Index of physical volume of products

Indicators that can be relevant both from the standpoint of assessing the situation at a particular enterprise, and when identifying macroeconomic trends, are various indices - for example, physical volume of production or sales. How are they calculated? For what purpose can they be used?

What is the essence of the physical volume index?

Index of physical volume is an indicator, which in general characterizes the quantity of products or services produced by an enterprise. It is relative and shows how much the output has changed when comparing the indicators in 2 different periods.

This index is based mainly on the use of information on the dynamics of various natural indicators in the production on a fixed list of products. Depending on the tasks of the researcher, the indicator for a particular enterprise or the general index of the physical volume-turnover or, for example, the output of industrial output, can be determined. In the second case, the structure of the indicator can include goods and services in the widest possible range. This index allows you to assess the state of affairs not on a separate enterprise, but in the industry as a whole. It can also be of great importance from the point of view of assessing the macroeconomic situation in the national economy.

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

Index of output by industry: nuances

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

First of all, a list of specific industries is defined, within which indicators for the output of certain goods will be analyzed. In addition, if the research objective requires it, the sub-sectors are also identified.

After that, for each branch 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 can include such indicators:

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

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

- The selling price for the corresponding product.

The formula in question can be supplemented by other indicators depending on the specific tasks that the researchers face.

In practice, indices defined for the industry can be combined to obtain data on the segment of the economy as a whole. For example, if the physical volume index is to be determined for the fuel industry, then in its calculation, indicators will be used that characterize the state of affairs in the oil-producing, oil-refining industry, gas, coal, and shale industries. At the same time, each of the relevant industries may have a different share in the total value added of the fuel industry. Thus, the overall index of physical volume of fuel production can be calculated taking into account many nuances. For example, characterizing the form of organization of output of goods at a particular enterprise or in the industry as a whole.

Let us consider in more detail how the index of the physical volume of production is calculated taking into account the specifics of the organization of production.

Calculation of production index: summation of indicators by enterprises

Among the Russian researchers, the approach is widespread, according to which the definition of the indicator in question is implemented in 4 stages:

- summing up of indicators by enterprises;

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

- Separation of revenue 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 specific enterprise is determined, then - it is summed up with the indicators that are determined in the study of the performance of other firms in the industry. As a rule, organizations that have comparable indicators for revenue, actual volumes of output of goods, and an assortment of products are selected.

Product Liquidity as a Criterion for Computing an Index

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

Delimitation of products by industry

In addition, the goods may be excluded from the index, according to their characteristics, relevant to the industry in question, but classified by other criteria. So, for example, if an enterprise produces military cars along with civil cars (the same model), then in analyzing economic indicators it makes sense to exclude the production of the first type from the index of the physical volume of output of cars. However, those indicators that will characterize the production of this type of equipment can affect how the composite index of the physical volume of production of the military industry of the state will be.

Market environment as a criterion for differentiation of products

Differentiation of indicators can make sense also because the production of civilian cars is generally 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 issued on a preliminary order, and therefore it will almost certainly be sold. In this sense, the company will perform an administrative task rather than one that would characterize the firm's activity as a full-fledged subject of commercial legal relations.

Thus, at this stage of the calculation of the indicator in question, it is important to make a correct delineation of 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 the researchers.

Calculation of the production index: the separation of revenue from output volumes

The next step in the calculation of the industrial index is its adjustment taking into account the revenue indicators, which relate not so much to the output of goods as to the price increase, but also to the increase in the company's income, for example, due to the provision of related services to some business entities. For example, related to the repair and maintenance of equipment manufactured by the enterprise.

This distinction will help the researcher, who determines the dynamics of macroeconomic trends, to better understand the principles of pricing in the relevant segment of the industry. The fact is that the index of the physical volume of products 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 establish reliably 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 number of goods, then the increase in the physical volume of production is not fixed.

Calculating the production index: defining the production cycle

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

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

Sales volume index

Having determined the essence of the production index, we will consider the specific application of this indicator in sales. Often the owners of enterprises turn to managers with the 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 will be similar in value to the study of economic segments to the indicator that is determined in the sphere of industry.

Industry-wide index in trade

In order to determine the industry-wide index (for example, in the retail segment), it is necessary to calculate the dynamics of its largest sectors - trade in food products, household appliances, clothing, etc. The principles of comparing indicators 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 specific industry in turnover for the retail segment as a whole. It can differ significantly from the performance of another industry. It is not ruled out that the index of the physical volume of goods turnover in the food retail will be positive, and in the electronic one - negative.

In order to determine the general indicator for retail as a whole (which will be important from the point of view of assessing the state of affairs in the national economy), the addition of the corresponding indices will have to be made taking into account the difference in their dynamics. In this case, the total index can be determined using rather complicated formulas.

Sales and revenue

In addition, it is worth noting that the index of physical volume of sales of goods does not always correlate with the revenue of the enterprise. Above, considering the specifics of the definition of the corresponding indicator in industry, we spoke about the need to distinguish the dynamics of the company's receipt of revenue and the real output of goods. The same can be said about the sale of products. It's one thing - if the firm's profit has grown due to price increases, the other - if the capital is earned by increasing sales.