The relevance of fixed costs in the diagnosis of operating risk to SME’S
Journal Title: Proceedings in Manufacturing Systems - Year 2017, Vol 12, Issue 3
Abstract
Due to their weak capitalization and low negotiation power on the market, small and medium-size enterprises (SME) have a high vulnerability to changes in the environment they operate. These vulnerabilities can significantly increase the operational risk of the business, going as far as compromising it. Particularly in areas of activity where technical capital is a business force, the level of fixed costs can be the main factor of operational risk. In view of this, the present paper aims to develop a simple and effective instrument for assessing operating risk to SME’s based on variation of some main indicators such as total sales, prices, fixed costs, variable costs. The proposed risk evaluation model, use two aggregate indicators: degree operating leverage (DOL) and business security interval (IS), calculated as an expression of enterprise’s economic performance, market position and level of capitalization (investment). Following the trend of these indicators is evaluated the trend of the operational risk of the business. The method proposed for evaluation of operating risk includes the main steps that are required to be followed under scientific control. These are presented in a decisional logic structure, in order to optimize the management decision in terms of minimizing the risk of the business which is objectively assessed through calculation. This way increases significant the applicative character of the method. The paper includes a case study to illustrate how to apply the method to a SME’s type company.
Authors and Affiliations
Nicolae Boian
Keywords
Related Articles
- EP ID EP249207
- DOI -
- Views 132
- Downloads 0
FINITE ELEMENT MODELLING OF POLYMER COMPOSITES PROCESSING
A PRELIMINARY STUDY ON THE ROTATIONAL MOLDING PROCESS
The rotational molding is a manufacturing method that allows obtaining parts with hollow form by rotating a mold around two perpendicular axes with the part material in the liquid state. Although the manufacturing meth...
FILLING PRESENT VACANCIES BY MEANS OF FUTURE ORIENTED RECRUITMENT PROCESSES
Related to the organizational culture, we presently witness a change of paradigm: if formerly considered not more than a tool for internal integration and coordination, nowadays, it is recognized as being a vital ingredi...
Single point incremental forming ‒ comparison between technological equipment by an overall processing time point of view
Single point incremental forming (SPIF) can be unfolded on various technological equipment. CNC milling machines and industrial robots are usually chosen for this purpose, both having advantages and drawbacks. The most o...
Task-oriented off-line parametric programming of an industrial robot serving CNC lathes
Industrial robotic arms are often employed in machine tool tending. If the scope of programming is restricted to a specific machine tool type, the tasks involved become standard to a large extent. Therefore, the correspo...