COST ANALYSIS ON THE BASIS OF DATA OF THE ENTERPRISE’S FINANCIAL STATEMENTS

Abstract

Enterprise’s financial statements may be defined as structured presentation of information about the financial position, financial performance and cash flows in the form of assets, liabilities, equity, income, costs, and cash flo s. Based on this information, one can analyze the enterprise’s income and costs, financial performance, financial position, financial stability, financial equilibrium, cash flows and operations efficiency. The object studied in this publication refers to the costs of the enterprises that apply the national accounting base of the Republic of Bulgaria – the National Accounting Standards, and its subject covers the specific areas of the analysis and the cost analysis methods. The aim is to present the capabilities and the methodical areas of the cost analysis based on the data from the enterprise’s financial statements, and in particular, the information from the Statement of Income and Costs. Based on the data of the enterprise’s Statement of Income and Costs, e can make analysis in the follo ing methodical areas: general cost assessment; analysis of income per costs of BGN 100 (cost effectiveness); analysis of costs by economic elements; analysis of gross cost-based return; analysis of net cost-based return with regard to the cost effectiveness. The overall assessment of enterprise’s costs comprises investigation of the amount, composition, structure and dynamics of costs. The aim of this analysis is to identify the change of costs in absolute values both in aggregate and by groups and specific types of costs for the current period with reference to the previous period, and their change in relative values. For management purposes, the average growth rates of costs in general and by types of costs in long-term perspective can be identified, the trends in their development can be described, etc. When analyzing the income per costs of BGN 100, we are able to determine the impact of the direct factors on the dynamics of this indicator of cost effectiveness. In their nature, these are the enterprise’s total amounts of costs and income, and their impact may be detailed by groups and by specific items within their composition. This enables us to identify the strength and direction of each cost and income item’s impact on the dynamics of the indicator that characterises the cost effectiveness. Based on the resultative analytical information, the management may make timely, justified and proper decisions for the enterprise’s cost management and their effectiveness. Income per costs of BGN 100 is directly related to the net income-based return. Therefore, the factors that affect the change of the cost effectiveness indicator further affect the change of net income-based return. Based on the data of the Statement of Income and Costs, we can analyze the amount, composition, structure and dynamics of the enterprise’s operating costs classified by economic elements. The opportunity to identify the profit from sale of products, goods and/or services in aggregate, based on the data of the Statement of Income and Costs, is also of great importance for the management for the purposes of calculating the operating cost-based return on that basis – an indicator that characterises the effectiveness of enterprise’s operations