EVALUATION OF THE INFLUENCE OF EXPENSES ASSOCIATED WITH THE FINANCIAL CYCLE ON THE PROFITABILITY OF THE PRODUCT SOLD

Abstract

It aimed to evaluate the profitability of an industrial product considering the financial expenses resulting from the duration of the financial cycle and the respective need for working capital. A methodology classifiable as descriptive, qualitative and in the case study format was used. It was concluded that profitability can be affected if the financial expenses arising from the cash conversion cycle are considered, since relevant differences were found between the values measured by the manufacturing contribution margin ($ 16,463.35) and the financial result of the sale ($ 1,902.85), caused by the calculation of financial expenses ($ 14,560.51) associated with the working capital required to sell the product in installments. In addition, the simulations carried out with a 15-day increase and decrease in the duration of the financial cycle show that the profitability of the product can be affected in these two projected contexts, which makes it possible to improve decisions about maintaining or adjusting the company's deadline policies. The contribution of the study is to show the practical application of an equation that improves the concept of contribution margin by also covering the amounts of financial expenses incurred by the allocation of working capital to support the duration of the financial cycle of the product in the evaluation of the respective result. In addition, it highlights the possibility of using this methodology in the reality of small industries, as data can be collected in internal controls or estimated.