PROFIT AND LOSS ACCOUNT – SYNTHETIC EXPRESSION OF ABSOLUTE RETURN

Abstract

This study has as main objective the presentation of the current state of knowledge regarding the profit and loss account as part of the financial statements which express in absolute value the profitability of companies and the empirical analysis of these concepts based on the information submitted by OMV Petrom between 2011 and 2015. Thus, in the first part we present several approaches from the specialized literature regarding the aspects mentioned above. The second part follows a vertical and horizontal analysis of key indicators used for measuring the absolute return. For the horizontal analysis we pursued the evolution in time of the following indicators: Gross Margin, Earnings Before Interest and Taxes (EBIT), Financial Result, Gross and Net Result. The vertical analysis aimed to explain the formation of the Gross Result via EBIT (which was also analyzed through the Gross Margin and other specific elements) and of the Financial Result (which was also analyzed through the different types of financial income and expenses). The results of the study revealed problems of profitability in the years 2014 and 2015 which, in our opinion, can be attributed to poor management of the commercial activity, exploration activity (research and development), distribution and financial activity.

Keywords

• profitability
• eficiency
• structure
• gross result.