To determine how sales volume affects profit, you need to multiply the financial result for the previous period by the change in sales volume for the same period.
The difficulty is that it is difficult to determine the change in the physical volume of goods sold, since the products are often heterogeneous. Therefore, the comparison must be made in japan phone number value terms. The most correct way to find changes in sales volume is to compare the reporting and basic parameters expressed in natural or conditional natural units. Such sales volumes are indicated in the same prices.
In order for the data to be comparable and the influence of other factors to be excluded, it is necessary to compare the reported and base sales volumes. To bring the scale of sales of the reporting period to a comparable form, it is necessary to know the index of change in the cost of goods, services or work. To recalculate, it is necessary to find the ratio of the sales volume of the reporting period and the index of change in cost. Such a calculation has an error, since the cost of products changes throughout the reporting period.
To understand how a change in the cost of goods sold affects profit, you need to compare the cost of sales of the product in the reporting period with the expenses of the base period, recalculating them for the change in sales volume.
The impact of the structure of the product range sold on profit is determined by comparing profit in the reporting period (it is calculated on the basis of prices) and cost in the base period.
To determine the impact of management and commercial expenses on profit, their values in the reporting and base periods are compared.
To understand how the sales prices of goods, services or works affect the change in profit, the sales volume of the reporting period (expressed in prices) and the base period are compared.
Preparatory stage of factor analysis
Net profit can be analyzed in different ways. The most common are horizontal, vertical and factor analysis of net profit. Also, when assessing the financial results of an enterprise, which includes net profit, it is necessary to analyze its quality and application.
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All types of analysis are united by one important element - the general preparatory stage, during which the structure of the enterprise's income and expenses is studied. This allows one to obtain an objective picture of the impact on net profit of all receipts and payments of the organization in total.
The total indicators of income and expenses are considered as aggregate factors in the formation of net profit, and their fluctuations are considered as a factor in its change.
Preparatory stage of factor analysis
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The basis is the simplest model of factor analysis of changes in net profit:
∆ЧП = ∆Д – ∆Р,
Where:
∆ЧП — change in net profit;
∆D — change in income;
∆Р — change in expenses.
For example, if the company’s income in the current period increased by 7,000,000 rubles, and expenses by 4,000,000 rubles, then the net profit compared to the previous year changed by 3,000,000 rubles (∆NP = 7,000,000 – 4,000,000).
This model can be made more detailed if we introduce a breakdown of income and expenses into the formula, i.e. separately take into account these indicators for the main activity (OD and OR) and other income and expenses (PD and PR). Then we get a second analysis model, which looks like this:
∆PP = (∆OD + ∆PD) – (∆OP + ∆PR) = (∆OD – ∆OP) + (∆PD – ∆PR).
This formula allows us to understand what had a greater impact on the change in the organization’s net profit – the main activity or other.
Preparatory stage of factor analysis
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At the preliminary stage, it is possible to determine the general ratio of income and expenses, and all other operations carried out during the analysis allow a more detailed study of the factors influencing the formation of net profit.