Margin analysis and its application in the financial management of the company

Abstract

In a market economy, the main goal of the enterprise is to increase profits and increase production efficiency. One of the necessary conditions for achieving this goal is the adoption of competent and economically sound management decisions. Margin analysis plays an important role in the justification of management decisions in business.Today, margin analysis is one of the most common economic concepts. His methodology is based on the study of the ratio "costs – sales volume – profit" between three groups of the most important economic indicators and forecasting the maximum and optimal value of each of these indicators for a given value of the others.Relevance of the research: in the modern conditions of the development of market relations in the XXI century, the process of unification of the economies of individual states and the change in the conditions of functioning of economic entities is taking place. This is primarily due to the fact that the number of main types of resources spent on production significantly affects production efficiency, profit and profitability. In this regard, an enterprise that uses various types of resources: material, labor, technical, etc., must effectively manage them. It is necessary to know how they are interconnected, what decisions need to be taken to increase the return of the resources used, since the level of their use directly affects the amount of consumption.