Managing the Cost-Effectiveness of Enterprises in a Volatile Economy

Abstract

The article is aimed at disclosing the role and importance of cost-effectiveness assessment in the system of management of enterprise finance on the basis of an in-depth study on the impact of modern conditions on cost-effectiveness, as well as substantiating the ways to strengthen it. Existing theoretical and practical approaches to managing the cost-effectiveness of domestic enterprises are analyzed and features of a system of its assessment in modern conditions are identified. Based on the carried out analysis, factors that can influence the efficiency of management of cost-effectiveness of enterprises are identified, and practical recommendations for its assessing and improvement are made. The authors substantiate the mechanisms for optimal management of enterprise finance, directed to: ensuring profitability; finding reserves to increase the cost-effectiveness of domestic enterprises; substantiation for the use of identified reserves. The authors necessitate the need for a comprehensive approach to cost-effectiveness assessment using two or more groups of indicators based on: account of the industry features of activities; stage of the enterprise’s life cycle; commodity market conjuncture; the creditors’ attitude towards the enterprise; financial mentality of the owners and managers of enterprise.

Keywords

• enterprise finance management
• cost-effectiveness
• profit
• borrowed capital
• equity
• financial strategy
• financial model
• financial leverage