The full cost characterizes. What does the cost of production mean? How to calculate cost of goods sold

Fixed assets are classified as production and non-production. Basic assets are funds directly or indirectly involved in production. Non-production facilities are those that serve social needs and are on the balance sheet of the OS organization.

Since profitability determines the efficiency of using fixed assets and capital investments, the profitability of using fixed assets demonstrates the level of profitability received by an institution from the use of fixed assets and the results of investing in fixed assets.

The higher the ROPS indicator, the higher the productivity from the use of production fixed assets. If the indicator begins to decline sharply, then management can conclude that the functioning of a particular asset is ineffective and decide to write it off.

Thus, the analysis of the OPS profitability criterion is aimed at searching for ineffective and ineffective segments of production processes at the enterprise, at assessing the quality of work and the degree of professionalism of employees involved in production and using specialized equipment. External and internal users of economic reporting with the help of ROPS can see how successfully the organization conducts its financial and economic activities, and how high the return on investment in fixed assets and capital investments is.

Formula for calculating the profitability of fixed assets

The economic indicator of ROPF is defined as the ratio of balance sheet, net profit to the average annual cost of fixed assets.

Data on profits and the average annual value of funds can be found in the annual financial statements - in the balance sheet and income statement.

The balance is calculated in several ways:

Profitability of general fund = (Net profit / Average annual cost of fixed assets) × 100%.

Example.

The amount of the general fund in 2016 was 1,060,000 rubles, in 2017 - 1,890,000.00 rubles.

The net profit of the institution for 2017 amounted to 2,300,000.00 rubles.

The average annual cost of fixed assets is determined as the arithmetic average of the indicators for 2016 and 2017: (1,060,000 + 1,890,000) / 2 = 1,475,000.00 rubles.

ROPF = (2,300,000 / 1,475,000) × 100% = 156% - the organization’s real profitability from the use of OPS.

To determine the amount of profitability, it is necessary to calculate the average annual cost of open pension fund:

With a known value of OS production facilities, the ROPF indicator is determined in the following way:

Calculation example

Initial conditions:

the organization’s net profit for 2017 amounted to 8,350 rubles;
OPF at the beginning of the year - 53,635 rubles;
OPF at the end of the year - 64,970 rubles.

Thus, the profitability of production fixed assets for 2017 was:

Average annual cost of open pension fund: (53,635+ 64,970) / 2 = 59,302.50 rubles.

ROPF = (8350 / 59,302.50) × 100% = 14.1%.

The coefficient is equal to the ratio of balance sheet profit to the average annual cost of fixed production and standardized working capital. In other words, the indicator represents the amount of profit per each ruble of the cost of products sold (production expenses). The initial data for the calculation is the balance sheet.

The calculation and analysis of the indicator is done by the FinEkAnalysis program in the Analysis and assessment of profitability and profitability block.

Production profitability - what it shows

Reflects the economic efficiency of a business or its division. Profitability of production shows how effectively the property of the enterprise is used.

Production profitability - formula

Formula for calculating the coefficient:

Calculation formula based on the new balance sheet:

Production profitability - meaning

The increase in value is related to:

with a reduction in production costs,
with increasing product quality,
with an increase in profit.

A decrease may indicate:

increase in production costs,
deterioration in product quality,
deterioration in the use of production assets.

Production profitability - diagram

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All organizations try to use their resources as efficiently as possible. To assess their activities, special economic indicators are used. One of them is the return on fixed assets.

First of all, you need to understand what constitutes fixed assets:

Definition of profitability

The return on fixed assets shows the dynamics of the return on investment in the corresponding resources - in the form of income that falls on a single monetary unit, reflecting the price of assets.

The purposes of calculating this coefficient are:

Increasing the shift ratio;
Reducing the downtime of special equipment;
Establishing the importance of using new technologies in specific situations;
Increasing the speed of development of new technologies;
Determining the need to replace or modernize any special equipment.

Calculation formula

The return on fixed assets of a company should be calculated using the following formula:

\(Profitability=\frac(Net Profit)(Cost of Relevant Funds)*100\%\)

Despite its simplicity, the form allows you to find out the company’s business model, which is extremely significant from the point of view of assessing the effectiveness of the company’s business model. The main purpose of the calculations is to determine the percentage of profit that correlates with investments in fixed assets.

Cost-benefit analysis

Some companies periodically conduct OS cost-benefit analysis. This is done for the purpose of:

Assessing how well employees perform their duties;
Finding the most efficient and most ineffective production areas;
Determination of indicators that predetermine an increase in the profitability of production in general, or in certain areas.

Basically, the analysis of this indicator is carried out together with the analysis of other indicators.

It is very important that the profitability ratio of fixed assets should be considered in dynamics. When new equipment is introduced into the production structure, it is possible that this will have a positive impact on the efficiency of the business model. However, this point must be documented by the company’s management. One way to do this is to calculate the profitability of the operating system over time.

Methods for increasing profitability

Based on the results of the analysis, companies are developing a set of measures aimed at increasing profitability. All methods are divided into two groups: