Home  Journals  Economic Analysis: Theory and Practice  18(417) - 2015 May

Techniques for analyzing income of distribution companies for equity management purposes

Available online: 21 May 2015

Subject Heading: ANALYSIS OF INCOME, PROFITS AND COSTS

JEL Classification: 

Pages: 41-50

Importance The current position of business entities in the distribution segment demonstrates an absence of their own current assets, drop in their financial stability and investment attractiveness, and a concurrent increase in their debt burden. In this respect, it is relevant to analyze corporate income in order to ensure its sustainability and efficiency of its operations, since adequate and correct corporate income management policies will increase profit as one of the main sources of equity increment and control of primary factors causing changes in equity.
     Objectives The article aims at substantiating methodological approaches to analyzing distribution companies' income for purposes of equity management, considering current economic tools and information support. The research pursues the following goals: to substantiate paths for further examination of income from operating, investment and financial activities, to evaluate the efficiency of the current corporate resource management policies, to specify a system of indicators for assessing the quality of income, its sufficiency to ensure sustainable operation of the entity and increase in its equity; to develop models for the factor analysis of an effect diversified business operations by business segment has on income and financial results of the entity.
     Methods Using techniques and methods of economic analysis, I evaluate income of the distribution company, considering diversified core activities per sectoral business segments. I also examine how the structure of revenue from sectoral goods sold influences profit from sale.
     Results As a result of the research, I propose certain models for the factor analysis of the effect a diversified structure of goods sold has on the revenue from sale and financial results.
     Conclusions and Relevance I conclude that the proposed methods for analyzing income may be applied to evaluate whether it is reasonable and effective to carry out diversified activities, and assess the effect of such diversified core activities on profit.

Keywords: income, financial result, diversified business, distribution, economic activity, revenue, diversification

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