Analysis of Sales, Benefits General Expenses

The line followed by the sales, benefits and expenses is a crucial factor for deciding if a society and its securities present a growth situation. The sudden rise of the sales or of the benefits during one year does not help us to reach a conclusion: it is necessary for they’re to be a constant line growth along several years.

Most of the analysts estimate that it is necessary five years to confirm that a company is a frank growth situation. Another aspect to be analyzed is the figures of the benefits. Some successive annual increments in sales can only be significant if accompanied by the growth of the benefits of a company.

When examining figures of benefits, try to untangle what is there behind the numbers so can in that way determine if the movement is not due to an isolated event or to a change in the accounting procedures.

The changes in the accounting methods can substantially affect the benefit figures. For this reason, most of the professionals center their attention in the complexity and number of notes that accompany the financial statements.

Usually, a considerable number of notes are enough reason to examine the figures more thoroughly, the secrets of a company are usually slightly hidden in these notes and it is possible to rescue valuable information from them. That is why most of the analysts dedicate much time to read (between lines) and valuate the notes before passing to study the text of the annual report. It is worth following this example, for which I advice to dedicate all the necessary time to study such notes.

The external auditing reports are the starting point for examining thoroughly the notes that appear on the annual report. Everything is important, so take your time to analyze and understand them. Also, if a company changes frequently of external auditors, you should observe more carefully its figures.

Apart from the sales and benefits figures, you should take a look to the evolutions of the general and management expenses. Many companies experiment a fast rhythm of growth until they get to a point in which the sales and benefits figures are stabilized. This usually happens when they lose control of their general and management expenses. Frequently the purchase of a private airplane and of other luxuries is an omen of problems for a company in growth, especially for those that are just beginning and need for it, to use all its benefits on the business.  That is why it is very important to observe the evolution of such expenses.

1.- gross benefits margin   =   gross benefits
                        net sales

The examination of the gross benefits margin of a company throughout the time gives you an idea of its capacity to maintain its position in the sector, and possibly to make better.

You must compare the gross benefit margin of the company we are analyzing with that of others in the same sector, in this way we may appreciate its position with respect to the rest.

2. Exploitation benefit margin   = exploitation benefits
               Net sales

If the exploitation benefit m margin of a company fluctuates too much, it is usually a sign of volatility of the sector in which it operates.

3. Net benefit margin   = net benefit
                              Net sales

The net benefit margin gives you an idea of what the company destines for fiscal sources. This index must also be compared with that of other companies of the sector to in this way determine if the company that we are researching has a better or worse profitability than the others.

Beginner Money Investing Opening an Investment Account Growth and Securities Stock - Company Growth Rate Profitability of Their Funds Analysis of Sales, Benefits & General Expenses Selecting an Account Executive Types of Accounts; Cash Account