Business activity of a business entity is reflected in the financial aspect in the speed of turnover of its funds. At the same time, with the help of profitability, the level of profitability of the activity of this entity is reflected.
Analysis of the business activity of an enterprise is a study of the dynamics and levels of various ratios and profitability, as well as turnover. These indicators are the relative results of the company's performance in financial terms.
The study of business activity can reveal the degree of efficiency in the use of funds by the enterprise. As mentioned above, business activity operates with such indicators as profitability and turnover ratios. They have a significant impact on the evaluation of the company's performance. For example, working capital turns over once a quarter if there is a 25% profitability of the main activity. Then the business activity index for the same quarter will be 0.25 (the same 25%). From this we can formulate the following conclusion: if, with a similar profitability, the turnover of this working capitaldoubles, business activity also doubles.
Similar conclusions are drawn on the issue of reducing or increasing profitability. In other words, if turnover slows down, it must be compensated by higher profitability. And if it is impossible to increase profitability, then it is necessary to regulate this process by turnover, i.e. increase output and sales of products.
Business activity is a dynamic and complex characteristic of entrepreneurial activity, as well as an assessment of the effectiveness of the use of resources available to a business entity. The levels of this indicator reflect the stages of the company's functioning, which consist in considering the origin, development, rise, decline and crisis, and also show the level of adaptation to changing market conditions and the quality of management.
Business activity can be characterized by a motivated managerial macro- or micro-level in the process of stable economic activity of an organization, which is aimed at ensuring the growth of employment and efficient use of resources in order to achieve market competitiveness.
Using the business activity index, the effectiveness of the use of labor, material, financial and other resources in all areas of activity is expressed, as well as the quality of management, capital adequacy of the company and the possibility of economic growth.
