Stages and types of factor analysis

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In order to obtain the required result from factor analysis, it is necessary to strictly adhere to the designated plan, individual for each. The main stages that need to be completed to achieve the goal:

The definition of the indicator that needs to be analyzed is the result for which the quantitative measurement of the causes influencing it is carried out.

Clarification of the factor model, i.e. the relationship between the causes and the final result. To do this, you need to take into account the calculation order of the analyzed indicator, i.e. find out what it consists of.

Evaluation of the impact of factors on the result. Different methods are used for this, but most often these are the methods of absolute units and chain substitutions. We will dwell on them in more detail below.

Analysis of the results obtained. You will receive answers to the questions you asked:

what factors do not lead to a significant change in the analyzed indicator;

which indicators have a positive effect and which have a negative effect;

what needs to be done to strengthen positive and weaken negative factors, and so on.

It is clear that the management, not croatia email list the financial structures of the enterprise, are responsible for resolving the latter issue, since it may include a revision of pricing policy, personnel changes, changes in motivational strategy, investment measures, and the introduction of an austerity regime.

Stages and types of factor analysis

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A financier must have certain theoretical knowledge to conduct competent factor analysis. He must be familiar with the models and know different methods of factor analysis of profit.

There are various classifications of factor analysis, but in practice the theory most often used is one based on the clear definition (rigidity) of cause-and-effect relationships. Accordingly, the analysis in question is divided into:

Deterministic - the dependence of the result on the influence of factors is expressed by a mathematical formula. The meaning of this can be understood by the following example: if the price of each unit of goods increases by two times, then, while maintaining the sales volume, the revenue will also double.

Stochastic - there is a relationship between the outcome and the factors that influence it, but it can only be discovered through deeper research.

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Alexander Kuleshov
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Most often, teachers in lectures on financial analysis give the following example for the second type: the productivity of employees depends on fluctuations in the geomagnetic field. It is clear that weather-sensitive people work less efficiently during magnetic storms, but not a single textbook contains a formula by which one can calculate the dependence of labor productivity on an increase in geomagnetic activity by 1 point.

Stages and types of factor analysis

Source: shutterstock.com

To obtain the data, it is necessary to analyze geomagnetic fluctuations over the past few years and compare the result with the amount of products manufactured during the same time. But even in this case, a formula compiled on the basis of research data conducted in the Far East region will not be suitable for assessing labor productivity in the southern regions.