Market size variance, or MSZV, is a measure of how a company's profits are affected based on fluctuations in market size. When companies produce a product, they expect to meet the demand that is created by the market. However, if there is less demand than anticipated, then the company loses out on projected profits. The amount of loss depends on the market share of the company and the price of the product. Overall, the lower the market size variance, the more accurately companies can predict their production needs and profit margins.
Instructions
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1
Subtract the actual market size from the projected market size. For example, if a company projected that 50,000 tables would be bought this year, but only 45,000 were purchased, then 50,000 minus 45,000 yields 5,000.
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2
Multiply the value from Step 1 by the market share of the company. For example, if Company A sells 50 percent of all tables in the market. Then 5,000 * .5 yields 2,500.
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3
Multiply the value from Step 2 by the cost of each table. For example, if each table is $50, then 2,500 * $50 yields $125,000. This value is the MSZV.