In the service, the Projects entity is a flexible tool of profit and profitability reflection under various areas of business, sales locations, large counterparties, objects, groups of goods or services.
Let us simulate the situation, in which we have a construction company making facelift of objects in different districts and residential quarters.
So, we entered the following into the projects:
Residential complex Hills
Residential complex Park
Therefore, we go to Analytics, the Projects report.
We can view information for a specific period or the whole time, for this you only need to select the desired period in the filter at the top of the report.
In the report, it is convenient to compare the projects’ profitability for further analysis.
We see the income, costs and profit of each project.
For comparison, we also included Project Administrative costs – they are the costs of the management company itself.
Thus, we can see what costs are incurred by the management company and what revenues pass through each of the residential quarters, and whether these revenues are sufficient to cover management costs.
For the convenience of the owner, financier or accountant, the salaries of employees can also be transferred to Projects. But it is not necessary to enter all categories directly but only those that are necessary for a quick comparison of costs and profits for a specific period.
There is a separate column of profitability as a percentage in the report. Profitability is a ratio of profit to your income, the return on your sales.
That is, if you made a sale for 1,840,000 USD and you know your average profitability, which you reach on average every month, then you can immediately estimate how much net profit you will have. For example, 25% of 1,840,000 USD is 460,000 USD net profit.
There is also a column for the income to costs ratio as a percentage in the report. That is, how many times, in what percentage, does our income exceed and cover our costs.
If the ratio Income\Cost % is more than 100%, it is a good indicator, that is, the income is higher than the cost part. If Income\Cost, % is equal to 100%, it means that the situation is moderate, the project brings income equal to the cost price, but not higher, in fact the project does not bring us any income at all.
If the indicator were lower than 100%, it would already be a signal for us that the costs are higher than the income part of the project, and therefore we need to take measures. From here we have a direct relationship of indicators, the higher the percentage of Income\Cost, %, the higher the percentage of profitability and vice versa.