Shows return on sales as a percentage. Return on Sales (ROS). Formula. Calculation using the example of Aeroflot OJSC. Increased costs and decreased revenue

One of the fundamental markers of activity productivity is, which is defined as an index of economic viability, demonstrating the level of effectiveness of the exploitation of production, material, financial, labor and other resources.

Return on sales

Profitability includes several fundamental indicators, including return on sales.

Return on sales is a measure of exactly how much Money from the sold product should be considered profit received by the company.

The calculation of profitability of sales is made for a certain time period and is expressed in. With the help of the latter, a company can effectively optimize its pricing strategy and costs directly related to its implementation.

This indicator is characterized by active alternation of periods of its increase and decrease. The reason for the intensive growth of the ratio can equally be an increase in profits, a decrease in sales volumes, and the simultaneous influence of these factors.

An increase in profits can be caused by an increase in prices, a decrease in costs, etc., as for a decrease in sales volumes, the reasons for this phenomenon may be different. If this process takes place after an increase in prices, then this is quite natural. If the reason is, for example, loss of interest in the product, then you should make adjustments to your activities.

Formulas and calculation features

The calculation of profitability of sales is carried out for the following purposes:

Effective provision of profit control;
Development monitoring business activity companies;
Comparison with profits received by competing companies;
Optimal determination of both profitable and unprofitable sales;
Assessment of the share of production costs in the general sales process;
Ensuring control over pricing policy;
In other significant commercial activities company purposes.

To calculate return on sales indicators, we use different kinds profit received, and therefore this coefficient is calculated using several different factors.

However, they all basically contain an equation such as:

Рп=(П/В) *100%, where:

Рп – return on sales,
P – profit,
B – revenue.

In most cases, profitability is based on three main values:

gross profit,
Operating profit,

The algorithm for calculating gross profit involves dividing the latter by revenue and then multiplying the resulting result by one hundred percent - Рп = (Пв/В) * 100%, where:

Рп – return on sales,
Pv – gross profit,
B – revenue.

Gross profit is determined by subtracting sales from revenue received. The indicated indicators are extracted from the Profit and Loss Statement (Form No. 2)

The algorithm for calculating operating profit involves dividing profit by revenue and then multiplying the resulting result by one hundred percent - Рп = (Mon/B) * 100%, where:

Рп – return on sales,
Mon – profit before tax,
B – revenue,
Indicators for this calculation are also extracted from Form No. 2.

The return on sales calculated using this formula shows what specific part is contained in the revenue received by the company minus the transferred and paid interest.

The calculation algorithm for net profit involves dividing net profit by revenue and then multiplying the resulting result by one hundred percent - Рп = (Пч/В) * 100%, where:

Рп – return on sales,
Pch – net profit,
B – revenue.

The necessary indicators for this calculation, as in the above cases, should also be extracted from form No. 2.

Analysis

Profitability calculation

Regular analysis of the company's sales profitability allows us to ensure effective management of economic activities, improve the latter's performance, increase profitability, and quickly respond to changes market conditions and so on.

Carrying out factor profitability sales, it is necessary to comprehensively take into account the specific features of the influence exerted by profitability on such factors as: changes in the products manufactured by the company or the services and work performed by it.

The most effective method is to conduct analysis over several months or even years; this approach allows you to determine the general trend economic development company and identify its weaknesses.

When conducting a profitability analysis, it is necessary to be guided by such fundamental and at the same time fairly simple criteria (applicable to absolutely all companies, regardless of their type of activity) such as:

Increasing profitability is a positive trend.
Declining profitability is a negative trend.

To determine the presence of certain trends in changes occurring in the profitability of sales, it is necessary to establish such periods as reporting and base. For the latter, it makes sense to take performance indicators either for the past or for the period in which the company received maximum profit. Accounting for the base period is required to compare the profitability calculated in each of the mentioned periods.

Factors reducing profitability

Why is profitability declining?

A decrease in profitability identified during the analysis may be caused by trends such as, for example:

Outpacing the growth rate, the rate of increase in revenue - the reasons that initiated this trend, I can advocate, in particular, price reductions, structural changes in the sales range, and increased standard costs. To change the situation, an analysis of the company's pricing policy, cost control system, and assortment policy is required.
The rate of decrease in revenue outpacing the rate of decrease in costs is a trend that may arise due to a decrease in the level of . In this situation, a comprehensive analysis of the marketing strategy is required.
An increase in company costs - this trend can be caused by factors such as lower prices, increased standard costs, and structural changes in the sales range. In this situation, an analysis of assortment policy, pricing and cost control is required.

It should be taken into account that the decrease in profitability revealed during the analysis is clear evidence that the company’s competitiveness is falling and the level of demand is seriously declining. In this kind of situation, the company needs to develop a system of procedures that ensure active stimulation of demand, improvement of the quality of products, as well as intensive development of new market sectors.

It should also be noted that if the results of the analysis lead to conclusions about a decrease in sales volumes or an increase in assets involved in turnover, then the ways to correct the current situation may well be enough to eliminate the causes.

However, if the main negative factor If there is a significant increase in costs, then all necessary corrective measures must be carried out with the utmost care, since the source of cost reduction can end quite quickly. Therefore, in this kind of situation, the best option may be to reorient to the production of some other product.

Increased profitability

The situation of declining profitability cannot be considered acceptable and quite naturally requires correction, for which the company needs to take measures aimed at increasing profitability in every possible way.

To develop the right company strategy, factors such as:

Fluctuations in market conditions
Changes in consumer demand,
Analysis of the activities of competing companies,
Saving internal reserves.

After a comprehensive study of all the above-mentioned factors, it is necessary, based on the conclusions obtained as a result, to begin the practical implementation of the strategy and take specific actions designed to correct the situation.

The main actions aimed at increasing profitability include:

Increase and modernization of production capacity.
Comprehensive control over the quality of manufactured products.
Development of an optimal marketing strategy.
Reducing the cost of manufactured products.
Proper motivation of personnel.

So, summing up all of the above, it is necessary to emphasize that return on sales indicators are one of the fundamental criteria for assessing the financial and economic activities of a company. To improve all indicators, it is necessary to properly analyze all existing achievements and identify factors that hinder further development. After all problems have been identified and the causes of their occurrence have been determined, measures should be carefully developed and taken to correct negative trends in the company’s development.

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Profitability is economic indicator, which shows the degree of efficiency of using any type of resources (material, natural, labor, capital, investments, sales, etc.). In other words, profitability is the profitability of a business, its economic efficiency and benefit.

Accordingly, if profitability indicators are negative, then running a business is unprofitable and you need to work on the indicators increasing profitability, find out the reasons for low profitability and look for ways to solve them. Profitability, its level is expressed in coefficients, and relative indicators are expressed as percentages.

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Also, profitability shows the efficiency of using certain funds, when the enterprise not only compensates for all costs, but also makes a profit.

There is such a thing as a profitability threshold - this is an indicator (point) that actually separates periods of unprofitable production and efficient work company (compare it with the break-even point).

To analyze the efficiency of an enterprise, actual profitability indicators are compared with planned ones, with data from past periods and similar economic data of other companies. The ratio of total income to main flows or assets will be profitability indices (ratios).

Basic profitability standards can be divided into the following main groups:

return on sales (return on sales);
return on assets (return on non-current assets);
return on investment;
return on current assets;
profitability equity;
product profitability;
income from the efficient use of production assets;

The total profitability of the company is determined by these basic indicators depending on the scope of its activities. Assets and their profitability equals the efficiency of using equity capital or invested funds, how assets generate profit and in what quantity, depending on the resources expended. Return on assets is calculated as the ratio of profit for a certain period to the size of assets for the same period.

Formula:

Return on assets, R act. = P (profit) / A (size of assets)

Using the same parameters, economists calculate the profitability of using production assets, investment capital, own fixed capital. For example, return on equity shows how effective the shareholders' investments in the business are.

Return on sales and formulas for calculating it

Return on sales (profitability products sold) is an indicator of profitability, expressed in coefficients and displays income (its share) for each monetary unit spent. Return on sales is calculated as the ratio of net profit to total revenue.

Formula:

Return on sales, R prod. = P (net income) / V (revenue volume).

Sales profitability directly depends on the company's pricing policy and its flexibility according to market conditions in a particular segment. Some firms apply their external and internal strategies, study competitors' markets, product ranges and product lines to obtain high sales returns.

There are no clear standards and values for indicating the profitability of sales, since the standard value and their indicators depend on the specifics of the company’s activities. Return on Sales Indicators Show Overall Effectiveness operational activities for a specific period.

Basic formulas for calculating return on sales

For effective management sales and monitoring the results of the company’s activities, the profitability of sales is calculated using the following indicators:

by gross profit;
by operating profit EBIT;
according to balance sheet data;
net return on sales;

Sales profitability by gross profit is an indicator (coefficient) of profitability, which denotes the share of profit on each monetary unit earned. This indicator is calculated as the ratio of net income (after paying all taxes) to the total amount of cash for the same period of operating activity of the enterprise.

The formula will be as follows:

Operating profitability = Gross income / Trading revenue.

Gross profit organization is also reflected in the financial statements. Profitability of product sales based on operating profit EBIT is the ratio of EBIT to total revenue. EBIT is total income, excluding all taxes and interest.

The formula for calculating this indicator is:

Operating profit margin EBIT = Total income (before taxes) / Total revenue

Return on sales based on operating profit EBIT is also called operating return on sales. This ratio is intermediate between the total sales return and the company's net profit results.

Return on sales on balance sheet– this is a coefficient that is calculated according to financial statements and characterizes the share of profit from the company’s sales in total revenue.

Calculated using the following formula:

Balance sheet return on sales = total income (or loss) from sales/volume of sales revenue.

Net sales return– this coefficient shows how many kopecks of net profit are in each monetary unit of revenue and is calculated as the ratio of net profit (the field of deduction of all taxes, cost and staff payroll, other expenses) to total revenue.

Formula:

Net sales return = Net profit/Revenue

In order to independently calculate data on net profitability from sales, it is enough to know the total number of units of products sold and income (after paying all relevant taxes and maintenance costs), which is not related to the non-operating activities of the enterprise (this could be exchange rate differences, investments, sales shares or other securities).

Analysis of results. Data on calculating return on sales help a company calculate various types of profit in total revenue, but everything also depends on the characteristics of the main activity of the enterprise.

Indicators for calculating profitability over several periods help to quickly manage processes economic activity organizations, quickly respond to market fluctuations and various economic methods influence improvements in performance and continuous income generation.

Return on sales indicators are used to calculate operational activities, it is better not to use this indicator for long-term periods, since the sales market is very dynamic and you need to respond to all its changes as quickly as possible.

These indicators are effective for solving daily and monthly tasks and plans for the sale of products and goods.

How to increase your sales profitability

The main ways to increase sales profitability are the following:

reduction in production costs (cost reduction);
increase in production volumes and, due to this, gross revenue;

But when introducing these improvements, the enterprise must have material and labor resources. Work in in this direction requires the selection of highly qualified personnel; it is possible to conduct training among personnel according to new methods and practices that are effectively used in global economic practice.

First of all, you need to study the position of competitors in the market, the range of products presented, pricing policy, promotions, and based on this, analyze what can affect the reduction of the cost of your products.

It is necessary to compare not only offers on the market in your region, but also take into account the features and advantages of leading companies on the market. Perhaps the low cost is influenced by the constant introduction of new technologies, then conduct research on how profitable it is to introduce these technologies in your business and at what speed the innovations will pay for themselves.

As practice shows, despite the initial costs of personnel development and the introduction of new products may seem large, but after doing an economic analysis, taking into account planned indicators, these costs are always justified.

To fully comply with market standards, you need to constantly monitor the dynamics of sales markets, customer requirements, and respond very quickly to all changes and fluctuations. Not only the pricing policy, but also the assortment policy should be effective. The assortment must be constantly updated and improved so that customers see it all (people love and are interested in new items). The quality of the product must also be appropriate.

To increase sales profitability, you need to consider not only economic forces and opportunities (cost reduction, profit optimization), but also an effective marketing policy. In most cases, to increase the profitability of sales, economists recommend eliminating or reducing some expense items, and marketers offer effective pricing policies.

The correct combination of marketing and economic decisions is guaranteed fixed income from sold products, goods or services.

One of the main indicators of an organization's performance is return on sales based on net profit. What does this indicator characterize? How is it calculated? All the details are below.

What is return on sales based on net profit?

The concept of profitability is directly related to the success, that is, profitability of any business. This financial indicator can be calculated for the enterprise as a whole or separately for its divisions (types of activity). In the process of calculations, it is easy to determine the return on assets, fixed assets (fixed assets), sales, goods, capital, etc. First of all, the calculation is based on the analysis of income accounting data for a certain time period.

Analysis of profitability values allows you to find out how effective is the management of the funds invested in the creation and further development of the company. Since calculations are carried out as a percentage or as a coefficient, the higher the results obtained, the more profitable the business is considered. Profitability calculation is used in the following situations:

For short- and long-term profit forecasting.
When receiving credits and loans.
When mastering new directions and analyzing already existing species commercial activities.
During the comparative analysis by industry.
In order to justify upcoming investments and investments.
To establish the real market price of a business, etc.

The return on sales indicator indicates what part of the company's revenue is profit. In other words, how much income did each ruble of sold products (works or services) generate? By managing this ratio, the head of the company can adjust the pricing policy, as well as current and future costs.

Return on sales based on net profit - formula

When calculating the indicator, the organization's accounting data for a given period of time is used. In particular, to determine the profitability of sales, information on net profit is required, which is indicated on page 2400 f. 2 “Report on financial results” (the current form was approved by the Ministry of Finance in Order No. 66n dated 07/02/10).

The formula looks like this:

RP = PE of the company / B, where:

RP is the value of return on sales,

PE - the amount of net profit (line 2400 f. 2),

B – the amount of revenue (line 2110 f. 2).

Additionally, to refine the indicators, you can calculate gross profit margin or operating profitability. Formulas change in accordance with specified goals:

RP for VP = VP of the company / B, where:

RP for VP - gross profit margin,

VP of the company - gross profit of the company (line 2100 f. 2),

B is the amount of revenue.

Operating RP = Profit before taxation (line 2300 f. 2) / V.

What return on sales value is considered normal?

We have already found out that RP shows the level of profit for a certain period. In dynamics, this coefficient helps to establish how the profitability of a business changes over time. To do this, analyze data for several periods - basic and reporting. Then it is easy to calculate the profit margin by performing factor calculations.

What profitability value is considered normal? There is no clear answer to this question. Optimal indicators depend on the type and specifics of the activity of the enterprise or its division. Of course, the higher the value obtained, the better, but the results can also be influenced by such features as duration production cycle, availability of investments, etc.

The average indicator of good profitability is considered to be a coefficient in the range of 20-30%, average - 5-20%, low - 1-5%.

Return on sales- an economic indicator that reflects the company’s income for each ruble received as a result of sales, or reflects the share of profit in the total volume goods sold or products. Return on sales comes from the German concept rentabel - profitable or profitable, and has been an economic and marketing relative indicator since ancient times. economic efficiency sales activities.

In practice, sales efficiency is determined by the return on sales ratio. Calculation formula return on sales ratio- the ratio of the company’s net profit to revenue multiplied by 100%

Coeff. Rentab.Sales = (Profit / Revenue) * 100%

The Western accounting system declares the concept Return on Sales (ROS) and gives the following calculation formula:

Operating Margin = Operating Income / Revenue

That is, the ratio of operating profit to revenue. In other words, return on sales (ROS) is how much money from the volume of products sold is the company’s profit.

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