Page 42 - IMDR MSME BOOK 2021

Managing Finance in Micro, Small & Medium Enterprises
factors that have bearing on the mix of products and
services companies provide, procurement practices, full
utilization of resources employed, sales and marketing
efforts, and product and service delivery. The
information obtained from this analysis helps the
managers to identify actions to take to reduce costs and
drive additional revenues. The revenue analysis is
crucial for the rms focussing to expand their business
lines, strengthen their nancials, or enter new markets.
The variance analysis has been used to control the cost.
It is the process of analysing the variances by
subdividing the total cost variance in different categories
such as material, labour and overhead. It helps the
management to identify and assign responsibilities for
off performance and to take corrective measures.
When standards are compared to actual performance
numbers, the difference is what we call a “variance.”
Variance analysis can be summarized as an analysis of
the difference between planned and actual numbers.
Variances are computed for both the price and quantity
of materials, labour, and variable overhead, and for xed
overhead and sales and are reported to management for
forward planning and remedial action in accordance
with the scenario.
With the motive to understand the use and effectiveness
of the revenue analysis and variance analysis by the
selected MSMEs, the analysis has been done. It is found
that out of 199 respondent rms, 162 business units
that is majority (81%) of them have a reasonably reliable
forecast of revenues for next one year. Majority 73% of
them track their revenues against forecast and analyze
variance every month. It reects the realization of
signicance of the revenue analysis by the selected
MSMEs. The monthly forecasting of revenues leads to
plan overall business operations efciently. By tracking