Each company engaged in the sale of goods, makes an assessment of the situation on the market. A firm cannot function successfully if it makes decisions that are contrary to the current situation. This applies to small, medium and large companies.
Market conditions - this is the current market situation at any time. It is influenced by factors that determine the value of securities, prices, production, unemployment, etc.
When market conditions are analyzed, a large number of different points are considered: the degree of business activity, the scale of operations in the market, the size of competition, the ratio of supply and demand, the emerging changes in the economy of the industry, country, etc. The main impact on the situation is exerted by preferences of buyers and the ability of manufacturers to meet the need. That is, first of all, the market conditions are evaluated from the position of the ratio of supply and demand. And since this process is stochastic in nature, the situation is constantly changing.
The factors forming the market are expressed in a number of indicators. They help assess the state of both individual industries and the economy as a whole. The list of indicators depends on the object of study. It can be a segment, a country, the world economy, etc. The indicators of the sectors of material production, the monetary sector and commodity exchange are considered.
In the analysis of material production consider:
- volume of production;
- portfolio of orders;
- size of employment;
- receipt of orders;
- volume of stocks;
- the amount of investment;
- capacity utilization;
- salary fund;
- the duration of the working week;
- the number of unemployed;
- the amount of investment;
- size of construction;
- the cost and number of construction contracts;
- livestock
- areas under crops;
- the volume of production in agriculture;
- productivity;
- the number of manufactured goods;
- the volume of freight by river, sea, rail, air and pipeline.
Market conditions from the position of commodity circulation is evaluated according to the following indicators:
- the amount of sales in wholesale and retail trade;
- price level;
- the movement of stocks of products in the distribution network;
- sales volume on credit;
- the size of imports, exports;
- geographical distribution and commodity structure of trade: by country, region, etc .;
- balance of payments status;
- movement of currency and gold.
Market conditions are also evaluated by the following indicators of the monetary sphere:
- issue of securities ;
- discount rate of various banks;
- stock price;
- profit of monopolies;
- movement of loans;
- state budget, etc.
Thus, market conditions are assessed using a complex analysis of a large number of indicators. It is worth considering that any of the factors describes only a conditional effect. For example, the offer of goods cannot be shown with a single figure. It can only be estimated by the company. So, production is measured immediately by a number of indicators: indices of the volume of manufactured products, the degree of utilization of the equipment used, and so on. When analyzing the situation from the position of prices, it is necessary to take into account indices, their reference and absolute values. At the same time, indicators can only serve as an approximate guideline, since they can significantly differ from the actual cost of the goods. For example, for oil, the market and reference prices may differ even by 30%.
Market conditions are constantly changing under the influence of a large number of factors. Financial analysts must be very attentive to changes in order for companies to work most efficiently.