Financial and Management Tools to Identify Realistic Factors Affecting Production Output

Correlation and regression analysis can be used to establish casual relationships between variables. In practice, these tools help to find out the variable value and determine its impact on the change of the dependent variable. The purpose of the article is to study the factors affecting the change in the production output, in particular, stock inventories, their turnover as well as contractors and buyers of finished products. Even if the values are expressed in different units of measurement, i.e. the production output and inventories - in rubles and inventory turnover - in turns, contractors - in the number of men, the economic and mathematical models presented enable us to make a comparison. Therefore, the article demonstrates a practical approach to find the dependency between specific and above factors (variables) and their cause-and-effect associations. In practice, it is necessary to find out the values of the variable and determine its impact on the change of the dependent variable. In this particular case, the production output is taken as a dependent value. Its value is influenced by variables (stocks of raw materials and supplies, their turnover, number of consumers formed for a certain type of finished product of a given production), and therefore they change proportionally. The calculation of values for one variable on the basis of another one will be shown using regression equation with known initial numbers. Consequently, a practical approach presented demonstrates how correlation analysis, mathematical function, regression equation and trend line can be applied allowing practitioners to identify not only cause-and-effect but also regression relationships between variables. The proposed regression analysis allows to identify changes in the microeconomic production policy and to trace their impact on the economic activity of the entity over time.