance.

Target - determine insurance rates and indicators characterizing the financial stability of the insurer, draw conclusions.

Insurance rate (tariff rate) is the rate of the insurance premium per unit of the sum insured or the object of insurance. It is determined in absolute monetary terms, as a percentage or ppm in a predetermined time interval (insurance period). When building property insurance tariffs, the tariff rate is a fee in kopecks from 100 rubles. sum insured per year. Insurance tariffs for compulsory insurance are established in accordance with federal laws on specific types of compulsory insurance. Voluntary insurance is calculated by insurers. The specific amount is determined by the contract of voluntary insurance by agreement of the parties.

The tariff rate is of two types: net rate and gross rate.

Net rate forms the basis of the insurance rate. Designed exclusively for the formation of the insurance fund. In terms of its economic content, this is the price of insurance risk. Its value should guarantee the formation of an insurance fund sufficient to pay insurance sums.

Risk premium– part of the net rate intended to cover possible deviations of the unprofitable sum insured from its average (expected) purpose. Necessary in case of payment of insurance compensation exceeding the average level. The amount of the allowance depends on the given level of security guarantee and the value of the standard deviation of the amount of payments (damages).

Gross rate is the rate at which the insurance contract is concluded. Consists of two parts: net rates and loads.

One of the main elements of insurance, which determines the amount of payments in the event of an insured event, is the sum insured.

Sum insured - the amount of money for which the property (in property insurance), life, health, ability to work (in personal insurance) is actually insured.

Based on the sum insured at current rates, insurance payments are calculated. In property insurance, the sum insured must not exceed the value of the insured object. For compulsory property insurance, the sums insured are determined by the legislation in a single amount (percentage) of the value of the relevant property. The established sums insured for voluntary insurance serve as the maximum limit; the owner of the property can insure it for smaller amounts. Sometimes, voluntary insurance provides for the minimum possible sums insured for insuring the property of cooperative and public organizations.

Loss of the sum insured - an indicator expressing in rubles and kopecks the ratio of the total amount of insurance compensation on the scale of the region or the country as a whole to the number of hundreds of the corresponding sum insured of all insured objects. It is a mathematical expression of the insurance risk, as the probability of damage, which forms the basis of the net tariff rates.

To construct net rates for all types of insurance, except for life insurance, the average unprofitable amount of the sum insured for the tariff period, which covers 5 or 10 years of this insurance, is used. Loss ratios of the sum insured are analyzed annually to determine their compliance with the current net rates in order to control the financial stability of insurance operations. The loss ratio of the sum insured is formed under the influence of various factors: the number of insured objects and their sum insured, the number of insured events, the number of affected objects, the amount of insurance compensation. It is determined for each type of liability or in general for the type of insurance.

The methodology for calculating net rates for each type or homogeneous objects of insurance is reduced to rounding off the average loss ratio of the sum insured for the tariff period, that is, for 5 or 10 years, adjusted for the risk premium. To do this, first of all, a dynamic series of unprofitability indicators of the sum insured is built and its stability is assessed, depending on which the issue of the size of the risk premium is decided.

Under financial stability of insurance operations is understood as a constant balancing or excess of income over expenses for the insurance fund. The problem of ensuring financial stability can be considered in two ways.

As a ratio of income and expenses.

In this case, the indicator of financial stability is defined as the ratio of income to expenses for the past tariff period:

Where KFU– coefficient of financial stability;

D- the amount of income of the insurer for the tariff period;

Z- the amount of funds in reserve funds;

R- the amount of expenses for the tariff period.

Financial stability ratio shows how many rubles of income and reserve funds fall on the ruble of expenses in a particular year.

The value of the financial stability ratio should be considered normal when it exceeds one, i.e. when the amount of income for the tariff period, taking into account the balance of funds in reserve funds, exceeds all expenses of the insurer for the same period. From the definition formula KFU it can be seen that in order to exceed the income over expenses for the tariff period on the basis of optimal tariffs, it is necessary to have a sufficient concentration of the insurance fund and the availability of a system of reserve funds that allow in unfavorable years to compensate for extraordinary damage, and thus ensure the distribution of damage over time.

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To do this, the ratio of income and expenses is calculated, which can be seen in table 23.

Table 22 Ratio of income and expenses

In order for income to cover expenses, this indicator must be equal to or greater than one. In LLC TPK Industar this figure is below one only in 2006. In other years, the organization's income covers the costs of current activities and is approximately always equal to one.

After analyzing the entire profit and loss statement in dynamics, we can make a general conclusion that the organization LLC "TPK" Industar "gained momentum in its production and trading activities until the end of 2008, and by 2009 it reduced its productivity, sales level and income.

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