MODELLING THE IMPACT OF FACTORS ON THE PROFITABILITY OF BUSINESS ENTITIES ACTIVITY

Abstract

The instability of the market environment requires business entities to make timely management decisions in order to ensure an appropriate level of profitability of production activity. At present, there are a significant number of methodologies that allow evaluating profitability and forecasting its dynamics for any period in the best possible way. Simultaneously, there is a need to deepen the modelling of the influence of factors that change the profitability of production, which is especially important in the context that profitability is a complex index. That is why accounting of its components will allow identifying the impulses that lead to a decrease or increase in the profitability of an entrepreneurial entity activity. The materials for the study are officially promulgated statistical data on the financial activity of business entities, including large, medium, small and micro-enterprises. The assessment of the impact on the level of profitability of all activities of enterprises is carried out with the involvement of factors: the volume of sales, capital investment, the number of employees, labour productivity, labour costs, the value of current assets, and the value of non-current assets. The information base for the evaluation is the data for the retrospective period of 2010–2020. In the process of modelling, we used such methods: analysis, synthesis, induction and deduction, as well as a set of statistical techniques for calculating the correlation coefficient, Student’s t-test and Fisher’s criteria, regression analysis, coefficient of determination, etc. The results of the implementation of the proposed methodology of calculating the impact of individual factors of economic activity on the resulting indicator of profitability have revealed the dependence between the main indicators and profitability. In particular, the following results are obtained: for large enterprises the dependence between the profitability of operating activities and all factors is significant; for medium enterprises, the dependence between the profitability of operating activities and the volume of products sold and the volume of capital investment is revealed; for small enterprises, the dependence is found only on the volume of capital investment. Moreover, for microenterprises, the dependence of profitability on individual factors of economic activity was not detected. For all enterprises, the dependence of profitability of operating activity on the volume of products sold, the volume of capital investment, labour productivity and labour costs was revealed. The proposed methodology for modelling the impact of individual indicators on the profitability of business entities has made it possible to identify the impulses that should be addressed to prevent the bankruptcy of an enterprise or a reduction in its profitability. The methodology will be useful for interested stakeholders wishing to systematically monitor profitability and make adequate management decisions on this basis.