3.4. Operational analysis of the activities of social institutions
Operational analysis is the analysis of the performance of an enterprise based on the ratio of production, profit and cost, allowing you to determine the relationship between costs and revenues for different volumes of production.
Its task is to find the most beneficial combination of variables and fixed costs, prices and sales volume.
This type of analysis is considered one of the most effective means of planning and forecasting the activities of the enterprise. We will describe the most commonly used financial indicators for carrying out operational analysis.
1. The coefficient of changes in gross sales (K IV. item ) characterizes the change in gross sales of the current period in relation to the volume of gross sales of the previous period.
2. Coefficient of gross margin (K m. ) . Gross margin (the amount to cover fixed costs and generate profits) is defined as the difference between revenue and variable costs.
In the same way, the auxiliary coefficients are calculated - the coefficient of the production cost of sales (K ppp) and the coefficient of general and administrative costs (K /sub>):
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3. Net income and net profit ratio (profitability of sales) (K pp. ).
The net income ratio shows how effectively & quot; worked & quot; the entire managerial team, including production managers, marketers, financial managers, etc.
4. Break-even point (threshold of profitability) is such revenue (or quantity of products), which provides full coverage of all variables and conditionally fixed costs with zero profit. Any change in revenue at this point leads to a profit or loss.
The profitability threshold can be determined both graphically (Figure 13) and analytical method. In the graphical method, the breakeven point (profitability threshold) is found as follows:
Fig. 13. Graphical definition of break-even point (profitability threshold)
1. Find the value of fixed costs on the y-axis and apply a fixed-cost line to the chart, for which we draw a line parallel to the X-axis.
2. We select any point on the X-axis, that is, any amount of sales volume (other than 0), calculate the volume of aggregate costs (constants and variables) for a given volume. Through this point and the point of intersection of the line of constant costs with the Y axis we construct a straight line.
3. We select again any amount of sales on the X-axis and for it we find the amount of sales proceeds. Through this point and the origin point, we construct a straight line.
Break-even point on the chart is the point of intersection of direct aggregate costs and gross proceeds (see Figure 13). In the break-even point, the revenue received by the enterprise is equal to its total costs, while the profit is zero. The amount of profit or loss is shaded. If an enterprise sells products less than the threshold volume of sales, then it suffers losses, if more - it makes a profit.
The break-even point is determined by the analytical method from the following formula:
where I is the amount of profit, rubles.
S - revenue, rubles.
V - aggregate variable costs, rub.
F - total fixed costs, rubles.
p - the price of a unit of production, rubles.
Q - the volume of sales, pcs;
v - variable costs per unit of output, rubles.
With zero profit, the sales volume will be:
where Q 'is the break-even point (the critical sales volume in physical terms), pcs.
The critical volume of production and sales of products can be calculated not only in kind, but also in value terms:
where S '- the critical volume of production and sales of products, rubles.
The economic meaning of this indicator is revenue, in which profit is zero. If the actual revenue of the enterprise is greater than the critical value, it receives a profit, otherwise it is a loss.
The above formulas for calculating the critical volume of production and sales in natural and value terms are valid only when only one type of product is produced or when the output structure is fixed, that is, the proportions between different types of products remain unchanged.
5. Financial Strength (PFP) . Excess of actual revenue over the critical volume of production and sales of products (the threshold of profitability).
PFP = Enterprise revenue - Profitability threshold.
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6. Force of operating lever (SWAP) impact . Shows, how many percent the profit will change at change of a gain from realization by one percent.
The results of operational analysis are used to formulate managerial decisions and obtain sound data in the following areas:
o development of possible scenarios for the development of institutions and evaluation of the final results of their possible activities;
o finding the most favorable relationship between variables and fixed costs, the price of products and the volume of production;
o Definition of the most priority areas of activity (which types of social services should be expanded, and which ones should be refused).
Analysis of the breakeven point is one of the important ways to determine the answers to many questions that are facing the management of the organization, because when combined with other methods, its accuracy is sufficient to justify management decisions in real life.
The results of operational analysis of the company's activities are usually a commercial secret, as they are associated with pricing factors and the use of existing production capacities.
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