Represents the amount of profit for the reporting period, as defined in the tax laws
Retained earnings (uncovered loss)
Retained earnings is the amount of net income left over for the business after it has paid out dividends to its shareholders. A business generates earnings that can be positive (profits) or negative (losses).
Profitability
Measurement of efficiency – and ultimately its success or failure
Task 9.2. Compare and analysis indicators of financial results which concerns each other
Example: Financial results performances and their concerns each other.
Performances
Last year
Reporting year
(+;-)
Growth
Concerns
Net income
507 693 607
974 038 284
466 344 677
191.8
191.8 >154.0
Sale
3 362 225 550
5 180 801 340
1 818 575 790
154.0
154>130.7
Own capital
7 745 794 466
10 124 233 076
2 378 438 610
130.7
130.7<184.0
Assets
13 198 104 658
24 276 893 065
11 078 788 407
184.0
184.0>100
Conclusion: Concerns of net income growth to sale growth was noticeably more 191.8 >154.0. This state is positive for this situation. It means more net profit remain in the entity. The sale of entity also increased 54% in reporting year comparing with last years results. In reporting years shares of owner increased by 30% and assets increased by 84% comparing with last years occurrence. According to accounting equation the liabilities of the entity increased by 8.700.349.797 soums which means entity stays almost half in obligations. The overall situation in the company can be assessed positively.
You may continue the conclusion….
Table 9.2 Complete table 9.2 and calculate it.
Performances
Last year
Reporting year
(+;-)
Growth
Concerns
Net income 270/2
527521
3265361
2737840
619.0
619.0>216.6
Sale (gross profit of sale) 030/2
4119042
8920630
4801588
216.6
216.6>144.4
Own capital 480/1
6750497
9750932
3000435
144.4
144.4>87.2
Assets 400/1
18077726
15771816
-2305910
87.2
87.2<100
Conclusion. In reporting period entities net income extremely increased by 619.0% and its more than sale which means entity gained more net profit in return sold assets. But there is a negative part of activity, from net income entity earned by its main activity only 959.451 that is, 29.4% of whole net income, other means corresponds to assets sold. Assets decreased by 12.8% and entity`s obligations also. It`s understandable by increasing in own capital of entity by 144.4% when assets decreasing. We can conclude that entity`s earnings are not circulating and this can affect negatively to financial position of the entity in the future.
Information source: Balance sheet and Financial statement forms
Task 9.3. Analyze dynamics of financial results using financial statements of a particular company and write your conclusion.
Table 9.3.
Financial results’ dynamics analysis
Indicators
Last year
Reporting year
Difference,
(+.-)
Rate of
growth, %
Net sale (010)/2
21152675
33961391
12808716
160.5
Cost of goods sold (020)/2
17033633
25040761
8007128
147.0
Gross profit on sale (030)/2
4119042
8920630
4801588
216.6
Period costs (040) = (050+060+070+080)/2
5924826
8959172
3034346
151.2
Other income(090) or loss(070) of principal (operating) activity
-1944796
-2996549
-1051753
154.0
Profit (loss) of principal (operating) activity 100/2
1217614
4529415
3311801
372.0
Incomes of financial activity 110/2
97947
82017
-15930
83.7
Expenses on financial activity 170/2
603667
585829
-17838
97.0
Profit (loss) of general economic activity 220/2
711894
4025603
3313709
565.5
Extraordinary income (loss) 230/2
-
-
-
-
Pretax profit (loss)(220+/-230) 240/2
711894
4025603
3313709
565
Tax income (profit) 250/2
138502
476298
337796
343.9
Other tax and payments from profit 260/2
45871
283944
238073
619.0
Net profit of reporting period 270/2
527521
3265361
2737840
619.0
Conclusion. In reporting period entity`s net sale considerable increased as by 60.5% than last year, and it more than cost of goods sold as 160.5>147.0 means alternatively increased gross profit on sale almost twice comparing to last years` results 216.6% in reporting period. The entity performed negative consequence in period costs and loss of operating activity increased by 51.2% and 54.0% in line. However, the entity`s profit of operating activity increased dramatically 372.0% more than last years profit of operating activity. The entity`s income from financial activity is decreased by 16.3% when expenses on financial activity also decreased by 3% in soums it shows positive proportion. The entity did not suffer extraordinary income or loss. In reporting period the entity`s net profit increased by very high indicator by 619.0%. Overall, the entity`s financial position is positive and it is optimized almost all indexes.
Information source: The statement of financial results information for appropriate year, report form F- №2 (yearly).
Task 9.4. System of performance are learned in the financial results analysis
#
Performances
Last year
Reporting year
(+,-)
Growth
1.
Income (million som):
21311607
34131779
12820172
160.1%
1.1.
Net sale
21152675
33961391
12808716
160.5%
1.2.
Other principal (operational) income
60985
88371
27386
144.9%
1.3.
Income (gain) from financial activities
97947
82017
-15930
83.7%
1.4.
Extraordinary income (gain)
-
-
-
2.
Expenses (million som):
20599713
30106176
9506463
146.1%
2.1.
Cost of goods sold
17033633
25040761
8007128
147.0%
2.2.
Periodic expenses
2962413
4479586
1517173
151.2%
2.3.
Other operational expenses
2005781
3084920
1079139
153.8%
2.4.
Financial expenses
603667
585829
-17838
97.0%
2.5.
Extraordinary expenses (Lost)
-
-
-
-
3.
Profit and expenses (million som):
x
x
X
x
3.1.
Gross profit on sale
4119042
8920630
4801588
216.5%
3.2.
Profit from operational activity
1217614
4529415
3311801
372.0%
3.3.
Pre tax profit
711894
4025603
3313709
565.4%
3.4.
Income tax
138502
476298
337796
343.9%
3.5.
Other tax from income and collections
45871
283944
238073
619.0%
3.6.
Net income
527521
3265361
2737840
619.0%
4.
Profit abilities, %
3.95%
18.6%
14.65%
4.1.
Sale profitability
2.5%
9.6%
7.1%
4.2.
Expenses profitability
2.6%
10.8%
8.2%
4.3.
Capital profitability
7.8%
33.5%
25.7%
4.4.
Assets profitability
2.9%
20.7%
17.8%
Conclusion. In reporting period the entity gained very high performance in pre tax profit increased by 465.4%. Net income more than previous years result by 2737840 or 519.0%. The entity`s profit ability changed positively from 3.95% to 18.6%. Sale profitability increased by 7.1% than previous year, cost effectiveness increased by 8.2% and positive changes in capital and assets profitability.
