System approach to assessing the efficiency of manufacturing business

Abstract

The purpose of this study is to theoretically and methodically substantiate the need to use a systematic approach to assessing the effectiveness of business activities. To achieve the goal of the scientific study, the main tasks were identified: to analyze the efficiency of working capital use, to study the return on fixed capital and to give a generalized assessment of the profitability of capital invested in business development. In accordance with the tasks outlined in the article, the main vectors of scientific research were identified, for which such analytical methods as comparison and generalization, deterministic factor analysis, and grouping of economic indicators were used. The key goal of any business, including manufacturing, is to increase profits and improve efficiency. In this regard, there is a need to evaluate business performance. In practice, such an assessment is usually based on the use of a basic indicator of profitability of production. However, this approach does not allow identifying and realistically assessing the main causes of certain changes in profitability. Given the importance of making management decisions for the future, a systematic approach should be used to assess the effectiveness of the production business. The system approach is based on the study of the dynamics of a number of indicators, answering the question of what is the level of return on total invested capital, working capital and fixed capital of the business. The article presents practical data of a production company with efficiency calculations using different methods: the traditional method and the method based on the system approach. The results of the calculations presented in the tables confirm the advantage of the system approach. The theoretical and methodological provisions discussed in the article, as well as the practical example given are the basis for recommendations for the use of the system approach in assessing the effectiveness of manufacturing business.