Analysis of absolute, relative and %-based measures including volume, price and mix impact on Sales, Costs and Margin
Variance analysis is an important part of any profession related to finance. Companies constantly measure their actual results against plans, forecasts, past periods, competitors, etc. Such comparisons inevitably lead to differences and deviations that need to be explained. These deviations are most often related to the elements of the Profit & Loss report (P&L) and Cashflow compared with Plan and Previous year.
What you’ll learn
- Variance analysis of absolute measures (revenue, cost, gross margin etc.).
- Variance analysis of relative measures (average selling price per 1 kg, average production cost per 1 meter etc.).
- Variance analysis of indicators expressed as % (% of gross profit, % of net earnings etc.).
- Mix analysis (products/customers/SKU/ingredients/lines, etc.) on financial performance.
- Variance analysis of variable and fixed costs.
- Analysis of energy costs in a manufacturing company.
- Labor cost analysis.
Course Content
- Introduction; about a lector; comparison bases –> 6 lectures • 16min.
- Variance analysis of Gross profit (price/volume/mix) –> 14 lectures • 1hr 11min.
- Fixed and Variable costs –> 6 lectures • 19min.
- Variance analysis of Net earnings and its presentation –> 3 lectures • 21min.
Requirements
Variance analysis is an important part of any profession related to finance. Companies constantly measure their actual results against plans, forecasts, past periods, competitors, etc. Such comparisons inevitably lead to differences and deviations that need to be explained. These deviations are most often related to the elements of the Profit & Loss report (P&L) and Cashflow compared with Plan and Previous year.
At first glance this is a purely technical exercise, however actually variance analysis has a significant impact on the management of the organization and the quality of decisions made. A high-quality variance analysis allows to answer such questions as:
– WHAT happened?
– WHY did this happen?
– HOW does this affect the future?
The last question obviously leads to the need to develop tactical solutions or refine the strategy
Having mastered the skills of variance analysis, a financial specialist will be able to go beyond the technical role of a “calculator”, become a business partner in his/her area of responsibility and make a significant contribution to business decision-making
During this course, you will learn how to conduct a variance analysis of:
– absolute values (revenue/cost/gross profit/net profit, etc.)
– relative measures (average price per 1 kg; cost per 1m, etc.)
– measures expressed as a % (% of gross/net profit)
– mix of various kinds (geography, products, customers, SKUs, ingredients of the recipe, etc.)
– total P&L from Revenue to Net earnings, as well as visualize the result using the Waterfall chart
The course is of particular value for employees of companies with a wide range of raw materials, semi-finished products and finished products (manufacturing and retail)