Cost-Volume Analysis and its Impact on Profitability: An Evidence from Nepal

Abstract

This study aims to investigate the financial dynamics and decision-making process of Nepal's public enterprises (PEs) in Kathmandu. In order to evaluate the relationship between cost, sales, and profit, this study, which is based on cost volume and profit (CVP) analysis, became essential for organizational sustainability. For this reason, sales revenue, variable cost, fixed cost, and profitability are the main focus of this study. For secondary data analysis, this study used a descriptive, correlational, and informal research design. The study's population consisted of only two manufacturing enterprises as a sample, and the manufacturing enterprises were all located in Kathmandu.  Regression analysis, correlation, and descriptive statistics were used to process and examine the gathered data. The research study's findings demonstrated the variation in sales revenue and expenses. Additionally, the study's findings showed that Himalayan Distillery Limited (HDL), a company, experienced a significant improvement in its safety margin, demonstrating a strong financial buffer. Similarly, Bottlers Nepal Terai Limited (BNTL) shown consistent growth in both operational profitability and efficiency. This study illustrates the importance of cost, volume, and profit analysis by connecting it to and financial planning and strategy formation. It can also be helpful for other comparable businesses in making decisions about their operations.