Index of physical volume of production

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:43

Indicators that may be important both in terms of assessing the state of affairs at a particular enterprise, and in identifying macroeconomic trends, are various indices - for example, the physical volume of production or sales. How are they calculated? For what purpose can they be used?

What is the essence of the volume index?

Index of physical volume - an indicator that generally characterizes the amount of products or services produced by an enterprise. It is relative and shows how much the mass of output has changed when comparing indicators in 2 different periods.

The index under consideration is based mainly on the use of information about the dynamics of various natural indicators in the framework of production according to a fixed list of manufactured goods. Depending on the tasks of the researcher, an indicator for a particular enterprise or a general index of physical volume can be determined -trade or, for example, industrial output. In the second case, goods and services in the widest range can be included in the structure of the indicator. This index allows you to assess the state of affairs not at a separate enterprise, but in the industry as a whole. It can also be of great importance in terms of assessing the macroeconomic situation in the national economy.

If necessary, the volume index characterizing the work of one factory can be compared with sectoral indicators or those that show other similar industries. As a result, the same sector-wide production index can be formed, reflecting the state of affairs in the whole segment of the state economy. Let's study the specifics of its calculation in more detail.

Industry output index: nuances

The index of the physical volume of output of goods for the industry as a whole is calculated in several stages.

First of all, a list of specific industries is determined, within which indicators for the production of certain goods will be analyzed. In addition, if the purpose of the study requires it, sub-sectors are also determined.

After that, for each industry or sub-sector, a list of analyzed goods is formed. It can be represented by a very large number of products - for representativeness.

After that, the volume index is calculated. Its formula may include such indicators:

- index of production volume within a particular industry or sub-sector;

- the volume of output of a particular product in the reporting period;

- the selling price of the corresponding item.

The formula in question can be supplemented with other indicators depending on the specific tasks facing researchers.

In practice, indices defined for an industry can be combined to provide data for a segment of the economy as a whole. For example, if the physical volume index needs to be determined for the fuel industry, then when calculating it, indicators will be used that characterize the state of affairs in the oil, oil refining, gas, coal, and shale industries. Moreover, each of the respective industries may have a different share in the total value added of the fuel industry. Thus, the overall index of the physical volume of fuel production can be calculated taking into account many nuances. For example, characterizing the form of organization of the release of goods at a particular enterprise or in the industry as a whole.

Let's consider in more detail how the index of physical volume of production is calculated taking into account the peculiarities of the organization of production.

Calculation of the production index: summing up indicators by enterprises

Among Russian researchers, there is a widespread approach according to which the definition of the indicator in question is carried out in 4 stages:

- summation of indicators by enterprises;

- differentiation of products by liquidity, relevance to marketlegal relations, other criteria;

- separation of revenue indicators from output;

- definition of the production cycle.

Thus, at the first stage, an individual index of the physical volume of output of goods by a particular enterprise is determined, after which it is summed up with the indicators that were determined in the study of the results of other firms in the industry. As a rule, organizations are selected that have comparable indicators in terms of revenue, actual volumes of output of goods, and the range of products.

Product liquidity as a criterion for index calculations

After the index of physical production is determined by summing up the indicators of enterprises comparable in size, it can be adjusted taking into account the specifics of demand for certain types of goods. Thus, the least liquid types of products may be excluded from it, since the dynamics of their sales in many cases is not a significant indicator in terms of obtaining macroeconomic data.

Distribution of products by industry

In addition, goods may be excluded from the index, according to their characteristics corresponding to the industry under consideration, but classified according to other criteria. So, for example, if an enterprise produces military vehicles along with civilian ones (of the same model), then when analyzing economic indicators, it makes sense to exclude products of the first type from the index of the physical volume of car production. However, the indicators thatwill characterize the production of this type of equipment, may affect what will be the composite index of the physical volume of production of the military industry of the state.

Market environment as a criterion for product differentiation

Differentiation of indicators may also make sense for the reason that the production of civilian vehicles in the general case is carried out with the expectation of their subsequent implementation within the free market, often in foreign countries. In turn, military products, as a rule, are produced on pre-order, and therefore they are practically guaranteed to be sold. In this sense, the enterprise will perform an administrative task rather than one that would characterize the activity of the company as a full-fledged subject of commercial legal relations.

Thus, at this stage of calculating the indicator under consideration, it is important to correctly distinguish between products by industry, if this, of course, is required based on the characteristics of the structure of the national economy, as well as the specific tasks of researchers.

Calculating the production index: separating revenue from output

The next step in calculating the industrial index is its adjustment, taking into account revenue indicators that are related not so much to the production of goods, but to price increases, as well as an increase in enterprise income, for example, due to the provision of related services to some business entities. For example, related to the repair and maintenance of manufacturedequipment enterprise.

This distinction will help the researcher, who determines the dynamics of macroeconomic trends, to better understand the principles of pricing in the relevant industry segment. The fact is that the index of the physical volume of production is considered in the general case separately from the indicators of the cost of goods and revenue in general.

Therefore, it is important for the researcher to reliably establish the fact of changes in the corresponding index in real terms. If the selling price of the goods has increased, and the company's revenue has grown, while the company has put on the market a similar amount of goods, then the increase in the physical volume of production is not recorded.

Production index calculation: definition of production cycle

At the third stage of calculating the indicator under consideration, it is necessary to correlate the dynamics of the output of finished products and the production volumes of those goods that are used to manufacture the corresponding products. In this case, we are talking about establishing a connection between the fact of the release of specific components and materials and the assembly of finished products, as well as considering these stages of manufacturing goods in the context of a single production process.

The statistics for the enterprise and the industry should not include indicators that are not directly related to production: for example, equipment purchased from a third-party supplier and resold should not be taken into account as the plant’s own products, respectively, its cost cannot affect index in question.

Volume indexsales

Having determined the essence of the production index, let's consider the specifics of using this indicator in sales. Often, the owners of enterprises turn to managers with a request: "Determine the index of the physical volume of sales of goods." What are its features?

In fact, characterizing the work of one enterprise or the general index of the physical volume of trade turnover will be similar in value in the study of economic segments to the indicator that is determined in the industry.

Industrywide trading index

In order to determine an industry-wide index (for example, in the retail segment), it is necessary to calculate the dynamics for its largest industries - trade in food products, household appliances, clothing, etc. The principles for comparing indicators here can be the same as in the case of industrial indices. That is, it will be considered, for example, what is the weight of a particular industry in turnover for the retail segment as a whole. It may differ significantly from other industry indicators. At the same time, it is possible that the index of the physical volume of trade in grocery retail will be positive, and negative in electronic retail.

In order to determine the overall indicator for retail as a whole (which will be important in terms of assessing the state of affairs in the national economy), the addition of the corresponding indices will need to be carried out taking into accountdifferences in their dynamics. In this case, the overall indicator can be determined using fairly complex formulas.

Sales index and revenue

In addition, it is worth noting that the index of the physical volume of sales of goods does not always correlate with the company's revenue. Above, considering the specifics of determining the corresponding indicator in industry, we spoke about the need to distinguish between the dynamics of the receipt of revenue by the enterprise and the actual volume of output of goods. The same can be said about the sale of products. It's one thing if the company's profits have increased due to an increase in prices, and another if the capital is earned by increasing sales.