The economic efficiency of the proposed measures shows how appropriate was the investment of funds.
Calculation criteria
They can be divided into two groups:
- Socio-economic.
- Economic.
The criteria for each category are different. The main of them when calculating the indicators of economic efficiency is considered to be how much the company will be able to maximize its profits, and how effectively capital investments are used. In determining the effectiveness of a socio-economic nature, the main parameter of the assessment is the level of satisfaction of the needs of the population.
In order to have high socio-economic efficiency, the economic system must satisfy a number of human needs. These include material, spiritual, social needs, guarantees of high quality and standard of living.
Methodology for calculating economic efficiency
Efficiency displays how much profit brings 1 monetary unit of invested funds. The higher its value, the better the company will manage the invested funds. The calculation of the economic efficiency of the proposed activities is carried out in order to determine how effectively the financing was carried out.
Classical costing is the ratio of the result (profit) to the costs incurred to obtain it. The formula for calculating the economic efficiency of the proposed activities can be represented as follows:
EE = Eph / 3 , where
- EE - economic efficiency;
- C - the cost of achieving the economic effect (investment);
- Ef - economic effect.
There is also a formula for absolute economic efficiency for production and non-production areas of activity. It can be represented as follows:
EE = (Eph 1 - Eph 0 ) / (I + K * K n ) , where
- EE - economic efficiency;
- Eph 1 is the overall result after the events;
- Eph 0 - result before the event;
- And - total costs;
- K - investment for events;
- To n - regulatory coefficient.
The normative coefficient is an indicator that characterizes the minimum acceptable efficiency of activity in a particular area. It differs depending on the scope.
Investment efficiency
In order to evaluate the effectiveness of capital investment, two formulas are used:
- Coefficient of economic efficiency.
- Payback period of deposits.
The calculation of economic efficiency differs from the proposed measures in the areas of production and trade. For production, the calculation formula has the form:
EE n = (C - SS) / K , where
- EE p - economic efficiency of production;
- C - the cost of products manufactured during the year, in wholesale prices;
- K - capital investments;
- SS - the cost of production produced per year.
If we talk about the sphere of trade, it should be noted that the formula for calculating the economic efficiency of the proposed measures has a slightly different form:
EE n = (H - I) / K , where
- EE p - economic efficiency in the field of trade;
- N - the amount of discounts;
- And - total distribution costs;
- To - invested capital.
Payback term
The second indicator used in assessing the effectiveness of events is the period for which the invested funds are paid back. The general formula for the payback period :
T = K / Eph , where
- T - payback period of events;
- K - invested capital;
- Ef - the economic effect of the measures taken (profit).
To calculate the term payback of measures in the field of trade, the formula is used:
T = K / (C - SS) , where
- T is the payback term;
- C - the cost of products manufactured during the year, in wholesale prices;
- K - capital investments;
- SS - the cost of production produced per year.
In the trading sector, the payback period is defined as follows:
T = K / (H - I) , where
- T is the payback term;
- N - the amount of discounts;
- And - total distribution costs;
- To - invested capital.