Net profit margin formula on balance sheet. Sales profitability is an important step towards financial success

Labor Relations- an indicator of the financial performance of an organization, showing what part of the organization’s revenue is profit. At the same time, various profit indicators can be used as a financial result in the calculation, which leads to the existence of various variations of this indicator. The most widely used are the following: sales by gross profit (gross profit margin), operating profitability (return on sales, ROS), return on sales by net profit(net profit margin).

Calculation (formula)

Return on Sales by Gross Profit = Gross Profit / Revenue

Gross profit is the difference between two key indicators"Profit and Loss Statement": revenue and cost of sales.

Operating margin = / Revenue

where EBIT is earnings before interest and taxes

Return on sales by net profit = Net profit / Revenue

To calculate all the above profitability indicators, the data contained in the 2nd form of financial statements - the “Profit and Loss Statement” - is sufficient.

The normal value of return on sales is determined by industry and other characteristics of the organization. With the same financial efficiency, for organizations with a long production cycle, the profitability of sales will be higher, for “high-turnover” activities - lower. Return on sales shows whether the enterprise’s activities are profitable or unprofitable, but does not answer the question of how profitable investments in this enterprise. To answer this question, return on assets and equity (return on equity, return on invested capital) is calculated.

The main criterion for business success is the final financial indicators, consisting in the profitability of the activity. There are several options for calculating the effectiveness of business relations, one of which is calculating the return on sales based on net profit. The formula for this method is given below.

Net profit

All Russian enterprises, taking part in economic life, are created to generate income.

The main criterion for assessing the efficiency of activity is the net profit of the enterprise.

This value is subject to mandatory reflection in the accounting records. the company's balance sheet (clause 23 of PBU 4/99).

In addition, the Ministry of Finance of the Russian Federation, by Order No. 66n dated July 2, 2010, approved the official forms of the balance sheet and financial statements financial results.

According to the above-mentioned act, the enterprise’s net profit indicators are reflected on line 2400 of the financial results statement.

You can obtain the desired value of the organization’s efficiency by subtracting the information in section 2410 from the indicators on line 2300.

In addition to this method, the company’s net profit can be obtained by excluding from gross revenue:

• full cost;
• taxes, contributions and obligatory payments.

Also included in this calculation are income and expenses from the non-core activities of the entity.

The net profit of the enterprise remains the property of the company and can be spent at the discretion of the beneficiaries of the company for the following purposes:

• payment of income to business owners;
• direction of profit to increase working capital companies;
• organization development;
• other needs at the discretion of the owners of the subject of economic relations.

It is also necessary to take into account that the return on sales can be calculated using net profit.

Return on sales based on net profit

It should be noted that calculating the profitability of the enterprise as a whole, as well as sales efficiency, is not prerequisite for proper maintenance and preparation of financial statements.

However given value necessary for:

• correct assessment of the profitability of the enterprise;
• determining the share of profits from various sales;
• determining the dynamics of sales revenues;
• timely correction of business tactics and strategy.

Currently, the formula for return on sales based on net profit is as follows:

RP = PE / VR, where:

• RP - return on sales;
• PE - net profit;
• VR - revenue.

As mentioned above, the value of net profit is contained in line 2400 of the financial results statement filled out by the enterprise in mandatory.

The revenue indicator is reflected in the same document, but in line 2110.

It should be especially noted that the official form for calculating return on sales based on net profit, as well as other indicators, has not been developed at the legislative level. Accordingly, business efficiency can be calculated using other values, for example:

• gross profit;
• profitability before tax.

All of the above indicators are also contained in the income statement.

In conclusion, it should be noted that the provisions of domestic legislation do not contain any standard indicators profitability. Accordingly, each subject of economic legal relations should determine the acceptability of the level of efficiency of its business, taking into account the specific features of its implementation.

In a general sense, profitability includes a set of indicators that comprehensively characterize the efficiency (profitability) of a business.

Profitability is always the ratio of profit to that object, the analysis of the influence of the effect of which needs to be clarified. In fact, the formula for return on sales on the balance sheet determines the share of profit per unit of the object in question.

Using the formula for profitability of sales on the balance sheet, you can find out with what degree of efficiency it is used equity(company assets), fixed and working capital, etc.

Labor Relations shows what part of the profit is in the organization's revenue. In the analysis, return on sales is denoted by ROS (from the English returnonsales).

General sales return formula as follows:

ROS = P / Qp * 100%,

Here ROS is return on sales;

P is the amount of profit;

Qп - sales volume (revenue).

Return on sales is a relative indicator, determined as a percentage.

Formula for return on sales on balance sheet

When calculating the profitability of sales on the balance sheet, information is taken from the financial results report (form No. 2).

In this case balance sheet return on sales formula depends on the type of profitability that users need:

• Gross Profit Margin:

  ROS=p.2100/p. 2110 * 100%

• Operating profit margin:

  ROS=(p.2300 + p.2330)/p. 2110 * 100%

• Net profit margin:

Standard value of return on sales

When calculating the profitability of sales, there are no specific standards, since the average statistical values ​​of profitability by industry are calculated. Each type of activity has corresponding norm coefficients.

In general, the formula for profitability of sales on the balance sheet should provide a profitability standard ranging from 20 to 30%, which reflects the high profitability of the enterprise.

An indicator of up to 5% indicates low profitability of the company, from 5 to 20% - average profitability, a profitability indicator of more than 30% indicates super-profitability.

Average return on sales by industry in our country:

• Agriculture – 10-13%,
• Mining – 25%,
• Construction – 5-10%,
• Trade – 7-8%.

Sales profitability analysis

The formula for profitability of sales on the balance sheet allows the administration of the enterprise to find out the degree of efficiency of the organization in the use of costs in the process of making a profit.

A cost-benefit analysis is needed in the following cases:

• Receipt and increase in profits;
• Control of company development;
• Conducting comparisons with competitors;
• Detection of profitable and unprofitable products, etc.

Examples of problem solving

EXAMPLE 1

EXAMPLE 2

Any activity related to sales is carried out with the aim of making a profit. It is the actual sale that provides income to the business, because at this stage the company receives money from the client. Profit, in turn, is the main goal of business as such. In order to achieve it, it is not enough just to make sales. They need to be profitable. Simply put, they are effective. Assessing profitability of sales is a comprehensive approach, which we will talk about.

Definition of “profitability”

Return on sales, or return on sales ratio, is an indicator of the financial performance of a company, demonstrating what portion of its revenue is profit.

If we express this concept as a percentage, then profitability is the ratio of net income to the amount of revenue received from the sale of manufactured products, multiplied by 100%.

Thanks to the profitability indicator, one gets the impression of the profitability of the enterprise’s sales process or how much the products sold pay for the costs of their production. Thus, the costs include: use of energy resources, purchase necessary components, staff working hours.

When calculating the profitability ratio, the volume of capital of the organization (volume of working capital) is not taken into account. Thanks to the data obtained, you can calculate how successfully competing enterprises operate in your field of activity.

What does profitability ratio mean?

Thanks to this indicator you can find out how profitable the company's activities are. You can also calculate what share falls on the cost price after the products have been sold. Having an idea of ​​the profitability of sales of its products, the company can control all costs and expenses, as well as adjust its pricing policy.

Important! Different manufacturing companies produce a wide variety of products, and to sell them they also use different strategic and tactical ways and advertising techniques, therefore the value of their profitability ratios will be different. Even if two firms producing goods received the same revenue and profit, and also spent the same amount on production, then after deducting tax costs, their profitability ratio will be different.

Also, the planned effect of long-term investments will not be a direct reflection of profitability. If an enterprise decides to improve the production technological cycle or purchase new equipment, then for some time the resulting coefficient may decrease significantly. However, if the sequence of introduction of new technologies and equipment at the enterprise was determined correctly, then over time the company will demonstrate increasing profitability indicators.

How is return on sales calculated?

To calculate the profitability of sales, use the following formula:

ROS = NI/NS * 100%

• ROS— Return on Sales – profitability ratio, expressed as a percentage.
• NI— Net Income – data on net profit expressed in monetary terms.
• N.S.— Net Sales - the amount of profit that the company received after selling products, expressed in monetary terms.

If the initial data is correct, then the resulting formula will allow you to calculate the real return on sales and find out how profitable your company is.

Calculation of a company's profitability using an example

When starting calculations, you must remember that using general formula It can tell you how efficient or ineffective a company's operations are, but it won't tell you where in the production chain there are problems.

For example, a company analyzed its activities and received the following data:

In 2011, the company made a profit of 3 million rubles, in 2012 the profit was already 4 million rubles. The amount of net profit in 2011 amounted to 500 thousand rubles, and in 2012 – 600 thousand rubles.

How can you find out how much profitability has changed over two years?

Calculations show that in 2011 the profitability ratio was:

ROS 2011 = 500000/3000000 * 100% = 16.67%

ROS 2012 = 600000/4000000 * 100% = 15%

Let's find out how much profitability has changed over the estimated time:

ROS = ROS2012 – ROS2011 = 15-16.67 = - 1.67%

Calculations showed that in 2012 the company's profitability decreased by 1.67%. The reasons for the decline in profitability are not yet clear, but they can be found out if you conduct a more detailed analysis and calculate the following indicators:

1. The change in tax costs that is needed to calculate NI.
2. Calculation of profitability of manufactured goods. Produced according to the following formula: Profitability = (revenue - cost - costs) / revenue 100%.
3. Profitability of sales personnel. For this, the formula is used: Profitability = (revenue - salary - taxes) / revenue 100%.
4. Advertising profitability of manufactured products. It is calculated using the following formula: Profitability = (revenue - advertising costs - taxes)/revenue * 100%.

When calculating these indicators, it is necessary to take into account the following features of the production process:

1. If the company is engaged in the provision of services, then the cost includes: organizing workplaces for sales specialists. For example, you need to purchase computers. Rent a room, allocate telephone line, pay for advertising, purchase software for work and pay for a virtual PBX.
2. When calculating the profitability of sales specialists, you can use a fairly simple formula - divide gross profit by total revenue. But it is better to use it when working with specific indicators: the profitability of each specialist, a specific type of product, or a section on the website.

What factors influence profitability of sales?

You can increase the profitability of sales if you reduce the cost and level of expenses. However, this must be done thoughtfully and carefully, since such savings may reduce product quality or negatively affect the work of staff. To avoid this, you should take a comprehensive approach to the issue of increasing profitability and study the following aspects:

• Staff efficiency.
• Sales channels.
• Competing companies.
• Sales and cost process.
• Efficiency of working with CRM.

Once these components of the business have been studied, you can move on to developing sales strategies and tactics. It is also important to understand how profitable each group of products is individually.

For example, a company offers clients three types of real estate for rent:

• Residential.
• Warehouse.
• Office.

Having applied calculations, we obtained the highest rates of return on sales for residential real estate, so we can increase the costs associated with this group of services, as they will pay off.

Increasing profitability in many cases also depends on the human factor, for example, on the level of employees involved in the production process, so the business owner needs to pay attention to:

• Effective use of specialist knowledge.
• Improvement of employee qualifications.
• Optimizing costs for specialists who are not directly involved in the production process.
• Implementation automated systems and innovative technologies.

Profitability may also depend on the industry. Thus, the heavy engineering industry shows a slow increase in sales profitability, and the highest rates can be observed in the trade or mining industries. For example, in 2014 highest indicators profitability were noted in chemical industry– 16.7% and in the field of subsoil development – ​​24-33%.

Profitability is influenced by the following features of the enterprise:

• Seasonality of sales.
• What activities does the company engage in?
• The area in which the company sells its products (regional characteristic).

Ways to increase profitability

The profitability indicator does not always meet the expectations of business owners. In this case, it is important to find the reasons for low profitability and ways to eliminate these reasons. There are many options for getting out of the situation; we tried to highlight the main ways to increase the profitability of sales.

We reduce costs. Reducing the cost of goods is the best incentive for profit growth. The main thing is not to do this at the expense of quality. It’s better to optimize logistics, work on the professionalism of managers, agree on more favorable conditions with the supplier.

We are raising prices. A difficult step that few are willing to take. Despite the fact that indecision in this matter is precisely the main mistake. Dumping is the path to killing business. Prices can and should be raised. You just need to do this wisely. Firstly, no sudden jumps. Secondly, be sure to warn customers ahead of time that prices are about to increase. This is an unspoken rule of good manners and a way to maintain trust in yourself and your company.

We focus on the client. For any product, the main thing is not the price, but the value that it represents for the buyer. The sales description should describe in detail what the main advantage of the product is, what problems it helps to solve, etc. This should be information that will force the client to buy the product right here and now. If a person understands what you really give him Best offer, then the price increase will fade into the background for him. Naturally, on our part we need to ensure good quality goods and services. No sales text will help you if you don’t properly organize delivery or if you sell outright nonsense to people. And on the contrary, with a loyal attitude, a person will become your regular customer.

And achieving a loyal attitude is simple: meet halfway where it is appropriate. If the buyer needs extra-urgent delivery, implement it. A person is dissatisfied with a purchase (for objective reasons) - offer a refund, replacement or small compensation at your discretion.

People appreciate not only a professional, but also a human approach. Which ultimately has a positive impact on profitability of sales.

We sell related products. Standard situation: store manager household appliances After purchasing a laptop, he suggests taking a monitor cleaning spray. A trifle, and one that you were unlikely to initially intend to buy. However, many agree. And all because this little thing will really be useful for them. Analyze which items from your assortment can be included with the main product and offer them to the buyer. In online stores, this technique is usually done using the block “Buy with this product.”

P.S. This method also suitable for b2b sales. Here, your main task will be to convey to your partner that the additional product will give more sales to his company first of all. As an argument, you can use example statistics on other partners.

The ability to quickly calculate the value of return on sales is important today not only for accountants and economists. Solid knowledge and confident skills in this area will even be useful, as they can answer a number of important questions.

Type of sales return formula

The return on sales formula is found in absolutely all economic textbooks.

The money received from the sale of manufactured products, goods sold, and services provided is the most objective criterion for the commercial success of a company operating under normal conditions. market economy enterprises.

To simplify the analysis of market performance indicators, companies use the concept of return on sales ratio.

Return on sales is the arithmetic ratio of the achieved profit after deducting the relevant tax to the net revenue (exempt from or turnover tax) received from all commercial transactions for a certain reporting period (month, quarter, half-year, year).

This economic micro-indicator is calculated as a percentage. In the economic literature, in calculation formulas, this indicator is designated ROS (Return on Sales) or NPM (Neto Profit margin). This economic quantity has synonyms in the form of the following terms:

• profitability of turnover
• net profit ratio
• product profitability
• profitability of products sold
• specific net profit

The classic form of the formula, which shows how to calculate the return on sales ratio, is:

Examples of calculating return on sales

Return on sales is one of the important operational tools for controlling corporate total costs required to create products, offer services, and sell goods.

Comparison of values ​​achieved in commercial activities results, allows you to assess the degree of efficiency of an economic agent in the market.

The return on sales indicator can be objectively influenced downward by the company's investment expenses, the purpose of which is to increase its market competitiveness.

In order to simplify the understanding of all important economic aspects, it is necessary to illustrate all the above statements with an example to make it clearer how to calculate ROS.

Example

The company's total revenue in 2014 was 1.5 million rubles. In 2015, this figure was 2.0 million rubles. At the same time, the net profit on the balance sheet amounted to 300 and 320 thousand rubles, respectively.

It is necessary to calculate the figure or return on sales ratio and monitor its dynamics. First, we calculate ROS for 2014 using the already known formula (300/1500) x 100% = 20%.

ROS for 2015 will be (320/2000)x100%=16%. As a result we get annual decline the company's market efficiency is 4%. In Russian-language literature on economics, this indicator may also be designated Krp, but the calculation remains similar. Through such an indicator, a qualified economist will be able to reach such an indicator as return on assets, also called capital productivity. Provided that the company earned a profit of 45.0 thousand USD for the year. e., and the cost of the operated assets (property) of the company is 250.0 thousand. e. with trading revenue for the same period of 200.0 thousand. That is, the calculation will look like this.