return on assets is a financial ratio that characterizes the efficiency of the use of fixed assets of the organization. Return on assets shows how much revenue falls on the unit cost of fixed assets.
It should be abolished that the return on assets indicator itself does not indicate the effectiveness of the use of production assets, but only shows how the volume of products received from the sale (i.e., revenue) correlates with the cost of the organization's means of labor. It is possible to draw conclusions about the effectiveness of the use of production assets by comparing the rate of return on assets in dynamics over a number of years, or by comparing it with the same indicator for other, similar enterprises in the same industry.
The return on assets index is calculated according to the following formula:
Return on assets = Revenue / Fixed assets
For a more accurate calculation, the value of fixed assets should not be taken at the end of the period, but as the arithmetic average for the period for which the proceeds are taken (i.e., the sum of the value of fixed assets at the beginning of the period and the end of the period, divided by 2).
Some sources recommend using the historical cost of fixed assets. However, in financial statements(Balance) indicated residual value fixed assets, therefore, this estimate is often used in the calculations.
At its core, the return on assets can be attributed to the turnover indicators (along with the inventory turnover, accounts receivable and other assets). Turnover indicators (coefficient) are always calculated as the ratio of revenue to certain assets or liabilities.
The return on assets ratio does not have a generally accepted normal value. This is due to the fact that the indicator is highly dependent on industry characteristics. For example, in capital-intensive industries, the share of fixed assets in the assets of the enterprise is large, so the ratio will be lower. If we consider the rate of return on assets in dynamics, then the growth of the coefficient indicates an increase in the intensity (efficiency) of the use of equipment.
Accordingly, in order to increase the return on assets, it is necessary either to increase revenues when using existing equipment (increase the efficiency of its use, produce products with greater added value, increase the time of equipment use - the number of shifts, use more modern and productive equipment), or get rid of unnecessary equipment by reducing thus its value is in the denominator of the coefficient.
The capital productivity formula for the balance sheet is a value showing how many rubles of income fall on a single ruble of the value of fixed assets.
Fixed assets (or fixed assets) are non-mobile funds that make up the underlying assets of an enterprise. Fixed assets include:
The capital productivity formula for the balance sheet contains the company's income, which includes the type of profit (revenue or operating income).
The capital productivity formula in its calculation includes two indicators that reflect certain aspects of the company's functioning:
Most often, the calculation is carried out for this type of income as revenue, since it reflects the primary result of the sale of goods (performance of work, provision of services). In some cases, profit from the sale of the enterprise is taken as income.
The capital productivity formula for the balance sheet also includes the full value of fixed assets, but it can also be calculated only for their active part, directly related to the production process.
If applied only active part fixed assets, it will be advisable only if there are on the balance sheet:
To calculate the formula for return on assets on the balance sheet, two forms of accounting are used:
The capital productivity formula for the balance sheet in general terms:
Photd.= p. 2110 / p. 1150 *100%
Fodd is here. - the rate of return on assets (in%),
Page 2110 from OFFR the amount of revenue,
Page 1150 of BB cost of fixed assets.
In order to obtain a more accurate result, the average annual value of the value of fixed assets is calculated. At the same time, the indicator of the line 1150 BB of the beginning and end of the period is summed up, then this amount is divided by 2.
Often, profit from sales is used instead of revenue in the calculation. Then line 2200 is substituted in the capital productivity formula for the balance sheet instead of line 2110.
The capital productivity formula for the balance sheet makes it possible to consider, evaluate the effectiveness of the use of fixed assets in the process production activities for the purpose of making a profit.
The return on assets indicator on the balance sheet is usually considered in dynamics for several periods of time in order to get a more complete picture of performance. If the cost of fixed assets rises sharply (for example, when starting a new production site), then the return on assets may decrease. For this reason, it is necessary to analyze other characteristics related to the use of the property of the enterprise and the types of profit.
In the case when the value of fixed assets increases, we can talk about a further increase in capital productivity.
The return on assets formula on the balance sheet makes it possible to analyze the weak points in investment and develop a more successful strategy for investing in the company's fixed assets.
The economic activity of the enterprise can be analyzed using a number of indicators. Very often for this the financial analysis uses accounting data, in particular balance sheet and report on financial results- Forms No. 1 and No. 2. One of the important performance indicators of the enterprise is the return on assets.
The cost of all fixed assets of the company can be calculated from F-1 data.
Since the balance sheet shows us data at the beginning and end of the reporting period, we need to find the average value of the indicator for the period. To do this, the value of line 1150 at the beginning of the period and the same line at the end of the period are summed up and divided by two. That is:
The resulting result can be compared with the data of the industry, market niche, competitors. There is no normative indicator with which it could be compared. Return on assets can be analyzed over a number of years. An increase in its value will signal an increase in the efficiency of using the company's fixed assets.
Mezentseva Vasilisa
To assess the activities of the enterprise, a fairly wide list of indicators is used, including those that reflect the effectiveness of the financial results of the organization at the end of the period. For these purposes, various types of profitability, turnover ratios, including capacities and returns (capital intensity / capital productivity, material intensity / material output, etc.) are most often used. What is return on assets Return on assets as one of the basic indicators of turnover and efficiency of an enterprise reflects the potential / actual "return" of money in response to financial investments. In other words, the characteristic reflects how many rubles of income fall on the ruble of the cost of fixed assets.
The organization does not have unused property, therefore, it is possible to calculate the full cost of fixed assets. At the end of the period, the organization received the following results:
Substituting these data into the formula for calculating the return on assets according to the balance sheet, we get: CP \u003d 2500 / (1100 + 1300) \u003d 2.08 rubles / rubles. Thus, the return on assets amounted to 2.08 rubles / rub., That is, one ruble invested in fixed assets accounted for 2.08 rubles of the company's revenue.
What characterizes the rate of return on assets The considered characteristic reflects the success of the use of fixed assets in order to produce products and, as a result, generate income.
Normal value The return on assets ratio does not have a generally accepted normal value. This is due to the fact that the indicator is highly dependent on industry characteristics. For example, in capital-intensive industries, the share of fixed assets in the assets of the enterprise is large, so the ratio will be lower.
If we consider the rate of return on assets in dynamics, then the growth of the coefficient indicates an increase in the intensity (efficiency) of the use of equipment. Accordingly, in order to increase the return on assets, it is necessary either to increase revenues when using existing equipment (increase the efficiency of its use, produce products with greater added value, increase the time of equipment use - the number of shifts, use more modern and productive equipment), or get rid of unnecessary equipment by reducing thus its value is in the denominator of the coefficient.
Kfund ↗ Growth financial stability by increasing the efficiency and effectiveness of the use of production assets. Kfund ≥ K*fund The excess of the indicator over the industry average values of the coefficient shows the growth of the enterprise's competitiveness. Kfund<
Turnover analysisEmail Definition Return on assets is a financial ratio that characterizes the efficiency of using the organization's fixed assets. Return on assets shows how much revenue falls on the unit cost of fixed assets. It should be canceled that the return on assets indicator does not in itself speak about the efficiency of the use of production assets, but only shows how the volume of products received from sales correlates (i.e.
proceeds) with the value of the means of labor available to the organization. It is possible to draw conclusions about the effectiveness of the use of production assets by comparing the rate of return on assets in dynamics over a number of years, or by comparing it with the same indicator for other, similar enterprises in the same industry.
The formula for calculating the return on assets (RO) is as follows: RO = VP / OSsg, where: VP - proceeds from sales of finished products (net of value added tax and excises); OSsg - the average annual cost of fixed assets at the beginning of the year. If you use the data of the balance sheet, then this formula will take the following form: FD = line 2110 in the form 2 / ((line 1150 Bng + line 1150 Bkg) / 2), where: Bng and Bkg are lines in the balance sheet at the beginning and at the end of the year, respectively. When using the average annual cost of fixed assets (hereinafter referred to as fixed assets) in calculating the return on assets, a more accurate result is obtained.
However, in most cases, the residual value of fixed assets is used to obtain a one-time indicator. How are capital productivity and capital intensity of fixed assets related Like capital productivity, capital intensity is an indicator that indicates whether fixed assets are used effectively.
Fixed assets are also called fixed assets, non-mobile assets and represent the basic property of the enterprise (buildings, structures, equipment, power lines, transport, patents, licenses, etc.). Income in this calculation refers to the types of profit - revenue or profit from sales. How to calculate it For the calculation, it is necessary to use two indicators that reflect certain aspects of the organization's activities - income and the cost of fixed assets.
It is most rational to calculate this type of income as revenue, because it reflects the primary result from the sale of products / the provision of services / the performance of work. In some cases, it is more expedient to use profit from sales as income (for example, if the cost of products / services / works is low and takes no more than 30% of the total revenue).
The practice of comparing the obtained indicator with the same results of competing enterprises is widely used. The formula for calculating the return on assets, the formula for calculating which is presented below, is as follows: F = Sales proceeds / Fixed assets In order to draw the right conclusions based on the data obtained, the indicator of the number of production assets should be taken as the arithmetic mean for the reporting period.
The two-factor model is calculated as follows: F2 = Af/F*O/Af, where Af is the active part of the production assets, F is the fixed assets of production, and O is the volume of product sales. The analysis can also take into account 4 factors - the level of specialization, the capacity of the company, the structure of production assets and the turnover of active means of production. F4 \u003d O / Oosn. * Oosn. / Msred. * Af / F * Msred. / Af, where Oosn. - the main products of the enterprise, Msred.
- the average annual capacity of the enterprise. Seven-factor analysis of capital productivity The seven-factor model of the analysis allows you to deeply evaluate all the elements that influenced the coefficient of efficiency of production capacities. The return on assets of fixed assets, the formula of which shows only a general picture of the state of the means of labor, would be incomplete without the following analysis.
The calculation formula looks like this: Vfa= (Vfab + Vfae)/2 where Vfa is the amount of fixed assets (annual average), rub.; Vfab is the cost of fixed assets (beginning of the period), rub.; Vfae – value of fixed assets (end of period), rub. Formula for calculating the balance To calculate the return on assets, you must have 2 forms of accounting - a balance sheet and a statement of financial results (profit and loss statement). They are also referred to as form #1 and #2, respectively. The amount of revenue can be found in the income statement, and the value of fixed assets can be calculated based on the balance sheet data.
The methodology for calculating the return on assets (calculation formula) according to the balance sheet is as follows: CP = (line 2110 OFR / (line
The economic activity of the enterprise can be analyzed using a number of indicators. Very often, for this, financial analysis uses data from financial statements, in particular the balance sheet and income statement - forms No. 1 and No. 2.
One of the important performance indicators of the enterprise is the return on assets.
In financial analysis, this is an indicator that characterizes the effectiveness of investments in fixed assets of an enterprise. It shows what share of the revenue falls on each ruble invested in them. Thus, the analyst will be able to say how efficiently machines, equipment, machinery and other fixed assets are used in economic activities.
The indicator is calculated on the basis of data from regular financial statements.
The basic formula of the indicator is given below:
Return on assets = sales proceeds: fixed assets.
Thus, the total revenue from the sale of the enterprise must be divided into fixed assets in value terms. We take all the data from the financial statements - from the balance sheet, form No. 1 (f-1) and the income statement (f-2).
The company's revenue is reflected in F-2, line 2110.
The cost of all fixed assets of the company can be calculated from F-1 data. Since the balance sheet shows us data at the beginning and end of the reporting period, we need to find the average value of the indicator for the period. To do this, the value of line 1150 at the beginning of the period and the same line at the end of the period are summed up and divided by two. That is:
(line 1150 at the beginning + line 1150 at the end) : 2
As a result, the return on assets formula can be rewritten as follows:
Capital productivity = line 2110 / ((line 1150 at the beginning + line 1150 at the end): 2)
Let's take a specific example. To do this, we present the data of the financial statements of Kapriz LLC in an abbreviated form.
We calculate the return on assets of the enterprise:
Return on assets \u003d 3,500,000 / ((163,000 + 170,000): 2) \u003d 21.02
Thus, for every ruble of investments invested in the company's fixed assets, there is a share of 21 rubles of sales proceeds.
The resulting result can be compared with the data of the industry, market niche, competitors.
There is no normative indicator with which it could be compared. Return on assets can be analyzed over a number of years. An increase in its value will signal an increase in the efficiency of using the company's fixed assets.
(efficiency of non-current capital) - a coefficient equal to the ratio of the value of manufactured or sold products after deducting VAT and excises to the average annual cost of fixed assets.
It is calculated in the FinEkAnalysis program in the Business Activity Analysis block as return on assets.
Shows what is the return on each ruble invested in fixed assets, what is the result of this investment.
The general formula for calculating the coefficient:
Calculation formula according to the old balance sheet:
| K f = | p.010 |
| 0.5*(p.120 n + p.120 j) |
where line 010 is the line of the income statement (form No. 2), lines 120 n and line 120 k are the lines of the balance sheet (form No. 1) at the beginning and end of the reporting period.
Calculation formula according to the new balance sheet:
Return on assets is an indicator that reflects the level and effect of the operation of fixed assets. The value of the indicator depends on industry specifics, the level of inflation and the revaluation of fixed assets.
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In this lesson:
Comment.
The phrase "increasing the use of fixed assets" is translated into normal language as "increasing the return on assets." This indicator was actively used in Soviet times, and therefore it is recommended to read the article " Return on assets". The formulas for return on assets are indicated there. The article details all the inferiority of the use of this indicator and the reasons for this.
Please note that when a modern economist talks about fixed assets, he means the current residual value (initial value minus accrued depreciation), and the "Soviet" economist means their initial cost and it does not matter that all fixed assets are already 50-60 years old . Therefore, "increasing utilization" simply means increasing output from existing capacity and nothing more.
Solution.
Return on assets = 180 million / 120 million = 1.5
Now we "ensure the growth of capital productivity" by 2%
We receive a new volume of production.
120 x 1.53 = 183.6 million
Well, let's find the difference.
180 - 183.6 = 3.6 million rubles
Comment. As you can see, the answer could also be obtained by simply multiplying the volume of production by 1.02 (since we have increased the use of OF by 2%, then the production will come out by 2% more). But then there will be no such chain of insane calculations that the teacher needs so much ...
Answer: 3.6 million rubles
Using the data in the table below, determine for two years:
|
Indicators |
Values |
|
Manufacture of marketable products in wholesale prices, thousand UAH. | |
|
The cost of the annual output of marketable products, thousand UAH. | |
|
The annual payroll fund of employees at the enterprise with deductions for social events, thousand UAH. | |
|
The cost of fixed production assets at the beginning of the year, thousand UAH. | |
|
During the year, fixed assets were put into operation at the beginning of the year, thousand UAH. | |
|
Including by quarters: | |
|
During the year, fixed assets were decommissioned, the total cost of which is, thousand UAH. | |
|
Including by quarters: | |
|
The average annual cost of standardized working capital, thousand UAH. | |
|
Average number of employees, thousand people | |
|
Observation data for the operation of metalworking equipment within two working days: | |
|
The number of machine-shifts worked in two days | |
|
Number of metalworking equipment, pcs. |
Solution.
Find the average annual cost of fixed production assets. It can be found using the formula:
OF N- the cost of fixed production assets at the beginning of the year, thousand UAH.
OF in i- the cost of fixed production assets introduced in the i-th month, thousand UAH.
tpi- the period from the moment of introduction of fixed assets until the end of the year (the number of months of use of fixed assets that are introduced during the year), months.
OF bi- the cost of fixed production assets that retired in i-m month, thousand hryvnia
t at i- the period from the date of disposal of fixed assets until the end of the year (the number of months in a year during which the retired fixed assets are not used), months.
n - the number of cases of the introduction of OPF.
m - the number of cases of disposal of the OPF.
Substitute the values into the formula.
OF avg =1500+ (300*9/12+300*6/12) - (110*9/12+190*6/12) =1500+(225+150)-
-(82.5+95)=1500+375-177.5=1697.5 thousand UAH.
Now let's find the return on assets. The return on assets shows the annual volume of production of marketable products per one hryvnia of the average annual cost of fixed production assets. It is determined by the formula:
TP- commercial products.
OF Wed. - the average annual cost of fixed production assets.
Substitute the values into the formula.
FD in \u003d 2000 / 1697.5 \u003d 1.178
Now let's find the capital intensity. This indicator is the return on assets, shows what part of the average annual cost of fixed assets is used for the production of marketable products worth 1 hryvnia.
Capital intensity can be found by the formula:
FU \u003d 1,697.5 / 2,000 \u003d 0.84875
Now let's find the capital-labor ratio. The capital-labor ratio can be found using the formula:
Ch r- the average number of employees of the enterprise, people.
OF Wed- the average annual cost of fixed production assets.
Substitute the values in the formula:
EF o =1697.5/4=424.375 UAH/person
Let's find asset retirement rate. It is calculated as the ratio of the value of fixed production assets retired during the year to the total value of fixed production assets at the beginning of the year.
Substitute the values into the formula.
K vyb \u003d 300/1500 \u003d 0.2
Let's find coefficient of renewal of fixed production assets. It is determined by dividing the value of fixed production assets introduced during the year by the total value of fixed production assets at the end of the year.
To find the cost of fixed assets at the end of the year, we need to add to the total value of fixed production assets, the introduced fixed assets and subtract the retired fixed assets.
Substitute the values in the formula.
To update =600/(1500+600-300)=600/1800=0.33
Let's find the shift factor of metalworking equipment. It shows how many shifts each piece of installed equipment is used on average. This coefficient is found by the formula.
In the article, we will consider the return on assets of fixed production assets, as well as the calculation formula for an investment project.
return on assets (English. Fixed assets turnover ratio) is a financial indicator that shows the intensity and effectiveness of the use of fixed assets. The return on assets ratio is used to analyze the financial condition of the enterprise and shows the effectiveness of the management of the enterprise's funds when analyzing its dynamics.
return on assets ratio shows how many products were sold (produced) per unit of production assets. The calculation formula is as follows:
The following indicators are used to assess the effectiveness of the company's production assets management: , .
The return on assets ratio does not have a single standard value. For each enterprise, their allowable levels of turnover of production assets are determined. Analysis of capital productivity is carried out in dynamics over several years, which allows us to assess the nature of the trend.
| Dynamics of the return on assets ratio | Financial condition of the enterprise |
| K Fund ↘ | Reducing the financial stability of the enterprise and the efficiency of the use of production assets and capacities. |
| K fund ↗ | Growth of financial stability by increasing the efficiency and effectiveness of the use of production assets. |
| K fund ≥ K * fund | The excess of the indicator over the industry average values of the coefficient shows the growth of the competitiveness of the enterprise. |
| K fund< К * фонд | The return on assets of the enterprise is below the industry average values of the coefficient. This is an indicator of a decrease in the competitiveness of the enterprise. |
To determine the strength of the influence of various economic factors on the level of capital productivity, factor analysis is used in practice. Consider a two-factor, four-factor and seven-factor model of return on assets.
The two-factor model shows how the value of the capital productivity ratio is affected by the structure of production assets.
where:
F a is the active part of fixed production assets;
N is the volume of manufactured and sold products of the enterprise;
F - fixed production assets.
The model makes it possible to assess the degree of interaction between the level of return on assets of an enterprise and seven factors: the structure of fixed production assets, the structure of machinery and equipment in active funds, the shift work of machines and equipment, the average cost of a piece of equipment, the duration of a machine shift, and the efficiency of equipment. The formula looks like this:
F mash - the average cost of existing machines and machine tools;
T cm - number of machine shifts;
c is the average cost of the equipment;
Q d - the number of machines and machines;
I is the duration of the period under consideration;
T h - the number of hours worked by machines and machine tools.
This model allows you to determine the nature of the interaction between the level of capital productivity of the enterprise and the level of specialization, the coefficient of average capacity of the enterprise, the structure of fixed production assets and the turnover of the active part of production assets.
where:
N oc - the main products of the company;
W is the average annual capacity of the enterprise.
The management of capital productivity is based on the management of revenue and the size of the fixed assets of the enterprise. An increase in the return on assets of an enterprise can be based on the following factors:
