Indicators of business activity of the enterprise
Indicators of business activity aretool for assessing the effectiveness of the main activity of the business entity. As the main characteristic of these indicators can be considered the speed of turnover of financial resources. The analysis of the economic activity of the subject is carried out by calculating the following coefficients:
- Turnover of assets, calculated as a rationet revenue (according to the Statement of financial results) to the average balance sheet total. This coefficient characterizes the optimality of the use by a business entity of all available resources, regardless of the sources of income.
- Turnover of accounts receivable or payabledebt, which is calculated by the ratio of net income to the corresponding average annual debt. This indicator reflects the speed of circulation of accounts receivable (payable) liabilities of the economic entity for the analyzed period, as well as the dynamics of financial loans that are provided or received by the enterprise.
- Duration of revolutions of the above typesdebts calculated as the ratio of the duration of the period under review to the corresponding turnover ratios of such debts. It characterizes the average repayment period for these types of debts.
- Inventory turnover, as well asown capital. As any coefficient, the turnover of material reserves is calculated by finding the ratio of the cost of production to the average value of such stocks. With the use of this indicator is given a characteristic of the speed of sale of commodity-material values of the business entity. When considering the turnover of equity, the ratio of net proceeds to the average equity of the entity is taken into account. This indicator evaluates the effectiveness of the company when using its own capital.
- Capital productivity (turnover of fixed assets). The calculation is made as the ratio of net proceeds to the average indicator for the year of fixed assets. With the help of this indicator, an assessment of the optimality of the use of fixed assets is given.
In general, the indicators of business activitythe enterprises characterize the general activity of the enterprise and its opportunities when promoting in the relevant market. The evaluation of these indicators is carried out in comparison with the activities of similar business entities in related areas of activity.
Indicators of business activity from the positionfinancial activities are very closely linked to an element of performance evaluation, such as profitability. This coefficient shows the profitability of the subject and is a relative indicator of its results.
The indicators of business activity will allow us to analyze the effectiveness of using our funds. Expressed in days, in the number of revolutions of each resource by choice for the analyzed period.
To fully characterize the activitiesthe enterprise needs to analyze also such concept as "the financial cycle" which begins from the date of repayment of accounts payable (payment for materials to suppliers) and comes to an end with date of reception of money resources from the buyer for the shipped production.
The indicators of business activity are of high qualitycharacter, when characterized by: the breadth of the market for the sale of goods, the availability of exported finished products, the company's commercial reputation and the stability of ties with counterparties. It is advisable to consider these coefficients in dynamics, i.e. compare them with the rate of change. It is the ratio of the dynamics of production and resources that determines the economic growth of the business entity.