First, the content of profitability analysis
Profitability, also known as profitability, refers to the ability of enterprises to obtain profits. The analysis of profitability should include the level, stability and durability of profitability. In the analysis of the profitability of enterprises, people tend to pay attention to the amount of profits obtained by enterprises, while ignoring the analysis of the stability and durability of the profitability of enterprises. In fact, the profitability of an enterprise cannot be measured only by the total profit of the enterprise. Although the total profit can reveal the scale or level of the enterprise's total profit in the current period, it can't explain how this total profit is formed, nor can it reflect whether the enterprise's profit can remain at the current level or grow at a certain speed, that is, it can't reveal the inherent quality of this profit. Therefore, the analysis of profitability should not only analyze the total amount, but also analyze the profit structure on this basis to grasp the stability and durability of enterprise profits. The latter is more important in report analysis.
Second, the method of profitability analysis
(I) Analysis of profit stability The stability of profit should be mainly analyzed from the perspective of profit structure of various businesses, that is, the stability of profit can be judged by analyzing the proportion of profits of various businesses in total profits. According to the nature of business, the profits in China's income statement are divided into sales profits of commodities (products), profits from other businesses, operating profits, non-operating income and expenditure, etc. Profit items are arranged in the order of profit stability. The higher the proportion of the first few items in the total profit, the stronger the stability of the profit. Because the main business is the main business of an enterprise, an extended enterprise always strives to ensure the stability of its main business, thus maintaining the stability of its profit level. Therefore, in the analysis of profit stability, we should focus on the proportion of main business profits, and focus on the orientation and influence of main business profits on the total profit level of enterprises.
(B) analysis of the sustainability of profits: the sustainability of profits, that is, the long-term trend of corporate profits. To analyze the sustainability of earnings, we usually compare the profits and losses of two or more periods. The comparison of each period can be absolute or relative. Absolute comparison method is to compare the absolute amount of income and expenditure, business or commodity profits that often occur in enterprises to see whether their profits can be maintained or increased. The relative comparison method is to select a certain year as the base year, divide the balance of the same item in the base year by the balance of each income and expenditure item in the income statement of each year, and then multiply it by 100% to get the percentage change of each related item, so as to judge whether the profit level of an enterprise has the possibility of sustained maintenance and growth. For example, if an enterprise's regular commodity sales or business profits grow steadily, it shows that the enterprise's profits are more durable.
(3) Several indicators of profitability analysis analyze the profitability of enterprises, and evaluate the profitability of enterprises through relative financial indicators. These indicators are generally divided into four categories according to resource input and operating characteristics: capital operating profitability analysis, asset operating profitability analysis, commodity operating profitability analysis and listed company profitability analysis. Basic indicators include: return on net assets, return on total assets, income profit rate, cost profit rate, earnings per share, return on common stock and dividend payment rate. The analysis of enterprise profitability mainly refers to the analysis of profit rate.
Third, the limitations of profitability analysis indicators
(1) The current income statement reflects the defects of the financial performance of the enterprise. The income statement of China enterprises is a performance report form based on the traditional concept of accounting income and the proportion of income and expenses. What is listed in this report is mainly realized income. It is suitable in the economic environment with stable price base, single market activity and low external risk, and can basically and accurately reflect the income of enterprise operating activities. However, with the improvement of economic marketization, price fluctuation has become an inevitable phenomenon in the economic process of various countries, especially in the 1980s, when innovations appeared, financial assets and financial liabilities with strong price fluctuation appeared, which changed the traditional concept that the value of assets was determined by necessary labor time, so the value was relatively stable. Therefore, it is inevitable to adopt fair value as the measurement attribute of financial instruments, but it also brings another problem: whether the gains and losses caused by changes in fair value are recognized in the income statement. If it is not confirmed in the income statement, it will make the income statement unable to truthfully reflect all the income of the enterprise in the current period, and abandon the unrealized appreciation outside the income calculation, which will make the income calculation lack logical consistency and fail to meet the requirements of fair and full disclosure, thus reducing the reliability of accounting information.
(B) the defects of the financial index system itself. The current financial indicators have a strong color of government assessment. Because the setting of financial index system mainly focuses on meeting the needs of government macro-control, it does not fully consider whether these evaluation information can effectively serve internal business decisions.
2. The index value is shallow and unreliable. For the purpose of protecting their own business secrets and market interests, the indicators disclosed by enterprises are usually limited to shallow and general financial information. At the same time, considering the market image and the good evaluation of the government and its institutions, enterprises often supplement and modify the information that should have been disclosed to varying degrees. Therefore, it is difficult for investors to make a correct evaluation of the real operation and financial situation of enterprises according to these indicators. For enterprise decision-makers, it is impossible to grasp the business performance and financial status of enterprises only through these simple index values, and some deep and detailed financial information that is really useful to enterprise operators cannot be found in the financial standard system, which will inevitably affect the enthusiasm of enterprises to improve management by means of financial means, thus greatly reducing the role of financial points.
3. The name, formula and calculation caliber of indicators are also very irregular; The time value of money and the influence of inflation are not considered in the analysis. In view of the above reasons, it is necessary to improve and perfect the existing financial analysis indicators.
Fourthly, the improvement and perfection of profitability evaluation index.
(A) the improvement of commonly used profitability evaluation indicators
1. ROE. There are two common calculation formulas for ROE. One denominator is the year-end net assets, and the other denominator is the average of the year-end net assets and the year-end net assets. These two forms of molecules are the net profit of the year. Since the numerator of ROE is the net profit of the current year, it is more reasonable to compare the denominator with the average of the net assets at the beginning and the end of the year, that is, it is more reasonable to use the latter formula. In profit distribution, cash dividends affect the net assets at the end of the year, thus affecting the return on net assets; Stock dividends do not affect the net assets at the end of the year, so they do not affect the return on net assets. As an index to evaluate the income of an enterprise in the current year, the calculated value should not be different because of different distribution schemes. Therefore, it is more reasonable to further increase the year-end net assets of the denominator to the year-end net assets before profit distribution.
2. Return on total assets. The general meaning of return on total assets refers to the ratio of total remuneration to average total assets in a certain period of time, which indicates the overall profitability of all assets of an enterprise, including liabilities and owners' equity. Liabilities in the total assets of an enterprise are provided by creditors, who receive interest income from the enterprise, which corresponds to the interest expenditure of the enterprise. The net assets in the total assets of an enterprise are shareholders' investments, and shareholders receive dividends from the enterprise, which corresponds to the net profit of the enterprise, that is, after-tax profit, rather than total profit. Therefore, it is more reasonable to change the numerator in the calculation formula of total assets compensation to the sum of net profit and interest expenses.
3. Cost profit rate. The profit rate of cost and expense is the ratio of the total profit of an enterprise to the total cost and expense in a certain period. By comparing the income and expenditure of enterprises, this index evaluates the price paid by enterprises to obtain income, and evaluates the income status of enterprises from the perspective of consumption, thus promoting enterprises to strengthen internal management, save expenditure and improve operating efficiency. We know that the total profit includes subsidy income, net non-operating income and expenses that do not match the cost. Therefore, it is more reasonable to change the numerator of the calculation formula of cost and profit rate into operating profit.
(II) Improvement of Common profitability evaluation Indicators Under market conditions, the cash flow of an enterprise largely determines the survival and ability of the enterprise, thus largely determining the profitability of the enterprise. This is because if the cash flow of enterprises is insufficient, the cash flow is not smooth and the cash distribution is invalid, it will affect the survival and development of enterprises, and then affect the profitability of enterprises. Common profitability evaluation indicators are basically calculated and evaluated based on accrual basis data, such as return on net assets, return on total assets, cost profit rate, etc. They can't reflect the profitability of enterprises accompanied by cash inflows, and there are defects and deficiencies in evaluating the profitability of enterprises only by "quantitative" quantity rather than "qualitative" quantity. In the practice of enterprises in China, it is common and serious that cash inflow lags behind profit recognition. Therefore, it is very necessary to supplement and increase the indicators to evaluate the profitability of enterprises with cash inflow, that is, to introduce cash flow to formulate profitability indicators to evaluate the relevant capabilities of enterprises.
Profitability analysis is the focus of enterprise financial analysis, such as financial structure analysis and solvency analysis. Its fundamental purpose is to find out in time through analysis, improve the financial structure of enterprises, improve their solvency and management ability, and finally improve their profitability and promote their sustained and stable development.