Profit analysis and definition of enterprise sustainability

Determining the financial sustainability of an enterprise is one of the most important components of a market economy. Insufficient financial base of the enterprise most often leads to insolvency of the organization, and as a result to bankruptcy, while excessive - prevents development and leads to the appearance of excessive reserves and reserves, thereby increasing the time of capital turnover and reducing profits. The analysis of profit, to some extent allows us to determine the parameters of such stability, it serves as the basis necessary for making the right decisions regarding the further development of the firm, but does not give a clear picture of the position of the enterprise at the moment.

Profit analysis is always needed, regardless of the mode of economic relations, but some aspects directly depend on social conditions and economic prerequisites. In a market economy, many entrepreneurs often resort to financial analysis to monitor the status of their business, as well as in critical situations, when you need to accurately assess the financial position of the company at the moment. Profit analysis is necessary in the transformation of organizational and legal structures, in the process of corporatization and privatization of the enterprise, as well as in raising the level of bankrupt enterprises to a new level. In any solid financial institution, every quarterly and annual report on the activities of an enterprise is necessarily accompanied by a profit analysis.

Often the analysis of profit and economic activity is associated with the processing of a large amount of information affecting a wide range of aspects of economic activity. As a rule, these are documents of financial statements, accounting records, a certificate of the balance of the enterprise. Thus, accounting data serves as the basic basis for financial analysis, although they are in themselves only an assumption about the true state of affairs in the enterprise. At the enterprises the accounting serves not only to reflect position of incomes, financial transactions and economic operations. Its data are an essential aspect for making managerial decisions and planning future tasks.

Profit analysis sets the main goal - obtaining the basic informative parameters that will give an accurate and objective picture of the company's profits and losses, its financial status, changes in the assets and liabilities of the enterprise, and settlements with debtors and creditors with the income of the bank servicing the transactions. Such information is obtained as a result of a comprehensive analysis of a variety of financial documents on a special science-based method. The result is a clear picture of the state of the enterprise, its assets, liabilities, property, profitability of the funds used and the rate of working capital.

Profit analysis allows you to track the development trends of the enterprise, to give an objective assessment of its commercial and economic activities. It is also a link between productive business activities and the adoption of managerial decisions. Financial analysis can be external and internal, and both are very important.

External profit analysis provides a clear picture of the liquidity of the balance sheet, profitability, profitability and solvency of the enterprise, as well as the company's overall income level. At the same time, internal financial analysis is carried out in the interests of the company itself, it is just as necessary as the external one. With its help, control over all branches of the enterprise is carried out, and further ways of its improvement are outlined.