## Methods, tools and techniques of economic analysis

*Questions: The concept of the method of economic analysis. Characteristic features of the method of economic analysis. Methods and techniques of economic analysis: traditional and math.*

*The concept of the method of economic analysis*

Economic analysis is based on the general knowledge of the dialectical method, which assumes that all phenomena and processes need to be considered in constant motion, change and development. Nothing stands still, everything flows, everything changes. Every minute there is a change in the economy enterprises that are learned in the process of comparison. The need for constant comparison - one of the characteristic features of the method of economic analysis. Comparisons are widely used in the economic analysis: actual performance compared with the results of previous years, the achievements of other companies target and forecast parameters, normative data. Every process, every phenomenon, in accordance with the principles of the dialectical method should be considered as a unity and struggle of opposites, which suggests the need to study the internal contradictions of the positive and negative aspects of each phenomenon, each process. For example, technological change has a positive effect on productivity and profitability level, but has a negative impact on the environment, polluting it; is the development of inactivity.

In accordance with the principle of the dialectical method to study business enterprises must take account of all relationships. No phenomenon can not be properly understood when considered in isolation. For example, the introduction of new technology increases the production costs, while increasing productivity, saving payroll and reduce production costs. Consequently, the growth rate of labor productivity growth rate will exceed the costs of maintenance and operation of new equipment, and the cost of production will decrease, and vice versa.

Economic analysis is intended to establish causal relationships and gives them a quantitative characteristic, that is, provides a measure of the influence of factors on the results of operations, which increases the level of analytical studies.

Causal relationships can be studied and measured by the method of induction and deduction. With the induction of research conducted from the particular to the general, from particular facts to generalizations, from cause to effect; used for a comprehensive assessment of all indicators of sensitivity to changes in individual factors. With the help of a study carried out deduction from the general to the particular, from the results of the causes; explores the whole complex of factors that shape the analyzed productive indicator.

Each economic phenomenon, each process should be viewed as a system or set of many interrelated elements, each of which contributes to its development. Any impact on one of the elements of the system is reflected in its other elements. Therefore, a systematic approach to the study of objects of analysis.

System approach allows more deeply explore the object of analysis, a more complete and holistic view of it, identify causal relationships between different parts of the object.

The analysis used a situational approach, according to which the management framework is a situation that needs to be managed to prevent the crisis. To make the right decision, you need to assess the situation and forecast of its development in the future. In modern conditions situational approach is one of the promising areas of economic analysis techniques.

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*Characteristic features of the method of economic analysis*

Technique - a set of methods and rules of the most appropriate implementation of the analytical study.

The general methodology used in the study of various objects of economic analysis in various industries. Private methods concretize the general procedure for certain sectors of the economy, types of production, and objects of research.

Economic Analysis Methodology - guidelines for analytical research:

- Guidance on consistency and frequency of analytical studies;

- A description of methods for studying the objects of study;

- Guidance on the organization of the analysis, its methodological, technical and information support;

- Recommendations on the design of the analysis.

Analysis technology - a sequence of analytical work.

Methods of research - methodological tools of analysis.

Stages of a comprehensive analysis of business enterprises:

-utochnyayutsya objects, purpose and objectives of the analysis plan is analytical work;

- Developing a system of indicators, which is characterized by an object of analysis;

- Information is collected for analysis to verify the accuracy, reliability, comparability;

- A comparison of actual results with the performance plan, codes, standards, data of previous years; achievements of leading enterprises; averages the data set trends and pace of development of the enterprise, its rating, the situation in the financial and commodity markets, identifies issues that need to develop measures to address them;

- Identify the factors and their impact on business results in the past and in the future, reveals untapped reserves and assesses the results achieved;

- Examines the possible scenarios of the enterprise in the current situation, existing reserves are estimated improve the efficiency of enterprise based on the study of innovation;

- Make recommendations for the adoption of strategic and tactical management decisions aimed at achieving the goals.

*Methods and techniques of economic analysis*

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The most important element of economic analysis techniques are techniques and methods (analysis tool) that are used at different stages of the analytical study. Among them, the traditional methods used to process and analyze the information (comparison, graphic, balance, average and relative values, analytical groups, financial calculations, heuristic methods for solving economic problems). To study the influence factors on the results of the calculation of reserves and apply deterministic and stochastic methods of factor analysis, optimization methods for solving economic problems.

In the economic analysis uses economic and mathematical methods listed in Table 1.

Table 1 - Economic-mathematical methods used in the economic analysis

the branch of mathematics |
methods |
appointment |

elementary Mathematics |
Proportion, balance equations |
To solve the traditional economic objectives: justification of resource requirements, cost accounting for production, study plans, projects, balance calculations |

Mathematical analysis |
Differential and integral, calculus of variations |
For solving optimization problems |

Mathematical Statistics |
Indices, correlation analysis, time series |
To solve economic problems in which the studied factors are probabilistic in nature |

econometrics |
Production functions, interbranch balance, factor analysis |
To solve economic problems, a condition which can be schematically represented in the form of chess diagrams reflect the relationship between the studied phenomena |

mathematical programming |
Linear, nonlinear, dynamic programming |
For solving optimization problems of production and economic activity when restricted to productive resources |

operations research |
Inventory management, scheduling theory, network planning, methods of queuing theory, system analysis |
To solve the problems that characterize certain actions in the economic system, and the choice of the optimal solution of a set of alternatives |

heuristic methods |
Informal methods, knowledge, experience, intuition |
To solve the problems, characterized by an informal statement of the problem |

The choice of methods of economic analysis depends on the purpose and depth of analysis, the object of study. Improving the tools of economic analysis is very important and is the basis for the success and effectiveness of the analytical work. The use of mathematical methods of research allows us to study a broader range of factors that determine the performance of the enterprise, improve the accuracy of the calculations. Thanks to them, we can solve multi-dimensional and optimization problems, provide a basis for science-based management decisions.

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**Questions for self-control**

1. What is the method of economic analysis?

2. What is a systematic approach to economic analysis?

3. What is the situational approach in economic analysis?

4. What is the method of economic analysis?

5. What are the main stages of the analytical work?

6. What is the essence of the method of induction?

7. What is the essence of the method of deduction?

8. What are the economic and mathematical methods used in the economic analysis and their purpose.