1 financial management. Financial management. Basic functions and methods of financial management
In practical use, financial management is associated with the management of various financial assets, each of which requires the use of appropriate management techniques and taking into account the specifics of the corresponding link in the financial market. Therefore, financial management can be considered as a complex management complex, which includes:
1) risk management;
2) management of credit operations;
3) management of operations with securities;
4) management of foreign exchange transactions;
5) management of operations with precious metals and precious stones;
6) management of real estate transactions.
Financial management is carried out in time. The time sign affects the goals and directions of management. On a temporary basis, financial management is divided into:
strategic management;
operational-tactical management.
Strategic financial management is investment management. It is associated with the implementation of the chosen strategic goal and involves, first of all:
financial assessment capital investment projects;
selection of criteria for making investment decisions;
choosing the most optimal option for investing capital;
identification of funding sources.
The evaluation of investments is made using various criteria, which can be very diverse. For example, it is profitable to invest capital if:
the profit from investing capital in the project exceeds the profit from the deposit;
return on investment exceeds the rate of inflation;
the profitability of this project, taking into account the time factor, is higher than the profitability of other projects.
All investments proceed in time, therefore, in strategic management, it is important to take into account the influence of the time factor: firstly, the value of money decreases over time; secondly, the longer the investment period, the greater the degree of financial risk. Therefore, strategic management widely uses such techniques as capitalization of profits (i.e., the transformation of profits into capital), capital discounting, compounding, and methods of reducing the degree of financial risk.
Operational-tactical financial management is the operational management of cash. Cash flow is expressed as a cash flow indicator and will be discussed later.
Cash management is aimed at:
to provide such an amount of cash, which will be sufficient to meet financial obligations;
to achieve high returns from the use of temporarily free cash as capital.
There are three goals of cash management:
increase the speed of cash receipts;
decrease in the speed of cash payments;
ensuring maximum return on investment of cash.
Each goal has its own management methods. So, for the first purpose, methods are used that allow you to collect funds as quickly as possible, for example, through the sale of manufactured products (works, services), using effective forms of payment; by receiving money from debtors, etc.
Accounts receivable management involves:
managing the turnover of funds in settlements in order to accelerate them;
control over the prevention of unjustified receivables (i.e. debts of financially responsible persons for shortages, theft, damage to valuables, etc.);
reduction in the amount of receivables.
Under control great importance has a selection of potential buyers and a choice of conditions and forms of payment for goods (works, services), for example, receiving an advance, prepayment, effective types of letters of credit, etc.
Buyers can be selected based on the following criteria:
observance by them in the past of payment discipline;
the state of their financial stability;
the level and dynamics of their solvency.
Accounts receivable management includes control over its duration. To do this, it is advisable to group receivables according to the timing of their occurrence: up to 1 month, up to 3 months, up to 6 months, etc.
To fulfill the second goal, methods are needed that allow you to defer payments in order to keep the money in circulation for as long as possible, for example, an investment tax credit.
To fulfill the third goal, you should use a cash management method that allows you to reduce it to a minimum, and, accordingly, increase the amount of money for investing in income-generating assets.
More on the topic 1.3. Financial management as a management complex:
- 2. Essence, prerequisites for the emergence and development of the science "Financial management"
- 3. Financial management as a management system. Subjects and objects of management.
- Kvochkina VI. Theoretical foundations of financial management: Educational and methodological complex. For fourth-year students studying in the specialty 080105 "Finance and Credit" with a specialization in "Financial Management" - Michurinsk: MichGAU Publishing House, 2007. - 122 p., 2007
- 3. Main functions and mechanisms of financial management
- 1.4. TECHNOLOGY OF MANAGEMENT DECISION-MAKING IN THE FINANCIAL MANAGEMENT SYSTEM
- 1.6.1 Information in financial management: concept and requirements for information, accounting principles
- 1.1. THE CONCEPT OF FINANCIAL MANAGEMENT. FINANCIAL MANAGEMENT AS A MANAGEMENT SYSTEM
- Topic 6. Financial management as a way to manage the company's finances
- The role of financial management in financial management of organizations. Purpose, tasks and functions of financial management.
- Topic 1. Financial management as a system and mechanism of financial management
- Copyright - Advocacy - Administrative law - Administrative process - Antimonopoly and competition law - Arbitration (economic) process - Audit - Banking system - Banking law - Business - Accounting - Property law - State law and management - Civil law and procedure - Monetary circulation, finance and credit - Money - Diplomatic and consular law - Contract law - Housing law - Land law - Suffrage law - Investment law - Information law - Enforcement proceedings - History of state and law - History of political and legal doctrines - Competition law - Constitutional law -
WORKING PROGRAM OF THE DISCIPLINE
FINANCIAL MANAGEMENT
Direction of preparation - 080200.62 "Management"
Training profiles - Small business management, Management by human resourses, Regional and municipal government
Qualification (degree) of the graduate - Bachelor of Management
Form of study - correspondence
1. The goals of mastering the discipline .. 3
2. The place of discipline in the structure of the PEP HPE .. 3
3. Competences of the student, formed as a result of mastering the discipline .. 4
4. Structure and content of the discipline.. 5
5. Educational technologies. fourteen
6. Evaluation tools for current monitoring of progress, intermediate certification based on the results of mastering the discipline and educational and methodological support for independent work of students 14
7. Educational, methodological and information support of the discipline (basic and additional literature, software and Internet resources) 21
8. Logistical support of discipline.. 22
1. The goals of mastering the discipline
Studying the discipline " Financial management"is an integral part of the process of preparing a bachelor in the direction 080200 "Management", training profiles - small business management, human resource management, state and municipal management.
The subject of this discipline is the financial system of business. The object of study is the process of managing cash flow, the formation and use of financial resources of organizations. In a market economy, the finances of organizations have become the main indicator characterizing the final results of their activities. Quantitative and qualitative parameters of the financial condition of the company determine its place in the market, the ability to function in a single economic space.
aim discipline is the formation of knowledge about the concepts and tools of financial management, as well as the skills to develop and implement sound and effective financial decisions.
The goal is achieved by solving the following tasks:
· mastery of the conceptual apparatus, the formation of a holistic view of financial management as a system that regulates the distribution and attraction of financial resources at the organization level;
study of the methodology of making financial decisions in the management of the organization;
obtaining knowledge about the methods and procedures for managing the organization's assets in cooperation with the sources of their financing;
· assimilation of the main directions and reserves to improve the efficiency of management of the organization when using the methods and tools of financial management.
The study of the discipline involves the development by students of the basic provisions of the theory and practice of financial management, which allows them to apply their knowledge and skills in improving the financial management system, implementing financial restructuring of the organization's activities, developing strategic and current plans, organizations crisis management substantiation of the economic feasibility of making managerial decisions in various areas of the organization's activities.
2. The place of discipline in the structure of the PEP HPE
"Financial management" is a discipline of the basic part of the professional cycle and is mandatory for students studying in the direction of training "Management" (qualification (degree) "Bachelor") and refers to the profiles "Human Resource Management", "Small Business Management", " State and municipal administration”.
The discipline is based on the knowledge and skills gained in the study of the following academic disciplines: "Management Theory", "Economic Theory", "Accounting and Analysis", "Money, Credit and Banks" and a complex of other general professional and special disciplines.
As a result of studying the discipline, the student must
have an idea:
about the place of financial management in the management system of the organization;
· legal and financial environment;
information support of financial management;
basic concepts of financial management;
· specialized areas of financial management;
Qualification requirements for a specialist in financial management;
· the structure and elements of financial management;
the financial decision-making cycle;
know:
a system of indicators characterizing the financial condition of the organization;
· process and technologies of development of the financial plan;
forms and methods of financing the organization's activities on a short-term and long-term basis;
· methods of valuation of financial instruments;
· methodology for evaluating the effectiveness of real and financial investments;
the process of developing the financial policy of the organization;
· methods and models of working capital management of the organization;
· methodology for estimating the cost and analyzing the structure of capital;
Criteria for establishing bankruptcy, methods for predicting bankruptcy;
be able to:
Analyze the financial condition of the organization;
determine the present and future value of money;
Calculate operating and financial leverage;
determine the organization's need for working capital;
· calculate the price of capital, determine the optimal structure of capital;
· evaluate the economic efficiency of the investment project;
predict the probability of bankruptcy of an organization based on the Altman model;
own:
· the skills of using financial management tools in the process of analysis, justification and management decision-making in the organization;
· experience in the analysis of the financial (accounting) statements of the organization.
3. Competences of the student,
formed as a result of mastering the discipline
The graduate must have the following professional competencies (PC):
organizational- managerial activity:
· the ability to analyze the relationship between the functional strategies of companies in order to prepare balanced management decisions (PC-9);
· use the basic methods of financial management for asset valuation, working capital management, decision-making on financing, formation of dividend policy and capital structure (PC-11);
· evaluate the impact of investment decisions and financing decisions on the growth of the value (value) of the company (PC-12);
plan the operational (production) activities of organizations (PC-19);
information and analytical activities:
ability to economic way of thinking (PC-26);
· the ability to apply quantitative and qualitative methods of analysis in making managerial decisions and build economic, financial, organizational and managerial models (PC-31);
the ability to apply the basic principles and standards of financial accounting to form accounting policies and financial reporting organizations (PC-38);
· Possession of skills in the preparation of financial statements and awareness of the impact of various methods and methods of financial accounting on the financial results of the organization (PC-39);
the ability to analyze financial statements and make informed investment, credit and financial decisions (PC-40);
the ability to evaluate the effectiveness of the use of various systems of accounting and distribution of costs; have the skills to calculate and analyze the cost of production and the ability to make informed management decisions based on data management accounting(PK-41);
· the ability to analyze market and specific risks, use its results to make management decisions (PC-42);
· the ability to evaluate investment projects under various conditions of investment and financing (PC-43);
· the ability to justify decisions in the field of working capital management and the choice of sources of financing (PC-44);
· own the techniques of financial planning and forecasting (PC-45);
understand the role financial markets and institutions, analyze various financial instruments (PC-46);
the ability to analyze the operating activities of the organization and use its results to prepare management decisions (PC-47);
entrepreneurial activity:
· the ability to develop business plans for the creation and development of new organizations (lines of activity, products) (PC-49).
4. Structure and content of the discipline
5 years and 3 years of study
| Sections and topics | Total | Lectures | Prakt. classes, seminars | Self. Work |
| Topic 4. Operational analysis | ||||
| Total |
3.5 years of study
| Sections and topics | Total | Lectures | Prakt. classes, seminars | Self. Work |
| Section 1. Financial management in the organization's management system | ||||
| Topic 1. Fundamentals of financial management | ||||
| Topic 2. Methodological basis for making financial decisions | ||||
| Topic 3. Risk and return financial assets | ||||
| Topic 4. Operational analysis | ||||
| Topic 5. Financial planning and forecasting of the organization's activities | ||||
| Section 2. Capital Management and Funding Policy | ||||
| Topic 6. Management of funding sources | ||||
| Topic 7. Price and capital structure management | ||||
| Topic 8. Working capital management | ||||
| Topic 9. Investment management | ||||
| Section 3. Special issues of financial management | ||||
| Topic 10. Bankruptcy and financial restructuring | ||||
| Topic 11. Financial management in small business | ||||
| Topic 12. International financial management | ||||
| Total |
Section 1. Financial management in the organization's management system
Topic 1. Fundamentals of financial management
External and internal cash flows of the company. Characteristics of financial management as a management system. Reproductive, distributive and control functions of financial management. Structure and elements of the financial mechanism. Financial methods and management techniques. financial instrument.
Organization of financial management service at the enterprise. Functional responsibilities financial manager and qualification requirements for him.
Information support of financial management. Accounting (financial) reporting as the most important element of financial management information support. The main forms of accounting (financial) reporting: balance sheet, income statement, cash flow statement.
Topic 2. Methodological basis for making financial decisions
Fundamental concepts of financial management.
Cash flows and methods for their evaluation. Discounting. Compounding. Fundamentals of financial mathematics. Percent. interest calculation methods. Simple and compound interest. Annuity. The theory of discounted cash flow.
Methods and tools for financial planning and analysis. DuPont formula as a tool for financial management and profit management. dead point method. sensitivity method. Methodology for analyzing the financial condition of the enterprise. Vertical and horizontal balance analysis. Vertical analysis and planning financial results enterprise activities.
Topic 3. Risk and return on financial assets
Methods for valuation of financial assets. Risk and return. Business and financial risk. Systematic (non-diversifiable) and non-systematic (diversifiable) risk. Portfolio of stock assets. Portfolio analysis. Risk and return of the financial portfolio.
Financial management in conditions of inflation. Valuation methods and accounting for inflation.
Topic 4. Operational analysis
Break-even analysis (operational analysis): goals, conditions and methods. Variable, fixed costs. Mixed cost allocation methods. The concept of relevant sales revenue and relevant costs. Relevant period. Production (operational) leverage (leverage). Critical production volume. Critical revenue (profitability threshold). Calculation of threshold revenue in multi-product production. Stock of financial strength. Factors that determine the level of operational risk of the company.
Topic 5. Financial planning and forecasting of the organization's activities
Financial planning and forecasting. Strategic, long-term and short-term financial planning. Financial strategy. Methods for forecasting the main financial indicators. Methods for planning financial indicators.
Organization of short-term (current) financial planning. Budgeting. Structure and main indicators of the financial plan. Cash flow plan.
Operational financial planning. Credit and cash plan.
Send your good work in the knowledge base is simple. Use the form below
Students, graduate students, young scientists who use the knowledge base in their studies and work will be very grateful to you.
Introduction. The content of the discipline and its tasks
1. The growth of the importance of finance in the life of society has led to an increase in the role and importance of financial management.
managert - in general view can be defined as a management system that includes a set of principles, methods, forms and techniques of management. Actually, management includes management theory and practical examples effective leadership, which refers to the art of management. Management is the process of developing and implementing control actions. The development of control actions includes the collection, transmission and processing of the necessary information, decision-making. Financial management is part of general management.
The purpose of financial management is:
* development of specific solutions to achieve optimal end results and finding the optimal balance between short-term and long-term goals for the development of the enterprise and decisions made in the current and prospective financial management;
* Ensuring the growth of the welfare of the owners of the enterprise in the current and prospective period.
The main tasks of financial management:
* ensuring the formation of a sufficient exchange of financial resources in accordance with the consumers of the enterprise and its development strategy;
* Ensuring the effective use of financial resources in the context of the main activities of the enterprise.
* optimization of cash flow and settlement policy of the enterprise;
* profit maximization with an acceptable level of financial risk and a favorable taxation policy;
* ensuring a constant financial balance of the enterprise in the process of its development, i.e. ensuring financial stability and solvency.
2. Financial management studies the management of cash flows at the macroeconomic level, i.e. management of the movement of financial resources of an economic entity.
Method study of its subject is dialectical (method-method of research).
tricks studies of the subject of financial management are:
* scientific abstraction;
* analysis and synthesis;
* qualitative and quantitative analysis;
* economic and mathematical modeling of financial processes.
Financial management is part of the financial mechanism. Based on economic disciplines"Finance and Subject", "Economic Theory", "AFHD", "Accounting", etc.
Topic№ 1.Financial memanagement as a management system
1. Financial management-- a specific system for managing cash flows, the movement of financial resources and the corresponding organization of financial relations.
Financial management is considered as a phenomenon with different forms of manifestation:
As a system of economic management and part of the financial mechanism;
As a governing body;
How kind entrepreneurial activity.
Financial management includes the strategy and tactics of management.
Under strategy refers to the general direction and method of using the means to achieve the goal. It allows you to focus on the solution options.
Tactics- these are specific methods and techniques for achieving the goal in specific conditions. The task of management tactics is a set of management methods and techniques acceptable in a given economic situation.
Financial management as a management system consists of 2 subsystems:
1. managed subsystem, or control object.
2. the control subsystem, or the subject of control.
Control object in financial management is a set of conditions for the implementation of cash flow, the circulation of value, the movement of financial resources and financial relations between economic entities and their divisions in the economic process.
Subject of management-- this is special group people (financial management as a management apparatus, financial manager as a manager), which, through various forms of managerial influence, carries out purposeful functioning of the object.
2. The functions of financial management determine the formation of the structure of the control system.
There are 2 main types of financial management functions:
- functions of the control object:
* reproductive , ensures the reproduction of advanced capital on an expanded basis;
* production - ensuring the continuous functioning of the enterprise and the circulation of capital;
* control (control of capital and enterprise management).
- functions of the subject of management- a general type of activity that expresses the direction of the implementation of the impact on people's relations in the economic process and in financial work. These functions consist of the collection, systematization, transmission, storage of information, decision-making.
- planning- covers the entire range of measures for the development and implementation of planned targets. A methodology for developing financial plans is being developed.
- forecasting- long-term development of changes in the financial condition of the object as a whole and its various parts (difference from planning, it does not set the task of directly implementing the developed forecasts in practice).
- financial institutions- an association of people jointly implementing a financial program based on some rules and procedures.
- regulation- the impact on the control object through which the state of stability of the financial system is achieved in the event of a deviation from the specified parameters.
- coordination- coordination of work of all parts of the management system, management apparatus and specialists.
- stimulation- encouraging employees of the financial system to be interested in the results of their work.
- control- checking the organization of financial work, the implementation of financial plans, etc. control involves the analysis of financial resources.
3. Financial management can be viewed as a complex management complex, which includes:
* management of credit operations,
* management of operations with securities,
* management of foreign exchange operations,
* management of operations with precious metals and precious stones,
* management of real estate transactions,
* management of financial innovations.
Financial management is carried out in time on a temporary basis. Financial management is divided into:
* strategic management,
* operational-tactical management.
Strategic management is investment management. It is associated with the implementation of the chosen strategic goal. He suggests:
* financial evaluation of capital investment projects,
* selection of criteria for making investment decisions,
* choice of the most optimal option for investing capital,
* definition of sources of financing.
Operational-tactical financial management is cash management. Cash management aims to:
* to secure such an amount of cash, which will be sufficient to fulfill financial obligations,
* to achieve high profitability from the use of temporarily free cash as capital.
4. Financial Directorate headed by a financial director or chief financial manager - this is the management apparatus of an economic entity. It consists of different divisions, the composition of which is determined by the supreme management body of the economic entity. These divisions include:
* planning and Economic Department,
* accounting,
* laboratory (bureau, sector) of economic analysis, etc.
The Directorate and each of its subdivisions function on the basis of Regulations on financial management or units. In the position: - general aspects of the organization of the directorate, its tasks, structure, functions, relationships with other divisions (directors) and services of an economic entity, the rights and responsibilities of the directorate.
The main functions of the Financial Directorate:
* determination of the goal of financial development of an economic entity,
* development of a financial strategy and a financial program for the development of an economic entity and its divisions,
* definition of investment policy,
* development of credit policy,
* establishment of cost estimates for financial resources for all divisions of an economic entity,
* development of cash flow plans, financial plans of an economic entity and its divisions,
* participation in the development of a business plan for an economic entity,
* ensuring the financial activities of an economic entity and its divisions,
* making cash settlements with suppliers and buyers,
* implementation of insurance against commercial risks, collateral, risky, leasing and other financial transactions,
* conducting accounting and statistical accounting in the field of finance, drawing up accounting. balance sheet of an economic entity,
* analysis of the financial activity of an economic entity and its divisions.
In financial management, the key figure is Financial Manager. It is advisable at large enterprises to form a group of financial managers, assign certain obligations to each specific area of work. The group is led by a leading financial manager - lead manager.
The activity of the financial manager is regulated by his job description , which includes the qualification characteristics of a financial manager. He is usually a contract employee. In addition to salary, he can receive remuneration in the form of a percentage of profits. (bonus).
5. Finances act as a tool for influencing the production and trade process of an economic entity. This influence is carried out through the financial mechanism.
financial mechanism- this is a system of financial leverage, expressed in the organization, planning and stimulation of the use of financial resources.
The structure of the financial mechanism includes 5 interrelated elements:
* financial methods,
* financial leverage,
* legal support,
* regulatory support,
* Information Support.
Scheme "The structure of the financial mechanism".
|
financial mechanism |
|||||
|
financial methods |
financial leverage |
Legal support |
Regulatory support |
Information Support |
|
|
Planning |
Instructions |
Information of various types and types |
|||
|
Forecasting |
Decrees of the President |
Regulations |
|||
|
Investment |
depreciation deductions |
Government Decrees |
|||
|
Lending |
Financial |
Orders and letters of ministers and departments |
Guidelines |
||
|
Self-lending |
Charter of a legal entity (economic entity) |
Other regulatory documentation |
|||
|
Self-financed |
Rent |
||||
|
Taxation |
Dividends |
||||
|
Settlement system |
|||||
|
Material stimulation and responsibility |
|||||
|
Insurance |
economic |
||||
|
Pledge transactions |
|||||
|
Transfer operations |
Share contributions |
||||
|
Trust operations |
Investments (direct, venture, portfolio) |
||||
|
Exchange rate quotation |
|||||
|
Forms of payment |
|||||
|
Factoring |
Types of loans |
||||
|
Fund formation |
Franchise |
||||
|
Relationships with the founders managing subjects, public management |
Preference |
||||
|
Exchange rates, securities |
financial method- way of influence of financial relations on the economic process.
* through the management of the movement of financial resources,
* in the line of market commercial relations related to the measurement of costs and results with material incentives and is responsible for the effective execution of monetary funds.
The action of financial methods is manifested in the formation and use of monetary funds.
financial leverage- methods of action of the financial method. These include: profit, income, depreciation, special-purpose economic funds, financial sanctions, rent, interest rates, deposits, bonds.
Legal support functioning of the financial mechanism includes legislative acts, resolutions, orders, circular letters and other legal documents of the governing bodies.
Regulatory support- form instructions, standards, norms, tariff rates, method of pointing and explaining, etc.
Information Support consists of various kinds and types of economics, commercial financial and other information. Financial information includes: information about the financial stability and solvency of partners and competitors, about prices, rates, dividends, percentages.
Information may be one of the types of intellectual property and be made as a contribution to the authorized capital of a JSC or commodity production.
6. The functions of finance in the sphere of production and circulation are closely connected with commercial calculation.
Commercial calculation- the method of managing the economy by comparing the costs and results of economic activity in monetary (value) form.
The purpose of applying commercial calculation is to obtain maximum income with minimal capital expenditure in a competitive environment.
In foreign economic practice, the requirement to measure the size of capital invested in production with the results of economic activity turns into the term "Innezt-auinut" ( input - authentic ).
Topic№ 2. Essence, composition of financial resources and capital
1. The term "Resources" - translated from French - an auxiliary tool. It means organizational means, values, reserves, opportunities, sources of funds and income.
The financial resources of an economic entity are the funds at its disposal. They are directed to the development of production, maintenance and development of facilities production area, consumption, can remain in reserve.
Financial resources intended for the development of the production and trade process are capital in its monetary form. In this way, capital- this is a part of financial resources, this is money put into circulation and generating income from this turnover. The turnover of money is carried out by investing them in entrepreneurship. Capital is money that is used to make a profit.
General formula of capital:
D - T - D 1 , where:
D - funds advanced by the investor,
D 1 - funds received by the investor from the sale of goods and including realized value added,
(D 1 -D) - investor's income,
(D 1 -T) - proceeds from the sale of goods,
(D-T) - the cost of the investor for the purchase of goods.
2. Structurally, capital consists of monetary funds. It includes: funds invested in fixed assets, invested in intangible assets, working capital, circulation funds.
According to the form of investment, they distinguish:
* business capital,
* credit capital.
Entrepreneurial- represents the capital invested in various enterprises through direct or portfolio investment. Such capital investment is carried out for the purpose of obtaining profit and the rights to manage the enterprise (JSC, partnerships)
Credit- this is the money capital presented on credit on the terms of repayment and payment. It is not invested in the enterprise, but is transferred to another entrepreneur for temporary use in order to receive interest.
Credit capital acts as a commodity, and its price is interest.
Capital has its price. Price, or cost, capital is the weighted average price constituent parts capital:
P - the price of capital, rubles;
C s - price equity(the amount of dividends paid, profit paid on employment and related costs), rub.;
Cz - the price of borrowed capital (the amount of% for the loan received, paid on paid bonds and related costs), rub.;
C p - the prices of attracted capital (the amount of fines paid and related costs), rub.;
C - share of own capital in the total amount of capital,%;
З - the share of borrowed capital in the total amount of capital,%;
P - the share of attracted capital in the total amount of capital, %.
3. Capital structure.
1. Fixed assets(fixed capital) - means of labor, reusable in households. process, while not changing their material-natural form (they cost more than 10 minimum wages and serve more than 1 year - from 01/01/1997, except for agriculture).
The life cycle of fixed assets consists of the following stages:
Receipt - participation in the production process - movement within the enterprise - repair - leasing - inventory - disposal.
Reimbursement of the cost of fixed assets as they wear out (with the exception of land plots) occurs in the process of depreciation.
The share of the value of each group in the total production of fixed assets is the structure of funds.
Funds are: - active;
Passive.
2. Intangible assets- investments of the company's funds in intangible objects used in the course of a long-term period in economic activity and generating income. Intangible assets are the value of industrial objects and intellectual property and other property rights (“know-how”, patents, licenses, copyright).
3. Goodwill(goodwill- company prestige two meanings:
a) this is the conditional value of the company's business relations, the price of the company's intangible assets, the monetary value of intangible capital. Intangible capital - brand prestige, business connections, stable clientele, etc.
b) the excess of the value of a certain group of assets over their market value, which is the sum of the value of the specified set of assets, if each of them were sold individually (similar to the sale of collections).
Goodwill manifests itself when a business entity is sold. The entity's price may include: the cost of equity to the value of capital added + Goodwill.
4.revolving funds. They consist of objects of labor that have not yet entered the production process, but are already at the disposal of the economic entity and objects of labor that are in the production process itself.
5.circulation funds- associated with the maintenance of the process of sale (circulation) of goods.
4. The economic organization of any economic entity begins with the formation of fixed and working capital, the value of which is reflected in the charter of the economic entity and is called authorized capital. (charter capital).
Authorized capital- this is the amount of contributions of the founders of an economic entity to ensure its vital activity. Its value corresponds to the amount fixed in the constituent documents and is unchanged. A change in the authorized capital can occur in the prescribed manner only after the re-registration of an economic entity.
Contributions to the authorized capital can be: buildings, structures, material assets, securities, rights to use natural resources, intellectual property, cash.
The cost is estimated in rubles by a joint decision of the participant of the economic entity and is their share in the authorized capital.
In unitary enterprises it is created statutory fund. Organizations or societies that are created without a charter have share capital.
They also act as a source of own funds. Extra capital- this is the amount from the revaluation of inventory, fixed assets. Intangible assets, the amount of commission income.
In the financial activities of an economic entity, there are:
Liabilities.
Assets - this is a set of property rights belonging to an economic entity, i.e. rights of possession, disposal and use of property.
The assets are:
* non-current- funds retired (withdrawn) from economic circulation (non-imported funds, long-term financial investments).
* negotiable- current, i.e. mobile assets, including revolving funds and circulation funds.
Liabilities - a set of debts and liabilities of economic entities, consisting of borrowed and borrowed funds, including accounts payable (subsidies).
The assets of an entity less its debts are net assets business entity.
Topic№3. « Sources of financial resourcesRowls. Consolidated profit»
1. According to the form of ownership, the sources of financial resources are divided into 2 groups:
* own,
The sources of financial resources are:
* profit,
* depreciation deductions,
* accounts payable permanently at the disposal of an economic entity,
* funds received from the sale of securities,
* share and other contributions of members labor collective, legal entities and individuals,
* credit and loans,
* Funds from the sale of a pledge certificate, an insurance policy and other cash receipts (donations, charity).
The system of profits and incomes consists of:
* profit from the sale of products,
* profit from other sales,
* income from vertical operations (net of expenses on these operations),
* balance sheet (gross) profit,
* net profit.
In addition, a distinction is made between taxable income and non-taxable income.
2 . The formation of the net profit of an economic entity includes:
*profit from product sales (goods, works, services) - the difference between the proceeds from the sale of products without VAT, excises, and the costs of the right and sale, included in the cost of production.
*production cost ( works, services) - the valuation of natural resources, raw materials, materials, fixed assets and other costs used in the production process, for the production and sale of costs included in the cost price, according to the economic content, are grouped according to the following elements:
- material costs (waste return),
- labor costs,
- deductions for social needs,
Depreciation of fixed assets,
Other costs.
*profit from other sales - profit received from the sale of fixed assets and other property, waste, intangible assets, etc. it is defined as the difference between the proceeds from the sale and the cost of this sale.
*income from non-operating operations includes:
Income from equity participation in the activities of other entities,
rental income,
Income from fines, penalties, etc.
These items of income form the balance sheet (gross) profit, which is reflected in the balance sheet. Income from business participation in other business entities, income from securities is taxed under a different item than profit. Therefore, this income is separated from taxable income in a separate group.
3. An integral principle of a market economy is the emergence of consolidated profits.
Consolidated profit - consolidated profit on accounting. reporting on the activities and financial results of tangible and subsidiaries.
Consolidated book. reporting is a combination of reporting of two or more business entities located in certain legal and physical households. relationships. The need for consolidation is determined by economic feasibility. It is beneficial for entrepreneurs to create several small enterprises, legally independent, but economically interconnected, instead of one large company. in this case, savings on tax payments can be obtained and the degree of risk in doing business is reduced, mobility is increased.
Consolidated reporting has 2 main features:
* it is not the reporting of a legally independent economic entity, and has a clearly expressed analytical focus. The purpose of such reporting is not to identify taxable income, but to obtain a general idea of the activities of the corporate family of households. subject.
* Consolidation is not just a summation of financial statements of the same name. Business entities of the corporate family. The consolidation process eliminates any intra-corporate financial business transactions, and only assets and liabilities, income and expenses from transactions with third parties are used in the consolidated financial statements.
Formation scheme net profit of an economic entity.
4. The essence of trade.
5. The procedure for creating a reserve fund, consumption and accumulation funds.
6. The concept of a contribution. Types of shares.
7. Investment fee.
4. In industries content commodity circulation(trade, public catering, logistics, procurement) instead of the category "proceeds from the sale of products" the category "turnover" is used.
The essence of the turnover is these relations associated with the exchange of cash income for goods in the order of sale.
5. The economic entity independently determines the direction of the use of profits, unless otherwise provided by the charter.
Net profit distribution scheme:
Company:
Ch.P. = Reserve Fund + Accumulation Fund + Consumption Fund
Partnerships:
Ch.P. = Reserve fund + Accumulation fund + Consumption fund + profit distributed among institutions.
reserve fund - created by economic consumers in case of termination of their activities to cover accounts payable. It is mandatory for a Joint Stock Company, a cooperative, an enterprise with foreign investment.
Deductions to R.F. are made until the size of these funds, established by the founding documents, is reached, it is not more than 25% statutory fund, and for the Joint Stock Company - not less than 15%. In this case, the amount of deductions to the fund should not exceed 50% of taxable profit.
accumulation fund andconsumption fund These are special purpose funds. They are formed if it is provided for by the founding documents.
accumulation fund - a source of funds of an economic entity, accumulating profits and other sources for creating new property, acquiring funds, etc. It shows the growth of the property status of the economic entity, the increase in its own funds.
consumption fund - a source of funds of an economic entity, reserved for the implementation of measures for social development (except for capital investments) and material incentives for the team.
6. One of the sources of financial resources is a share contribution (share) - this is the amount of the monetary contribution paid by a legal entity and an individual when entering into a joint venture.
A share contribution is obligatory for joining an LLP, a mixed enterprise, a joint Russian-foreign enterprise (often with a cooperative).
It is paid: - in cash;
By transferring ownership of economic property and other material values of the rights to use natural resources;
property rights;
By providing property in the use of an economic entity without reimbursement for a certain time of the owner's expenses (maintenance, repair, depreciation);
By deductions from employees' wages over a specified period of time.
7 . The investment contribution is a tool for self-crediting of the activities of an economic entity.
Investment fee - this is the employee's monetary contribution to the development of this business entity, which accrues interest to the investor in the amount and within the time period, defined by the treaty or the provision on the investment contribution.
Topic№ 4 .Formation of a rational structuresources of enterprise funds
1. Financial resources are used by the enterprise to finance current expenses and investments.
Investments- these are all types of existing and intellectual values invested by an investor in business objects in order to make a profit.
Investments- these are cash, securities, other property and rights having a monetary value, invested in making a profit.
Investments are carried out by a legal or financial entity, which, in relation to the degree of commercial risk, is divided into:
* investors- a legal or natural person who, when investing capital, mostly someone else's, thinks, first of all, about minimizing risk. He is an intermediary in the financing of capital investments.
* entrepreneurs- invests own capital at a certain risk.
* speculators- ready to take a certain, pre-calculated risk.
* players- at any risk.
Investments are divided into:
*clean- investments aimed at maintaining and expanding fixed assets. CV is an investment in fixed assets.
* transfer- the expenditure of money, leading only to a change in the owner of the capital. These include buying shares.
2. In economic practice, 3 centers of capital investment can be distinguished:
Cost center.
Profit (translated from French - profit, benefit) is a center whose income from activities steadily exceeds the costs of this activity.
Venture (translated from English - dare, take risks) - a center that does not yet bring a steady income, may soon bring it. This is a risky investment in the center, which can eventually become sustainable and turn into a profit.
Cost Center- it is the center through which the cash flow passes and the output from it is mainly information.
3. Investments are:
* risky,
* portfolio,
* annuity,
* interactive.
Risk investments or venture capital - is an investment in the form of new shares issued in new areas of activity associated with high risk. It is invested in unrelated projects in the hope of a quick return on investment and a high rate of return.
Direct investments- investments in the authorized capital of an economic entity in order to generate income and obtain rights to participate in the management of this economic entity.
Portfolio- associated with the acquisition of securities and other assets.
A portfolio is a collection of various investment values brought together that serve as a tool for achieving a specific investment goal of the investor.
annuity (from German - annual payment) - an investment that brings the investor a certain income at regular intervals. This is a type of financial rent. It is a series of payments of the same amount, regularly received at regular intervals for a certain number of years.
Basically, these are investments in shares, bonds, non-state pension fund, income-generating real estate. The depositor becomes a rentier, i.e. can live on the income received from a one-time investment of capital.
4. The principles of forming an investment portfolio are the safety and profitability of investments, their growth, liquidity of investments.
Under security refers to the invulnerability of investments from shocks in the investment capital market and the stability of income.
Under liquidity is understood as the ability of any financial resource to participate in the immediate acquisition of goods (works, services), i.e. it is the ability to quickly and without loss in value turn into cash.
The main goal in the formation of a portfolio is to achieve the most optimal combination of risk for the investor.
The method of reducing the risk of serious losses is portfolio diversification , i.e. the acquisition of a certain number of different securities.
Over time, the investment goals of the investor may change, which leads to a change in the composition of the portfolio. Portfolio revision is reduced to determining the ratio of profitability and risk of securities included in it.
5. When buying shares and bonds of one JSC, an investor should proceed from the principle of financial leverage.
Financial leverage - the ratio between bonds and preferred shares, on the one hand, and ordinary shares, on the other.
L - leverage level;
O - bonds, rub.;
A 1 - preferred shares, rub.;
A 2 - ordinary shares, rub.
Financial leverage is an indicator of the financial stability of a JSC, which is reflected in its investment portfolio profitability. High leverage leads to financial instability.
Time value of financial resources.
Credit
1. Time value of financial resources.
2 . Characterization of compounding and discounting processes.
3 . Index.
4 . Credit.
1. Financial resources, the material basis of which is money, have a temporary value.
The time value of financial resources can be considered in 2 aspects:
1 th aspect associated with purchasing power of money. Cash at a given moment and after a certain period of time with an equal nominal value have completely different purchasing power. With the current state of the economy and the level of inflation, funds that are not invested in invested activities or kept in a bank depreciate very quickly.
2 th aspect associated with circulation of funds as capital and receiving income from this turnover. Money should make new money as quickly as possible. Additional income from the circulation of money is determined using income discounting methods.
Income discounting is the reduction of income to the moment of capital investment. The discount factor, i.e. the reduction factor (at) is defined as follows:
a t= , where
a t- discount factor,
t- Time factors, i.e. the number of years during which the amount of money is in circulation and generates income,
n- Rate of return (or percentage rate).
Discount multiplier allows you to determine the present value (financial equivalent) of a future amount of money, i.e. reduce it by an income accruing over a certain period of time according to the law of compound interest.
To determine the accumulated capital and additional income, taking into account discounting, the following formula is used:
To t= k(1+ n)t, where
To t- the amount of capital investment by the end of the t-th period of time from the moment of the contribution of the personal amount, rub.
To- current assessment of the amount of capital investments, i.e. from the position of the initial period, when the initial contribution is made, rub.
n- discount factor (i.e. rate of return or interest rate, fractions of a unit).
t- time factor (number of years or number of capital turnovers).
2) D \u003d K (1+n) t - TO, where
D- additional income, rub.
Example.
We have 10 thousand rubles. We can invest in two ways:
* for the 1st year with 100% income, therefore, the revenue will be 10 thousand rubles.
* for the 3rd month at 25% of income, hence the revenue 2.5. thousand roubles.
Which option is more profitable?
2 th option: for 4 turnovers per year, the additional income will be:
1st turnover: 10+ 2.5= 12.5 thousand rubles
2nd turnover: 12.5+ 3.12= 15.6 thousand rubles
3rd turnover: 15.6+ 3.9= 19.5 thousand rubles
4th turnover: 19.5+ 4.9= 24.4 thousand rubles,
those. for the year additional profit: 24.4-10= 14.4 thousand rubles, which is 4.4 thousand rubles. more than option 1.
Or by the formula:
D \u003d K (1+n) t - TO,
D= 10(1+0.25) 4 -10= 14.4 thousand rubles
This additional income (D), as well as the future cost of capital (K t) were determined using the compounding method.
2. Compounding- it is the process of moving from today's (i.e. current) value of capital to its future value.
The opposite process to compounding is discounting.
Discounting- it is the process of determining the present (i.e. current) value of money when its future value is known.
Income discounting is used to estimate future cash receipts (profit, %, dividends) from current moment. An investor, having made an investment of capital, must be guided by the following provisions:
* there is a constant depreciation of money,
* preferably a periodic income on capital, and in an amount not lower than a certain minimum.
The investor evaluates how much income he can receive in the future and what is the maximum possible amount of financial resources that can be invested in the business. This assessment is made according to the formula:
TO- current estimate of the amount of capital investment, i.e. from the position of the initial period, when the initial contribution is made, rub.
3. To measure the dynamics of economic processes for a certain period, relative indicators are used - index .
1) as a method of analyzing the dynamics of indicators,
2) as an economic instrument of state regulation.
In the latter case indexing - this is a way to preserve the real value of monetary resources (capital and income) in terms of their purchasing power in conditions of inflation.
Indexation is used to increase wages, pensions, incomes, i.e. the guaranteed level of expenses and incomes is provided.
When analyzing and... Financial resources need to take into account price changes, for which use the price index.
Price index- an indicator that characterizes the change in prices over a certain period of time.
Distinguish:
Individual (single product),
General (group) index.
Individual index
p 1 - the price of a specific product of the reporting period,
p 2 - price of ….. period.
General price index
g 1 - the number of goods sold for a certain period.
Price index is implemented according to a single methodology approved by the State Statistics Committee of the Russian Federation of 06/29/95.
They can be applied:
* to assess the dynamics of purchasing opportunities in the past period,
* in forecasting the financial resources needed in the future based on emerging price trends.
For the analysis and forecast of quantitative indicators of economic activity, the following are also used:
Cost index (revenue. Turnover),
Index of physical volume (output or turnover),
quantity index,
Structure index.
Cost index- is the ratio of the revenue of the reporting period to the revenue of the previous period in the corresponding periods.
q 0 - the number of goods sold over the past period.
Physical volume index is determined by dividing the value index by the price index:
I p 0 = or i 0 =
Quantity index:
the average price of a commodity in the previous period.
Structure index:
4. Credit - the provision by the lender of money to the borrower in the amount and on the terms stipulated by the loan agreement, and the borrower undertakes to return the amount of money received and pay interest on it (Article 819 of the Civil Code of the Russian Federation).
Loans are:
Financial,
Commercial,
Investment
Tax.
financial loan- a loan issued by a credit institution on terms of urgency, repayment and payment. It happens: - short-term (up to 1 year),
Long term (over 1 year).
Commercial loan- deferral of payments from one economic entity to another. It is provided by the host. to the subject by suppliers of enterprises (p; y) in the form of a bill of exchange loan, corporate loan or open account, and by the buyer to the supplier in the form of an advance payment.
Investment tax credit- such a change in tax payment, in which the organization is given the opportunity, within a certain period and within certain limits, to reduce its tax payments, followed by a phased payment of the loan amount and accrued interest. It can be provided for the tax on profit (income) of the organization, for regional and local taxes for a period of 1 to 5 years (but not more than 50%). Provided during research, technical re-equipment of own production.
tax credit- deferment or installment payment of tax. The basis for granting is the damage caused as a result of natural Disasters, other circumstances. Provided for one or more taxes.
Subject No.5 . Assessment of the financial position and financial stability of the enterprise
1 .The financial condition of an economic entity is a characteristic of its financial competitiveness (ie solvency and creditworthiness), the use of financial resources and capital, the fulfillment of obligations to the state and other economic entities.
The movement of any commodity and material values, labor and material resources is accompanied by the formation and expenditure of funds, so the financial condition of an economic entity reflects all aspects of its production and trading activities. The characteristic of the financial condition of an economic entity includes an analysis of:
1. Profitability (profitability);
2. Financial stability;
3. Creditworthiness;
4. Use of capital;
5. The level of self-financing;
6. Monetary self-sufficiency.
The source of information for the state AF is the balance sheet and its appendix; statistical and operational reporting.
According to the scope of accessibility, information can be divided into:
open;
Closed (secret).
The information contained in the accounting and statistical reporting, goes beyond the economic entity and is public information.
Each economic entity develops its planned indicators, norms, tariffs, limits, a system for their assessment and regulation of financial activities. This information is his trade secret, and sometimes "know-how". The enterprise has the right not to provide information containing commercial secrets. The list of information constituting a commercial secret is determined by the head of the enterprise.
2 .There are several methods of processing economic information in AHD.
1. The most widely used comparison. Its essence is to compare homogeneous objects to find similarities or differences between them. With the help of comparison, the general and particular in economic phenomena are revealed, changes in the level of the objects under study are established, trends and patterns of their development are studied. The following types of comparisons are used in the analysis:
a) comparison of actual results achieved with data from previous periods. This makes it possible to assess the rate of change in the studied indicators and to determine trends and patterns in the development of economic processes;
b) comparison of the actual level of indicators with the planned ones. It is necessary to assess the degree of implementation of the plan, the definition of unused reserves of the enterprise;
c) comparison with approved norms of resource consumption. It is necessary to identify the economy or overspending of resources for the production of products, to assess the effectiveness of their use in the production process and to identify lost opportunities to increase output and reduce costs;
d) comparison with the best results, i.e. the best examples of work, advanced experience, new achievements of science and technology. This allows you to identify best practices and new opportunities for the enterprise;
e) comparison of indicators of the studied enterprise with industry average data. Required to determine the rating of the enterprise;
f) comparison of different options for solving economic problems. This allows you to choose the most optimal of them;
g) comparing the results of activities before and after a change in any factor or production situation. It is used when calculating the influence of factors and determining the amount of reserves.
2. Relative and absolute values.
Absolute indicators show the quantitative dimensions of the phenomenon, regardless of the size of other phenomena in natural units.
Relative indicators reflect the ratio of the value of the phenomenon under study with the value of another phenomenon or with the value of the same phenomenon, but taken for a different time or for another object. Relative indicators are obtained by dividing one value by another, which is taken as the basis for comparison. Expressed in the form of coefficients or percentages.
3. A way to group information.
Grouping - dividing the mass of the studied set of objects into quantitatively homogeneous groups according to the corresponding characteristics.
4. balance method.
It serves to reflect the ratios, proportions of two groups of interrelated economic indicators, the results of which should be identical. They make up a balance in which, on the one hand, the need is shown, and on the other, the actual availability of resources.
5. heuristic methods.
Relate to informal methods of solving economic problems. They are mainly used to predict the state of an object under conditions of partial or complete uncertainty, when the main source of obtaining the necessary information is the scientific intuition of scientists and specialists in this field. The essence of this method lies in the organized collection of opinions and proposals of specialists (experts) on the problem under study with subsequent processing of the received answers. The main varieties of the method of expert assessments are:
a) the method of "brainstorming" - the generation of ideas occurs in a creative dispute;
b) the method of "brainstorming" - one group of experts puts forward ideas, and the other analyzes them;
c) the Delphi method - an anonymous survey of specialists on pre-prepared questions, followed by statistical processing of information.
6. Method of tabular and graphical reflection of analytical data.
This is the most rational and easy-to-perceive form of presenting analytical information about the phenomena under study.
3. The profitability of an economic entity is characterized by absolute and relative indicators.
Absolute rate of return- this is the amount of profit (income)
Relative rate of return- the level of profitability.
Profitability is the profitability (profitability) of the production and trade process.
The level of profitability of trade and public catering enterprises is established by the ratio of profit from the sale of goods (public catering products) from the sale of goods (public catering products) to the cost of production (to turnover).
Р - profitability level, %
P - profit from the sale of products, rub.
C is the cost of production, rub.
In the process of analysis, the dynamics of changes in the volume of net profit, the level of profitability and the factors that determine them are studied. The main factors affecting net profit are:
The volume of proceeds from the sale of products;
Cost level;
Level of profitability;
Income from non-sales operations;
Expenses on non-operating operations;
The amount of taxes paid out of profits.
An analysis of the profitability of an economic entity is carried out in comparison with the plan and the previous period. The analysis is carried out according to the work data for the year. Planned indicators are developed by the economic entity independently for internal use.
All costs at the enterprise in relation to the amount of revenue can be divided into 2 groups:
Conditionally permanent;
variables;
Conditionally fixed costs are called costs, the amount of which does not change when the proceeds from the sale of products (rent, depreciation of fixed assets, etc.) change.
Variable costs are costs, the amount of which changes in proportion to the change in the volume of proceeds from the sale of products (labor costs, transportation costs, deductions to various funds, etc.).
Semi-fixed costs are analyzed by absolute amount, variable costs are analyzed by comparing cost levels as a percentage of revenue.
The division of costs allows you to clearly show the relationship between the proceeds from the sale of products, the cost and the amount of profit from the sale of products.
An analytical method can be used to determine breakeven point- point for which is equal to the sum of the cost. The calculation of this point is to determine the minimum amount of proceeds from the sale of products, at which the level of profitability of an economic entity will be more than 0%:
T min - the minimum amount of revenue at which the level of profitability is more than 0%, rub
C post - the amount of conditionally fixed costs, rub.
From lane - the amount of conditionally variable costs, rub.
T - proceeds from the sale of products, rub.
4 .Under the creditworthiness of an economic entity is understood that it has the prerequisites for obtaining a loan and its repayment on time. The creditworthiness of the borrower is characterized by its accuracy in the calculations of previously received loans, the current financial condition and the ability, if necessary, to mobilize funds from various sources. The bank, before granting a loan, determines the degree of risk that it is willing to take on and the amount of credit that can be provided.
One of the important indicators of creditworthiness is liquidity.
The liquidity of an economic entity is its ability to quickly repay its debts. In essence, the liquidity of an economic entity means the liquidity of its balance sheet. Liquidity means the unconditional solvency of an economic entity and implies a constant equality between assets and liabilities both in terms of the total amount and the timing of the onset. Analysis of the liquidity of the balance sheet consists in comparing the funds of the asset, grouped by the degree of their liquidity and arranged in descending order of liquidity, with the liabilities of the liability, grouped by their maturity and in ascending order.
Similar Documents
Features of the price of various sources of capital when making long-term financial decisions. Characteristics of graphical methods for determining the break-even point. Analysis of the objectives of financial management of the enterprise. The effect of financial leverage.
test, added 05/21/2015
The essence and features of the financial activities of the holding. External and internal environment of the enterprise functioning, analysis of financial indicators. The main areas of financial management, its methods. Improving the corporate management of the holding.
thesis, added 03/18/2010
Essence and tools of financial management. Basic principles and tasks of financial management in the conditions of activity of modern Russian enterprises. The system of financial leverage. Operational planning of the financial activity of the enterprise.
abstract, added 01/26/2014
Theoretical foundations of management financial resources on the enterprise on the example of the company LLC "OCS Marketing". Conditions for the effective functioning of financial resources. Ways to improve the financial resources management system of the enterprise.
term paper, added 04/16/2015
The main functions of financial management. Leverage - a system of economic leverage aimed at increasing profits. Characteristics of the liquidity of the company's balance sheet, assessment of its financial stability. Analysis of the turnover of the firm's assets.
course of lectures, added 11/16/2010
Financial management in the management system, the mechanism of its functioning. The main types and methods of analysis in the financial management system. Evaluation of the dynamics of financial performance indicators on the example of "Big-Tools" LLC. General characteristics of the organization.
term paper, added 05/26/2015
Financial management as a management system. Goals of cash management. The main functions of the financial directorate. The degree of efficiency of solving the control problem financial flows enterprises. Drawing up a financial plan, budgeting.
term paper, added 01/27/2012
Essence, main types and goals of financial management. Financial management as a management system. Motivation of workers financial service interest in the results of their work. Checking the organization of financial work in the enterprise.
presentation, added 04/09/2012
Operational financial planning of an industrial enterprise. Definition of financial planning, its goals and objectives. Classification of financial plans. Methods of financial planning. Calculation of the consumption of material resources for the planned year.
term paper, added 03/30/2007
Essence, sources of formation and use of investment resources of the enterprise. Analysis of the financial stability of the company, its strengths and weaknesses. Formation of the main strategic goals of activity and directions for investing funds.
INTRODUCTION
"Financial management" is one of the main disciplines for students of economic specialties. The discipline "Financial management" is aimed at forming a student's complete system of knowledge about financial relations in the economic process, the financial mechanism, the technology of managing the financial activities of an economic entity.
The development of market relations in the country not only strengthened the role of finance in the functioning of the enterprise, but also determined the direction of fundamental changes in the field of financial management.
Management - from English word"management" - manage. Therefore, - financial management, i.e. the process of managing cash flow, the movement of financial resources. However, is it right to consider the English term "financial management" not literally as "financial management", but as stated above "financial management"? A positive answer is undoubted, and this is explained by the logic and consistency of the development of scientific knowledge and practical experience, i.e. go from finance to financial management, or - from simpler to more complex. Therefore, the first lecture will be devoted to the theoretical foundations of financial management - the definition of finance, the principles of organizing finance in enterprises, finance in a market economy.
The transition to a market economy contributed to the birth new specialty in the field of management - financial manager.
A financial manager must be a highly educated, creative thinker.
Formation professional managers in the Republic of Kazakhstan will determine the emerging new economic solutions, the development of the market sphere, the development of forms of ownership and business, a new level of banks, securities markets and targeted training of specialists.
Starting the study of theoretical and practical financial management, the student must have an idea about the place of this academic discipline in economics and practice.
"Financial management" is a synthetic discipline that incorporates the achievements of a number of disciplines. Scientific and practical developments in the field of finance, credit, insurance, statistics, financial analysis and a number of other sciences serve as the basis of financial management.
When studying the course, it is necessary to acquire the skill of independent work not only with textbooks and teaching aids, but also with recommended methodological publications. Students themselves need to constantly monitor the publication of new laws, government regulations, as well as textbooks and teaching aids.
For each topic of lectures in these methodological developments a mandatory minimum of educational literature is recommended, which is not very large and feasible for any student, they must also be studied.
^
TOPIC 1. THE CONCEPT OF FINANCIAL MANAGEMENT.
1. Finance in a market economy. Principles of organization of finance at the enterprise.
2. Financial management as a system and mechanism of financial management.
3. The scope of financial management and its functions in market conditions.
4. The relationship of financial management with other disciplines. Tasks of a financial manager.
Literature: L-7 (p.18-24), L-8 (p.15-26), L-16 (p.10-19), L-18 (p.7-8,43-44), L-25 (p.21-24).
1.1. Finance in a market economy. Principles of organization of finance in enterprises.
Deep economic changes are taking place in Kazakhstan, the former mechanism of the former mechanism of economic management by market methods of managing is being replaced.
Finances play a huge role in the structure of market relations, as well as in the mechanism of their regulation by the state.
Finance (from the Latin finish - end) - the end of the payment, settlement between the subjects of economic relations.
Later this term was transformed into the term "finance". The authorship of the term belongs to the French scientist Jean Boden, who in 1577 wrote the work “6 books on the republic”.
Finance is an economic category that expresses that part of economic relations that is associated with the creation of funds of funds and their use for the purpose of reproduction, stimulation and satisfaction of the social needs of society.
In the total set of financial relations, two large interconnected areas are distinguished:
Finances of business entities.
Public finances.
Each link performs its tasks, has its own organizational structure of the financial apparatus, but together they form the financial system of the state.
The task of public finance is the concentration of financial resources at the disposal of the state and their direction to finance national needs. They are based on the system of budgets, off-budget funds (pension fund, social insurance fund, state employment fund, compulsory medical insurance fund).
Leading in the financial system are the finances of business entities. This is due to the fact that they are monetary relations associated with the formation and distribution of financial resources, i.e., the finances of economic entities provide the circulation of capital and relationships with the state budget, tax authorities, banking and other institutions of the financial and credit system.
At the same time, with the transition to market conditions of management, enterprises are independent in economic and financial relations and bear full responsibility for compliance with loan agreements and settlement discipline.
In a market economy, the financial independence of the enterprise has received a new direction of development. That is, the company got the opportunity to form its financial resources not only from traditional sources (profit and depreciation), but also to attract contributions from the founders, funds received from the sale of securities and other contributions. In this situation, the importance of effective management of financial resources sharply increases. The financial well-being of the enterprise as a whole, its owners and employees depends on how efficiently and expediently they are transformed into fixed and working capital, as well as into means of stimulating the workforce.
Today, enterprise finance is an indicator of its competitiveness in the market, i.e. the prestige of an enterprise is ultimately determined not by the number of employees, the volume of output, but by its financial stability, i.e. the position it occupies in the market.
Therefore, the finances of enterprises in market conditions should have certain organization based on principles.
Organization principles:
Rigid centralization of financial resources in the enterprise.
Financial planning.
Formation of financial reserves.
Unconditional fulfillment of financial obligations to partners.
In the process of achieving self-sufficiency, the enterprise solves two problems:
a) Loss control. If an enterprise suffers chronic losses, then a set of measures is required for the financial recovery (rehabilitation) of the enterprise, which is developed by the enterprise itself, if these measures do not produce results, then the enterprise is subject to liquidation or sale.
b) Increasing profitability. The enterprise should not only cover its expenses with income, but also be profitable, i.e. get revenue.
^
1.2. Financial management as a system and mechanism of financial management.
In a market economy, the competitiveness of any business entity can only be ensured by effective management the movement of its financial resources (capital). To rationally manage, you need to know the methodology, methods, management techniques.
The subject of the study of financial management is the study of the mechanism for managing monetary funds, monetary relations, i.e. what constitutes the concept of finance.
As for the definition of financial management, it is associated with the concept of financial management mechanism, or financial mechanism. And financial is a system of actions of financial levers, expressed in organizing, planning, stimulating the use of financial resources.
Financial relations between numerous areas of management are shown precisely during the movement of financial resources, which, in turn, are the object of management.
Development of management goals, anticipation of the positive action of the financial mechanism, financial decision-making and are within the scope of the immediate responsibility of the financial manager.
Financial management is aimed at increasing financial resources, investments and increasing the amount of capital.
In general, financial management can be represented in the form of a diagram shown in Fig. 1.1.
This scheme gives a general idea of financial management as a mechanism for managing the movement of financial resources, the ultimate goal of such management is to increase competitive positions enterprises in the relevant field of activity through the mechanism of formation and effective use of profits.
Financial management is an integral part common system enterprise management, which in turn consists of subsystems: the object of management (managed subsystem) and the subject of management (management subsystem).
The object of management in financial management is a set of conditions for the implementation of cash flow, the circulation of value, the movement of financial resources and financial relations between business entities.
The subject of management is specific professionals, a special group of people who, through various forms of managerial influence, carry out the purposeful functioning of the object.
The impact of the subjects of economic relations on the object of management in the development of a certain strategy and tactics reveals the content of financial management.
It is possible to formulate a whole system of financial management goals, this and
Avoiding bankruptcy and major financial failures;
Survival of the firm in a competitive environment;
Cost minimization;
Ensuring cost-effective activities;
Profit maximization, etc.
The priority of a particular goal is explained in different ways within the framework of the existing theory of business organization (which can be found by studying the additional recommended literature).
^
1.3. The scope of financial management and its functions in market conditions.
The modern approach to the term "Financial Management" involves understanding and analyzing the structure of capital in making financial decisions.
According to this, the functions of financial management cover two areas of the company's activity: the acquisition of funds, as well as their distribution. Regardless of the results, it also includes receiving external funds. The main task of the financial manager is the efficient and rational allocation of available funds. In this case, it is necessary to take into account:
1) How big is the enterprise and how fast will it grow?
2) in what form will it own the assets?
3) what will be the composition of its obligations?
These three questions are important financial problems of the enterprise. In other words, financial management deals with three important issues related to the activities of the enterprise, i.e. investment, financing and dividend decisions are the three main functions of financial management.
I Investment solutions are related to the choice of assets in which the funds of the enterprise will be invested. Assets that can be acquired are expressed in two groups.
1. Long-term assets that will generate income after a certain period of time in the future.
2. Short-term or current assets that, in the normal course of business (activities), turn into cash, usually within one year.
Accordingly, decisions on the choice of assets in an enterprise can be of 2 types.
I-type - includes the first category of assets and in the financial literature - capital budgeting (the process of selecting components of investment projects based on determining the current value, future cash flows and making decisions on their financing. During the budgeting process, actual and planned cash flows and capital expenditures are compared) .
II-type. Financial decisions concerning current assets or short-term assets are defined as working capital management.
The first aspect - capital budgeting refers to the selection of a new asset from available alternative or newly allocated capital, when the existing asset is not able to justify the invested funds.
The elements of capital budgeting include the analysis of risk and unreliability of projects. Since the income from investment decisions will be in the future and its accumulation is unreliable. Thus, investment proposals can be priced lower (higher than the physical volume of sales and the price level. Therefore, the element of risk in the sense of unreliability of future income / benefits is difficult to apply. Therefore, income is assessed as a ratio to the risk associated with it.
Finally, the assessment of benefits in a long-term project implies certain norms and standards from which the benefits will be considered (for example, barrier norms, requirement norms, minimum income norms, etc.).
These standards are broadly expressed in terms of the cost of capital.
The concept and measurement of the cost of capital is another more important aspect of the capital budgeting decision.
Conclusion. Key elements of capital budgeting decisions:
1) general assets and their components
2) types of entrepreneurial risk in the enterprise
3) the concept and measurement of the cost of capital
Working capital management concerns the management of current assets. This is a significant and integral part of financial management, so that short-term survival in the market is necessary as precondition to long term success.
One aspect of working capital management is balancing profitability and risk/commitment. There are contradictions between profitability and liabilities. If the firm does not have enough working capital, i.e. it does not invest enough in current assets, it may become illiquid and therefore cannot meet current liabilities and thus is at risk of bankruptcy.
If current assets are too large, this can also adversely affect profitability. Therefore, the main direction of the financial manager in this area is to ensure the relationship between profitability and liabilities.
II Financing. The second important decision included in financial management is the financing decision. Investment decisions concern mixed assets, i.e. mixed financing or capital structure or leverage (borrowing policy).
There are also two aspects to the financing decision:
I Theory of capital structure, which shows the theoretical relationship between the use of debt and returns to shareholders. The use of debt provides for an increase in shareholder income, which in turn may be associated with financial risk. The right balance between debt and equity, provides a balance between risk and return to shareholders, necessary condition. A capital structure with a moderate ratio of debt and equity (own) capital is called the optimal capital structure.
Thus, two questions arise
1) Is the capital structure optimal?
2) in what ratio will the funds cause the maximization of shareholder income?
The second aspect is the establishment of an appropriate capital structure in actual cases.
Thus, the financing decision concerns the relationship of two aspects:
a) the theory of capital structure
b) decision of the capital structure.
III The third important decision in financial management is the decision related to dividend policy . That is, the policy of the enterprise in the field of profit use, which determines what share of the profit is paid to shareholders in the form of dividends, and what share remains in the form of retained earnings and reinvestment.
Which course should be chosen - dividends or reinvestment?
The decision will depend on shareholder preference and the firm's investment policy and other factors.
^
1.4. The relationship of financial management with other disciplines. Tasks of a financial manager.
Financial management is an inseparable part of general management and is closely related to related disciplines such as economics, accounting, as well as various areas of production and marketing.
In particular, enterprises and firms operate in a close macroeconomic environment and therefore the financial manager must know and be well versed in both macroeconomics and microeconomics. Especially:
1) should assume how the monetary policy of the state affects the prices and cash of the enterprise;
2) be experienced in fiscal policy and know how it affects the economy;
3) to know the various financial institutions and their modus operandi, evaluate potential investments;
4) anticipate the consequences of different ways and levels of financial revitalization and the impact of changes in economic policy on their financial decisions;
5) know the relationship between supply and demand and the strategy for maximizing profits;
6) calculate the results associated with changes in various production factors, the "optimal" level of product sales and the result of the pricing strategy; preferred profit margins, risk and value determination, etc.
Financial statements are closely related to the activities of the enterprise - it is primarily a system of indicators that characterize the conditions and financial results of the enterprise for a certain period of time.
On the relationship between financial management and accounting say the following two definitions:
1. They are closely related in terms of the degree of reporting, which is important information for an enterprise's financial decisions.
2. The key differences are the reporting assignment functions.
Thus, accounting and financial management are functionally interconnected. But there are also key differences: differences in the circulation of funds and decision-making.
The purpose of accounting is the collection and presentation of financial data. The financial manager uses this data to make financial decisions. But that doesn't mean that accountants never make decisions or that money managers don't collect data. However, the main functional purpose is to collect and provide data, while the more important responsibility of the financial manager is financial planning, forecasting and control over the implementation of decisions made.
In addition to economics and accounting, a financial manager makes daily decisions based on areas such as marketing, production, and quantitative methods. For example, a finance manager considers the impact of new business development and the alignment of proposed marketing projects with their own capital-intensive projects that affect cash flow projections. Changes in the production process are taken into account, the need for capital investments is confirmed. And here the financial manager must clearly evaluate everything and only then finance the project.
The tools of analysis are manifested in the field of quantitative methods, useful and analyzed complex complex problems of the financial manager.
Rice. 1.2. Influence of other disciplines on financial management
Principles of organization of financial management
financial mechanism
financial leverage
financial methods
Legal support
Regulatory support
Information Support
Investment decisions
Capital budgeting
Dividend Policy
Reinvestment of profits
Summary.
Financial management - financial management, i.e. the process of managing cash flow, the formation and use of financial resources of enterprises.
Financial management is an integral part of the overall enterprise management system, which in turn consists of two subsystems: the object of management (managed subsystem) and the subject of management (management subsystem).
The goals of financial management are realized through the functions of the object and subject of management.
Financial management performs three critical functions: investment decisions, financing and dividend decisions.
Terms and concepts:
Management
Financial management
Centralized cash funds
Decentralized Funds of Cash
Financial Manager
Control system
Managed system
Tests for self-control of knowledge.
1. Financial management is
a) a form of managing the process of financing business activities. c) a complex process of managing cash flow, cash funds, financial resources of enterprises. c) a science that is only emerging simultaneously with the formation of a market economy and the development of entrepreneurship. d) a form of management that determines the scale and priorities business2. Functions of financial management
a) reproduction c) distribution c) control d) investment decisions3. Capital budgeting is
a) the process of selecting investment projects by the enterprise; b) the financing of the production process; c) the process of accumulation of funds; d) the determination of the present value of cash flows4. The main source of information for financial management
a) production plan c) statistical data c) accounting records d) portfolio of securities
^
TOPIC 2. FINANCIAL MODEL OF CAPITAL.
1. Financial resources and capital.
2. Financial model of capital.
3. The main assets of enterprises.
4. Intangible assets.
Literature: L-7 (p. 29-33), L-8 (p. 34-47), L-9 (p. 279 - 284), L-18 (p. 110-114), L-31 ( p. 89), L-35.
2.1. Financial resources and capital.
Financial resources are a set of funds of funds at the disposal of enterprises, organizations and other organizational structures of various forms of ownership, i.e. the financial resources of enterprises are those funds that remain with an enterprise or other economic entity after they have reimbursed all the costs and expenses associated with the implementation of current economic activities.
Financial resources formed from various sources enable the enterprise to invest in new production in a timely manner, to ensure, if necessary, expansion and technical re-equipment operating enterprises, finance research, development and implementation, etc.
The use of financial resources is carried out in many areas, the main of which are:
Payments to organizations of the financial and banking system in connection with the fulfillment of financial obligations (payment of taxes to the budget, payment of interest to banks for the use of loans, repayment of previously taken loans, insurance payments);
Investing (own funds) financial resources in securities of other firms purchased on the market;
The direction of financial resources for the formation of monetary funds of an incentive and social nature;
Use of financial resources for charitable purposes, sponsorship.
To ensure uninterrupted financing of the production process, financial reserves are of great importance. In the conditions of transition to the market, their role increases significantly. Financial reserves are able to ensure the continuous circulation of funds in the reproduction process, even in the event of huge losses or the occurrence of unforeseen events. Financial reserves can be created by enterprises themselves at the expense of their own financial resources (self-insurance), their management structures (on the basis of standard deductions), specialized insurance organizations (insurance method) and the state (reserve funds).
With the transition to a market economy, the role of financial services in finding financial sources for the development of an enterprise increases. The search for effective directions for investing financial resources, operations with securities, timely attraction of borrowed funds become the main ones in managing the finances of an enterprise, forming the so-called "financial management".
Financial management is such an organization of financial management on the part of financial services, which allows you to attract additional financial resources at the most favorable conditions, invest them with the greatest effect, carry out profitable operations in the financial market by buying and reselling securities.
The choice of a source for covering the costs of an enterprise with a lack of its own financial resources depends on the purpose of investing funds.
To meet the short term need for working capital it is advisable to use loans from credit institutions.
When making large investments in the expansion, technical re-equipment or reconstruction of production, you can attract a long-term loan or use the issue of securities.
It is equally important for an enterprise to rationally use free financial resources, to find the most effective directions for investing funds that bring additional profit to the enterprise. Here it is important to be able to foresee the dynamics of economic processes and to professionally master the technique of financial transactions.
Financial resources used for the development of production, in economic activity represent capital in its monetary form.
Capital is value that brings surplus value. Only the investment of capital in economic activity, its investment create profit.
Managing finances means managing capital. In essence, the capital reflects the system of monetary relations, embodying the cyclic movement of financial resources - from their mobilization into centralized and decentralized funds of funds, then distribution and redistribution, and, finally, the receipt of the newly created value (or gross income) of this enterprise, including profit .
Thus, the movement of capital and its management reflect the movement of financial resources and the management of this process.
2.2. Financial model of capital.
The capital structure includes cash invested in fixed assets, intangible assets and working capital.
The financial model of capital can be represented as follows:
The line outlines the working capital area.
Share capital is the amount of money invested in a company by shareholders who take on the business risk. The maximum amount of share capital permitted to be issued is determined by the company's articles of association.
Share capital is the owner's contribution. A distinction must be made here between paid-in share capital and declared but not yet paid-in capital. Only the former is usually shown on the balance sheet of a small business, as it represents the amount actually deposited into a bank account by the shareholders, as proof of which they receive share certificates as evidence of equity participation.
The most "solid" capital is provided by the shareholders, and the accumulation of profits is done precisely for the shareholders.
Borrowed capital - loans provided to a company (enterprise) to finance its operations on the terms of repayment within a specified period. They can take the form of long-term loans, short-term loans (for a period of up to 1 year) or a bank overdraft.
Invested capital - the total amount of money invested in the company, consisting of shareholders' funds and borrowed capital. In essence, the company's debt to investors and creditors.
From this moment, there are two possibilities for using money - they can be invested either in fixed assets (or in working capital) or directed to external investments. The financial model of capital is shown in fig. 2.1.
The part converted to working capital will be spent on materials and on converting them into goods ready for sale, as well as converting all this into cash. (The working capital of an economic entity will be discussed in the next topic).
The flow of money to suppliers will be interrupted by the creditor "barrier" just as the receivable "barrier" will slow down the return of money coming into the business.
The working capital zone is highlighted in fig. 2.1. But since this model is a "snapshot", there is no constant movement in it.
Purchased materials are dead unless someone puts them to work turning them into a final, marketable commodity. This transformation process involves spending money on wages, rent, taxes, insurance, communications, and so on.
For the same reason, some of the fixed assets will be fully utilized in the form of depreciation. In some enterprises, raw materials and partially finished products ("work in progress") appear in the production process until they are qualified as final goods. In addition, there are many centralized (administrative) costs that require money.
The sale can be carried out either through direct payments or on credit. In the latter case, debtors slow down the process of cash inflow.
If the enterprise has invested funds in external projects, then the interest on investments will come from behind the "boundary" of working capital in the form of income.
Finally, some of the money will be lost due to the constant payment of taxes, interest on loans and dividends on shares.
Evaluating the model in terms of the effectiveness of enterprise management, it must be recognized that the financial manager is responsible for the use of all resources. The financial manager is not interested in how the owners create capital, managers exist in order to draw up an optimal structure of equity and debt capital, as well as to ensure proper management of resources.
2.3. The main assets of enterprises.
Cash advanced for the acquisition of fixed assets is called fixed assets. Fixed assets (funds) are the material and technical basis of production at any enterprise. In a market economy, the initial formation of fixed assets, their functioning and expanded reproduction is carried out with the direct participation of finance. At the time of acquisition of fixed assets and their acceptance on the balance sheet of the enterprise, the value of fixed assets quantitatively coincides with the value of fixed assets. In the future, as the fixed assets participate in the production process, their value bifurcates: one part of it, equal to depreciation, is attributed to finished products, the other - expresses the residual value of existing fixed assets.
The textbook "Financial Management" is structurally represented by 4 chapters. The first chapter is devoted to considering theoretical foundations financial management, a description of the financial system, and financial management information systems. The following chapters discuss approaches to the financial management of an organization: issues of managing financial results and profitability, decisions on optimizing the capital structure, making investment decisions, managing long-term and current assets. The manual was developed to provide the variable part of the discipline of the same name and is intended for students of all forms of study in the direction of "Economics", and can also be useful to managers and specialists of various levels.
Fundamentals of Financial Management
1.1. Theoretical concepts of financial management
Modern financial management is based on the theoretical principles of many scientific areas and generalizes the experience of financial management of companies in the context of the economic and financial environment, the relationship of financial management of an organization with stakeholders (stakeholders).
Currently, financial management studies managerial financial decisions made on the basis of the basic theoretical concepts of economics and finance.
The theory of financial management consists of a number of concepts that represent a systematic approach to the study of the allocation of monetary resources, taking into account the factor of time, as well as a set of quantitative models with which all alternative options are evaluated and financial decisions are made and implemented.1
Concept (from lat. conceptio- understanding, system) is a certain way of interpreting and "understanding" a phenomenon, system, process. Concept in financial management this is a way of "understanding", a theoretical approach to certain aspects of phenomena, the functions of financial management.
Consider the key theories of financial management that form the foundation for making financial decisions.
The concept of the priority of economic interests of owners.
For the first time, the idea of the concept was put forward by the American economist Herbert Simon within the framework of the theory of decision-making developed by him in commercial organizations, known as the “theory of bounded rationality”. Refuting the notion of a firm as an organization aimed at maximizing profits, he formulated an alternative target concept of its economic behavior, which consists in the need to satisfy the interests of owners as a priority.
In its applied meaning, it formulates the goal of financial management of the organization - maximizing the market value of the company.
The concept of ideal capital markets.
The current level of competitive production and technology requires significant financial investments, therefore, attracting capital and its effective investment become paramount in financial management. Most of the early theories of financial management are based on the assumption of the existence of ideal capital markets (perfect capital markets). This concept is descriptive - descriptive in nature. The analysis and adoption of these decisions requires the study of the factors of the surrounding financial environment and the financial market.
Ideal capital market is a market in which there are no difficulties, as a result of which the exchange of securities and money is carried out easily and does not involve any costs.
The ideal capital market assumes the following:
– there are no transaction costs (costs for interaction with institutions such as insurance companies and stock exchanges, costs for the conclusion and execution, legal protection of contracts, costs for collecting and processing information, negotiating and making decisions);
- there are no taxes;
- available a large number of buyers and sellers, and none of them can influence the market price of financial assets;
– there is equal access to the market for all investors;
- all market participants have the same amount of information;
– all market participants have the same expectations. Although the set of such premises is rigid, this theory explains the development of relationships and transactions in the financial environment. Often the reality is close to the initial conditions of the theory. If, in a real situation, the initial assumptions are not met, they can be discarded one by one and determine the impact of each of the conditions on the final results.
Stakeholder Theory.
The activity of the company is to some extent in the zone of interests of many stakeholders, and the interests of all these persons cannot even theoretically coincide, therefore it becomes obvious that the optimization of the management of a large company requires taking into account many factors that are not only of a material nature. Stakeholder Theory- this is one of the theoretical directions in management, which forms and explains the company's development strategy in terms of taking into account the interests of the so-called stakeholders (stakeholders).
The concept of agency relations.
The concept of agency relations deals with the issue of representation or agency conflicts. Within financial management, these potential conflicts arise between:
1) shareholders and managers;
2) between creditors and shareholders.
The purpose of the firm is to maximize the ownership of its shareholders, which means maximizing the price of the firm's shares. A potential cause of conflict of interest is that the owners of the firm give managers the power to make decisions.
In modern conditions, the number of agency conflicts includes not only traditional, but also conflicts of the type "minority - majority owner", "controlling owner (insider) - outsider".
The concept states that the activities of managers (agents) will only then be aimed at realizing the main goal of financial management, when it will be additionally stimulated by their participation in profits, and also controlled by the owners.
This stimulation and monitoring are associated with additional costs of funds, which are called agency costs. In turn, agency costs affect the formation and distribution of profits, the dividend policy, and, accordingly, the price of the company's shares circulating on the market.
A typical manifestation of agency conflicts and agency costs is the situation of “entrenched” managers, which means that they receive additional monetary rewards and avoid taking risks. Researchers note that management's ownership of shares in equity capital from 5% to 25% gives rise to the effect of "entrenched" management, when there are no dividends, investments in fixed assets exceed industry standards, and non-core investments predominate.
The concept of the temporary unlimited functioning of an economic entity means that the company, once it has arisen, will exist “forever”, it has no intention to suddenly curtail work, and therefore its investors and creditors may believe that the obligations of the company will be fulfilled. Financial statements in accordance with international standards (IFRS) are prepared on the assumption that the company will continue to operate at the present time and for the foreseeable future.
It is assumed that the company has neither the intention nor the need to liquidate or significantly reduce the scale of operations.
It is understood that we are talking about the so-called normal conditions for the functioning of the company, which can only be violated by force majeure.
The concept of opportunity cost, also called the concept of opportunity cost, is that the adoption of any financial decision is associated with the rejection of some alternative option that could also bring some income. This lost income must be taken into account when making decisions.
Opportunity Costs represent the income that the company could have received if it had chosen a different option for using its available resources.
The concept plays an important role in assessing options for possible investment of capital, the use of production capacity, the choice of lending policy options, and in making decisions of an ongoing nature (for example, receivables management).
Concept temporal values of money lies in the fact that the monetary unit available today and the monetary unit expected to be received after some time are not equivalent (Figure 1.1).
Such disparity is determined by three main reasons: inflation, the risk of not receiving the expected amount, and turnover, i.e. the ability of money to generate income.
Compared to the amount of money that may be received in the future, the same amount available at a given time can be immediately put into circulation and therefore bring additional income.
Fig 1.1. Logic of the time value of money concept
According to the concept of the time value of money, today's receipts are more valuable than future ones. This implies the need to take into account the time factor when making financial decisions, especially long-term ones.
To correlate the future and today's value of money, accrual (interest) and discounting formulas are used.
Discounting- Bringing the future value (FV) to the current period of time, establishing today's equivalent of the amount paid in the future.
With this concept in mind, various models discounted cash flows (DCF), which are widely used in the practice of financial management.
There are four steps to consider when considering discounting.
Calculation of projected cash flows. Risk assessment.
Including risk in the analysis.
Determination of the present value of money.
The formula for mathematical discounting for compound interest is:
where PV is funds held or invested to date or the present value of funds received in the future;
FV- funds receivable in the future or the future value of today's cash;
r- discount rate;
n- number of years.
In order to determine the current equivalent of a certain amount of money, for example, 20 thousand rubles, which may be needed in the future, for example, in 2 years, it is necessary to discount this amount using a discount rate (generally equal to the discount rate of the Central Bank). If the discount rate of interest is, for example, 18% per annum, then the present (current) value of the future 20 thousand rubles. will be: 20 / (1 + 0.18) 2 \u003d 14.3 thousand rubles. this means that, having today 14.3 thousand rubles, you can put them in the bank at this rate, and in 2 years you will have 20 thousand rubles.
The concept of trade-off between risk and return.
The essence of this concept is that there is a directly proportional relationship between the level of expected income (profitability) and the level of risk associated with it.
The higher the promised, required or expected return (that is, the return on invested capital), the higher the degree of risk associated with the possible non-receipt of this return. However, the opposite is also true.
Based on this concept, multiple models for evaluating financial assets (financial investment instruments) and a methodology investment analysis in the portfolio theory system.
G. Markowitz's conclusions about the portfolio are very important for solving the problem of risk minimization. Aggregate risk can be reduced by pooling risky assets into one portfolio. At the same time, the overall risk, as a rule, is less than for each financial asset separately. However, the concept of G. Markowitz does not specify the relationship between the level of risk and the required return. This problem is solved by the studies of D. Lintier, J. Moissin, W. Sharp, in which it is concluded that in ideal capital markets the required (expected) return on a risky asset is a function of three variables: risk-free return, average return on the securities market, “ volatility index” of the profitability of this asset on the market on average.
An illustration of the concept of trade-off between risk and return is Sharpe model - a model for assessing the profitability of financial assets(САРМ, Capital Asset Pricing Model).
k s= k rf+β( k m− k rf)
where ks is profitability of the company's shares;
krf– yield of “risk-free” securities;
β – beta coefficient of the company's systematic (market) risk;
km– expected average return on the securities market;
The average rate of return on the market is 16%, the return on risk-free investments in government securities is 6%, for the company "WOW" the coefficient β = 0.8. Then the profitability of the shares of this company is determined: 16 + 0.8 (16 - 6) = 24%.
This model can be used to evaluate the return on a company's shares, taking into account systematic risk. These conclusions are important when making decisions on the formation of an optimal capital structure and the choice and justification of the effectiveness of an investment project.
The concept of cost (structure) of capital.
To finance the current and investment activities of organizations, financial resources are needed, which can be attracted from various sources, on different conditions.
We will proceed from the assumption that the company's current (current) assets are financed from short-term sources of funds (short-term liabilities), and non-current (permanent) assets - from long-term ones.
Rice. 1.2. Sources of financing
Figure 1.2 shows all sources of funding, including long-term and short-term.
Exactly long-term sources – ownandborrowed – calledcapital .
Thus, the capital used consists of share capital and long-term liabilities.
Attracting each source of capital is associated with certain costs for the company. The ratio of the payment for capital to the amount of capital raised is called cost ( at the price ) capital and expressed in percent .
The price of each source of capital is related to the payment to its "owners": banks need to pay interest on loans issued; for investors - income from their investments; shareholders - dividends. The value of the cost of capital - the cost or price of capital - is determined by the return required by the "owner" of the capital.
The company's costs of raising and servicing capital vary significantly by type of individual sources. In this regard, when choosing alternative sources of financing assets, a quantitative assessment of the cost of capital raised plays a decisive role.
The concept of the cost of capital is based on the mechanism of influence of the ratio of equity and debt capital chosen by the company on the indicator of its market value.
Minimizing the cost of capital, other things being equal, maximizes the market value of the company and the welfare of the owners.
Market Efficiency Concept capital was put forward in 1970 by the American economist Eugene Fama in his work Efficient Capital Markets: A Review of Theoretical and Practical Research. This concept is hypothetical and reflects the dependence of the price efficiency of the financial market on the level of information support of its participants. According to this hypothesis, the pricing process assumes that the expected return on securities is a random variable that reflects the appropriate level of awareness of market participants. The concept of market efficiency is based on the fact that in an efficient market, any new information as it becomes available is immediately reflected in the prices of shares and other securities. Financiers use the concept of market efficiency, meaning information, not operational efficiency.
An efficient market is one in which prices reflect all known information. The theoretical possibility of the existence of three forms of market efficiency - weak, moderate and strong - is considered. Under weak form refers to a situation where current prices reflect all the information contained in past price changes. Moderate suggests that current market prices reflect not only the dynamics of market prices, but also all other publicly available information. Therefore, with a moderate form of efficiency, it makes no sense to study the annual reports of firms and other statistics. Under strong form efficiency is understood as such a market, the prices of which reflect all information, including not only publicly available, but also available to individuals. According to this hypothesis, with a strong form of efficiency, superprofits cannot be obtained even by initiates.
The concept of efficient markets is directly related to the concept of trade-off between risk and return.
In a moderate form of efficiency, where all publicly available information is reflected in prices, the alternatives are that higher returns come with higher risk. In efficient markets, securities prices are formed in such a way that the receipt of excess returns is excluded, and differences in expected returns are determined by differences in the degree of risk. For example, the expected return on a firm's stock is 15%, but the same firm's bonds yield only 10%. What does this mean for investors? The higher expected return on stocks reflects their greater riskiness. What funding decision should the firm's managers make—whether to finance the firm with debt or equity capital? If managers believe that the stock and bond markets are moderately efficient, then they should be indifferent to the choice of sources of funding (except for taxes).
The most important capital markets tend to be efficient, i.e. exclude the receipt of excess income. And the markets for physical goods, as a rule, are not efficient at least in the short term. For example, in the early days of IBM and Apple computers, these companies made windfall profits.
Thus, the capital markets efficiency hypothesis has practical implications for both managers and investors. For managers, this hypothesis means that it is impossible to increase the value of the firm through operations in the financial market. Transactions in an efficient market have zero NPV. It is possible to increase the value of the company only with the help of operations in the market of material goods and services.
The concept of asymmetric information is closely related to the concept of market efficiency, and its meaning is that certain categories of persons may have information that is inaccessible to all market participants equally. On the one hand, complete symmetry in the information provision of market participants cannot be achieved in principle, since there is always so-called insider information. On the other hand, it is this concept that explains the existence of the market, because each of its participants hopes that the information that he has may not be known to his competitors, and, therefore, he can make an effective decision.
The adoption of any financial decision requires knowledge of the conceptual foundations of financial management, evidence-based methods for their implementation, general laws and patterns of development of a market economy, financial markets and systems, etc.
1.2. The financial system and its participants
Financial decisions are implemented within the financial system.
The financial system is made up of a range of institutions, institutions, and markets that provide services to businesses, citizens, and government.
The financial system as a set of special institutions designed to most effectively redistribute the limited financial resources of the economy includes a subsystem of state redistribution, as well as a rather complex subsystem of financial intermediaries that ensure the redistribution of financial resources on market conditions.2
Main actors– the participants of the financial system are:
– state (public sector, government, governmental organizations);
– households (households, families or citizens);
- firms (enterprises, organizations, commercial companies);
financial intermediaries (institutions).
State is a subject of management that ensures the organization and functioning of all elements of the socio-economic system. The state also acts as a business entity along with other participants, since, in the face of state enterprises, it produces certain types of goods and services (including market ones). The state also means the sphere of public finance, which is understood as the process and mechanism for the formation and use of public financial resources, the balance of income and expenses.
Household in economics, an economic unit consisting of one or more persons, which, on the one hand, supplies the economy with resources; on the other hand, it uses the money received to purchase goods and services that satisfy the material needs of a person.
Firm (enterprise) - an economic entity whose activities are aimed at the production of products, the performance of work, the provision of services, i.e. meeting public needs and making a profit. In other words, a firm is a legal entity that raises capital to carry out its activities and ensures its growth at the expense of profits.
Financial institutions include various participants in financial markets that mediate direct flows of savings from their owners to users of these funds. The institute of financial intermediaries includes commercial, savings banks, savings and loan associations, mutual savings funds, credit unions, insurance companies, pension funds.
Financial decisions made by households:
– Decisions to consume and save money. Regarding the proportion in accordance with which funds are directed to consumption and savings. Households save a certain portion of their income for future use; they accumulate a general wealth pool that can be held in various forms.
– Investment decisions. In what assets should you invest your existing savings. This is the process of personal investment or the distribution of funds between different types of assets.
– Financing decisions regarding the use of borrowed funds to realize their consumer or investment aspirations.
– Decisions related to risk management. Should you insure your summer cottage.3
Financial decisions taken firms:
- Solutions strategic planning(what kind of business to do - determining the scope of activity, whether to diversify your activities or even radically change strategic goals) these decisions are financial because they are associated with the assessment of costs and revenues, taking into account the time factor.
– Investment planning. Formulation and development of investment projects. Development of implementation methods.
– Decisions related to financing. Decisions on the capital structure - development of a practical financial plan, development of an optimal financing structure.
– Working capital management. Operational tracking of cash flows.
The most common organizational forms of business according to global practice are corporations - joint-stock companies open type.
Corporation(JSC) is a company that is a separate legal entity, usually operating separately from its owners. The corporation has the right to own property, borrow money and enter into contracts. Corporate taxation rules are different organizational forms business (sole proprietorship and partnership). The corporation is managed on the basis of statutory documents. Shareholders are entitled to a share of the corporation's earnings in the form of dividends in proportion to the number of shares they own. The advantage of a corporate organization is that under it the shares can be transferred to other owners without disturbing the normal operation of the company. Another advantage lies in limited liability shareholders. In case of non-fulfillment of obligations, the property of shareholders does not suffer.
A feature of corporations is the separation of ownership from management.
The owners involve specialist managers for management, who may not be shareholders. The main rule for managers will be: to strive to make financial decisions that would be made by the owners themselves, in order to achieve the main goal - maximizing the wealth of shareholders, i.e. market value of their shares.
Reasons for separating ownership from management:
– To manage affairs, you can find professional managers with the necessary abilities.
– Possibility of pooling the financial resources of many households.
– Investors can spread risk by investing in different firms.
– To save the cost of collecting information.
– To achieve the learning curve effect or the effect of a functioning enterprise, if the owner is also the manager of the firm, then the new owner for successful management business will have to learn. If not, when the business is sold, the manager continues to work in his place and the efficiency of work is not disturbed.
Financial assets exist in the economy due to the fact that the savings of market participants differ from their investments in real assets, i.e. into buildings, equipment, inventories and goods. Financial assets include deposits with banks; deposits; checks; insurance policies; investments in securities; obligations of other enterprises and organizations to pay funds for delivered products (commercial credit); portfolio investments in shares of other enterprises; blocks of shares in other enterprises, giving the right to control; shares or shares in other enterprises.
Financial assets and money would be absent if the amount of savings would constantly equal the sum of investments of all market participants in fixed assets, and current expenses and capital investments would be paid from current incomes. Financial assets arise only when the market entity's investment in real assets exceeds its own savings. This overspending is then financed by a loan or equity issue. Of course, there must be another market entity that is interested in lending capital.
The interaction between the borrower and the lender is mediated by the financial market. In the economy as a whole, oversaving market entities provide capital to undersaving entities. Individuals and organizations that want to borrow come into contact with those who have an excess of funds in the financial markets. In a developed economy, there are many and varied financial markets.
The purpose of financial markets is the efficient distribution of savings between end users. Efficiency is greater, the better developed the country's financial markets. Financial markets deal with stocks, bonds, bills of exchange, mortgages and other rights to real assets.
For the financial manager, the most interesting are capital markets, in particular the securities markets, because, firstly, they are a source of additional financing, and secondly, the position of the securities of a given company in this market serves as an indicator of its activity.
In advanced economies, the movement of funds linking households, firms, and the public sector is mediated by financial institutions. The peculiarity of the balance sheet structure of financial intermediaries is the predominance of financial assets. Households are the ultimate owners of all business firms, including financial institutions. Financial institutions are engaged in the transformation of direct requirements into indirect ones. Firms' investments in real assets exceed savings. This difference is covered by the issuance of financial liabilities in excess of the available financial assets. Households are net creditors because they have a surplus of funds. Financial institutions also have an excess of savings over investment and lend to firms. They increase the size of financial assets by issuing financial liabilities.
If we consider an individual firm in the context of the environment, the cash flow looks like that shown in Fig. 1.3.
Rice. 1.3. Cash flow linking an individual firm and the capital market:
1 - placement on the securities market and attraction of investors' funds;
2 - investing in real assets;
3 - cash flow generation as a result successful activity;
4 - payment of taxes and other deductions;
5 - payments to investors and creditors;
6 - reinvestment of part of the profit in assets;
The financial system is made up of institutions that provide services to firms, households, and governments and mediate financial flows between them.
The financial system can be represented by four participants: households, commercial firms, financial intermediaries and government organizations. The key figures within the financial system are households and firms that make various financial decisions on saving and investing funds, risk management. Financial decisions determine the existence of financial assets that are formed and used in financial markets. The redistribution of funds is mediated by institutions of financial intermediaries.
Financial management is one of the most promising and sought-after scientific areas.
Financial management as a theory includes a system of knowledge about the financial management of the company, methods of formation and use of financial resources.
– Determination of the objectives of financial management;
– Study of the economic and financial environment;
– Working capital management;
– Investment policy and asset management;
– Management of sources of funds.
Due to the globalization of business, the spread information technologies, changes in the financial, economic environment is transformed and the content of financial management. The literature presents different definitions of financial management, here are the main ones:
– the science and practice of financial management of a company, aimed at achieving its tactical and strategic goals;
– the science and art of making investment decisions and finding sources of financing for this;
– management of financial resources and cash flows of the company;
- the science of using the company's own and borrowed capital in order to obtain the greatest economic benefit with the least risk.
The given definitions reflect different aspects of financial management: investment and asset management, capital management, financial planning and financial performance management.
Modern financial management is considered as a system of models and tools for managing cash flows and company value. The theory of financial management deals with the development of a methodology for managing the company's financial flows.
These definitions express the essence of financial management, which consists in substantiating decisions on the use of resources and raising capital in conditions of uncertainty, risk, information asymmetry, and the time lag between making a decision and obtaining a result.
Financial management as a theory is a field of knowledge that pays great attention to the role of financial managers. The authors of foreign textbooks define finance as the science of how people manage the spending and receipt of scarce monetary resources over a certain period of time.4
The purpose of financial m management - maximizing the wealth of owners with the help of rational financial policy.
As the main criterion for the effectiveness of financial management (and, accordingly, the goals of financial management) by a company in modern studies, the indicator of the company's value is recognized. instead of the previously dominant profit.
For shareholders (owners) of companies, the primary task is to increase their financial well-being. At the same time, the growth in the welfare of owners is measured not only and not so much by financial and economic indicators, but rather by market value of the company which they own. Creation shareholder value means that market price shares of the company exceeds their accounting estimate. The theory explores financial and non-financial factors that affect the cost and growth of the owners' wealth.
The theory and practice of financial management are closely interrelated. The theory generalizes the experience of financial management of successful companies, modifying the traditional models of financial analysis and management, thereby developing the theory and contributing to the advancement of financial technologies.
Financial management as an activity represents the application of theoretical models and developments in practice. Financial management as a management activity consists in making decisions aimed at achieving the goals of the enterprise through the effective use of the entire system of financial relationships and resources at the disposal of the financial manager.
An important feature is that decisions on the use of resources and raising capital are made under conditions of uncertainty, risk, information asymmetry, and the time lag between making a decision and obtaining a result.
The main areas of financial management of the enterprise are:
– development of financial strategy and financial policy;
- financial and information support by compiling and analyzing the financial statements of the enterprise;
– evaluation of investment projects and formation of an investment portfolio;
– selection of sources of financing and effective management of the capital structure.
Financial management consists of several successive stages, called the control loop (Fig. 1.4.):
1. Planning: Setting a goal and a program of activities for its implementation;
2. Choice of financial instruments and implementation of the program;
3. Organization and control of the implementation of decisions;
4. Analysis and evaluation of possible results;
5. Choice of actions based on the results of the analysis;
6. Implementation of corrective actions;
7. Possible revision of the plan based on the results of the analysis.
Rice. 1.4. Control circuit
The management loop helps to understand the activities of the financial manager, who: defines the goals of the financial management of the organization, plans the use of resources, organizes activities (creates formal structures), provides appropriate team motivation, coordinates the work of each team member with other members and teams, controls, monitors activities.
Financial Manager(CFO) is engaged in the efficient allocation of resources within the enterprise and the mobilization of funds on the most favorable terms. The financial manager is the person responsible for converting inputs into output goods and services. Therefore, he is responsible for the effectiveness and efficiency of the enterprise. The area of responsibility of the financial manager is presented in the "input-output" scheme (Fig. 1.5). Input resources include material, human, financial, informational resources, as well as intangible and difficult to evaluate with money, for example, employee motivation, company image, etc. The output results are also diverse and are not limited to the goods produced. This may include satisfaction with the work done, meeting customer expectations, and many other things that will affect future performance. Input resources are evaluated by the manager in terms of quality and economy. The process of transformation (transformation) is evaluated by the manager from the standpoint of performance, efficiency, the ratio of benefits and costs incurred. The output results allow you to determine. To what extent has the goal been achieved? efficiency management. The work of a manager can be effective if the goal is achieved. The work of a manager is effective if the goal is achieved with the least amount of means.
Rice. 1.5. Responsibilities of the financial manager
Thus, the financial manager is the person responsible for resources, their use and financial performance, he is also responsible for investment decisions and financing decisions. An important duty is also to provide the market with financial information on the performance of the company, since the financial manager is an intermediary between the company and the financial market.
Types of managerial decisions in financial management
The financial manager makes decisions on the use of various resources to ensure the interests of business owners and obtain the expected economic benefits. In financial management, all management decisions fall into three main areas:
1) investment of resources;
2) the main activity of the business through the use of these resources;
3) funding to ensure the creation of funds for these resources.
Rice. 1.6. Simplified business model: investments, operations, financing
General Model business uniting these three areas, shown in the figure (Fig. 1.6), demonstrates the classification of decisions into three types:
– Investment decisions or capital investment planning decisions;
– Operational decisions on current financial management;
– Decisions on funding sources.
Consider the main strategies in each of these areas.
1) Investment decisions with capital investments are long-term.
Investments are the main driving force behind any business. They support competitive strategies developed by managers and are based on plans (capital budgets) to invest existing or newly acquired funds in the main areas:
Real assets (buildings, machinery and equipment, office equipment);
Scientific developments, improvement of products or services, programs to promote goods to the market, etc.
2) Operational decisions are current, wear short-term and reflect the tactics of financial management. These include decisions on the effective use of already invested funds for work in selected markets, as well as the establishment of the correct pricing and service policies. These decisions invariably boil down to economic dilemmas where managers must strike a balance between the impact of competitive pricing and the impact of competitors on sales on the one hand, and the profitability of the products or services on the other. At the same time, all business operations must remain cost effective in order to be competitively successful.
3) financial decisions or financing decisions - these are long-term decisions on the choice of sources of financing for investments and capital structure, drawing up plans for financial growth. There are two main areas of decision-making and strategy formation:
– profit management and formation internal sources financing;
– determination of the price of sources of financing and optimization of the capital structure of the company.
Usually, long-term investment and financing decisions are made by the top management of the company and approved by the Board of Directors, since these decisions determine the long-term viability of the company.
Financial service and functions of the financial director
The financial director does following features in company:
1) In the field of corporate strategy:
– Definition of strategic goals in quantitative terms;
– Development of strategic projects and making investment decisions;
– Assessment of the conformity of market opportunities and company resources;
– Financial planning and budgeting;
– Development of financial criteria for all levels of management and incentive system;
– Development of financial and dividend policy.
2) In the field of asset management:
– Formation of the optimal structure of assets;
– Development of working capital management policy;
– Formation of asset protection policy;
– Distribution of cash flows over time;
3) In the field of financial management:
– Formation of an optimal capital structure;
– Providing the enterprise with financial resources and the efficiency of their use.
4) In the field of financial management tactics:
– Financial analysis of the organization's activities;
– Profitability management;
– Optimization of tax payments.
5) Choosing a behavior model in the financial market.
6) Information support of financial decisions and provision of financial information to stakeholders.
In addition to the study and practical application of financial analysis tools, it is necessary to understand that management decisions depend on the points of view of stakeholders, as well as on the reliability of information. In any situation, the purpose of the planned activity and the purpose of the analysis should be clearly defined, otherwise the analysis process becomes meaningless.
The structure of the financial service.
The organizational structure of the financial service of the company influences the performance of certain functions of financial management. The typical structure of the financial service is shown in fig. 1.7.
Most large companies there is a position of financial director (financial manager), who is vice president for financial matters. Functions can be distributed between the treasurer, the chief accountant and the deputy financial director for financial planning (vice president for financial planning).
Rice. 1.7. The structure of the financial service of the company
The CFO is primarily responsible for the development and implementation of financial policy. The duty of the treasurer is to monitor the current account of funds, attracting funds, maintaining relations with banks, shareholders and investors who own securities.
The chief accountant is responsible for the company's financial statements, internal accounting and tax payments.
Management is sometimes defined as "the art of asking the essential questions". Qualitative judgments in the search for answers to financial and economic questions are just as important as quantitative results. The degree of accuracy and improvement of financial analysis results also depends on the specific situation. The majority of analytical efforts should be directed to areas where the potential for loss from insufficient analysis is greatest.
1.4. Information base of financial management
Information management is one of the necessary elements of the financial management of an organization. The lack of quality information (information asymmetry) can lead the owners of the enterprise to the loss of possible benefits, and managers - to a weakening of control over resources and processes.
Information management becomes one of the necessary elements of the competence of a financial manager.
The collapse of a number of large companies (Enron, Artur Andersen.) at the beginning of this century due to the distortion of financial statements led to the tightening of requirements for the provision of financial information.
The US passed the Sarbanes-Oxley Act, requiring the chief financial officer and chief executive of a company to be responsible for the accuracy and reliability of financial information. The Sarbanes-Oxley Act was passed in the US on July 30, 2002. He changed the composition and procedure for reporting by companies issuing securities, strengthened control over the reporting and activities of companies by shareholders, the public (represented by auditors) and the state (represented by the main regulatory body - the Securities and Exchange Commission).
The change in information requirements on the part of investors is caused by:
– global changes in competition;
– strengthening the role of intellectual capital;
– growth of dynamism and uncertainty, increase of risk factors.
The concept of "information" should be distinguished from the term "data", since the latter means raw information, the source of information.
Information – it is information that reduces uncertainty in the area to which it relates.
The characteristic features of information are:
- understandability;
– relevance (information must be relevant);
- usefulness.
At all stages of development and decision-making, the reliability of information and its interpretation will play a decisive role. Therefore, before proceeding with the collection and analysis of information, it is necessary to provide what kind of data and why it is necessary to obtain.
The role of information in a market economy is great, it is essentially channels of connection with other market agents and with environment. The famous economist J. March defined modern market as an exchange of information. At the same time, one of the main functions of the company is obtaining information in order to determine:
– results of future sales;
- expenses;
- the behavior of competitors.
In a broad sense the information support system includes information resources, organizational, software, technical, technological, legal, personnel, financial support, which is designed to collect, accumulate, process, store and issue information.
Both external and internal stakeholders need financial information.
Information resources and sources of their receipt are conditionally divided into internal and external.
Sources of information about external environment: legislative and regulations on the topic, materials of Rosstat of Russia of its regional divisions, long-term plans and forecasts of government bodies in the field of economic policy and finance, analysis of trends in price changes and the exchange rate, analysis of the structure of prices for products (services) and resources in Russia and in the world, scientific and methodological literature and monographs on the topic. Carriers of internal information are financial, managerial, regulatory and planning documentation, founding documents, personnel, organizational units.
Economic information. Management systems allocate economic information related to the management of the processes of production of products, works and services.
Economic Information reflects the processes of production, distribution, exchange and consumption of material goods and services, is associated with social production, which is why it is sometimes called production.
Economic information is characterized by a large volume, multiple use, periodic updating and transformation, the use of logical operations and the performance of relatively simple mathematical calculations.
Economic information includes:
- operational reporting of the economic services of the enterprise (budgets, plans);
- regulations relating to various aspects of the enterprise, including foreign trade;
- assessment of the general inflation index and forecast of absolute or relative price changes for individual products (services) and resources;
- information about the taxation system;
– banking system information, including data on interest rates on loans and deposits;
– information on the economic condition of companies of competitors, contractors;
– information stock market and etc.
Economic information has a certain structure, the minimum structural unit of economic information is an indicator. The indicator has a complete semantic content and consumer significance for management purposes; it cannot be divided into smaller units without destroying the meaning.
financial information. Financial information of an internal nature is information about the company that can be presented in digital terms and is contained in the financial (accounting) statements.
External financial information - this is information about the structure of financial markets and financial indices, financial intermediaries, financial instruments, cash flows generated by market participants.
There are other sources of financial information about the company: mass media and communications, economic magazines.
The preparation of internal financial statements is based on the process of accounting within the corporation, so financial statements would not be possible without a functioning accounting system. The results of the company's activities are ultimately reflected in the financial (accounting) statements.
Internal financial information - this is information that can be obtained from financial (accounting) reporting and management reporting.
Financial statements in different countries have generally the same semantic meaning, but the order in which they are compiled is different. In some countries, the procedure, principles for compiling, disclosing accounting information in financial statements are regulated at the legislative level, in others a great initiative belongs to the compiler. Therefore, financial statements prepared by economic entities may be different both in external format and in internal content, and more precisely, in the order in which information is presented and disclosed. In order to harmonize national accounting systems, the national accounting laws of many countries have taken steps to bring them closer together. Such basic frameworks can be international financial reporting standards (IFRS), US Generally Accepted Accounting Principles (USGAAP).
International Financial Reporting Standards are developed with the aim of achieving uniformity in financial reporting throughout the world.
The concept of international standards is based on a number of assumptions. The main ones include:
1) principle charges, in accordance with which the results of business transactions are recognized upon their completion (not in cash) and are included in the financial statements of those periods to which the business transactions relate;
2) principle business continuity, implying a predictable future and no intention of liquidating or significantly reducing the scale of the enterprise;
3) reliable and accurate presentation of information, implying that the accountant is obliged to objectively and accurately reflect the financial position of the enterprise; this principle is enshrined in the law of the Russian Federation "On Accounting";
4) intelligibility implies that users have sufficient knowledge of accounting;
5) relevance- a principle that combines three conditions: timeliness, significance, value for forecasting and evaluation;
6) caution or conservatism - a principle that includes two clear rules:
- the profit that arose in this reporting period should be reflected in the same reporting period when the values \u200b\u200band were sold or services were rendered;
- the loss should be reflected in the reporting period in which it arose, in particular, assets should always show the real or very close to the real state of affairs;
7) comparability- the principle associated with the stability of accounting policies and methods of data processing.
Users of accounting information and their information needs.
The objectives of financial statements are determined by the needs of users. In the rules of international accounting standards, the following list of users is given:
– investors who need information to help them determine what to buy. Hold or sell securities;
– workers those interested in stability, profitability and future opportunities of the enterprise;
– creditors for loans that are interested in whether the loan will pay interest on time;
– suppliers and other creditors who are interested in repaying their debts on time;
– buyers who need information about the stability of the company;
– governments and their bodies are interested in information for regulating the activities of companies, determining tax policy, maintaining statistics;
– public is interested in information about the company's contribution to the local economy, job creation and the continuation of positive trends.
Managers need financial information to plan and control the activities of the company. The use of accounting data by managers for planning and control is the area management accounting.
financial information , important for management, is presented in financial forecasts, plans, budgets and reports.
The main and most important report that companies issue to their shareholders. Is an annual report. This report provides two types of information. Firstly, it includes a verbal section: a letter from the chairman on the results of the company's activities for the reporting year and new directions for development, as well as an auditor's report. Secondly, the annual report presents four main financial documents: balance sheet, income statement, retained earnings statement, and cash flow statement. The annual report is of considerable interest to investors.
The basis of the company's accounting (financial) statements is the balance sheet (statement of financial position) (Fig. 1.8.), which is a summary two-sided table of all the company's accounting accounts, which reflects its financial condition on the day (date) of compilation. This presentation of information in the balance sheet makes it possible to analyze and compare indicators, determine their growth or decline.
Rice. 1.8. Balance sheet structure in accordance with Russian standards
The balance sheet contains two main sections - "Assets" and "Liabilities", and thus allows you to get an idea of the financial condition of the company, namely, the composition of the invested funds (assets) and the sources of their financing (liabilities). The balance sheet total gives a rough estimate of the amount of funds at the disposal of the company. The balance sheet makes it possible to assess the effectiveness of the company's capital allocation, its sufficiency for current and future activities, to assess the size and structure of borrowed sources, as well as the effectiveness of their attraction.
The balance sheet is compiled in accordance with the principle of double entry and can be represented as an equation:
Total Assets = Equity + Total Liabilities
This equation means that funds owned and controlled by the enterprise (assets) must be financed either with a loan or by the owners themselves.
Assets - these are the resources controlled by the enterprise as a result of past activities, as a result of which economic benefits are expected in the future.
Assets are divided into non-current ( basic or permanent) used for a number of years, and negotiable (mobile or current) used within the next year or production run.
Equity - funds owned by the owners of the organization.
Equity may include funds originally invested (for example, for a joint-stock company) the value of ordinary and preferred shares), as well as accumulated (reinvested) profits and reserves.
Commitments is a financial debt that must be repaid by the company.
They are divided into long-term and short-term (or current). long term duties are long-term loans, loans, loans and bonds. Short term liabilities (current liabilities) include a number of items:
– bank overdraft or short-term loans and
– accounts payable resulting from the purchase of goods and services on credit.
International standards do not contain prescriptions either in relation to the form of the balance sheet or in relation to specific list the articles to be disclosed therein, nor in relation to their arrangement relative to each other.
The balance sheet of JSC Crimicare as of December 31, 2013 and 2012
Based on the information presented in the balance sheet, external users can decide on the feasibility and conditions for doing business with this company as a partner, assess the creditworthiness of the company as a borrower, and the feasibility of acquiring shares in this company and its assets.
For ease of use for analytical purposes, an aggregated balance sheet is built, placing assets in descending order of liquidity, and liabilities in order of debt repayment. (Fig. 1.9.).
Rice. 1.9. Aggregate balance
Profit and loss statement (Fig. 1.10.) Contains information about the current financial performance of the company for the reporting period, i.e. reflects information related to the formation and distribution of company profits.
Rice. 1.10. Enlarged scheme of the profit and loss statement in accordance with Russian standards
The presentation of the income statement is based on the accrual principle, according to which transactions and losses are recognized when they occur, and not as cash is received or paid.
Expenses are recognized in the income statement on the basis of a direct comparison between the costs incurred and the specific items of income earned.
Report about incomes and material losses reflects the impact of management decisions on the activities of the enterprise and characterizes the financial results achieved during the reporting period.
Analytical forms of the income statement can highlight the articles necessary to justify management decisions.
Rice. 1.11. – Analytical income statement form
The information to be presented in the income statement generally includes the following items:
- revenue;
– results of operating activities (operating profit);
– financing costs (interest on loans payable);
- tax expenses;
- Net income (loss).
Sharing in the process of analyzing the balance sheet and income statement of the company allows you to understand how the increase in equity capital due to retained earnings, as well as a deeper understanding of the state of the analyzed company. The profit and loss statement is the most important source of information for analyzing the company's profitability, profitability of products sold, production profitability, determining the amount of net profit remaining at the disposal of the company and other indicators.
Profit and loss statement of JSC Crimicare, million USD
The focus of this paper is on measuring the financial results of a company. Operating profit measures the potential for additional value creation from the core business. Managers, analysts and bankers calculate earnings before interest, taxes and depreciation (EBITDA), which is an important guide to management decisions. In the reporting year, this figure was $383.8 million for Crimicare. After deducting $4 million for preferred dividends, the company has $113.5 million of net income available to ordinary shareholders. Net profit is one of the most important criteria for success, it represents the return on the owners' investment. Retained earnings characterizes the growth of equity from internal sources.
Statement of cash flows (ODDS).
The report is prepared in accordance with the principle of accounting for all cash flows that have passed through the company for the period.
The cash flow statement provides information about the actual cash flow. Cash flows are classified by type of activity: operating, investing and financing. A company's cash flow differs from its book profit because some profits and costs do not result in a cash payment. The relationship between cash flow and profit will be discussed in more detail in the next chapter. According to world practice, the cash flow statement can be presented in different ways (in different formats) - on a cash basis or an indirect method. In accordance with the direct cash method, ODDS includes all inflows (receipts) and all outflows of money. The structure of ODDS in accordance with the cash basis is presented in the table.
Table 1.1
Cash flow statement
The indirect cash flow statement (ODFS) provides information about changes in financial position. Report is compiled by comparing the items of the opening and closing balances, as well as using data from the income statement for the same period. The cash flow statement is called a document on changes in the financial position for the reporting period. The structure of the ODDS by an indirect method is presented in the example below.
The structure of the cash flow statement using the indirect method is presented below.
The structure of the company's cash flow statement:
Cash flow is influenced by investment, operating and financing decisions. Figure 1.12. the characteristic of these changes is given.
Rice. 1.12. – Statement of cash flows in the context of decision making
Cash flow statement of JSC KRIMIKER for 2013, million USD
Crimicare's cash flow statement should worry managers as the company is cash-strapped. requiring decisions to improve the situation.
The primary purpose of the cash flow statement is to provide users of financial statements with information about the cash inflow and outflow of an entity for a period. Such information makes it possible to assess the company's short-term and long-term solvency, its ability to repay loans and dividends, its need for additional financing, its ability to generate cash flows and additional value.
End of introductory segment.
