II.

Methods for assessing the influence of factors in relative size

1. The method of relative connected substitutions

A. Application of the method in the case of product relationship:

We assume that X represents the quantitative factor and Y represents the qualitative factor in the
analysis model.
The index of the phenomenon, IF is determined by the following relationship:

F1 X 1 xY 1
x100 x100
IF = F 0 = X 0 xY 0

STEPS:
1. The relative deviation of the phenomenon
ΔF
∇ F= x100=I F −100=¿ ¿
F0

2. Influences of factors:
Influence of quantitative factor X:
ΔF( X ) X xY X xY ΔXxY0
x100= 1 0 x100− 0 0 x100= x100
∇ F( X ) = F0 X 0 xY 0 X 0 xY 0 F0

The influence of the qualitative factor Y:

ΔF( Y ) X 1 xY 1 X 1 xY 0 X 1 xΔY
x100= x100− x100= x100
∇ F(Y ) = F0 X 0 xY 0 X 0 xY 0 F0

3. The relationship of truth:

∇F = ∇ F (X)+ ∇ F (Y)

B. Application of the method in the case of a ratio:

S1. X- quantitative factor and Y- qualitative factor
X1
Y1
F1 x100
X0
x100=
IF =
F0 Y0
STEPS:
1. The relative deviation of the phenomenon
∇ F=I F−100=
ΔF
F0
x 100
{
¿ 0 , F 1 ≥F 0
¿ 0 , F 1< F 0
2. Influences of factors:
X- quantitative factor
X1 X0 ΔX

{
ΔF ( X ) Y0 Y0 Y ¿ 0, X 1 ≥ X 0
∇ F ( X )= x100= x100− x100= 0 x100 | ¿
F0 X0 X0 F0 ¿ 0, X 1 <X 0 ¿
Y0 Y0

Y- quantitative factor

X1 X1 −ΔYxX 1

{
ΔF(Y ) Y1 Y0 Y 0 xY1 ¿ 0,Y 1 ≤Y 0
∇ F (Y )= x100= x100− x100= x100 | ¿
F0 X0 X0 F0 ¿ 0, Y 1 >Y 0 ¿
Y0 Y0 în condiţiile X1;

3. The relationship of truth:

∇ F = ∇ F (X)+ ∇ F (Y)

S2. Y- quantitative factor and X qualitative factor

STEPS:

1. The relative deviation of the phenomenon

∇ F=
ΔF
F0
x 100
{
¿ 0 , F 1≥F 0
¿ 0 , F 1 <F 0

2. Influences of factors:
Influence of quantitative factor Y:

X0 X0 X ΔY
− 0

{
ΔF(Y ) Y1 Y0 Y 0 xY1 ¿ 0,Y 1 ≤Y 0
∇ F (Y )= x100= x100− x100= x100 | ¿
F0 X0 X0 F0 ¿ 0, Y 1 >Y 0 ¿
Y0 Y0
Influence of the qualitative factor x
X1 X0 ΔX

{
ΔF ( X ) Y1 Y1 Y1 ¿ 0,X 1≥ X 0
∇ F ( X )= x100= x100− x100= x100 | ¿
F0 X0 X0 F0 ¿ 0, X 1 <X 0 ¿
Y0 Y0

3. The relationship of truth

 ∇ F=∇ F (Y )+∇ F( X )

Application 1.
The general analysis model of net turnover (CAN) is given with the related data in the table below:
CAN= q x p, where

- "q" means the quantity of products obtained during the period;

- "p" represents the unit selling price.

Financial exercise
Absolute
Indicator Symbol U.M. Previous Ended Index
deviations
N0 N1

Net turnover CAN lei 510.000 577.500 67.500 113,23 %

quantity of q buc 600 700 100 116,66 %

products

price p lei/buc 850 825 - 25 97 %

STEPS:
1. The relative deviation of the phenomenon
ΔCAN 67 . 500
∇ CAN= x 100 = x100
CAN 0 510 . 000 = 13,23 %
Interpretation:
The net turnover increased in the current year compared to the previous year by 13.23%. The situation
is a favourable aspect reflecting an increase in the volume of activity of the entity (we assume that the
effects of inflation are zero).

2. Influences of factors:
The order of analysis of the factors is:
- I: q represents the quantitative factor in the model (because it is expressed in physical units of
measurement);
- II: p represents the qualitative factor in the model (because it is expressed in the same units of
measurement with the phenomenon, value units, reflects the essence of the phenomenon because the
essence of turnover is reflected by the selling price, etc.).

 Relative influence of the quantity sold (q) on the net turnover:

ΔCAN (q ) q x p 0−q 0 x p0 Δq x p 0
∇ CAN(q )= x 100 = 1 x100= x100=
CAN0 CAN0 CAN0
100 x 850 85 . 000
= x100= x100 = 16,66 %
510 . 000 510. 000
Interpretation:
The net turnover increased compared to the previous year by 16.66% due to the increase in the
quantity of products sold by 16.66%. The influence is favorable, reflecting an expansion of customer
volume.

 The relative influence of the unit selling price (p) on the net turnover:

ΔCAN( p) q 1 xp1 −q1 xp 0 q1 x Δp

∇ CAN( p )= x 100 = x100= x100=
CAN0 CAN0 CAN0
700 x (−25 ) 17 .500
= x100=− x100=−3 . 43 %
510 . 000 510. 000

Interpretation:
The net turnover decreased compared to the previous year by 3.43% due to the decrease of the unit
sales price by 3%. A decrease in the selling price at a given time can be a market strategy in order to
increase the quantity of products sold and finally to obtain a higher sales volume. This is also the case
of the analyzed entity because we can see that from one financial year to another there was an
increase in the quantity sold due to a reduction in the unit selling price.

3. The relationship of truth

∇ CAN = ∇ CAN(q) + ∇ CAN( p) = 16,66 % -3,43 % = 13,23 % (A)

Application 2.
The general analysis model for earnings per share is given with the related data in the table below:

RNE
EPS=
NA
Indicator Symbol U.M. Financial exercise Deviations
name Previous Ended (N1)
(N0)
Earnings EPS Lei/share 782,39 825,37 43,98
per Share
Net income RNE Lei 239.893.084 253.071.184 13.178.100
Number of NA number 306.614 306.614 0
common
shares
STEPS:
1. The relative deviation of the phenomenon
ΔEPS 42,98
∇ EPS= x 100 = x100
EPS0 782,39 = 5,49 %
Interpretation:
Net income per share increased by 5.49% compared to the previous year, which will become an
attractive aspect for potential investors.
 2. Influences of factors:
The order of analysis of the factors is:
I: NA is a quantitative factor (expressed in physical units of measurement);
- II: RNE is a qualitative factor (it expresses the essence of that phenomenon of profitability).

 Relative influence of the number of shares outstanding (NA) on earnings per share:
ΔEPS(NA ) 0
∇ EPS( NA )= x 100 = x100
EPS0 782,39 =0%

Interpretation:
The net result per share does not change due to the number of shares outstanding, the latter remaining
unchanged from one year to another.

 Relative influence of the net result for the year (RNE) on earnings per share:
ΔEPS(RNE ) 42,98
∇ EPS( RNE)= x 100 = x100
EPS0 782,39 = 5,49 %
Interpretation:
The net result per share increased by 5.49% compared to the previous year due to the increase
of the net result of the year by 5.49%.

3. The relationship of truth

∇ EPS = ∇ EPS (NA) + ∇ EPS (RNE) = 0 % + 5,49 % = 5,49 % (A)

Facultative:
Problem

The manager of the company X would like to check the evolution of Profit rate for 2
successive months.
In order to adopt concrete improvement solutions, he wants to know:
Exactly how much the profit rate changed during the 2 successive months
The manager wants to know the exact causes of this change and the extent to which
they have led to declining profit ratio
More exactly he wants to know how and what are the influences of revenues,
expenses and turnover on the change of this ratio

Rp=Profit / Turnover *100 = (Revenues-Expenses)/Turnover *100

Revenues: R1=10,000 lei, R0= 11,000 lei
Expenses: E1= 8,000 lei, E0= 7,000 lei
Turnover: T1= 6,000 lei , T0 =5000 lei
Profit ratio: Rp1=33% Rp0=80%
Steps:
1. The absolute change of the phenomenon (Rp) ∆Rp= Rp1-Rp0 = 33% - 80%= -47%
Intepretation: The level of Profit rate decreased by 47% in the current period compared by the
previous period (-)
2. The determination of the influences of factors (turnover, revenues, expenses)
-the influence of turnover ∆Rp(T)= (R0-E0)/T1 *100 - (R0-E0)/T0 *100 = -13.33
The influence of revenues ∆Rp (R) = (R1 – E0)/ T1 *100 – (R0- E0)/T1 *100=-16.66
-the influence of expenses ∆Rp (E) = (R1-E1)/T1 *100- (R1 – E0)/T1 *100 =-16.62
3. Verifying the relationhip of truth ∆Rp= ∆Rp (T)+ ∆Rp (R) + ∆Rp (E)=-46.61

2. The relative balance sheet method

It has the same characteristics as the balancing procedure except that all calculations are now
performed in relative quantities.

 Application of the procedure on a classical balance relationship of the type:

Sf = Si + I –E

STEPS:
1. The relative deviation of the phenomenon
 ΔSf
Sf
Sf = 0
{
x 100 ¿ 0 dacă Sf1≥Sf0
¿ 0 dacă Sf1<Sf0
2. Influences of factors
 The influence of SI

Sf(Si) =
ΔSf (Si)
Sf0
x100=
ΔSi
Sf0
x 100 {¿¿00 dacă Si1≥Si0
dacă Si1<Si0 ,

 The influence of I

Sf(I) =
ΔSf( I )
Sf0
x100=
ΔI
Sf0
x 100
=
{¿0¿ 0 dacă I1≥I0
dacă I1<I0 ,

 The influence of E

Sf(E) =
ΔSf ( E )
Sf0
x100=
-ΔE
Sf0
x100
=
{¿¿00 dacă E1≤E0
dacă E1<E0 ,

3. The relationship of truth

 Sf =  Sf (Si) +  Sf (I) +  Sf (E)

Application

We assume the following model , regarding the final stock of materials and raw materials Sf
= Si + I-E. Based on the corresponding data presented in table, explain the evolution of the
final stock of raw materials and materials using the relative balance sheet method.

Elements January February Absolute Index

2021 2021 deviation
Initial stock of 30.000 40.000 10.000 (((40.000-30.000)/
raw materials 30.000)*100)+100=
and 133,33%
materials(Si)
Supply of raw 100.000 120.000 20.000 120%
materials and
materials(I)
Consumption 40.000 20.000 -20.000 50%
of raw
materials and
materials (E)
Final stock of 90.000 140.000 50.000 155,55%
raw materials
and
materials(Sf)

STEPS:
1. The relative deviation of the phenomenon
ΔSf 50 . 000
x100= x100=55,55 %
Sf =
Sf 0 90 . 000
3. Influences of factors
The influence of SI
ΔSf(Si) ΔSi 10 . 000
x100= x100= x100=11,11 %
Sf(Si) = Sf0 Sf0 90. 000

Interpretation:
The final stock of raw materials and materials increased by 11.11% compared to the previous
month due to the increase of the initial stock of materials and materials by 33.33% compared
to the previous month.

 The influence of I
ΔSf( I ) ΔI 20 . 000
x100= x100= x100=22,22 %
Sf(I) = Sf0 Sf0 90. 000
Interpretation:
The final stock of raw materials and materials increased compared to the previous month by
11.11% due to the increase in the volume of supplies of materials and materials by 20%
compared to the previous month.

 The influence of E
ΔSf( E ) −(-20 . 000)
x100= x100=22,22%
Sf(E) = Sf0 90 .000
Interpretation:
The final stock of raw materials and materials increased compared to the previous month by
22.22% due to the decrease in consumption of materials and materials by 50% compared to
the previous month.
3. The relationship of truth
Sf = Sf(Si)+ Sf(I)+ Sf(E) = 11,11 % + 22,22 % + 22,22 % = 55,55 % (T)