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Profitability Management of a Company Based on the Case of PJSC "PGK

ФИО студента: Ramil Faskhutdinov

Руководитель: Elena A. Senatorova

Кампус/факультет: Graduate School of Business

Программа: Business Administration (Bachelor)

Год защиты: 2021

In this thesis, theoretical aspects of the company's profitability management were considered, in particular, special attention was paid to the methods of profitability analysis. The purpose of the work was to analyze profitability of the company PJSC " Freight One"for the period 2017-2020 and to develop recommendations for managing profitability of the company. In accordance with the purpose of the work, the following tasks were formulated: 1. To study the essence and indicators of profitability; 2. To determine methodological approach to analysis of profitability; 3. To study financial activities of PJSC " Freight One"; 4. To analyze profitability of the company; 5. To provide the company with advice on profitability management. In order to fulfill the forementioned tasks, the reports of PJSC " Freight One" for the period of 2018 to 2020 were taken from open sources. On the basis of those sources, profitability analysis was carried out on the basis of the following methods: 1. Vertical and Horizontal analysis (describing the overall financial condition of the company); 2. Analysis of profitability ratios; 3. The Dupont model (in particular, the three-factor and five-factor versions of it) 4. The method of chain substitutions (to assess the degree of influence of the Dupont model factors on the return on equity). Based on the results of conducted analysis of the company, the following conclusion was made: both profitability coefficients and overall performance indicators have been relatively good over the concerning period even though epidemiological situation in the world has negatively affected both the global economy and freight rail transportation in particular. Despite the overall good state of the company's indicators, several aspects that require improvement were discovered. These include: 1. A decrease in the group of indicators of return on sales for the entire period under review; 2. A decrease in the return on equity for the period 2018-2020 (-13%). Having studied the indicators of profitability of sales in more detail, the catalysts for the decline were established: the increased cost of production in 2019-2020 (+24.5%) and the decreased revenue from sales (-9% in 2020). Having studied the return on equity indicator using the Dupont model, the relationship between an increase in cost of sales and a decrease in this ratio was also established. Moreover, using the Dupont model, the factors that have the greatest influence on the return on equity indicator (in order of how great their impact was) were established: return on sales, financial leverage, asset turnover. Thus, the company was provided with the following recommendations for managing profitability: in the short term, PJSC " Freight One" needs to focus their efforts on reducing cost of sales (as increasing revenue in the current situation seems to be difficult). In the long term, the company needs financial leverage, which will increase both return on sales and return on equity, as well as other indicators of the company’s performance.

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