Complex economic analysis

Everything is subordinated in this world to nature laws: people are gifted with sufficient reason to comprehend these laws and to observe them” (F. Keen)). [ 1] The economic analysis dates back to the times of the Ancient Greece and Rome. As applied science, the economic analysis began to develop in process of development of human society and the type of economy accompanying it. What is a basis of human society in its economic way? Wealth? Prosperity for all? Personal benefit?

Enrichment of the few about which great Aristotle wrote by generalizing rich people as “oligarchs”. Many millennia back people opened such economic categories as “cost”, “work”, “price”, “exchange” and by developing such categories, money appeared I the lives of humans. Money was means of a measure, an exchange, and accumulation. Ever since a little has changed in the meaning of economic theory. For instance, even in ancient time’s Greek fishermen, was interested to sell caught fish, quicker and as soon as possible, while it didn’t deteriorate.

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On the other hand, the same fishermen sought to look for and note such places he could catch a plenty amount of fish. Is it possible to tell, that the fisherman thought for maximizing profit, ND minimization of own expenses, including, time for search of a “fish” place? If it is possible, in that case it is an example of the elementary economic analysis from the independent economic person whose purpose was an increase of efficiency from the done work.

Practical activities of people if it wasn’t made on account of moral, the religious purposes and feelings, as a rule it was always directed on achievement of definite purposes and tasks, whether it be: hunger satisfying, construction of Parthenon, the basis of Ancient Greek colonies in new lands. No doubt, since ancient mimes a little has changed in the economic analysis. Aim has always been a leading motive and work has always been a key to achievements For instance, the person has always been trying to predict future crop of olives, to prevent a drought, which could ruin olive trees and to leave one without food in future time.

Consequently it means that the person always strove for the analysis. Understanding that the nature is changeable, and a hunger instinct, on the contrary, is constant, the Ancient Greek farmer found ways of possible rescue of own agricultural enterprise, and sometimes to a course there were most improbable measures. On the one hand, the farmer could sacrifice to Zeus a bull; On the other hand, the same person could dig out small channels in order to make access of its olive trees to water.

Thus, it means, the same person could find a solution to such problems by the rational administrative decision. Thus, it is possible to conclude, laws of the economic analysis – are fundamental, universal, for each country and each temporary era. At the same time, the principles of the economic analysis and accounting are individual concerning each concrete enterprise. Today experts allocate 4 main schools of accounting, each of which as it will be shown further, has own differences (see table 1). Table 1.

Features of leading national schools in the area of economic analysis and accounting. Account and analysis problem definition National schools ITALY FRANCE GERMANY USA Purpose Control of behavior of performers Increase of efficiency of use of resources Elaboration of rational registration and analytical procedures Control of behavior of managers Subject Rights and obligations of persons Stocks and streams of resources Procedures Behavior of managers Basic science Legal right Political economy Mathematics Psychology Analysis method Induction

Deduction The main object of the economic analysis is Enterprise, as it was shown on the example off plantation of olive trees,. According to S. Segovia explanatory dictionary, the enterprise has some values: 1) “Production or economic establishment, plant, factory, workshop”; 2) “The conceived business undertaken by somebody”. Proceeding from the given definitions, the enterprise can be both the subject of business, and a certain idea.

The problem of any of four models given above is a providing the authentic forecast by means of which the person who has launch a CE retain enterprise, will be able to reach the planned goal For creation to the forecast the businessman, the idea carrier, has to reveal first of all a circle of factors and the phenomena which have the direct or indirect relation to the core of business. First of all, by observing, investigating different factors that relates to business, a person who want to launch a business builds theoretical model of the analysis of business.

Having created thus a certain theoretical baggage of data, the businessman can make the decision on the necessary practical actions promoting movement in the chosen direction. After the the purpose is reached production cycle becomes isolated. Let’s generalize the main components of a such cycle: a) Facts / the phenomenon; b) Concepts/size; c) Laws / Forecasts. Direction of business model also subdivided by: a) Supervision; b) Measurement; c) Analysis; d) Synthesis; e) Choice of model of practical measures; e) Practical actions.

It is natural to assume interrelation of the economic analysis with other scientific disciplines as operating by concepts, creation of the forecast, development of recommendations at initial unsuccessful actions, and many other factors can’t exist only within one scientific discipline. Among disciplines with which the economic analysis is most closely mound, it is possible to call: Statistics. The statistics is urged to help with creation of the forecast by means of certain categories, I. . the concepts reflecting the most essential signs of a subject, or the world around phenomenon. Relative and average sizes, comparisons of individual and group factors, coefficients (indexes), or “weak” and “strong” links which represent a conceptual framework necessary within the economic analysis; Accounting and audit. Researchers consider science of accounting as “elder sister” of the economic analysis. So, according to scientists, accounting was in use already in Ancient Egypt.

In those days copyists of the Pharaoh carefully fixed by means of papyruses and clay plates key information on economic stocks (collecting grain, a fig, damage of products) and trade operations (trade between the cities of Egypt, trade with tribes in the territory modern Libya and the Sinai Peninsula). Let’s notice, a basis for the economic analysis is information which can provide only accounting, in particular, financial statements of the enterprise (the balance sheet, income statement, the report on cash flow). Besides, the separate subgroup of accounting which is also demanded during carrying out the economic analysis is audit.

Audit is an independent analysis of accounting reports which is carried according to the desire of director of the company or at will of external authorities; Law. Criminal, civil and administrative law also plays a role when carrying out the economic analysis. This aspect depends on activity of the enterprise which can be as lawful, or legal, and illegal, which means breaking the adopted acts or amendments. Besides, procedure of payment by the enterprise of taxes and all due collecting, strict maintaining contractual obligations, also are spheres of contact of the economic analysis and Jurisprudence.

Subject of the real research is carrying out the complex economic analysis of the enterprise and delivery of an assessment of its efficiency. This area assumes initial research of theoretical aspects of the economic analysis, and also methods of an assessment of efficiency of the enterprise that means studying of a subject, object and tasks of the economic analysis as branches of economic science. Further – research of methods and receptions of an economic assessment of business in conclusion of what follows the analysis of competitiveness to the enterprise and development to an assessment to efficiency to business.

Chronologically research is subdivided into some scientific branches: 1) Theoretical branch (subject of the economic analysis, task, object of the economic analysis, technique and analysis of competitiveness of the enterprise, development of an assessment of efficiency of business); 2) The practical branch (collection of information and the complex characteristic of activity on the example of the concrete Kickstand enterprise that assumes the analysis of the external and internal environment of the enterprise, the internal analysis of the company, identification throng and weaknesses of the current provision of business.

Further the analysis of competitiveness of the enterprise from a position of the main rival enterprise. The last stage is analysis of available financial statements of two enterprises for six year period Concerning a question of a subject of the research paper, it is necessary to notice that the subject includes both as theoretical disclosure of an essence and methods of the economic analysis and practical complex economic analysis of the enterprise, and also development of an assessment of efficiency of business.

The last includes need of carrying out the comparative analysis of the main financial statements of the enterprise during six years. In this regard, is possible to claim that this work has own, specific component as during research I have used internal financial reports of the enterprise and also its main competitors, and periodic materials, electronic resources with the maintenance of a range of various scientific techniques of a complex assessment of the enterprise.

The structure of the thesis includes the introduction, three heads, the conclusion, the list of the used literature and the appendix. Chapter 1 of work is devoted to disclosure of theoretical aspects of the economic analysis and study of methods of assessment of efficiency. In this section I uncover subject, object and tasks of the economic analysis as parts of economic science. In detail the technique of development of an assessment of efficiency of business by means of the analysis of competitiveness of the enterprise from a position of the independent participant of the market.

Chapter 2 contains the complex economic analysis which has been carried out on the example of domestic production cooperative “Disintegrations”. Also one can find is the chapter 2 characteristic of the external, internal environment of the enterprise, identification of weaknesses and strengths, opportunities and threats of business and also the comparative analysis of all four factors is made.

Further, in the analysis I analyze competitiveness of the enterprise, its products, calculation of the main finical ratios (coefficients of operational efficiency, strategic positioning, profitability indicators) and etc Further in a chapter 3 one can find recommendations in order to increase efficiency of business, to improve financial performance and to strength imitativeness of the Disintegrations.

Besides, ways to decrease production expenses are offered that in turn can lead to decrease in the general cost of products of the enterprise, which will allow to conduct more aggressive price policy and to lead to income growth, then, arrived, and as a result, the general profitability of the Disintegrations. CHAPTER 1 Theoretical aspects to the economic analysis to the company. Meet an assessment of efficiency of the enterprise. 1. 1 .

Subject, tasks and classifications of the economic analysis Subject of the economic analysis is the enterprise, organizational structure of the enterprise, and also it “financial health”, represented as assets and liabilities. The economic analysis affects economic processes which can include purchase (import) of production, including not only created products, but also spare parts, accessories, production from accessories, and also production sale / realization with use of the fixed and current assets, profit formation, its distribution.

Therefore, object of the study of the economic analysis are economic processes of the enterprise and its organization which develops under the influence of objective and biased factors. In particular, the change in price for the raw materials be an objective factor, because from this material an accessory, equipment or industrial machine is made. The change in price in turn is a consequence of activity of the market, or in other words it is eternal search of balance between supply and demand.

Subjective factors, on the contrary, directly depend and are connected with activity of the person. For example, imagine that marketing service of the enterprise chose the tactics, aggressive campaign for advance of already known product in the stagnating market, and spend for these purposes the considerable budget. As the result, growth of sales volumes and scanty increase in net profit in view of large volume of expenses, and it didn’t lead to return of invested funds.

Thus, incorrectly estimated tendency of development of the market could lead to recession in business work instead of growth Also, mistakes in forecasts and signals incorrectly interpreted by producers from buyers, could be examples of subjective factors. As a result it obvious that successful financial activity of the enterprise comprises a set of variable aspects, such as skillful planning of activity of the enterprise, forecasting of future notation to occupied branch, the competent analysis to strong sides and weaknesses of the main rivals of enterprise, quality of operational decisions, effective management and etc.

Together with it, I will notice, that the economic analysis includes the analysis of only those economic processes which are suitably reflected in system of economic information. More precisely, I mean financial statements of the enterprise, and its compliance accepted by FIRS. In case the reporting is partially reflected, or reflected obviously incorrectly, the economic analysis of the enterprise is ere difficult. Besides accounting, statistical account, and also the accounting of productions at the enterprise represents extreme importance.

Moreover, among tasks of direct forecasting of financial and economic activity there can be following directions: Correct calculation of dynamics of the main financial performance of the enterprise includes: the output analysis, the analysis of volume of realization of production, the analysis of efficiency of work with a certain number of the personnel at the enterprise, the analysis of production cost, the analysis of a material capacity f production, the analysis of conditional expenses and profit for production, the profitability analysis, the profit analysis; Quantitative assessment of changes in production ,technical, and organizational levels of the enterprise; Definition of extent of use of the fixed production assets, labor and financial resources, the analysis of influence of labor / financial resources on economic efficiency of the enterprise, the general indicator of profitability; Identification of the major factors which have entailed a deviation of the main actual indicators of activity of the enterprise production import, production and production sale) from the planned indicators; Research and measurement of the current and perspective reserves, methods to increase efficiency of the enterprise and decrease in production expenses of the enterprise; Differentiation of sites of responsibility among specific managers, strengthening of corporate spirit of team. However, despite above-mentioned directions, the main objective of the economic analysis is a forecasting of expected results of economic activity. However, forecasting, or the analysis, is also possible to classify by a range of criteria. Classification of the economic analysis by types is defined, first of all, by the purposes, methods of research and generalization of studied materials. In turn, the purposes and methods for the different parties involved in activity of the enterprise (the state, shareholders, management, workers of shops) can differ from each other in view of interests of the parties.

Division on character of the analysis can be the first classification of the economic analysis: a) Theoretical and economic analysis; b) Concrete and economic analysis. As the second classification division on production and management scale can river: a) Macroeconomic analysis. Mentions the industry as a whole or concrete branch, a market segment; b) Microeconomic analysis. The enterprise, its organizational structure and activity in the market. Enterprise interaction with other market forces,competitors, buyers and etc Other factors, according to which classification of types of the economic analysis can be made, are: 1. The subject which carries the analysis; 2. Object studied during the analysis; Purpose to carrying out analysis; 4. Range of studied problems; 5.

Aspect of research; 6. Character of decisions made on the basis of the analysis and measures; 7. Degree of a computerizing and automation of computing works. Let’s consider in more detail mentioned factors: 1. The subjects which are carrying out the economic analysis, I. E. Persons performers of the analysis can be both internal departments of the enterprise, and external economic services (the auditor company, the financial, credit, tax organizations, etc. ); 2. The objects studied during the analysis, can be as the independent enterprise, or its concrete division, and group of companies or their association (holding, industrial group); 3.

The purpose of carrying out the analysis an include as the analysis for the purpose of definition of basic indicators for planning, and the analysis of results of internal and external activity of the company, leading of monthly / quarter / annual results, identification of reserves of the enterprise, search of increase of competitiveness of the enterprise, improvement of internal interaction between divisions, preparation of financial statements for external body (tax service, the auditor company, extraordinary meeting of shareholders), drawing up the business plan of the investment project, the conclusion of the credit agreement, etc. ; 4. The aspect of research can be the allowing types: a) Financial and economic aspect; b) Technical and economic aspect; The financial and economic aspect opens interrelation of operational and financial performance, being guided by periodic financial statements of the enterprise before external bodies. In practice the financial and economic analysis is executed by managers of the company, or representatives of council of shareholders, the auditor companies.

The technical and economic analysis is devoted to studying of economic activity of the enterprise on the basis of interrelation of economic indicators with technological equipment of the enterprise. The work organization, technologies applied in production, degree of efficiency of involvement of fixed assets, materials and manpower – the main objects of attention for the performer of the technical and economic analysis. Functional and cost the analysis is a method of system research of the enterprise which purpose is optimization of the price, expenses and the production technology. This type of the analysis is urged to provide the continuous growth of efficiency of activity of the enterprise; 5.

The range of studied problems has the following subspecies: a) full, comprehensive analysis of economic activity; b) elective, thematic analysis of some kinds of activity; 6. Character of decisions made on the basis of the analysis is subdivided on: a) The preliminary; b) The quick; c) The overall; d) The perspective. Let’s notice if earlier the most demanded was total nature of accepted actions, in modern conditions into the forefront operational and perspective analyses act. The operational analysis, in particular, is directed on studying of system of the indicators retracting the current activity to the enterprise. Indicators are based on daily results of work.

Tasks of the operational analysis are daily control of a course of performance f planned indicators, identification of the current deviations from planned indicators, identification of the reasons of these deviations and their timely leveling, search of irrational use of resources, maximizing the current efficiency in involvement by the enterprise of fixed assets, timely generalization and providing the current reporting. The perspective analysis, in turn, forms a basis of strategic planning of activity of the company. Forecasting, scientific Justification of accepted strategy are under construction not on the current day results, but on results of next week, decade, month, quarter, year; 7. Degree off computerizing and automation of computing works means the analysis made by means of electronic computer facilities or by means of a local network from several computers. 1. 2.

METHODS AND RECEPTIONS OF THE ECONOMIC ANALYSIS OF BUSINESS The economic analysis is a process of studying of economic subjects which includes a collection of information, its systemization, generalization and further use within achievement of the set purposes. Thus collection of information about concrete objects as a rule can be divided into collection of information about object components, or the phenomena. So, if the purpose is the analysis of profitability of sales, the performer has to isolate some categories from the financial characteristic of the enterprise which comparison will lead to the end result, namely return level, a percentage ratio of profit to total sales or gross revenue. Other example: production, dynamics of production. It means not only the production analysis of the enterprise as a whole, but also research of compound divisions.

In a case with the production analysis in the “Disintegrations”, the performer separately investigates all stages of a chain of production of the chemical pump AH 125-80-250, including production hop, assembly shop, a repair and experimental site, and also painting shop and department of pre-sale testing. Besides, the analysis of dynamics assumes involvements of data in various intervals of time (month, quarter, and year) that will allow the researcher to obtain more authentic data within the analysis. Along with the economic analysis, research and creation of the forecast, in practice companies use economic synthesis that allows making a complex picture of production on the basis of separate factors.

It is possible to tell that if the analysis assumes following room the general to the particular as it was shown above, within economic synthesis the analyst has to investigate all stages of technical production. Besides, the performer shouldn’t forget about economic indicators (the cost of purchase of spare parts, metals, import cost, labor input of a technological chain and number of the involved personnel that directly influences the salary size to the employees, other expenses, profit on sale, payment of taxes, net profit). Speaking differently, the method of the economic analysis can be compared by analogy to deduction which, as shown in table 1, most will apply at the German economic school The course to research occurs from the general to the particular.

For example, in the analysis of gross expenses of the Disintegrations by production and realization AH 125-80-250, at first the assessment of the general prime cost of one unit of production then this category passes breakdown on the following articles of expenses is made: 1. “Costs of materials”; 2. “An expense on salary payment”; 3. “Transportation cost”; 4. “Cost of payment of the customs duties and collecting”; 5. “Business expenses”; 6. “Management expenses”. In process of carrying out the economic analysis one can find certain agreements, contradictions causing deviations of production and a loss. In the light of it is possible to speak about development of the methods neutralizing negative factors. The following fact can be an example of a contradiction: dealers and outlets are interested if each chemical pump of the AH brand are completed with engines with average height of axis not less than 160 mm.

While for the Disintegrations the similar condition is unacceptable. First, engines with height of an axis are higher than 160 mm as a rule are more expensive, and can be got only by order, at the same time duration of transportation and route length not always remunerate quality. On the other hand, reorientation of all production only on one type of the electric motor will negatively affect a nomenclature line of cooperative, width of a choice of various production, client base, and competitiveness. Receptions of the economic analysis can be divided into the following types: a) Traditional receptions of the analysis; b) Unconventional receptions of the analysis.

The economic analysis combines several disciplines as it was shown above on the example of adjacent conceptual area between the economic analysis and statistics, the economic analysis and accounting, the economic analysis and audit. The natural science being in a basis of the analysis naturally is the mathematics This circumstance has an obvious historical explanation. Cave people, having learned to satisfy the hunger by means of wild-growing herbs, over time passed from work of daily, expeditious “hunting” behind blackberry, to its collecting and accumulation. Collecting was made not for a satisfying a momentary hunger, but for purpose of reserves, on a case if tomorrow bushes with berries will be eaten by animals, or will wither. People learnt how to overcome momentary instincts and to save something as reserves.

In such way, ancient people could assume, how many capacities (baskets, bowls, bowls,) with blackberry berries are necessary for them to endure winter successfully. Thus, ability to count, planning, I. E. An initial form of the economic analysis had close interrelation with mathematics. However, as time passed, economic methods of the analysis were improved and became eventually more difficult. Therefore, that category of economic analysis which has changed from generation to generation can be called traditional. Among similar receptions: average sizes, relative sizes, groups, groups, comparisons, comparisons, coefficients (indexes), obstructions of variables.

Speaking in more detail, as an example of traditional sizes we will allocate the following types: Percent. For example, percent of the spoiled blackberry among total number to berries, or percent to performance to painting to the pump AH 125-80-160. For instance, if the plan of realization of the chemical pump of the real brand for 1 quarter 2013 provides sale of 5 units for total amount of 12 500 000 tenses, and the fact makes 3 for a total cost of production of 7 500 000 tenses, the plan is executed for 60,0%; Coefficients (indexes). For example, the index f realization of production for March, 2013 tells about growth of number of sold pumps of the AH brand in comparison with basic month.

January 2013, initial stage of sales is accepted casabas. The pump AH 125-80-160 isn’t seasonal type of the pump, unlike submersible pumps of the brands “Test, “Bats”, owing to basic any financially successful interval of time can be considered. So, if in January, 2013. Management of sale of the Disintegrations realized to clients 2 pumps AH 125-80-160, and in March, 2013- 1 pump, the coefficient of growth is equal h = 0,5. The gain coefficient, in turn, makes-0,5; Share (specific weight). This indicator characterizes set structure, I. E. Realized production, the relation of the chosen category to the nomenclature to total. For example, during 1 quarter 2013.

Management of sale of the Disintegrations sold about 15 chemical pumps of the AH brand, the share of the pump AH 125-80-160 in the general structure makes 3/15 * 100% = 20%; Average size. This concept allows making a general characteristic of the phenomenon in time or space. For example, the average monthly payment of the collector of the pump AH 125-8-160, consisting of a salary and variable part (award) makes 85 000 tenses. In reactive some types of comparisons are applied: Comparison of uniform indicators. For example, the average monthly salary of the collector of the chemical pump makes 85 000 tenses while the salary of the senior economist of Department of management and planning is equal 160 000 tenses; Comparison of changes of interdependent diverse indicators.