Page 47 - IMDR MSME BOOK 2021

Managing Finance in Micro, Small & Medium Enterprises
in turnover, prots, and capital structure of the
company.

Prot analysis involves analysing the reported prot
gure of a business to determine the actual extent of its
protability. This analysis is required to be done by
external analysts, as internal management of the rm
routinely reports overly optimistic prot information to
the stakeholders. The protability is the barometer to
assess the operational efciency of the rm. It is used as
the criteria for decision making by the different
stakeholders of the rm. It not only safeguards the rm
from the situation of insolvency, but it also paves the way
for the expansion and growth of the rm.
In the present study it is found that the majority 73% of
the sample business units analyse protability for each
line of business/segment. It helps to assess the prot or
loss generated by a particular product line of a business,
or a particular geographic location.
An attempt has been made to know how much the
respondent rm has grown on an average per year
during the last three years (Table No.5 (Figure No.8). It is
found that in last three years majority (47%) of the
respondent’s rms’ turnover has been grown by 10%-
25%, followed by 27% rms where turnover has
increased by above 25% and 22% of the respondents
where the turnover growth has remained less than 10%
in last three years.
The average growth rate of Net prot before tax has been
reported as 10%-25% by 46% of the rms in the last
three years, followed by less than 10% growth in net
prot before tax in 31% of the sample rms. The average
growth rate of Net prot after tax of the rms in the last
three years, has been reported as less than 10% by
majority 37% followed by35% of respondents where the
growth in net prot after tax remained 10%-25%.