How do you calculate interim management balances?

By Nathalie Pouillard

Published: 19 October 2024

The interim management balance, also known as the MIS, is one of the financial indicators you need to monitor in your accounts to manage your business effectively.

To be more precise, there is not one interim management balance but several .

What are they and how do you calculate them? Tables and examples in this article!

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What are the different intermediate balances?

Interim management balances are the results of calculations made at different stages of an accounting analysis, based on sales.

There are 9 MIS:

the sales margin (or gross margin) for commercial companies,
production for the financial year for craft and industrial companies,
value added,
gross operating surplus,
operating profit,
financial result,
profit on ordinary activities before tax,
exceptional items,
net profit for the year.

These financial indicators give structure to the financial statements, but they are also found in the profit and loss accounts at the end of the financial year, or in business plans when a company is being set up.

What are interim management balances used for?

Breaking down a company's results into interim management balances makes it possible to :

analyse the company's financial structure using a number of management indicators, in particular :
- production, the company's normal activity,
- related to investments and financing,
- of an exceptional nature ;
analyse its performance by identifying the income and expenses that have the greatest impact on its profits or losses;
measure profitability;
compare several accounting periods over time;
compare MIS as a percentage of turnover with other companies in the sector;
make decisions and adjust company management.

MIS also help to calculate the company's self-financing capacity (CAF), so that it can expand, finance a new project and demonstrate its financial health to shareholders and banks.

How to calculate MIS?

Here is a table summarising the calculations of intermediate management balances, in order:

GIS table
GIS	GIS calculation
Sales margin	= Sales of goods and services excluding VAT (turnover) - Purchases of goods excluding VAT
Production for the year	= Production sold + Production capitalised +/- Inventory production
Value added (VA)	= Production for the year + Sales margin - Intermediate consumption (sub-contracting, etc.)
Gross operating surplus (EBITDA)	= VA + Operating subsidies - Taxes - Payroll costs
Operating profit (EBIT)	= EBITDA + Operating income - Operating expenses - Depreciation, amortisation and operating provisions
Financial result (FR)	= Financial income - Financial expenses
Profit before tax and exceptional items (EBIT)	= Operating income +/- Financial result
Exceptional items	= Extraordinary income - Exceptional expenses
Net profit for the year	= EBIT + Extraordinary income - Corporation tax - Employee profit-sharing (i.e. Total income - Total expenses)

Interim management balances table: example

You can transfer your interim management balances to Excel or use accounting software:

Sales of goods and services excluding VAT		450 000
Purchases of goods excluding VAT		120 000
Sales margin	450 000 - 120 000	330 000
Production of ancillary products		4 000
Subcontracting		14 000
VA	330 000 + 4 000 - 14 000	320 000
Staff costs		30 000
Taxes		1 000
EBITDA	320 000 - 30 000 - 1 000	289 000
Operating income		0
Operating expenses		2 000
Depreciation and amortisation		3 000
REX	289 000 - 2 000 - 3 000	284 000
Financial income		0
Financial expenses		2 000
Net financial expense	0 - 2 000	- 2 000
EBIT	284 000 - 2 000	282 000
Extraordinary income		1 500
Exceptional expenses		500
Extraordinary profit	1 500 - 500	1 000
Income tax		40 000
Net profit	282 000 + 1 000 - 40 000	243 000

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How should MIS be interpreted?

These management indicators enable us to assess a company's performance,

whether it is due to normal activity or to exceptional activity,
whether its positive results should be put into perspective following a fund-raising exercise or a slowdown in investment, for example, or whether the opposite is true.

Here are some possible interpretations:

the gross margin highlights the profitability of the company's business , the development of its commercial policy and its negotiating capacity with suppliers and customers;
production for the year includes capitalised production, which may inflate net profit for the year but hide a fall in sales;
added value is the surplus wealth created by the company, and demonstrates its ability to cover salaries and social security contributions;
Gross operating surplus is just as revealing: it is the cash flow remaining after payment of wages and salaries and tax and social security debts, without taking into account investment and financing policies or exceptional events;
operating profit is the wealth generated by the company's activity, but taking into account its investment policy;
Net financial income shows the company's financial position, particularly if it is in debt;
pre-tax profit on ordinary activities measures the impact of the company's financial policy over the last financial year(s);
Extraordinary income reflects an exceptional situation that is not part of the company's normal business activity; it is normally one-off and should be kept in perspective;
lastly, net profit simply represents the company's profit or loss for the financial year. It is provided to shareholders to determine future management policy and the possibility of paying dividends or making savings, among other things.

Article translated from French