There are many methods that help in taking both short-term and strategic decisions on the management of the enterprise.Perhaps one of the simplest among them is the operational analysis, which is also sometimes called the break-even analysis.During this process, the definition of indicators such as the amount of coverage, the threshold of profitability and others.
basis of this type of analysis - the unit costs of the enterprise for production variables and constants.The reason for this division is that high costs behave differently when changing sales and production.Thus, the amount of variable costs, calculated per unit of output, is always constant, but the total amount is proportional to the volume of production.But the amount of fixed costs, by contrast, is always constant, but their share in the cost per unit is inversely proportional to the quantity of products.
One of the most important indicators is a critical program.It represents a volume of production in kind, which allows the company to operate without loss.The threshold of profitability (break-even point) is determined by multiplying the price of a critical software products.In other words, the threshold of profitability - is a measure of the level of the company's revenue, at which the break-even.Both of these parameters can be determined by examining how the graph and analytically.Let us more detail on the second method.
to determine critical programs needed to find the number of products you want to produce and sell to cover the entire amount of fixed costs.Thus, it suffices to divide the sum of these same fixed costs of the difference between price and variable costs per unit.It should make a reservation, we proceed from the assumption that the company is selling exactly the same products, and produces much.Threshold proceeds, as mentioned, can be found by multiplying the result obtained in bulk at a price.
Another indicator that needs close attention is the commercial margin.You may also meet such names as the amount of coverage or contribution to cover.Determined this figure is very simple, by reducing the amount of revenue the variable costs.Accordingly, the amount of coverage must cover fixed costs and generate a profit.Note that commercial margins proportional to the volume of products, but per unit of its value does not change.In this regard, often determine the amount of coverage share in the revenue.Knowing this value, we can use another method of calculating the threshold of revenue - Section fixed costs at a fraction the amount of coverage.
to determine whether the company is far from the loss, calculated the value of the stock of financial strength.It is determined by the difference between the proceeds obtained by the sale of products and the threshold of profitability.This indicator can also be calculated as a share of revenues.
latter figure, which would like to see it operating leverage.It describes the degree of operational risk, showing the how many times the profit of the company will change compared to the change in revenue.The calculation is very simple and it is in relation to the commercial margin for profit.The risk, which is estimated by the indicator, due to the fact that in the presence of a constant part of the cost.This risk is greater the closer the company is working to breakeven.With an increase in revenue of the company activity is becoming more secure from this point of view, as the proportion of fixed costs has been steadily declining.
The above calculations are based on the assumption that all dependencies are linear.Of course, the real interaction is much more complex, and, for example, the actual profitability threshold may be different from that found, but for the basic analysis methods described can be used quite safely.