Managing an organization's costs, expenses and revenues is essential to ensuring the financial health and sustainability of its business. However, many managers still make the mistake of focusing only on the final cash balance, ignoring the path the money takes and the factors that influence it.
This lack of vision can lead to serious failures in strategic planning and management, compromising the company's financial stability. A common example is the practice of setting sales prices that are lower than variable costs, which increases losses even with higher sales volumes.
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Strategic cost and price management is therefore essential for sustainable growth, enabling assertive decisions and achieving better financial results. Check out the essential financial indicators below to taiwan whatsapp data support this management and other essential concepts for efficient strategic analysis.
4 essential indicators for cost management
Financial indicators for good cost management1. Profitability
This indicator assesses the economic viability of the business, showing whether partners or investors are obtaining the expected return. It allows the manager to check whether shareholder remuneration exceeds the minimum attractive rate, acting as a strategic thermometer for medium and long-term success.
2. Profit margin
Directly linked to cost management, the profit margin reveals whether sales are generating profits after paying expenses. More than selling at a profit, it is necessary to achieve the profitability expected by shareholders, ensuring the financial success of the business.
3. Turn
Turnover indicators analyze sales volumes and allow you to assess whether performance is above or below the break-even point. An integrated analysis of margins and volumes makes it possible to identify portfolio efficiency, adjusting strategies to improve profitability.
4. Indebtedness
Understanding the level of debt is crucial to assessing the financial health and risks of the business. This indicator helps identify the ability to pay interest and debts, allowing for safer financial management.
Variable costing: fixed and variable expenses
Analysis of fixed and variable costsEffective cost management requires a good distinction between types of expenses. Fixed costs, such as rent and salaries, are the same regardless of the operation, while variable costs, such as raw materials and commissions, fluctuate with the volume produced or sold.
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Bad decisions often occur due to a lack of analysis of these costs. For example, selling a product for less than its variable cost generates increasing losses as sales increase. Prices higher than the variable cost contribute to covering fixed costs and generating profits.
Practical example: strategic promotions
Imagine an airline with available seats on a scheduled flight. The variable cost per passenger is R$30, which is for the meal. Any price above this amount contributes to profits, since the fixed costs of the flight are already covered.
With these indicators and analyses, it is possible to plan, control and optimize the company's costs, identifying the break-even point and developing robust strategies.