Dec.2001Journal of China University of Mining & TechnologVol 11 No. 2Balance analysis of Profitand Loss on ExploitingCoal-Bed Gas in chinaⅩ lAO Jian-hong(肖建洪), MIAO Jian-guo(苗建國), CHEN Xiao-hai(陳曉慧Department of Economics and Management, CUMT, Beijing 100083, P. R. ChinaAbstract: Models about four aspects according to the balance principle and practice in China were established, which involve the minimum production scale, alert production scale, safe running scale, and thegoal production scale for specified profit level. It provides an effective quantitative analyzing method forKey words: coal-bed gas; production scale; balance of profit and loss; investment; modelCLC number: F 40 Document code:A Article ID: 1006-1266(200102-0196-01 Introductionfixed cost and v is the unit fluctuant cost, then theSince the pollution of burning coal is verycost function can be expressed as C= F+aQheavy, the utilization of clean energy becomes an inThe balance principle is shown in Fig. 1exorable trend. The coal-bed gas is a kind of cleanenergy and is now used in industry in China. Fewresearches on economical evaluation of it have beenarried outThe balance analysis of profit and loss, a basiceconomical method, is used widely in managementdecision. It is applied to analyze the operational sitFig 1 Diagram of balance princation of corporation by calculating balance outputIn Fig. 1, Qo is the balance output. If the tax isbalance sales volume and safe running rate.not involved, the equation isF/(P-v). TheAccording to the present practice of coal-bedmajor circulation tax of coal-bed gas corporation isgas development in China, this article paper the emthe value-added tax, if imposing at 5%, then PQ=phasis on the study of investment and operation F+vQ+ PQx 50cale of exploitation projectFP(1-5%)(1)2 Linear Analyzing ModelIf the standard profitof coal-bedThe tendency of production cost and sales in-ject is r(the general conclusion is 12%); the totalcome has both linear and nonlinear changes, so theinvestment is K the goal profit should be rKmodel analyzing includes two aspects accordinglySuppose Q is theTHs中國煤化工wibeKmine: the price is P, so the total sales income isCNMHG(2)S= PQ. If C means the total cost, Fis the annualReceived date: 2001-04-25Biograph方數(shù)據(jù) ian-hong(1965-),male, from Xianyou County. Fujian provincengineer. graduate student ( for doctor'sXIAO Jian-hong et alBalance Analysis of Profit and Loss on Exploitinguppose Qi is the output of the reporting periSuppose s is the sales income and Pis the priceod and we define the safe running rate as the pro- there is s=PQ. In addition, the price is generallyportion of (Q,- Qo) to Q,, that is, A=(Qthe linear function sales volume. If P=A+KQQo)/ Q,. For A>30%, we think the running of thenthe project is safe. So we getS= PQ=(A+KQ)Q=AQ+kQ.(5)Q1≥Q/0.7In case of considering the tax expense, whichFor A<10%, the production gets into the imposed at 5% according to the present regulationalert phase. The alert production scale is Q< we have (the tax rate is indicated with r)Q./0.9. Therefore, we can judge the operation safe [K(1-r)-aJQ2+[A(1-r)-bjQ-f=0(6)level of coal-bed gas corporation by calculating theDeducing the eg (6), we get the balance outfe running rateTake the coal-bed gas corporation in Huainan Qb-A(1-)]for example. Its total investment of single mine isRMB 2.59 MYuan; designed output is 1.5 hm;A(1-)-b12+4fk(1-r)-a2[K(1-r)-a(7)the present average price is 2. 1 Yuan/m; the an-nual fixed cost is 425. 6 k Yuan; the unit fluctuatedStill taking the Huainan Corporation for exanpIe, we can make a more precise and more reason1.43 Yuan/m. We can use the above lirable conclusion on the balancing scale, alert scalemodel to make out some related data easily. The desafe running scale and the goal optimum scalewn InTable 1 The table of production scaleTable 2 is the related financial data of the corOut put/10m3Alertporation in 1996-2000.75.327483.6971107.6106130.3363Table 2 Sales data of Huainan corporationY19961997l99819993 The Nonlinear Analyzing Modelles volume/125.42131.25142,35146.55153.37When the sales income function and cost func-ion are all nonlinear, the balance principle of profit(Y2.122,082,011.981.89and loss can be expressed as fig. 2Changing cost/(Y1.581.511,481.4543If the price function is P=A+kQ, and the uS=4@+ 82-nit fluctuated cost function is,v= aQ+b, we candetermine the coefficient by recursion analyze. Thecalculation is shown in table 3Table 3 Calculation of recursion analysisQPQ1996125.422.121.58265.90198.1715731.20As we know, the production cost of coal-bed997131.252,081.51273.00198,1917227.19gas corporation is related to the production scale. If1998142.352.011.48286.10.6720262.441999146.551.981.45290.17212.5021476.52C indicates the cost, there is C= vQ+f. And al2000153.371.891.43289.87219.3223522.2sO,the unit fluctuated cost is usually the linear415.061038.8598219.5function of output, that is, v=aQ+b. The fixedTYH作cost f includes the fixed asset depreciation and otherereforefixed expenditure. So, the total production cost canbe expressed asPQP>QK(f=(aQ+b)2+fQQ2+bQ+fournal of China University of Mining & TechnologVol 11 No. 25×1405.0549698.9410alert output C=Q。/0.9=80.3489×104m3and5×98219.5998.9410the safe running output Q,=(Q00.7)x10'm20.1597.447-0.00078,We can also establish the profit function basedon specified profit rate; and deduce the optimumP-k>Qproduction scale by derivative. But for the limit of4length, this article does not make a further discus-10.08+0.0078×698.941sIon≈3.10635So, the price function will be P= 3. 106 354 Concl usion0.007 8Q and the sales income function will be S=The balance analysis of profit and loss is an ef-3.106354-0.0078Q2.Btheame fective method to evaluate themethod, we know the unit fluctuant cost functionoperation situation. By using it, the coal-bed gascan be expressed with v=2.187.004 99Q and exploitation corporation can be clear about the bal-the total cost function can be expressed as Cance output, alert output, safe running output, and0.004 99Q+ 2. 187 5Q+ 42 56. According to goal output on time, arrange the production planformula (7), we get Ql=72. 314 0, and Q= reasonably to reduce production costs and raise the243.1818. In view of the objective reality of Cleconomical result. So it is of great significance incoal-bed gas exploitation, we choospractice72.314X10* m'as the balance output. 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