Analysis of the Operation and Financial Condition of the Enterprise

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Analysis of the Operation and Financial Condition of the Enterprise net profit gained during the year reported; undistributed profit at the beginning of the year; total distributable amount of profit; dividends payable to shareholders (participants); undistributed profit at the end of the year.Estimates of the balance sheet items and financial performance measures are closelyrelated with other financial statements as increase (decrease) in profit compared to thepreceding period and transfer of profit to equity affects the enterprise development andfinancial position.Table 3.3 Possible order of income statement analysisItem Questions to be consideredProfit Is the outcome of the enterprise performance profit or loss?What is the distribution of profit?Turnover What is the turnover of an enterprise?What is the increase/decrease in the enterprise turnover?What factors influence the changes in the turnover of an enterprise?Revenues What is the revenue structure of an enterprise (the percentage by thetype of production or services from the turnover)?Costs What is the structure of costs (percentage of cost from the totalamount of costs or from the turnover)?What is the amount of costs compared to the previous period?What is cost increase/decrease against turnover increase/decrease?Example Preparation of the income statementThe following information is available for the period ended 31.12.200X.58
Analysis of the Operation and Financial Condition of the EnterpriseAmountRoad transport operating and maintenance costs 1200Rent payments received from tenants 2000Closing stock (as of 31 st of December) 3000Rent payments paid for the period to 31 st of December 5000Trucks 6300Annual depreciation of trucks 1500Lighting and heating costs 900Telephone and postal services 450Sales and distribution 97400Purchases of goods 68350Insurance costs 750Accounts receivable 1000Interest on bank loan payable for the period to 31 st of December 620Bank loan 150000Balance of cash assets 4780Salaries to employees and social payments 10400Opening stock as at 1 st of January 4000Prepare the income statement for the year ended on 31 st of DecemberIncome statement for the year ended on 31 st of DecemberSales (Turnover) 97400Less Prime cost of goods sold:Opening stock as at 1 st of January 4000Add Purchases of goods 68350Less Closing stock (as of 31 st of December) (3000)(69350)Gross profit 28050Rent payments received from tenants 2000Salaries to employees and social payments (10400)Rent payments paid for the period to 31 st of December (5000)Lighting and heating costs (900)Telephone and postal services (450)Insurance costs (750)Road transport operating and maintenance costs (1200)Interest on bank loan payable for the period to 31 st of December (620)Annual depreciation of trucks (1500)Profit 923059
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Analysis of the Operation and Financial Condition of the Enterprise

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