Description

Explanation of Application
(What is profit sensitivity analysis?)
By inputting sales figures / variable costs /current profit on the statement of accounts, with profit sensitivity analysis, the following can be understood: current profits of 0 when discounting by a certain percentage, current profits of 0 when reducing volume by a certain percentage, current profits of 0 when increasing... Read More variable costs by a certain percentage and current profits of 0 when increasing fixed costs by a certain percentage can be obtained. This information has not been available in conventional settlements of accounts. These become clear when profit sensitivity analysis is performed. If you look at the results of profit sensitivity analysis for Toyota, Nissan and Honda, it is easy to understand which company has good profit sensitivity as you can see that there are great differences between each company in profit sensitivity percentages. 2 companies can be compared in the premium version, For this reason, profit sensitivity analysis results are read by businessmen, managers and investors who regularly read statements of accounts.
(In industries that conduct cost accounting)
If companies in the manufacturing industry do not use direct cost accounting when conducting profit sensitivity analysis, volume and variable costs are not linear. However, Japanese tax laws recommend full cost accounting. In this case, if this is not changed to direct cost accounting, it is not profit sensitivity analysis. However, companies that are not in the manufacturing industry (sales and services sectors), are displaying volume and variable costs in a linear manner so it is possible to correctly conduct profit sensitivity analysis.

(How to use profit sensitivity analysis)
Profit sensitivity analysis gives numbers (①②③④) to categories that are sensitive to profit.

(In the case of a positive settlement of accounts)
20% or more　　　 　Green light (Walk)
10% - less than 20%　　Amber light (Caution)
0% - less than 10%　　 Red Light (Stop)
(In the case of a negative settlement of accounts)
All　　　　　　 Red light (Stop)
(In the case of making a business plan)
There are cases where a business plan is made from sales figures and where it is made from current profit.
It is preferable to make 100 business plans.
Therefore, the contents of each business plan should be noted in memos.