Key performance indicators of the enterprise, its stability and efficiency

A sufficient number of products sold on the market covers the costs spent for its production, in other words, its absolute cost price. Subsequent sales will be profitable. The size of the profit will depend on the ratio in which (on the basis of the analysis) the conditional-constant costs, and the variable conditional variables, as part of the total cost price. When the sold quantity of products reaches the minimum margin sufficient to cover the cost price, then the profit will start to grow faster than the amount of expenses grows and there will be an opportunity for development and investment.

Constant analysis and certain key performance indicators of the company give a true idea of its profitability or loss. If an enterprise reduces its economic activities, the profit is reduced, and the losses increase ahead of the rate of decrease in sales.

The main indicators of the enterprise's performance are its effectiveness. You can calculate using the following formula:

Пр = Впр - Зпр

In this calculation: Pr - profit obtained from the sale of products.
Впр - the gain received from realization of production.
Зпр - the sum of the costs spent for sale and manufacture of production.

According to the calculation indicators, the economic effect that characterizes the business as profitable and exceeding expenses will be seen. The indicator of the economic effect compares the level of costs and resources expended on its achievement. However, such an indicator as profitability is beyond the scope of this analysis and performance evaluation.

Profitability, net profit, cost recovery, economic efficiency are the main indicators of the activity of a particular business. Profitability gives an idea of how quickly the costs will be repaid and the enterprise will make a profit.

Calculation of profitability :

• Products: R n = ratio of profit from sales (sales) / divide by full costs.
• Assets: this R a = ratio of profit (for the reporting period) / total of the Security Council. Where SB is the average balance. The calculation shows how the current and fixed assets are used, how effective and whether they are of interest to financial and credit institutions, to business partners.
• Fixed capital: R oc = book profit / divide by PSC. Where ССОК - the average cost (fixed capital).
• Own capital: R ck = net profit / divide by the average cost of the OS. This indicator characterizes what part of the profit is accounted for by each ruble invested by the owner. OS - fixed capital.
• Return on capital: T = capital / net profit. The calculation shows how soon the funds invested in the enterprise will pay off, if the conditions of financial and economic activity do not change.

The main indicators of the company's activity form a "break-even point of activity", which can be reduced to the answer to the question: what quantity of products should be sold to cover the costs of its production and reimbursement of conditional variable costs. Based on the analysis, the unit price is set in accordance with all the conditionally variable costs in order to completely cover them and receive a stable profit.

The indicators, in accordance with the requirements of the market, can be correlated with two groups:

• Evaluation , which characterizes the results of a particular activity and the level of development achieved.

• Costs, which reflect the costs of the implementation of types of production and activities.

The division is relatively arbitrary and characterizes the relative performance of the enterprise. The type and direction of the analysis depends on the goals that are set before it. Thus, production costs can be considered as an estimate of the achieved level of costs, but the level can become an amount when it is planned to produce not units of products but to provide services. The same can be said about the indicator, such as profit, which for the lessor is not in the first place, for him the movement and the liquidity statistics of the company are more important.

Therefore, the estimation of total sales volumes, gross profit and net profit (after taxes and interest on loans and borrowings were paid), economic efficiency, capital turnover are the main indicators of the company's activity, characterizing its position for the reporting period.