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Enhance Knowledge
| EnhKnowTM
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LLC
Technology Brokerage & Royalty Servicing |
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Business
Communications |
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Understanding Corporation Viability
Analytics |
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Published: September 2, 2020 |
Original Media: This Publication |
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Updated: None |
The viability of a corporation to sustain enduring existence is
reflected by the realization of safety margins in the financial analysis
of the corporation. Two methods: Break-even Analysis and Viability
analytics; can be used to establish the existence or lack thereof of a
safety Margin in the operations of a corporation. Although not quite
obvious to many, the two concepts of evaluating the existence of Safety
Margins of a business are different even though similar in respects.
The differences between the two approaches are reflected in the
evaluation constructs, the revenue dataset and the cost dataset, used to
make the determination as shown in the forms of Fig. 1 & 2. The datasets
of Break-Even |
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Analysis are inherently linear while the datasets of the Viability
Analytics are not linear but closely captures and so reflects the
business model of the corporation.
Break-Even Analysis only evaluates the Break-Even Point, production
volume, of a company for which the company should be profitable, based
on a presumed set of product price and cost of unit-product. Quite
significantly, Break-Even analysis does not necessarily consider the
market Allocation context of the Break-Even Point; after all the mere
existence of a Break Even Point does not assure the viability of the
corporation. The Break-Even Point must be within the Market Allocation
market size such as to still permit the creating of large enough Safety
Margin. In effect, although Break-Even Analysis datasets may be
convergent as to produce a root for the derived simultaneous algebraic
equations, such convergence may not be supported by the Market
Allocation of the corporation.
However, the EnhKnow Viability Analytics determines the Break-Even
Point, without presuming set values for neither the product price nor
the cost of unit-product. Rather Viability Analytics evaluates both the
product price and unit-production cost simultaneously and reflexively,
in course, of the analysis, and then uses the values in other
evaluations of the prospects of specific activities of the corporation
in assessing the viability of the corporation. This intrinsic feature of
the Viability Analytics permits the near immediate determination of any
prospects of the datasets divergence derivative of the organizational
design and cost structures, and therefore also provides the opportunity
to elicit for redesign those features contributory to the divergence
such as to induce the viability of the corporation, after all. In that
regard, in assessing the viability of the corporation, the Viability
Analytics explicitly captures into the mechanisms of the datasets
evaluation, the constructs of Purchase Management and Vendor Supply
programs, towards determining the impact of such constructs on the
viability of the corporation.
More specifically, EnhKnow Viability Analytics evaluates the Market-size
and its potential to support the corporation as an on-going business
entity. It also evaluates the Sales Model of the corporation for its
effectiveness to produce sales that is supported by the Market
Allocation as to vest the corporation with financial viability. In
addressing the performance analysis of the Sales Model, Viability
Analytics also explicitly factors the maturity terms of the class of the
corporation. As is well known, every corporation has a maturity age as
determined over the years and is as given in Table 1, Ventures Maturity
Age. Assessing the Sales |
| Venture Class |
Maturity Age |
Service Corporation
Manufacturing Corporation
Chemical Process Company
Biological Process Company |
1 - 3 yrs
3 – 5 yrs
7 – 10 yrs
10 – 15 yrs |
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Model of a corporation within the context that factors its state
of maturity in the analysis is critical in reliable evaluation of its
continued enduring existence. In fact this particular analysis
contributes heavily towards characterizing additional capital investment
needs and the prospective state of financial viability.
Particularly remarkable is that Viability Analytics especially performs
analyses of the stability of the Supply Chain and Buyer Chain. Both
these analyses are crucial to the extent that instability of either
chain invariably foretells absence of viability. The impact of the
Supply Chain instability is the same for all industries but the effect
of Buyer Chains instability is particularly noticeable in the
performance and viability of corporations in the Engineering and
Construction industry.
In a larger context though
Bankruptcy
Company,
IPO company,
Distressed
company and
Venture Start-Ups which are evolving towards or have evolved
away from the state of enduring existence therefore are simply in
transient states and are analyzed specially for the prospects of
evolving back into an enduring existence, as characterized with
Business
Enduring Viability Analytics for the reliable advising of investors for
making more informed safe-capital or conservative investments. |
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