The essence of enterprise finance and its functions. The essence of organizational finance
Completed:
Checked:
Volgograd 2010
Introduction……………………………………………………………………......….3
Chapter 1. Theoretical aspects finance of enterprises………………...……...5
1.1. Essence, functions and organization of enterprise finances…..………...5
1.2. Financial resources of the enterprise……………………………….……..…8
1.3. The essence of financial management and the need for its application in the activities of the enterprise……………………………………...13
1.4. Financial planning at the enterprise………………………..……19
Chapter 2. Analysis of the organization of the finances of an enterprise (using the example of LLC “Horns and Hooves”) ………………………………………………………..………….……... 25
2.1. general characteristics enterprises, organizational structure and main activities…………………………………………………………………….….25
2.2. Financial and economic analysis of the activities of the enterprise LLC “Horns and Hooves”……………………………………………………………………………………….…27
Chapter 3 Ways to improve the organization of finances……...…………...… 40
3.1. The main ways to strengthen the finances of an enterprise………………...….40
3.2. Forecast of the financial condition of the enterprise……………………..…. 47
Conclusion………………………………………………………………………………….…… 51
List of used literature………………………….…………..………53
INTRODUCTION
Finance is a system economic relations on the formation and use of funds Money based on the distribution and redistribution of national income.
For modern economic development, this topic is very relevant, since the economy can develop effectively and sustainably only if the basic macroeconomic proportion (between consumption and accumulation) corresponds to the natural level, determined by the socio-economic conditions of social production (development of productive forces, specific needs of society, etc.). P.).
Target course work– study of the essence and functions of enterprise finance in the conditions market economy, suggesting ways to strengthen financial condition.
The work solves a number of problems: to characterize the essence and functions of the enterprise’s finances, to analyze the enterprise’s finances, to suggest ways to improve the enterprise’s finances.
The object of scientific research will be the economic state of the limited liability company “Horns and Hooves” (hereinafter referred to as “Horns and Hooves LLC”).
The subject is the finances of an enterprise in the process of economic activity.
Research methods - historical and logical, analysis and synthesis, induction, deduction, expert assessments.
The work consists of an introduction, 3 chapters, 7 paragraphs, a conclusion and a list of references.
In the process of preparing and writing this work, the works of recognized experts in the field of financial analysis and financial management, legislative materials of the Russian Federation and International law on this topic, materials from periodicals, scientific and methodological literature, theoretical materials, statistical collections and articles from the Internet were used and summarized , and also carried out analytical studies based on the balance sheet and other forms of reporting.
Chapter 1. Theoretical aspects of enterprise finance
1.1. Essence, functions and organization of enterprise finances
In the process of development of market relations, non-state forms of farming arose: joint stock companies(open or closed), partnerships, cooperatives. These enterprises are characterized by a special way of generating funds for their operation, by forming an authorized capital or authorized fund.
The process of functioning of any enterprise is cyclical. Within one cycle, the necessary resources are attracted, combined in the production process, sales of manufactured products and obtaining final financial results. In a market economy, there is a shift in priorities in the objects and targets of the management system for a business entity. At the same time, enlarged and relatively independent economic objects that make up the scope of application general functions management are funds (more precisely financial resources), labor resources, means and objects of labor. In a centrally planned economy, priorities in the management of these objects, as a rule, were not set. This approach was understandable and quite natural. Total planning, centralization, and limited resources inherent in this type of economy provided for the introduction of strict funding
In a market economy, these restrictions are largely removed (limits are abolished, the role of centralized supply is reduced, etc.), and effective management involves optimizing the resource potential of the enterprise. In such a situation, the importance of effective management of financial resources sharply increases. How efficiently and expediently they are transformed into fixed and working capital, as well as incentives work force, depends on the financial well-being of the enterprise as a whole, its owners and employees. Financial resources in these conditions become of paramount importance, since they are the only type of enterprise resources that can be quickly transformed into any other type of resources. The role of financial resources is important at all levels of management, but it acquires particular importance in terms of enterprise development.
Finance is a system of economic relations during which the formation, distribution and use of centralized and non-centralized funds of funds take place in order to perform the functions and tasks of an economic entity and provide conditions for expanded reproduction and meet the social needs of personnel. Simplifying the above, we can say that enterprise finance represents monetary relations associated with the formation and distribution of financial resources, which are formed from sources such as: own and equivalent funds; mobilized in the financial market as a result of transactions with securities; arriving in the order of redistribution (2, p.15).
Enterprise finance is the main element in the structure financial system states.
The term "finance" is usually associated with the process of cash flow. This process takes place not only on a social scale, but also during the distribution of profits at an enterprise, the transfer of tax payments to state budget revenues, and the formation of various monetary funds.
Common to numerous and varied financial processes and
operations is that they all have a monetary form of expression. Monetary character is the main feature of the financial sphere.
However, finance is not money itself, but monetary relations through which the distribution and redistribution of the value of the gross social product occurs. As a result, cash incomes and savings are formed for enterprises and the state, which are used for expanded reproduction and satisfaction of social and other needs of society (5, p. 20).
In the structure of financial relations, the finances of enterprises occupy a decisive position, since they serve the main link of social production, where material wealth is created. The following groups of monetary relations can be distinguished as part of enterprise finance:
Related to the formation and use of trust funds at the enterprise (authorized fund, production development fund, incentive funds, etc.);
Arising between enterprises (in connection with the payment and receipt of fines for violation of contractual obligations, making share contributions by members of the association, their participation in the distribution of profits, etc.);
Emerging at enterprises with insurance organizations (in connection with the formation and use of various types of insurance funds);
Formed by enterprises with banks (in connection with receiving bank loans, their repayment and payment of interest on them, as well as in the case when an enterprise provides the bank with its available funds for temporary use for a certain fee);
Arising from enterprises with the state (in connection with payment in
tax budget, transfer of funds to various extra-budgetary funds);
Developing in enterprises with their higher management structures (16, p. 17).
The essence of finance as an economic category is reflected in its functions. There are two main opinions on this issue in the financial literature.
1. Enterprise finance performs 2 functions: distribution and control.
2. Finance has 3 functions: generating income (capital accumulation; making expenses (distribution); monitoring efficiency (28, p. 21).
The second position interprets the distribution function more broadly.
Through the financial mechanism, finances are distributed, that is, funds of funds are formed and used according to intended purpose(authorized fund, production development fund, material incentive fund, reserve fund, etc.).
The control function of finance allows you to find out how timely and completely financial resources are received by the relevant funds, and whether they are used effectively. The instrument for implementing the control function of finance is financial information. It consists of financial indicators, which are contained in the accounting, statistical and operational reporting of the enterprise. Financial indicators allow you to see various aspects of the enterprise’s work and evaluate the results of economic activities.
Thus, in terms of economic essence, enterprise finance represents monetary relations in the formation and use of monetary income and funds of enterprises.
The material carrier of financial relations are the financial resources at the disposal of enterprises and intended to satisfy its production and social needs. Financial resources are presented in the form of profits, taxes, contributions to social insurance, reserve and insurance funds (17, p. 45).
1.2. Financial resources of the enterprise
The financial resources of an enterprise are cash income, savings and receipts that are at the disposal of the enterprise. They are intended to fulfill financial obligations to the budget, banks, insurance and other organizations. In addition, financial resources serve to carry out expenses for expanded reproduction, and are also used to economically stimulate the enterprise’s employees. They are also material carriers of financial relations and are used in stock and non-stock forms (26, p. 78).
The sources of financial resources are the enterprise’s own funds and those attracted by it from various sources.
Initially, the formation of financial resources occurs at the time of establishment of the enterprise, when the authorized capital is formed. Its value shows the size of those fixed and circulating funds that are invested in the production process.
According to Article 14 of the Law, “the authorized capital of a company is made up of the nominal value of the shares of its participants. The size of the authorized capital of the company must be at least 100 times the minimum wage established by federal law on the date of submission of documents for state registration society. The size of the authorized capital of the company and the nominal value of the shares of the company's participants are determined in rubles. The authorized capital of a company determines the minimum amount of its property, which guarantees the interests of its creditors."
According to Article 15 of the Law, “a contribution to the authorized capital of a company can be money, securities, other things or property rights, or other rights that have a monetary value.”
According to Article 17 of the Law, “an increase in the authorized capital of a company is allowed only after its full payment... can be carried out at the expense of the company’s property, and (or) at the expense of additional contributions of the company’s participants and (or), if this is not prohibited by the company’s charter, at the expense of deposits third parties admitted into society."
According to Article 18 of the Law, “an increase in the authorized capital of a company at the expense of its property is carried out by decision of the general meeting of participants of the company, adopted by a majority of at least two-thirds of the total number of votes of the company... A decision to increase the authorized capital of a company at the expense of property can only be made on based on data financial statements of the company for the year preceding the year during which such a decision was made... The amount by which the authorized capital of the company is increased at the expense of the company’s property must not exceed the difference between the value of the company’s net assets and the amount of the authorized capital and reserve fund of the company.”
An increase in the authorized capital of a company due to additional contributions of its participants and contributions of third parties accepted into the company is regulated by Article 19 of the Law. " General meeting of the company's participants by a majority of at least two-thirds of the total number of votes of the company's participants...may decide to increase the authorized capital of the company by making additional contributions by the company's participants. Such a decision should determine the total cost of additional deposits, and also establish a uniform ratio for all participants in the company between the cost of an additional deposit and the amount by which the nominal value of its share is increased. This ratio is established based on the fact that the nominal value of a company participant’s share may increase by an amount equal to or less than the value of his additional contribution.”
At the time of registration of the company, the authorized capital must be paid by its participants at least half. The remaining unpaid part of the company's authorized capital is subject to payment by its participants during the first year of the enterprise's activity. If a company violates this obligation, it must either announce a reduction in its authorized capital and register its reduction in the prescribed manner, or cease its activities through liquidation.
Article 30 of the Law regulates the provisions related to the creation of reserve and other funds of the company.
In the future, financial resources are formed mainly from profits and depreciation charges. Along with them, the sources of financial resources are: proceeds from the sale of disposed property, various targeted revenues, payment for the maintenance of children in preschool institutions, mobilization of internal resources in construction, etc.
Significant financial resources, especially for newly created and reconstructed enterprises, can be mobilized in the financial market. This involves the sale of shares, bonds, other types of securities issued by the enterprise, as well as borrowed funds in the form of various loans.
In addition, enterprises can receive financial resources through redistribution (in the form of insurance compensation payments from insurance companies, from associations, concerns and industry structures of which they belong). Basic financial resources are classified in the following way:
Formed at the expense of own and equivalent funds. Formed from income (profit from financial transactions, profit from core activities and other types of income) and receipts (depreciation charges, proceeds from the sale of retired property, shares and other contributions of members of the workforce);
Mobilized in the financial market (sale of own shares and other types of securities, credit investments);
Receipts in the order of redistribution (insurance compensation for incurred risks, dividends and interest on securities of other issuers, budget subsidies, other types of resources) (14, p. 86).
Financial resources generated from various sources enable the enterprise to timely invest in new production, ensure, if necessary, expansion and technical re-equipment operating enterprise, finance research, development and implementation.
Financial support for reproduction costs can be carried out in three forms: self-financing, lending and government financing (26, p. 54).
Self-financing is based on the use of the enterprise's own financial resources. In case of insufficiency own funds it can either reduce some of its expenses or take advantage of funds raised in the financial market through securities transactions.
Lending is a method of financial support for production costs, in which costs are covered by a bank loan provided on the basis of repayment, payment, and urgency.
State funding is provided on a non-repayable basis from budgetary and extra-budgetary funds. Through such financing, the state purposefully redistributes financial resources between the production and non-production spheres, sectors of the economy and territories of the country, between forms of ownership, individual groups and segments of the population, etc.
In practice, all of the above forms of cost financing can be used simultaneously. The main thing is to achieve between them the optimal of this period ratios. This is possible only on the basis of an active financial strategy carried out by the financial services of the enterprise. The optimal ratio between equity and borrowed funds is considered to be 2:1. In other words, own financial resources should exceed borrowed ones by 2 times. In this case, the financial position of the enterprise is considered stable.
The use of financial resources is carried out by the enterprise 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 using loans, repayment of previously taken loans, insurance payments);
Investment of own funds in capital costs for expansion of production and its technical renovation;
Investing financial resources in securities of other companies purchased on the market;
Direction of financial resources to the formation of monetary funds of an incentive and social nature;
Use of financial resources for charitable purposes, sponsorship (29, p. 41).
To ensure uninterrupted financing of the production process great importance have financial reserves. In the conditions of transition to a market economy, their role increases significantly. Financial reserves are capable of ensuring a 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), by their management structures (based on regulatory contributions), by specialized insurance organizations (by the insurance method) and by the state (reserve funds).
At the expense of financial resources, financial funds are formed, the purpose of which is to prepare conditions that ensure the satisfaction of constantly changing social needs.
1.3. The essence of financial management and the need for its application
With the transition to a market economy, the role of financial services in finding financial sources for enterprise development increases. The search for effective directions for investing financial resources, transactions with securities, and timely attraction of borrowed funds become the main ones in managing the finances of an enterprise, forming the so-called “financial management”. Management of financial resources and cash flows of an enterprise is one of key elements the whole system modern management, which has a special, priority significance for today's Russia. Financial management is a type professional activity aimed at managing the financial and economic functioning of an enterprise based on the use modern methods. It includes:
Development and implementation of the financial policy of the enterprise using various financial instruments;
Making decisions on financial issues, their specification and development of implementation methods;
Information support through the preparation and analysis of financial statements of the enterprise;
Assessment of investment projects and formation of an investment portfolio, assessment of capital costs, financial planning and control;
Organization of the apparatus for managing the financial and economic activities of the enterprise (2, p. 23).
Financial management methods allow you to assess the risk and profitability of a particular method of investing money, the efficiency of an enterprise, the rate of capital turnover and its productivity.
The task of financial management of an enterprise is to develop and practical use methods, means and tools to achieve the goals of the enterprise as a whole. In this case, the following goals are achieved: maximizing profit, achieving a stable rate of profit in the planning period, increasing enterprise income. Ultimately, all these goals are aimed at increasing the income of business owners (17, p. 96).
The tasks of financial management include finding the optimal balance between short-term and long-term development goals of the enterprise and decisions made within the framework of financial management. For example, a company may refuse to invest in the renewal of fixed capital in order to obtain high current profits, but this will subsequently affect the competitiveness of its products and lead to a decrease in production profitability, and therefore to a deterioration in the company’s position in the market.
Long-term financial management primarily takes into account risk and uncertainty. Ultimately, the main thing in the financial management of an enterprise is making decisions to ensure the most efficient movement of financial resources between the enterprise and its sources of financing, both external and internal.
Managing the flow of financial resources expressed in cash is a central issue in the financial management of an enterprise. The flow of financial resources consists of cash:
Received as a result of the financial and economic activities of the enterprise;
Purchased on financial markets through loans;
Returned to the enterprise as payment for invested capital in the form of interest and dividends;
Enterprises invested and reinvested in the development of economic activities;
Aimed at paying tax payments (9, p.23).
The functions and methods of financial management can be divided into 2 blocks: a block on external financial management and a block on internal accounting and financial control.
The external finance management block involves the implementation of the company’s relations with legal and economically independent market entities acting as clients, lenders, suppliers and buyers.
The internal accounting and financial control unit includes control over the maintenance of production records, cost estimates, control over the payment of wages and taxes, collection and processing of accounting data for internal financial management and for the provision of reporting data, preparation and control over the accuracy of financial statements ( balance sheet, income statement, cash flow statement, etc.), analysis of financial statements and use of its results for external and internal audits, assessment of the financial condition of the enterprise for the current period and its use for making operational management decisions and in for planning purposes.
The most important decisions made in the field of financial management of an enterprise relate to the issues of optimizing the structure of assets, determining the needs for their replacement or liquidation, developing methods and means for implementing investment policy, determining the needs for financial resources, and managing a securities portfolio.
Investment policy involves 2 types of financial management: long-term and short-term, which have their own character traits. Short-term investment decisions are aimed at determining the capital structure of an enterprise for the current period, which is reflected in its balance sheet. Long-term investment decisions, called strategic, are aimed at ensuring the successful functioning of the enterprise in the future. They require the use of modern methods of analysis to select optimal directions and paths for the development of an enterprise for the future, taking into account objective laws and the specifics of economic development (18, p. 76).
Decisions regarding the choice of sources of financing are very important for an enterprise. It is necessary to develop and implement a policy for the optimal combination of own and borrowed funds to ensure the most efficient functioning of the enterprise, to develop and implement a policy for attracting capital on the most favorable terms and to develop an optimal dividend policy.
Financial management is an organization of financial management on the part of financial services that allows you to attract additional financial resources on the most favorable terms, invest them with the greatest effect, and carry out profitable transactions in the financial market by buying and resell securities.
The choice of source for covering the costs of an enterprise when there is a lack of its own financial resources depends on the purpose of investing funds. To cover short-term and medium-term working capital needs, it is advisable to use loans from credit institutions. When making large capital investments in 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 areas 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 professionally master the technique of performing financial transactions.
When investing money in securities, financial services employees must comply with a number of requirements in order to achieve the greatest profitability from such operations. These requirements are:
When buying shares (bonds) of other enterprises, it is necessary to invest only excess financial resources, and the enterprise must always have cash in case of upcoming payments. Cash can either be in the form of cash reserves in a business's bank account or embodied in highly liquid government securities;
Before purchasing shares (bonds) of any company, it is necessary to comprehensively study its activities and analyze the dynamics of its financial results. It is better not to rely on your own analysis, but to get advice from reliable experts. It is not recommended to make a transaction having only confidential, unverified information about the state of affairs of the enterprise whose securities are planned to be purchased. You cannot buy shares of companies that do not publish earnings reports;
You need to invest in the securities of several companies, and it is better if they represent different sectors of the economy. Everyone's investment financial resources only one object may fail if this enterprise fails or finds itself in a difficult economic situation;
Must be studied regularly financial reports those enterprises in whose shares (bonds) funds are invested. When considering reporting data, one should not limit oneself only to the indicators of balance sheet and net profit, its distribution, the amount and level of dividends; it is necessary to determine and study the dynamics of such coefficients as the rate of return on share capital, the level of profitability, the rate of turnover of advanced funds, the ratio of equity and borrowed funds, etc. The state of affairs at the enterprise of interest to the investor must be compared with the general situation in the corresponding sector of the economy;
It is not recommended to refuse to purchase shares (bonds) just because of low interest dividends. Sometimes it is better to go for relatively low dividends if the stability and long-term nature of their receipt is confirmed. For example, in countries with developed market economies, fixed income securities are most popular among investors. Investment of funds is considered appropriate if the rate of return on investment exceeds the percentage paid by the credit system for the use of temporarily free funds (26, p. 29).
The role of financial policy in enterprise management is determined by the fact that it affects all aspects of its economic activity- scientific and technical, production, logistics, sales - and reflects in a concentrated form the influence of numerous internal and external factors. Within the framework of a unified financial policy of an enterprise, sources of financial resources and their distribution within the company are determined.
It is difficult to determine specific forms and methods of implementing financial policy. And although within individual firms there are significant differences in the use of specific forms and methods of financial policy, we can talk about its general features, principles and tools. The most important of them are: distribution and redistribution of profits, financing and lending to the activities of various divisions, determining the structure and nature of intra-company financial transactions and settlements on them.
1.4. Financial planning at the enterprise
The financial plan of an enterprise is interconnected with other aspects of planning the economic activities of the enterprise. These include plans for the sale of products, for raw materials, for production, for advertising, for capital investments, for attracting (returning) funds, for the distribution of income, as well as expense estimates (4, p. 32).
The direct basis of the financial plan is forecast calculations for the sale of products to consumers or a sales plan based on orders, forecasts of demand for products and goods, levels of sales prices for them, and other factors of market conditions. Based on sales indicators, production volumes, costs of manufacturing products, carrying out work and providing services, as well as profit and other indicators are calculated.
The purpose of the enterprise’s financial plan is, on the one hand, to forecast the medium-term financial outlook, and on the other, to determine the current income and expenses of the enterprise. The financial plan is drawn up by the enterprise for the year with distribution by quarters. It reflects income and expenses by item and proportions in the distribution of funds.
In addition to the balance of income and expenses financial plan contains calculations of a number of fundamental indicators: profit from industrial activities, depreciation charges for the restoration of fixed assets, receipts of funds through long-term and medium-term lending, bank interest on loans, financial results from other types of activities, etc.
The composition of the indicators of the planned balance of income and expenses of an enterprise is a specific system that allows, within each planning period, to determine the sources of costs, their ratios, the degree and direction of use, the distribution of sources and balance.
Thus, the remaining part of the enterprise’s profit after paying taxes is used for the needs of the enterprise, including the creation of a financial reserve, financing of capital investments and the increase in working capital, interest payments to banks for the credit resources they provide, dividends to the founders and for other purposes.
Financing of capital investment costs is carried out at the enterprise through depreciation charges for the complete restoration of fixed assets, involvement in the investment process of excess stocks of equipment, machinery and materials, profits allocated for reinvestment, and from other sources.
Of utmost importance for the success of financial management of an enterprise is the analysis of the implementation of planned plans, first of all, the analysis of financial reporting indicators, that is, the identification of relationships and interdependencies between various indicators of its financial and economic activities included in the reporting. The results of the analysis allow stakeholders and organizations to make decisions based on an assessment of the current financial situation and the activities of the enterprise in previous years and its possibilities for the coming years.
Financial reporting is an important tool for financial management. The main forms of financial statements are: balance sheet, income statement, statement of changes in financial position and statement of cash flows, as well as notes to the statements.
The most important types of analysis for financial management purposes are the study of reporting, horizontal, vertical, trend analysis of reporting, as well as analysis of financial ratios.
The main reporting ratios used in financial management:
Liquidity ratios: current ratio, quick ratio and net current assets;
Business activity ratios (efficiency of resource use): asset turnover, accounts receivable turnover, equity turnover;
Profitability ratios: profitability of all assets of the enterprise, profitability of sales, return on equity;
Capital structure coefficients: ownership coefficient, financial dependence coefficient, creditor protection coefficient (1, p. 9).
An important tool of financial management is not only the analysis of the level and dynamics of these ratios in comparison with a certain base, but also the determination of the optimal proportions between them in order to develop the most competitive financial strategy.
When conducting a financial analysis of an enterprise’s activities, it is also necessary to take into account the dynamics of its financial stability indicators, since the strength of the enterprise’s finances acts as a criterion for its market position. The key to the survival of an enterprise is its stability. In order for an enterprise to operate effectively in the market and develop, it, first of all, needs stable cash revenues sufficient to pay suppliers, creditors, employees, local authorities, and the state. After all the calculations and fulfillment of obligations, profit is also necessary, the volume of which should not be lower than planned.
Despite the simplicity and efficiency of financial ratios, when making financial decisions, it is necessary to take into account the limitations of these indicators. When conducting a financial analysis of the economic activities of an enterprise, the following points should be taken into account.
An analysis of an enterprise's cash flow must be based on complete and reliable information reflected in the financial statements, some of which are mandatory, and some of which are used for the successful organization of the financial manager's activities.
The most important components of the analysis of the cash flow of an enterprise are the analysis of the turnover of fixed assets, working capital and financial results.
When analyzing fixed assets, the starting point is their monetary valuation, which includes initial, replacement, residual and market values. Fixed assets of an enterprise, as well as turnover from their sale, are subject to taxation. At the same time, enterprises receive tax benefits to update fixed assets. Reproduction of fixed assets includes their input, disposal and growth. Of great importance is the process of expanded reproduction of fixed assets, meaning their expansion and renewal on a new technological basis. Reproduction of fixed assets is ensured by capital investments made in the form of real investments
In the analysis of working capital, the main place is occupied by inventories. They are usually assessed at average actual purchase prices (13, p. 16).
The main part of the costs for the production and sale of products, works and services is included in the cost price, production and distribution costs. Part of the costs is included in financial results. The list of costs included in the cost is determined by regulatory documents. By saving costs and rational use of material resources, an increase in profits is ensured.
The receipt of revenue from the sale of products largely depends on the payment procedure between the supplier and the consumer; the forms of payment are established by them in the agreement or contract. The most common payments are by payment orders, less often by checks and letters of credit.
With non-cash payments, the shipment and payment of goods do not coincide in time, which leads to the appearance of accounts payable or receivable, which are subject to careful analysis.
Effective use of working capital means accelerating their turnover and releasing them from circulation, which is an additional source of growth in working capital.
Target entrepreneurial activity- making a profit, therefore the final stage of analyzing the cash flow of an enterprise is the analysis of financial results.
The financial plan of the enterprise ensures the interconnection of financial indicators, the distribution of income and the formation of funds of funds. A strategic financial plan is one of the trade secrets of an enterprise. Planning of financial resources and investments guarantees the fulfillment of obligations to the budget, banks and provides financing for business activities.
Let us specify the theoretical postulates using the example of the limited liability company “Horns and Hooves”.
Chapter 2. Analysis of the financial organization of an enterprise (using the example of Horns and Hooves LLC)
2.1. General characteristics of the enterprise, organizational structure and main activities
The object of this analysis is the enterprise – Horns and Hooves LLC. Organizational and legal form – Limited Liability Company. Form of ownership – private property.
The company also has 2 separate divisions in Volgograd and Astrakhan. Addresses separate divisions: 400078, Volgograd, Kuznetsova st., 20, 414040 Astrakhan, st. Kommunisticheskaya, 23/ st. Raskolnikova 6 "a"
Horns and Hooves LLC is the regional representative of PF SKB Kontur CJSC in the Volgograd region, the head Service Center for servicing subscribers of the Kontur-Extern System (developed by PF SKB Kontur CJSC, Yekaterinburg), operating on the basis Licenses B030 No. 0053.
Basis for activity: Agreement with CJSC PF SKB Kontur, License issued by CJSC PF SKB Kontur for the right to operate as a Registration Center for the Kontur-Extern system in the Volgograd region
The implementation of the System on the territory of the Volgograd region began in October 2003, and since January 2004 it has been operating in commercial operation mode. During this time, more than five thousand enterprises in Volgograd and the region connected to the System, which transferred more than 200,000 electronic documents using the System.
The main document management services in the System are:
Filing tax and accounting reports
Information about the status of your personal account
Unformalized document flow
Submitting reports to the Pension Fund
Submitting reports to statistical authorities
The purpose of the activities of LLC "Horns and Hooves"
· Registration of subscribers in the Kontur-Extern System.
· Maintenance of performance tax authorities in relation to the Kontur-Extern System.
· Search for subsidiary remote registration centers (subsidiary UCRs) in the Volgograd region.
· Consulting support for subscribers of the Kontur-Extern system by phone hotline and by email.
· Providing additional services related to development job descriptions and regulations for working with confidential information at the workplace of a subscriber of the Kontur-Extern system.
· Provide assistance in promoting the products of JSC PF SKB Kontur, as well as study the territory of the Volgograd region in order to identify new customers.
Organizational structure Horns and Hooves LLC looks like this
Rice. 1. Organizational structure of Horns and Hooves LLC
2.2. Financial and economic analysis of the activities of the enterprise LLC "Horns and Hooves"
Liquidity and solvency assessment
The purpose of this analysis is to determine the company’s ability to pay its short-term obligations within a year. A detailed analysis of the liquidity and solvency of an enterprise can be carried out using absolute and relative indicators. (3, p. 78)
Of great importance for the calculation of a number of analytical coefficients is the indicator of the value of own working capital, which characterizes that part of the enterprise's own capital that is the source of covering current assets. The amount of own working capital is numerically equal to the excess of current assets over current liabilities, therefore any changes in the composition of its components directly or indirectly affect the size and quality of this value. As a rule, a reasonable increase in own working capital is considered a positive trend, but there may be exceptions. (3, p. 13) For example, the growth of this indicator due to an increase in bad debtors is unlikely to improve high-quality composition own working capital. We will take Table 1 as the basis for the calculations (the data for the calculations are taken from Appendix 2-5).
The absolute liquidity ratio shows what part of the short-term debt the organization can repay in the near future. Characterizes the solvency of the organization as of the balance sheet date. (20, p. 74) For this enterprise, the value of the absolute liquidity ratio at the beginning of 2009 was 0.067; at the end of 2008, this figure decreased by 0.06 and amounted to 0.007. The coefficient value of 0.007 indicates that the available funds and securities are not enough to cover the current liabilities of the enterprise.
The quick liquidity ratio is used to pay off urgent obligations. (20, p. 42) At the beginning of 2009, the indicator was 0.092, by the end of the next year it changed to -0.085 and the indicator was 0.007, the general conclusion is that this dynamics negatively affects the solvency of the enterprise, i.e. To. coefficient less than 0.6. This indicates a high financial risk associated with the fact that the company is not able to pay its bills.
The current ratio is used to assess the financial stability of an enterprise. (20, p.13) For this enterprise, the indicator at the beginning of 2008 is 1.23, during the next year there is a slight increase in the coefficient by 0.07 and at the beginning of 2009 it is 1.30, this value is enough for the indicator to be normal, Thus, the conclusion is that the company has enough working capital to cover its short-term obligations. The company is financially stable.
The current liquidity ratio is less than the norm, which demonstrates the lack of current assets to cover short-term liabilities.
The data in Table 4 indicate a low level of liquidity of the constituent elements of current assets; it is significantly lower than the established standard values for all indicators.
The general liquidity indicator is used when choosing the most reliable partner based on reporting. (20, p. 16) At the beginning of 2009, the indicator was 0.42, then there was a slight deterioration by 0.03 and at the end of 2009 the indicator was 0.39 General conclusion : for this enterprise this indicator is not normal.
To explain the above calculations, we present the following description. The coverage ratio reflects whether the enterprise has enough working capital to pay off its short-term obligations during the year. The generally accepted standard for the value of this indicator is in the range from 1 to 2. (20, p. 18) That is. we can say that this company does not have enough working capital to pay off short-term obligations, this once again confirms the current liquidity ratio.
Summarizing the data for calculating the quick liquidity ratio, we can say that even with the help of accounts receivable, the company is not able to pay off its debts, which also confirms its unstable financial position.
In the conditions of the Russian economy, the advisability of assessing the liquidity of enterprises through general and current liquidity ratios raises doubts. It seems that in most cases it is more reliable and objective to assess liquidity only by the cash indicator. However positive points there are in the work of the enterprise, this can be seen from the analysis of changes in ratios: during the analyzed period the standard was not achieved, but growth was outlined, in particular, the absolute liquidity ratio by the end of the period increased slightly, but increased. This means that the company will be able to repay all its debt obligations in the future.
Assessment of enterprise business activity and profitability
To implement this direction, various indicators can be calculated that characterize the efficiency of using material, labor and financial resources. The main ones are production indicators, capital productivity and turnover indicators. These indicators are of great importance for assessing the financial position of the enterprise, since the rate of turnover of funds, i.e. the speed of their conversion into monetary form has a direct impact on solvency; in addition, an increase in the speed of turnover of funds is reflected in an increase in the production potential of the company, which generally affects the efficiency of all production. (6, p. 12)
The results of calculating the capital productivity indicator indicate that this fact (decrease in the turnover of fixed assets) may be associated with obsolescence and wear and tear of production equipment, i.e. we can say that technical level fixed assets of the studied object is at a low level.
To clarify the conclusions about the turnover of funds and the financial condition as a whole of this subject under study, we will consider a number of particular indicators of the turnover of current assets and current liabilities (Table 5).
Table 5 Business activity assessment
| Coefficient/calculation formula | Changes |
||
| 1 | 2 | 3 | 4 |
| Revenue from sales (line 010 f. No. 2) | 1268 | 4066 | 2798 |
| Net profit (line 140-line 150) | 168 | 594 | 426 |
| Capital productivity (line 010f. No. 2/(line 120beginning+line 120end)/2) | 634 | 2033 | 1399 |
| Turnover of funds in calculations (in revolutions) (line 010f. No. 2/line 240) | 0 | 214 | 214 |
| Turnover of funds in settlements (in days) (360 days/item 4) | 0 | 1,68 | 1,68 |
| Inventory turnover (in revolutions) (line 020 f. No. 2/(line 210 start + line 210 end)/2) | 0,48 | 1,52 | 1,04 |
| Inventory turnover (in days) (360 days/item 6) | 750 | 236,84 | -513,16 |
| Short circuit turnover (in days) (((line 610+line 620) beginning+(line 610+line 620)end/2)360/line 020 f.No.2) | 0 | 0 | 0 |
| Duration of the operating cycle (item 5+item 7) | 750 | 238,52 | -511,48 |
| Duration of the financial cycle (clause 9-clause 8) | 750 | 238,52 | -511,48 |
| Redemption of DZ (((line 240beg.+line 240end)/2)/line 010f.No.2) | 0,007 | 0,002 | -0,005 |
| Equity turnover ((line 010f. No. 2/(line 490beg.+line 490end)/2) | 2,91 | 9,36 | 6,45 |
| Turnover of total capital (line 010f. No. 2 / average balance sheet total) | 0 | 0 | 0 |
Having examined the data in Table 5, it should be noted that the turnover of current assets has increased. In general, this trend is positive, but in the case when this turnover is due to an increase in funds.
Based on the indicators discussed above, we will analyze the indicators characterizing the main stages of cash circulation, during production activities enterprises. These indicators are: the duration of the operating cycle and the duration of the financial cycle. The reduction in operating cycle times can be seen as a positive trend.
It is obvious that different types of current assets have different liquidity, which refers to the time period required to convert a given asset into cash, and the costs of ensuring this conversion. Only cash has absolute liquidity. In order to pay suppliers' bills on time, an enterprise must have a certain level of absolute liquidity. As studies of the liquidity of this enterprise have shown, the object under study has a fairly low solvency, due to the small share of cash in assets, so a small additional influx could be extremely useful.
The efficiency of the enterprise’s economic activities and economic expediency its functioning is directly related to its profitability. (21, p. 18) Let's consider the structure of working capital (Table 6).
Table 6 Structure of working capital, thousand rubles.
The load factor shows the amount of working capital per unit of products sold: according to Table 6 it is clear that in 2009 this indicator increased.
As a result, after analyzing the values of the given coefficients, we can conclude that working capital was used most efficiently in 2009.
The indicator of availability of own working capital is also important for the enterprise. It is calculated as the ratio of the amount of own working capital to the total amount of working capital. (21, p. 19)
In the process of analysis, it is necessary to study in more detail the composition, structure and dynamics of fixed capital.
Long-term assets, or fixed capital, are investments for long-term purposes in real estate, bonds, stocks, mineral reserves, joint ventures, intangible assets, etc. (21, p. 22)
Table 8 Composition and dynamics of fixed capital
The profitability of production and assets is important characteristic the efficiency of the company's use of its assets and capital. The main indicators of profitability are: profitability of products, profitability of core activities, return on equity, and others,
Table 9 Calculation of profitability
The profitability indicators calculated in all options are positive values, which characterizes the enterprise as financially stable and profitable.
In addition, there are indicators that allow us to judge and evaluate the composition and structure of fixed assets:
1. Renewal coefficient (K rev), characterizing the share of new funds in their total value at the end of the year:
To obn = cost of received fixed assets / cost of fixed assets at the end of the period.
2. Period of renewal of fixed assets (T renew):
T obn = cost of fixed assets at the beginning of the period / cost of received fixed assets.
3. Retirement rate (Q):
Kv = cost of retired fixed assets / cost of fixed assets at the beginning of the period.
4. growth rate (K pr):
To pr = cost of increase in fixed assets / their value at the beginning of the period. (5, p.18)
We summarize the analysis of OS use in Table 10.
Table 10 Analysis of the use of fixed assets
Analysis of the calculated coefficients shows that in 2009. the structure of fixed capital did not increase, because renewal and growth coefficients are equal to zero, there has been no disposal of fixed assets.
In contrast to the concepts of “solvency” and “creditworthiness”, the concept of “financial stability” is broader, as it includes an assessment of various aspects of the enterprise’s activities. (8, p. 16)
A general indicator of the financial stability of an enterprise is the surplus or lack of sources of financial resources for the formation of reserves and costs. (8, p. 16)
Important indicators characterizing the financial stability of an enterprise are:
Financial autonomy (independence) coefficient or specific gravity equity capital in its total amount;
Financial dependence ratio (share of borrowed capital in the total balance sheet currency);
Leverage of financial leverage or financial risk ratio.(8, p.20)
Let's look at these indicators in Table 11.
ZZ (inventories and costs) = inventories + VAT on purchased values;
SOS (own working capital) = capital and reserves - non-current assets;
CF (operating capital) = capital and reserves + long-term liabilities – non-current assets;
| Indicators | At the beginning of 2009 | At the end of 2009 |
| ZZ (p.210+p.220) | 861 | 2951 |
| SOS (p.490-p.190) | 178 | 691 |
| CF (p.490+p.590-p.190) | 178 | 691 |
| VI (p.490+p.510+p.520-p.190) | 178 | 691 |
| Fs=SOS – ZZ | -683 | -2260 |
| Ft=CF – ZZ | -683 | -2260 |
| Fo=VI – ZZ | -683 | -2260 |
VI (value of sources) = capital and reserves + long-term liabilities + loans and credits - non-current assets.
The Fs indicator has a negative value at the beginning of 2008 and amounts to -683; at the end of 2009 it does not change; therefore, the reserves of this enterprise are not enough for its own working capital. Indicator Ft and Fo - these indicators also have a negative value.
Conclusion: according to Table 11, we can conclude that the financial condition of this enterprise is unstable (all F<0).
We will consider the calculation and analysis of market stability coefficients using Table 12.
Table 12 Calculation of market (financial) stability indicators
| Index | For the beginning of the year | At the end of the year | Change |
| 1 | 2 | 3 | 4 |
| U1-debt-to-equity ratio (line 610 + line 620 / line 490) | 4,28 | 3,31 | -0,97 |
| U2 – coefficient of provision with own sources of financing (line 490-line 190/line 290) | 0 | 0 | 0 |
| U3 – financial independence coefficient (line 490/line 300) | 0,19 | 0,23 | 0,04 |
| U4 – financing coefficient (line 490/line 590+line 610+line 620) | 0 | 0 | 0 |
| U5 – financial stability coefficient (line 490/line 300) | 0,19 | 0,23 | 0,04 |
As Table 12 shows, the ratio of borrowed equity at the beginning of 2009 was 4.28, over the next year the indicator decreased by 0.97 and amounted to 3.31, which does not satisfy the normal constraint (U £ 1). Consequently, the value of the indicator is influenced by the following factors: low turnover of enterprise funds, unstable demand for products sold, lack of established supply and sales channels. This indicator must be considered in conjunction with the equity ratio U2. For this enterprise, U2 is equal to 0. The indicator does not meet the standard value, so the organization depends on borrowed sources of funds when forming its current assets. The value of the financial independence coefficient U3 at the beginning of 2009. equal to 0.19, over the next year the indicator increased by 0.04 and amounted to 0.23, but the indicator is below the critical point, which indicates an unfavorable financial situation. This conclusion is confirmed by the value of the financing ratio. The financial strength ratio is well below the alarming limit. Thus, all indicators of financial stability do not meet the recommended values and their dynamics are negative.
The higher the level of the first indicator and the lower the second and third, the more stable the FSP.
Thus, analysis of the coefficients and assessment of the dynamics of their changes allows us to draw the following conclusions: the enterprise depends on external investors, is unable to maintain the level of its own working capital and replenish working capital from its own sources. The company is financially unstable.
Chapter 3. Ways to improve financial organization
3.1. The main ways to strengthen the finances of an enterprise
Due to the fact that the finances of enterprises are currently in a state of crisis, the priority task for the state and enterprises is to strengthen the finances of enterprises and, on this basis, to stabilize the finances of the state. Without its implementation, other problems cannot be solved. The main ways to strengthen the finances of enterprises are related to optimizing the funds they use and eliminating their deficit.
The most important areas for improving financial work at enterprises are the following:
Systematic and ongoing financial analysis of their activities;
Organization of working capital in accordance with existing requirements in order to optimize financial condition;
Optimization of enterprise costs based on an analysis of the interaction of the cost-revenue-profit relationship;
Optimization of profit distribution and selection of the most effective dividend policy;
Optimization of the property structure and sources of its formation in order to prevent an unsatisfactory balance sheet structure;
Development and implementation of the enterprise's strategic financial policy.
The main goal of financial analysis is to obtain several key (the most informative) parameters that give an objective and accurate picture of the financial condition of the enterprise, its profits and losses, changes in the structure of assets and liabilities, and in settlements with debtors and creditors. At the same time, the analyst and manager (manager) may be interested in both the current financial state of the enterprise and its immediate or long-term prospects, that is, the expected parameters of the financial state.
The efficiency of using working capital depends on many factors, which can be divided into external ones, which have an impact regardless of the interests of the enterprise, and internal ones, which the enterprise can and should actively influence. At the present stage of economic development, the main external factors include such as the crisis of non-payments, high taxes, and high bank loan rates. The crisis in the sales of manufactured products and non-payments lead to a slowdown in the turnover of working capital. Therefore, it is necessary to produce products that can be sold quickly and profitably, stopping or significantly reducing the production of products that are not in current demand. In this case, in addition to accelerating turnover, the growth of accounts receivable in the assets of the enterprise is prevented.
An important condition for increasing the efficiency of using working capital is the rational organization of inventories. The main ways to reduce inventories come down to:
Rational use;
Liquidation of excess stocks of materials;
Improving standardization;
Improving supply organization.
An important role belongs to improving the organization of warehouse management.
Reducing the time spent by working capital in work in progress is achieved by improving the organization of production, improving the equipment and technology used, improving the use of fixed assets, especially their active part, and saving on all items of working capital.
The presence of working capital in the sphere of circulation does not contribute to the creation of a new product. Excessive distraction of them into the sphere of circulation is a negative phenomenon. The most important prerequisites for reducing investments in working capital in this area are:
Rational organization of sales of finished products;
Application of progressive forms of payment;
Timely execution of documentation and acceleration of its movement;
Compliance with contractual and payment disciplines.
A necessary condition for making a profit is a certain degree of development of production, ensuring that the proceeds from the sale of products exceed the costs of its production and sales. The components of the main factor chain that forms profit - “costs - production volume - profit” - must be under constant attention and control. This problem is solved on the basis of organizing cost accounting using the direct costing system, the importance of which is increasing in connection with the transition to a market economy. The features of this system are:
Dividing costs into fixed and variable;
Connection of production and financial accounting;
Multi-stage preparation of income statements;
Development of methods for economic-mathematical and graphical presentation and analysis of reports for forecasting net income.
The profit distribution mechanism should be structured in such a way as to contribute in every possible way to increasing production efficiency and stimulating the development of new forms of management.
One of the most important problems of profit distribution both before the transition to market relations and in the conditions of their development is the optimal ratio of the share of profit accumulated in budget revenues and remaining at the disposal of business entities. An economically sound profit distribution system must, first of all, guarantee the fulfillment of financial obligations to the state and maximally provide for the production, material and social needs of enterprises. After paying all mandatory payments, net profit remains, part of which can be used for production and social development society, and the other - to pay interest on bonds, as well as to the reserve fund. Payments to employees in the form of cash awards or shares are possible in accordance with a certain percentage provided for by the charter. The remaining net profit is used to pay dividends to shareholders. The board of directors, based on the financial condition of the company, the competitiveness of its products and development prospects, makes a decision on the specific ratio of net profit distributed in these areas. It is possible that in certain periods the profit will not be used to pay dividends to shareholders, but will go in larger amounts to the production and social development of the workforce and other purposes.
The financial condition of an enterprise is characterized by the placement and use of funds (assets) and the sources of their formation (liabilities). To prevent an unsatisfactory balance sheet structure, it is necessary to monitor changes in the structure of property and the sources of its formation and take measures aimed at improving the structure: the optimal ratio of the enterprise's own and borrowed funds, reducing the shares of receivables and payables, reducing unjustified reserves of material resources, etc.
In the conditions of market relations, there is an objective need to determine trends in the financial condition, orientation in financial opportunities and prospects, and assessment of the financial condition of other economic entities. The company needs to develop an internal financial strategy. It includes different methods and actions to achieve the main strategic goal, namely:
· formation of financial resources and centralized strategic management of them;
· identifying critical areas and focusing on their implementation of efforts, maneuverability and use of reserves by the financial management of the enterprise;
· ranking and step-by-step achievement of goals;
· compliance of financial actions with the economic condition and material capabilities of the enterprise at each period of time;
· creation and preparation of strategic reserves;
· taking into account the economic and financial capabilities of your competitors;
· identification by the head of the threat from competitors, mobilization of the main forces to eliminate it and skillful selection of areas of financial transactions;
· maneuvering and fighting for the initiative to achieve decisive superiority over competitors.
The financial strategy is developed taking into account the risk of non-payments, inflation surges and other force majeure circumstances. It must correspond to production tasks and, if necessary, be adjusted and changed. Control over the implementation of the financial strategy ensures verification of income receipts and their economical and rational use. Well-established financial control helps to identify internal reserves, increase the profitability of the economy, increasing cash savings.
The strategy for achieving private goals consists of the skillful use of financial transactions aimed at ensuring the implementation of the main strategic goal.
The objectives of the financial strategy are:
Study of the nature and patterns of financial formation in market economic conditions;
Development of conditions for the preparation of possible options for the formation of financial resources of the enterprise;
Determination of financial relationships with suppliers and buyers, budgets of all levels, identification of reserves and mobilization of enterprise resources for the most rational use of production capacities, fixed assets and working capital;
Providing the enterprise with financial resources;
Ensuring the effective investment of temporarily free funds of the enterprise in order to obtain maximum profit;
Determining ways to implement a successful financial strategy and strategic use of financial opportunities, comprehensive training of enterprise personnel to work in market conditions.
3.2. Forecast of the financial condition of the enterprise
After conducting a financial analysis of the enterprise, we can suggest the following.
For financial recovery, an enterprise must adhere to the goals set by external management.
Solvency should be restored, because According to the results of the analysis, there are prerequisites for this.
The only acceptable means of restoring solvency is to increase the current assets of the enterprise at the expense of the results of economic activities while simultaneously increasing the passive item “Profit”. Thus, the criterion for restoring solvency is the receipt in the forecast period of profit in the amount necessary to ensure a twofold excess of current assets over current liabilities.
The profitability of an enterprise's funds or their sources is determined both by the pricing policy of the enterprise and the level of production costs of sold products, and by business activity, measured by the turnover of funds or their sources, as well as the profitability of activities.
Ways to increase the profitability of funds or their sources: with low sales profitability, it is necessary to strive to accelerate the turnover of capital and its elements and, conversely, low business activity of an enterprise determined by one reason or another can be compensated only by reducing production costs or increasing product prices, i.e. .e. increasing profitability of sales.
Undoubtedly, the company needs to reduce the amount of receivables and payables, but it should also prevent the growth of these indicators.
To do this you should:
If possible, focus on increasing the number of orders in order to reduce the risk of non-payment, which is significant if there is a monopoly customer;
Monitor the status of settlements on overdue debts;
Timely identify unacceptable types of receivables and payables, which, first of all, include: overdue debts to suppliers and overdue debts from customers for more than three months, overdue debts for wages and payments to the budget, extra-budgetary funds.
Since a positive factor of financial stability is the presence of sources for the formation of reserves, and a negative factor is the amount of reserves, the main way out of a crisis financial situation will be: replenishment of sources for the formation of reserves and optimization of their structure, as well as a reasonable reduction in the level of reserves.
A less risky way of replenishing sources of reserve formation should be considered an increase in real equity capital (net assets) due to an increase in profits and profitability, repayment of debt of participants (founders) for contributions to the authorized capital. The main form of increasing the equity capital of an enterprise should be the distribution of net profit to reserve funds formed in accordance with the constituent documents, and the conservation of retained earnings for the purposes of core activities with a significant limitation on its use for non-productive purposes.
Thus, the enterprise should increase profits by increasing business activity indicators and profitability of production and economic activities.
To do this, it is necessary to improve the material and technical base, which requires additional investments, and the enterprise lacks its own funds. The question arises, where to get the money.
Attracting loans for profitable projects that can bring high income to the enterprise is also one of the reserves for the financial recovery of the enterprise.
One of the effective methods of updating the material and technical base of an enterprise is leasing, which does not require a full lump sum payment for the leased property and serves as a type of investment. The use of accelerated depreciation for leasing operations allows you to quickly update equipment and carry out technical re-equipment of production.
In the future, you should quickly respond to market conditions, changing the product range and pricing policy in accordance with its requirements.
According to the analysis, it is clear that Horns and Hooves LLC has a significant amount of accounts receivable, which tends to grow.
Therefore, the company should take advantage of an important source of financial recovery - factoring, i.e. assignment to a bank or factoring company of the right to claim receivables, or an assignment agreement under which an enterprise assigns its claim to the debtor to the bank as security for loan repayment. This procedure began with the external management plan.
One of the main and most radical directions for the financial recovery of an enterprise is the search for internal reserves to increase the profitability of production and achieve break-even operation through more complete use of the enterprise's production capacity, improving the quality and competitiveness of products, reducing its cost, rational use of material, labor and financial resources, reducing unproductive costs and losses.
These measures help accelerate capital turnover by reducing excess inventories and the collection period for receivables. All this will allow you to increase profits, obtain your own working capital and achieve a more optimal financial balance sheet structure and financial stability.
Conclusion
Finance is an integral part of monetary relations and plays a huge role in the formation, distribution and use of centralized and decentralized funds of funds in order to perform the functions and tasks of the enterprise and ensure conditions for expanded reproduction. We can also say that finance is objectively necessary, as it is determined by the needs of social development. Without finance, it is impossible to ensure the individual and social circulation of production assets on an expanded basis, regulate the sectoral and territorial structure economically, stimulate the rapid implementation of scientific and technical achievements, and satisfy other social needs.
The functions of finance, namely: distribution and control - these functions are carried out by finance simultaneously. We must not forget that in addition to these two main functions, there are others: the regulatory function - it is associated with state intervention through finance in the reproduction process, the stabilization function - provides stable conditions in economic and social relations for all economic entities and citizens.
Thus, enterprise finance represents monetary relations in the formation and use of monetary relations and funds of the enterprise. The main aspects of financial management of an enterprise are: the search for effective directions for investing financial resources, transactions with securities, and timely attraction of borrowed funds.
Analysis of the enterprise's coefficients allows us to draw the following conclusions: the enterprise depends on external investors, is unable to maintain the level of its own working capital and replenish working capital from its own sources. The company is financially unstable. Undoubtedly, the company needs to reduce the amount of receivables and payables, but it should also prevent the growth of these indicators. The enterprise should increase profits by increasing business activity indicators and profitability of production and economic activities.
List of used literature
1. Bakanov M.I., Sheremet A.D. Theory of economic analysis: Textbook. 3rd ed., revised. – M.: Finance and Statistics, 1995.
2. Balabanov I.T. Fundamentals of financial management / Textbook. – M.: Finance and Statistics, 1997. – 478 p.
3. Ermolovich L.L., Sivchik L.G., Tolkach G.V., Shchitnikova I.V. Analysis of the economic activities of an enterprise: Textbook /Under general. Ed. L.L. Ermolovich. – Mn.: Interpressservice; Eco-perspective, 2005. – p.576.
4. Jacques Richard. Audit and analysis of the economic activity of an enterprise. – M.: UNITY, 1997.
5. Kovalev V.V. Financial analysis: Capital management. Choice of investments. Reporting analysis. – M.: Finance and Statistics, 1996. – 432 p.
6. Kovalev, L.T. Financial situation of the enterprise: express study // Novaya Ekonomicheskaya Gazeta. -2005. - No. 21. - With. 21-24.
7. Kozharsky, V.V. Analysis of the balance sheet // Economic Planning Department. - 2005. - No. 3-5. - With. 23-26.
8. Kozharsky, V.V. Calculation of financial stability coefficients // Economic Planning Department. - 2005.- No. 2. - With. 46-48.
9. Kreinina M.N. Financial condition of the enterprise. Assessment methods. – M.: ICC “DIS”, 1997. – 224 p.
10. Lapusta, M.G. Finance of organizations (enterprises): Textbook / M.G. Lapusta, T.Yu. Mazurina, L.G. Skamay. – M.: INFRA-M, 2007. –575 p.
11.Lupey, N.A., Finance of organizations (enterprises): Textbook / N.A. Loop. – M.: ITK “Dashkov and K”, 2008. – 258 p.
12. Mazurina, T.: Enterprise finance / T. Mazurina, M. Lapusta. – M.: ALFA-PRESS, 2009
13. Negashev E. V. Analysis of enterprise finances in market conditions: textbook. allowance. – M.: Higher. school, 1997. – 192 p.: ill.
14. Nechaev E.V. Analysis of enterprise finances in market conditions: Textbook. – M.: Higher. school, 1997. – 192 p.: ill.
15. Ostapenko, V.V. Enterprise finance: textbook / V.V. Ostapenko. – M.: Omega-L, 2008. – 302 p.
16. Fundamentals of entrepreneurial activity (Economic theory. Marketing. Financial Marketing) / Sub. ed. V.M. Vlasova. – M.: Finance and Statistics, 1994. – 469 p.
17. Pavlova L. N. Financial management. Managing the cash flow of an enterprise. – M.: Banks and exchanges, UNITY, 1995.
18. Rodionova V. N., Fedotova N. A. Financial stability of an enterprise in conditions of inflation. – M.: Perspective, 1995.- 98 p.
19.Savitskaya, G.V. Analysis of the economic activity of an enterprise: Textbook for universities / G. V. Savitskaya. – 7th ed., rev. – Mn.: New knowledge, 2004. – 704 p.
20.Savitskaya, G.V. Economic analysis: Textbook / G.V. Savitskaya. – 11th ed., rev. – M.: New knowledge, 2006. – p.640-660
21.Strazhev, V.I. Analysis of economic activities in industry. – Textbook / Under general. ed. IN AND. Strazheva. - Mn.: Higher. school, 2006. - 480 p.
22. Sokolov Ya.V. Accounting: from origins to the present day: Proc. manual for universities. – M.: Audit, UNITY, 2006.
23. Stone D., Hitching K. Accounting and financial analysis: Transl. from English – St. Petersburg: JSC “Literature Plus”, 2004.
24.Theory and practice of crisis management: Textbook for universities / Ed. Belyaeva S.G. and Koshkina V.I. – M.: Law and Law, UNITY, 2006. – 469 p.
25.Theory of analysis of economic activity/Ed. V. V. Osmolovsky. – Minsk: Higher School, 2000.
26. Thompson A., Formby D. Economics of the Firm / Transl. from English – M.: ZAO “Publishing House BINOM”, 1998. – 544 p.: ill.
27. Fashchevsky V.N. On the solvency of an enterprise // Financier. – 2000. - No. 3. – p.34
28. Enterprise Finance/Ed. E.I. Borodina. – M.: Banks and exchanges, UNITY, 1995.
29.Financial management: theory and practice: Textbook / Ed. E.S. Stolpova. – 3rd ed., revised. and additional – M.: Publishing house “Perspective”, 1998. – 656 p.
30. Finance of organizations (enterprises): a textbook for universities / N.V. Kolchina [etc.]; edited by Prof. N.V. Kolchina. – M.: UNITY, 2007, -382 p.
31. Finance of organizations: textbook / V.F. Kokolina [et al.]/-M: Publishing House “MAGISTR-PRESS”, 2007.-254s
32. Friedman, A.M., Finance of organizations (enterprises) / A.M. Friedman. – M.: ITK “Dashkov and K”, 2009-488p.
33. Sheremet, A.D. Enterprise finance: management and analysis: textbook / A.D. Sheremet, A.F. Ionova. – M.: INFRA-M, 2006.-479 p.
34. Shulyak, P.N. Enterprise finance: textbook / P, N, Shulyak. – M.: ITK “Dashkov and K”, 2009-712p.
35. Shcherbina, A.V. Finances of organizations / A.V. Shcherbina. – Rostovn/D: Phoenix, 2005. – 506 p.
As we have already noted, finance is the science of managing cash flows. These are economic relations regarding the creation, distribution and use of funds of funds.
The finances of an organization are also economic relations, but at the microeconomic level. In our course, the concepts of “organization” and “enterprise (firm)” coincide and will be used interchangeably in the future.
An enterprise (organization) is an independent economic entity that has the rights of a legal entity, engaged in various types of economic activities, the purpose of which is to meet public needs, generate profit and increase capital.
Thus, an enterprise is understood as any economic entity - a legal entity, regardless of the type and scale of activity and form of ownership, carrying out its activities with the aim of making a profit.
Finance of enterprises (organizations) is the relationship that arises in the process of forming funds of funds, their distribution and use.
At an enterprise, finance performs distribution and control functions.
These functions are performed in the form of transactions and cash flow analysis. In the process of managing cash flows, sales and costs, with the help of the distribution function of finance, funds are directed in the right direction and at the same time the execution of financial decisions, the correctness of forecasts and planned calculations are monitored.
In the process of carrying out economic activities, enterprises (organizations) enter into financial relationships:
with the founders;
other enterprises and organizations;
higher authorities and their divisions;
employees of the enterprise;
by the state;
credit and insurance organizations;
investment institutions.
Financial relations with the founders are based on contributions to the authorized capital and distribution of profits.
Financial relations with other enterprises arise regarding receivables and payables.
Financial relations with higher and lower levels in corporations arise regarding the redistribution of financial flows.
Financial relations with the employees of the enterprise arise regarding the calculation of wages, compensation for damage caused by one party to the other, as well as regarding the performance by the enterprise of the duties of a tax agent in relation to the income of its employees.
An enterprise has financial relations with the state, primarily as a taxpayer, and also as a recipient of budget allocations, subsidies and other government assistance.
The enterprise has financial relations with credit institutions regarding settlement and cash services, lending, financial leasing, trust management, etc.
Insurance organizations carry out financial transactions to insure property, risk, liability, life and health of employees.
Investment funds and organizations provide assistance in financing large investment projects.
Principles of financial organization:
independence in the field of organizing financial and economic activities,
self-financing,
material interest and responsibility,
division of funds into own and borrowed funds,
provision of financial reserves. Independence is ensured by the state guarantee of non-interference in the operational and strategic activities of enterprises, except in cases specified by law. If an enterprise does not violate, for example, environmental legislation, then it has the right to conduct production activities using the chosen technology. The founders can choose any type of activity permitted by law. You just need to remember that some types of activities are subject to licensing. Licensing is being introduced to ensure that in risky areas of activity (construction, transport and others) the requirements for the level of qualifications of workers and other requirements that reduce the risk of disaster are met. The choice of the scale of activity, the place and methods of implementing plans remains with entrepreneurs.
Self-financing presupposes the ability of an enterprise to provide itself with all the necessary resources not only for simple reproduction, but also for expanding the scale of its activities. An enterprise is endowed with some resources upon creation, then increases its resources as a result of its activities and must rely only on its own strength. You should know the golden rule:
No one except the owners is obliged to cover the losses of the enterprise in the period when its income does not cover all expenses.
Hence the conclusion - an enterprise should not rely on external sources to cover expenses, but earn money for this, ensuring business efficiency.
Material interest and responsibility stem from the very purpose of entrepreneurial activity - making a profit. In the process of activity, the enterprise assumes a number of obligations - to pay wages to employees, taxes - to the state, suppliers - for delivered products, banks - for loans received, etc. Responsibility must be ensured by financial reserves according to the law. The company is liable for its obligations with all its property, and the founders of the company - only with their contribution to the authorized capital, but the above rule should also be remembered.
In the activities of a company, it is important to learn to distinguish between own and borrowed (raised) funds. Own funds are permanently owned by the enterprise and can be used at any time and in any direction; borrowed funds are at the disposal of the enterprise temporarily and must be returned to the owner within a specified period. Raising funds from third parties is a normal phenomenon in business, but they must be used effectively so that they bring a profit in an amount not lower than the interest that must be paid for their use. And it is absolutely unacceptable to spend borrowed funds on consumption, since in this case returning them becomes a problem.
Providing financial reserves. The creation of financial reserves will allow the company to insure its risks. In developed countries, it is customary to judge the reliability of a partner by the presence and size of reserve capital. Russian legislation obliges joint stock companies to create a reserve fund in the required amounts, but not less than 5% of the authorized capital. It is only necessary to note that joint-stock companies can make contributions to the reserve fund from after-tax profits. This approach reduces the interest of enterprises in creating significant reserves and contradicts the established world practice of encouraging reserves.
The role of finance in the activities of organizations can hardly be overestimated. With the help of finance, the problems of creating and increasing capital, distributing profits are solved, cash flows are redistributed, and investments are made. As mentioned above, finance exercises control over the movement of capital.
In the course of implementing their tasks, all firms make four main types of financial decisions:
1) decisions related to investments;
2) decisions on the capital structure (dividing funds into equity and borrowed funds);
3) decisions related to working capital management;
4) decisions related to risk assessment.
To carry out its production and economic activities, the enterprise creates and uses financial resources.
The financial resources of an enterprise are the totality of its own cash income and funds raised from outside, intended to fulfill the financial obligations of the enterprise, finance costs associated with current tasks and costs associated with the expansion of production.
Financial resources are divided into internal and external. Domestic financial resources include:
sales income;
profit from core and other activities;
depreciation deductions. External financial resources include:
own funds (entrepreneurial capital received from investors);
borrowed funds;
funds mobilized in the financial market (funds from the sale of own shares, bonds and other securities);
funds received through redistribution (insurance compensation, income from financial investments, funds from parent companies);
budgetary allocations (budget funds for short-term state support of enterprises producing products of national importance). The formation of an enterprise's monetary funds begins from the moment of its organization and is the most important aspect of its activities. Cash funds are formed from own and attracted capital.
The equity capital of an enterprise is divided into constant and variable parts.
The permanent part is the authorized capital.
Authorized capital is the main initial source of the enterprise's own funds. It is the source of the formation of fixed and working capital, which in turn is used to purchase fixed production assets, intangible assets, and working capital.
The variable part is additional capital, reserve capital, retained earnings and special funds.
Additional capital is an increase in equity capital due to share premiums, gratuitously received values, and revaluation of property.
Reserve capital (fund) is the monetary fund of an enterprise, which is formed in accordance with the legislation of the Russian Federation and constituent documents to cover unforeseen losses and losses. The source of his education is profit.
Cash funds also include a depreciation fund, a currency fund and funds created by an enterprise at the expense of its own profits.
Raised capital is a variable value; it consists of loans, borrowings and accounts payable.
Financial management is carried out using a financial mechanism.
The financial mechanism of an enterprise is a system for managing the finances of an enterprise in order to achieve maximum profit.
The financial management system includes:
financial methods;
financial instruments;
legal support;
information and methodological support for financial management.
Financial methods include financial planning, financial accounting, financial analysis, financial control, lending, insurance, a system of taxes, settlements and sanctions. Using financial methods, the movement of financial resources is managed and the effectiveness of their use is assessed based on the analysis of financial indicators.
Financial instruments are any type of contract, the result of which is the appearance of a certain item in the assets of one party to the contract and in the liabilities of the other party to the contract. This can be cash, financial investments and various types of debt. Financial instruments can be primary, for example, accounts receivable and payable, shares, bonds, bills, and derivatives, for example, financial options, futures and forwards, interest rate and currency swaps.
It must be remembered that transactions with financial instruments are always associated with financial risks. Risks include price, credit, liquidity, and cash flow risks. A detailed presentation of this issue is given in the course “Financial Management”.
Legal support allows enterprises to exist in the legislative field; regulatory regulation of the activities of economic entities ensures equal business conditions. Legal support plays an important role in the functioning of the financial system. In Russia there is a Civil Code of the Russian Federation, a Tax Code of the Russian Federation, a Budget Code of the Russian Federation, the regulatory framework contains hundreds of acts regulating financial relations in the economy. In the field of finance, legislative initiative can be taken by the State Duma, the Ministry of Finance, and the Bank of Russia; methodological support for the implementation of laws is entrusted to the Ministry of Finance and the Bank of Russia.
Information support is a necessary condition for normal production and management processes. Timely receipt of sufficient and reliable information helps to build the management process at a modern professional level. Internal information is generated in the financial and management accounting system and in automated management systems. Enterprises receive external information about stock markets, prices, interest rates, and taxes through communication systems and various information agencies. The information is used in financial planning and forecasting. The quality of information directly affects the effectiveness of cash flow management, the financial stability of the enterprise, its competitiveness, and the formation of financial resources.
State regulation of the finances of organizations in a market economy is quite limited. The state has no right to interfere in the operational activities of companies or manage cash flows by any means. There are only three forms government regulation: refinancing rate, tax rates and depreciation policy. These forms in various combinations allow the state to carry out its function of managing the economy without interfering in the specific actions of market entities. By raising or lowering interest and tax rates, as well as establishing rules for calculating depreciation, the state can contribute to the development of priority areas of the economy or stagnation in certain unpromising industries.
The essence and functions of enterprise finance. Financial mechanism of enterprises Enterprise finance is a set of economic relations through which funds of funds are formed and used both for the needs of the enterprises themselves and to meet national needs. For the purpose of managing the finances of enterprises, the financial mechanism of Fig.
Share your work on social networks
If this work does not suit you, at the bottom of the page there is a list of similar works. You can also use the search button
Course "Enterprise Finance"
Topic 1. “The essence and functions of enterprise finance”
1.1.Financial mechanism of enterprises
Enterprise finance- this is a set of economic relations through which funds of funds are formed and used both for the needs of the enterprises themselves and to meet national needs.
In order to manage the finances of enterprises, a financial mechanism is used (Fig. 1).
Fig.1. Enterprise financial management system
The financial mechanism of enterprises is a system for managing their finances, designed to organize the interaction of financial relations and funds of funds in order to effectively influence the final results of production, established by the state in accordance with the requirements of economic laws by issuing legislative and regulatory acts and used by enterprises taking into account their features and tasks.
Thus, if finance is an objective economic category that reflects objectively existing monetary relations, then the financial mechanism is a systemfinancial management.
The financial mechanism should facilitate the most complete and effective implementation of its functions by finance and their interaction.
1.2.Functions of enterprise finance
Finance performs three main functions:
Providing;
Distribution;
Test.
Supporting function of financeassumes that the enterprise must be fully provided with the necessary funds in the optimal amount while observing a very important principle: all expenses must be covered by its own income. The temporary additional need for funds is covered by credit and other borrowed sources. At the same time, optimizing sources of funds is one of the main tasks of enterprise financial management, since if there is a surplus of funds, the efficiency of use decreases, and if there is a shortage, financial difficulties arise that can lead to serious consequences. In addition, optimizing sources of funds is one of the ways to obtain the highest financial results.
Distribution function of financeenterprises are closely related to the supply chain. Distribution relationships also have a major impact on the final results. The distributed proceeds from the sale of products are partially used to reimburse the costs of the enterprise (consumed means of production and wages), and the other part represents its profit. Profit is distributed between the enterprise and the budget. The financial mechanism of these relations includes:
the dependence of wages on the usefulness of the products produced and the receipt of payments for them;
reasonable distribution of profits between the enterprise, trade and banks, in which the majority should go to the manufacturer;
the objective reality of standards for the distribution of profits between enterprises and budgets of various levels, as well as extra-budgetary funds, implying long-term and stability;
the validity of deductions for accumulation (production development) and consumption;
sufficiency of funds for social needs, for research and development, for personnel training and other purposes.
Control function of financeenterprises is associated with the use of various types of incentives and sanctions, as well as corresponding indicators. If an enterprise makes timely payments to the budget, banks, and suppliers, it thereby improves its final results, increases the efficiency of production and use of funds. Otherwise, it is forced to pay fines, penalties, penalties, a tense financial situation arises, and the final results worsen. One form of financial control is the use of a number of financial indicators. The main one is the stable availability of funds from the enterprise. This is precisely where the interaction of the control function of finance with the first two is manifested; This is a manifestation of financial control over the ruble. Other financial indicators include: debt to suppliers, bank, budget, employees, availability of working capital from relevant sources, losses, liquidity, solvency, etc.
Financial activities at enterprises are carried out by the financial department, which is their independent structural unit. In small enterprises, the financial department can be combined with the sales department (financial and sales department) or with the accounting department (accounting and financial department). The head of the financial department reports to the manager and shares responsibility with him for the financial condition of the enterprise.
The financial department of an enterprise may include a department head, a deputy head, senior economists, economists, a cashier, a cashier-collector, and a typist. Employees of the financial department of an enterprise usually perform the following types of work:
- financial, credit and cash planning and operational management of plans implementation;
- issuing payment documents to customers and monitoring their payment;
- payment of supplier bills;
- obtaining and repaying loans;
- receiving cash from a bank;
- payment of wages and other payments, etc.
The main task of employees of the financial services of the enterprise is the most complete practical implementation of finance functions.This is first of allimplementation of the supporting function of financeby strengthening the financial position of the enterprise by increasing its profitability, increasing profits by increasing labor productivity, reducing product costs, improving its quality, and introducing scientific and technological progress.
An important place in the activities of the financial service of an enterprise is occupied byissues of distribution of cash income, profit. In addition, material incentives and financial responsibility represent the implementation of the control function of finance.
In this regard, the tasks of financial services of enterprises include:
- creation of financial resources for industrial and social development, ensuring profit growth, increasing profitability;
- fulfillment of financial obligations to the budget, banks, suppliers, higher organization, for the payment of wages and other obligations arising from the financial plan, as well as the organization of settlements;
- promoting the most efficient use of production assets and investments;
- development and implementation of financial, credit and cash plans;
- implementation of measures for the efficient use of production assets, bringing the size of own working capital to the established economically justified standards, ensuring the safety and accelerating the turnover of working capital;
- control over the correct use of financial resources, ensuring safety and accelerating the turnover of working capital.
An important task of the financial service of an enterprise iscorrect organization of payments for finished products and constant monitoring of the implementation of the plan for the sale of products and profits.Of great importance when organizing financial work at an enterprise is the timeliness of settlements with the budget, the organization of relationships with banks, the correctness of settlements with workers and employees, and monitoring compliance with working capital standards.
Thus, the financial service of an enterprise is called upon to play an important role in the process of production and sales of products.
Currently, the finances of enterprises are in a state of crisis, which is manifested by:
- in a significant lack of funds both for production activities and for investments; this is expressed in the low level of wages, delays in their payment, as well as in the virtual cessation of funding for the social sphere from enterprises;
- the high cost of the loan and the impossibility of using it sufficiently for the needs of the enterprise;
- in significant non-payments of enterprises to each other, growing at a fairly high rate, which aggravates the shortage of funds among enterprises and complicates their problems.
Therefore, at the moment, the priority task for the state and enterprises is to strengthen the finances of enterprises and, on this basis, stabilize the finances of the state.Without its implementation, other problems, including the problem of inflation, cannot be solved.
The main ways to strengthen the finances of enterprises are related to optimizing the funds they use and eliminating their deficit.
The most important areas for improving financial work at enterprises are the following:
- systematic and ongoing financial analysis of their activities;
- organization of working capital in accordance with existing requirements in order to optimize financial condition;
- optimization of enterprise costs based on dividing them into variables and constants and analysis of the interaction and relationship “costs revenue profit”;
- optimization of profit distribution and selection of the most effective dividend policy;
- wider adoption commercial loan and bill circulation in order to optimize sources of funds and impact on the banking system;
- use of leasing relations for the purpose of production development;
- optimization of the property structure and sources of its formation in order to prevent an unsatisfactory balance sheet structure;
- development and implementation of the strategic financial policy of the enterprise.
1.3.Financial relations of enterprises
Financial relations with other enterprises and organizationsinclude relations with suppliers, buyers, with construction, installation and transport organizations, post and telegraph, with other enterprises and organizations, including those from other countries. In the modern development of financial relations there are a number of unresolved problems, the negative impact of which is enormous. These include:
large non-payments of enterprises to each other and, as a consequence, accounts receivable and payable;
application of prepayment;
lack of conditions due to inflation and other reasons for the use of a number of market mechanisms, in particular, such as bills of exchange, and a number of others.
Financial relations within the enterpriseinclude relations between branches, workshops, other structural divisions, as well as relations with employees of the enterprise and its shareholders, if this concerns joint-stock companies. Financial relations between the structural divisions of an enterprise presuppose that they have a certain economic independence, which should ensure the efficiency of their work. For these purposes, settlement or current accounts may be opened for them at the bank.
These relationships are greatly influenced by the overall problems of the enterprise.
Relations with the company's employees are currently complicated by a lack of funds, a decrease in production volume, low wages and untimely payments.
The main problems of relations between enterprises and shareholders are: complete unpredictability in many cases of the economic situation of an enterprise due to the influence of factors beyond its control; impossibility of paying full dividends on shares; illiquidity of JSC shares; constant aging of production due to lack of funds for its development and a number of others.
Financial relations with budgets of various levels and extra-budgetary fundsare associated mainly with the transfer of taxes and deductions there.
Financial relations with commercial banksinclude relations in the implementation of non-cash and cash payments, lending, as well as the provision of various banking services, such as factoring, trust, leasing, etc. The improvement of non-cash payments is associated with the development of correspondent relations between banks. Credit relations are not developing enough for two main reasons: due to the very high cost of credit, as well as due to the difficult financial situation of enterprises, leading to frequent non-repayment of the loan within the contractual period. This also slows down the development of banking services.
.Other similar works that may interest you.vshm> |
|||
| 7017. | ESSENCE AND FUNCTIONS OF FINANCE | 50.09 KB | |
| By this time, money, commodity-money relations and statehood had already existed for a long time, so this term originally meant any monetary payment. Therefore, this term reflected: Firstly, monetary relations between two entities where money acted as the material basis for the existence and functioning of finance; Secondly, the subjects, the population and the state, had different rights in the process of these relations; one of them, namely the state, had special powers; Thirdly, in the process of these... | |||
| 6116. | ESSENCE OF FUNCTION AND ROLE OF FINANCE | 149.06 KB | |
| Study the basic concepts of finance, the functions of finance, the interaction and relationship of finance with other economic categories, financial resources. | |||
| 6298. | CONTENT AND FUNCTIONS OF STATE AND MUNICIPAL FINANCES, THEIR COMPOSITION. STATE FINANCIAL POLICY. STATE REGULATION OF FINANCE | 29.88 KB | |
| Content and direction of financial policy. The main directions of modern financial policy of the Russian Federation. Basic methods and forms of state and municipal finance management In a broad sense, there are several forms and methods of state financial management: financial planning; forecasting; programming; financial regulation; financial control; adoption of financial legislation; system of methods for mobilizing financial resources. Financial planning is part of the national economic... | |||
| 21546. | Finance functions | 24.34 KB | |
| The small number of specialists means that our budget is drawn up and accepted by people who have only a mediocre idea of what finance is. The subject of research into the essence of finance is also relevant because a clear idea of what finance is and the boundaries of its distribution has not yet been given. 1 The concept and essence of finance The need and essence of finance Finance is one of the most important economic categories reflecting economic relations in the process of creating and using funds. Finance... | |||
| 16096. | 12.01 KB | ||
| It includes rules of law, bankruptcy legislation governing the rights and obligations of creditors, debtors and other participants in bankruptcy proceedings, law enforcement practice, informal rules and procedures that form the expectations of stakeholders, ensure rights and help them realize and protect them during bankruptcy proceedings. Effective legislation underlies the institution of bankruptcy. High level competition and the threat of bankruptcy guides managers toward conscientious and effective management... | |||
| 10106. | Credit, essence and functions of credit | 36.79 KB | |
| With the development of market relations in our country, the emergence of enterprises of various forms of ownership (both private and state, public), the problem of clear legal regulation of financial and credit relations of business entities acquires special importance. | |||
| 10746. | Essence, functions and laws of credit | 9.38 KB | |
| The law of conservation of loaned value is that in the process of repayment, the borrower transfers to the lender exactly the loaned value that was transferred to the borrower for temporary use: the same in size and having the same consumer properties. | |||
| 9344. | Essence, principles and functions of law | 25.42 KB | |
| The latter is especially clearly visible in the domestic literature. If we compare the definitions of the concept of law and approaches to its study, characteristic of the Soviet period, with the definitions of the concept of law and approaches to its knowledge in the post-Soviet period, it is easy to see that the most important feature | |||
| 6772. | ESSENCE, SUBJECT AND MAIN FUNCTIONS OF CULTURAL STUDIES | 21.56 KB | |
| It is possible to understand the essence of culture only through the prism of human activity and the peoples inhabiting the Earth. Main function The phenomenon of culture is humanistic. PRIMITIVE CULTURE The problem of primitive culture is one of the most complex in cultural studies and is determined by two reasons. The objective complexity of the interconnected system of methodological questions about the causes of the emergence of culture as a cosmic event. | |||
| 10602. | The essence and functions of labor. Its social aspects | 61.74 KB | |
| The essence and functions of labor. The relationship between economics and sociology of labor and other sciences. The essence and functions of labor. The main forms of the labor process are the expenditure of human energy during the interaction of a worker with the means of production and during the production interaction of workers with each other, both horizontally and vertically. | |||
The finances of enterprises (firms) operate within the framework of the state’s financial system and form the basis of the entire financial system, since they serve the sphere of material production, where the gross national product and national income are created - a source of financial resources for other parts of the financial system.
Enterprise finance represents monetary relations associated with the formation and distribution of financial resources, which are formed from sources such as own and equivalent funds, funds mobilized in the financial market, and funds received through redistribution (insurance compensation, budgetary allocations, funds from extra-budgetary funds of an economic nature and others).
Enterprise finance is economic monetary relations that arise in the process of financial and economic activity of an enterprise regarding the formation of fixed and working capital, accumulation, distribution and use of funds, as well as control over this process.
Enterprise finance plays an important role in ensuring effective economic and social development of the country. This role is manifested in the following:
financial resources concentrated by the state and used by it to finance various social needs are mainly formed from the finances of enterprises (firms);
enterprise finances form the financial basis for ensuring the continuity of the production process aimed at meeting the demand for goods and services;
part of the financial resources generated by enterprises (firms) is directed for consumption purposes, thus, with the help of firms’ finances, the social tasks of society’s development are implemented in a decentralized manner;
Enterprise finance can serve as the main instrument of state regulation of the economy. With their help, the reproduction of the manufactured product is regulated, the needs of expanded reproduction are financed based on the optimal ratio between funds allocated for consumption and accumulation;
enterprise finance is used to regulate industry proportions in a market economy, contribute to the creation of new industries and modern technologies;
Enterprise finance allows you to use household cash savings by providing the opportunity to invest them in profitable financial instruments (securities) issued individual enterprises.
The finances of an organization as an economic category are manifested in the functions they perform.
In modern economic literature, the following functions of enterprise finance are distinguished:
providing;
distribution;
control.
The supporting function consists in the systematic formation of the required amount of funds from various alternative sources to ensure the current economic and financial activities of the enterprise and the implementation of the strategic goals of its development. The prerequisite for distribution and its beginning is the accumulation of capital - the formation of resources that form the firm's funds of funds.
The distribution function is closely related to the supporting function and is manifested through the distribution and redistribution of the total amount of generated financial resources.
The financial resources of the enterprise are subject to distribution in order to fulfill monetary obligations to the budget, creditors, and counterparties. The result of redistribution is the formation and use of target funds of funds, maintaining an effective capital structure.
The control function is implemented through financial control over the results of the production and financial activities of the enterprise, as well as over the process of formation, distribution and use of financial resources in accordance with current and operational plans. The control function is implemented in the following areas:
control over the receipt of revenue from the sale of products and services;
control over the level of self-financing, profitability and profitability;
control over the correct and timely transfer of funds to monetary funds from all established sources of financing;
control over targeted and effective use financial resources and others.
The organization of finances of an enterprise (firm) is based on certain principles. The principle of self-sufficiency and self-financing. Self-sufficiency assumes that the means that ensure the functioning of the enterprise must pay for themselves - generate income that corresponds to the minimum possible level of profitability.
Self-financing means full recoupment of costs for the production and sale of products (services), investing funds in the development of production at the expense of one’s own funds and, if necessary, through bank and commercial loans. In countries with developed market economies, the level of self-financing is considered high if the share of a business firm’s own funds reaches 70% or more.
The principle of economic independence consists in independently determining development prospects and planning one’s activities; in ensuring industrial and social development; in independently determining the direction of investing funds in order to make a profit, and more. In a market economy, the economic independence of enterprises has expanded, but certain areas of economic activity are determined and regulated by the state (for example, regulation of the economic activities of natural monopolists, etc.).
Principle financial liability means the presence of a certain system of responsibility of enterprises for the conduct and results of economic activities. In accordance with the current Russian legislation(Federal Law of the Russian Federation “On Insolvency (Bankruptcy)”, 2002) firms that violate contractual obligations, settlement and tax discipline are held accountable and bankruptcy proceedings can be initiated by an arbitration court at the initiative of creditors.
Interest in the results of activities is inherent in the employees of the enterprise, management and the state. This principle is implemented through the development of forms, systems and amounts of remuneration, incentive and compensation payments, social guarantees for the workforce. The interest of the state is manifested in the fact that an enterprise is a potential taxpayer, which, through the creation of a system favorable conditions functioning ensures rhythmic and efficient activity. The financial mechanism plays an important role here.
The principle of control over the financial and economic activities of the company is implemented in the process of performing the control function of finance.
More on topic 7.1. The essence, functions and principles of organizing the finances of an enterprise:
- 12.1 Goals and functions of enterprises in market conditions. The essence and functions of enterprise finance, principles of their organization. Types of financial relations of enterprises Enterprise finance
The finances of an organization are a system of monetary relations arising as a result of its economic activities.
From a material point of view, an organization's finances represent the organization's cash savings or financial resources. Financial science studies not resources as such, but the relationships that arise from the formation and use of these resources.
The initial formation of finance occurs at the time of establishment of the organization, when the authorized capital is formed. Its sources, depending on the organizational and legal forms of management, are: authorized capital (share capital), share contributions of members of cooperatives, industry financial resources (while maintaining industry structures), long-term credit, budget funds. The size of the authorized capital shows the amount of those funds - fixed and working capital - that are invested in the development process of the organization.
The main source of finance in operating organizations is the cost of services provided (products sold), various parts of which, in the process of revenue distribution, take the form of cash income and savings. Financial resources are formed mainly from profits (from the main and additional types activities).
Areas of manifestation of financial relations:
Relations between organizations for the sale of services, products, supplies of raw materials, materials, components.
Relations between organizations and banks that arise when receiving and repaying a loan, when buying and selling currency, and when paying for banking services.
Relations with insurance companies and organizations for insurance of property, commercial and financial risks.
Relations with commodity, raw materials, and stock exchanges for transactions with production assets.
Relations with investment funds and companies for investment placement, privatization.
Relations with branches and subsidiaries.
Relations with staff regarding the redistribution of profits between participants, payment of salaries, dividends, and with shareholders, if they are not members of the workforce.
Relations with the tax service when paying taxes, with audit firms, with non-budgetary organizations.
The common element of the listed monetary relations is that they:
1. Expressed in monetary form.
2. Represent a set of payments and receipts.
Finance functions:
Reproductive.
Distribution.
Test.
The reproduction function consists of servicing the circulation of fixed and working capital with monetary resources in the process of the organization’s commercial activities based on the formation and use of cash income and savings.
Distribution function - the essence of this function is to ensure optimal proportions of distribution of profit (income) between the organization, the state, and various funds.
The control function is financial control over the economic activities of an organization in terms of consumption and expenditure of the organization’s internal resources, as well as control of the organization’s relationships with banks, the state and other organizations.
The organization stands legal entity, which is determined by a combination of characteristics: isolation of property, liability for obligations with this property, the presence of a current account in a bank, acting on one’s own behalf. The isolation of property is expressed by the presence of an independent balance sheet on which the organization’s property is listed.
Financial relations of an organization arise when monetary basis the formation of the organization’s own funds, its income, the attraction of borrowed sources of financing economic activities, the distribution of income generated as a result of these activities, their use for the development of the organization.
The organization of economic activity requires appropriate financial support, i.e. initial capital, which is formed from the contributions of the founders of the organization and takes the form of authorized capital. This is the most important source of formation of property of any organization. Specific methods for forming authorized capital depend on the organizational and legal form of the organization.
When an organization is created, the authorized capital is used to purchase fixed assets (funds), software and the formation of working capital in the amounts necessary to conduct normal business activities is invested in the acquisition of licenses, patents, know-how, the use of which is an important income-generating factor. Thus, the initial capital is invested in the direct activities of the organization, during which value is created, expressed by the price of services sold. After the sale of services, it takes a monetary form - the form of revenue from the sale of services, which goes to the organization’s current account.
Revenue is not yet income, but a source of reimbursement of funds spent on services and the formation of cash funds and financial reserves of the organization. As a result of using the proceeds, qualitatively different components of the created value are separated from it.
Since the basis of the service provided is mainly current expenses, such as the cost of advertising, ongoing software maintenance, taxes and mandatory payments, payment of wages to employees constitutes the costs of the organization for the provision of services, taking the form of cost. Before the receipt of revenue, these costs are financed from the organization’s working capital, which is not spent, but advanced. After receipt of proceeds from the sale of goods, working capital is restored, and costs incurred by organizations for the provision of services are reimbursed.
Separating costs in the form of prime costs makes it possible to compare the revenue received from the sale of services performed and organizational expenses. The point of investing funds in the organization’s activities is to obtain net income, and if the revenue exceeds the cost, then the organization receives it in the form of profit.
Profits are the result of the circulation of funds invested in the activities of the organization and relate to the organization’s own financial resources, which it manages independently. Optimal use of profits for their intended purpose allows us to increase the scope of our activities on an expanded basis.
The profit remaining at the disposal of the organization is a multi-purpose source of financing its needs, but the main directions of its use can be defined as accumulation and consumption. The proportions of profit distribution between accumulation and consumption determine the development prospects of the organization.
Part of the profit allocated for accumulation consists of the organization’s monetary resources, used for its professional, scientific and technical development, the formation of financial assets - the acquisition of securities, contributions to the authorized capital of other organizations, etc. The other part of the profit, used for accumulation, is directed to the social development of the organization. Part of the profit is used for consumption, resulting in financial relations between organizations and individuals, both employed and not employed by the organization.
Since the finances of an organization as a relationship are part of the economic relations that arise in the process of economic activity, the principles of their organization are determined by the fundamentals of the organization’s economic activity. Based on this, the principles of financial organization can be formulated as follows: independence in the field of financial activities, self-financing, interest in the results of financial and economic activities, responsibility for their results, control over the financial and economic activities of the organization.
Self-financing is a prerequisite for successful economic activity of an organization in a market economy. This principle is based on the full recovery of the costs of carrying out activities and expanding the professional and technical base of the organization; it means that each organization covers its current and capital costs from its own sources. If there is a temporary shortage of funds, the need for them can be met through short-term bank loans and commercial credit, if we're talking about about current costs, and long-term bank loans used for capital investments.
The economic activities of an organization are inextricably linked with its financial activities. The organization independently finances all areas of its expenses in accordance with production plans, manages available financial resources, investing them in order to make a profit.
In the process of creating their target cash savings, the management of the organization should be guided by the following principles:
Strict centralization of finance ensures rapid maneuverability of finances and their concentration on priority areas of development of the organization.
Financial planning is the distribution of an organization's cash income for the future according to the main areas of its expenditure.
Formation of financial reserves that ensure the financial stability of the organization and mitigate risk in conditions of fluctuations in market conditions.
Unconditional fulfillment of financial obligations to the state and partners.
Achieving self-sufficiency in self-financing.
Self-sufficiency is the ability of an organization to cover its expenses (expenses) with the results of its own activities. In the process of achieving self-sufficiency, 2 problems are solved:
1. Fight against unprofitability
2. Increased profitability.
Self-financing is the ability of an organization to use earned funds not only to reimburse its costs, but also to finance the expansion of areas of activity, professional growth and solving social problems. The source of self-financing is residual (net) profit.
These principles are the basis of the organization's financial strategy and are embodied in financial management.
There are 3 main sources of financial resources for the organization:
1. Sources of own and equivalent funds:
From the main activity
From additional activities
From financial and intermediary transactions
Other types of income.
Income:
Revenue from services (work) performed
Revenue from sales of software products
Target revenues
Other types of income.
2. Funds mobilized in the financial market:
Sale of own shares, bonds and other types of securities
Loans and investments from third parties.
3. Funds received in the order of distribution:
Insurance indemnity for risks
Financial resources coming from concerns, associations, holdings
Financial resources formed on a share basis
Dividends and interest on securities of other organizations
Budget subsidies
Other types of resources.
So, financial resources arise and function at the second stage - the distribution stage. At the same time, the initial sphere of their formation is the processes of primary distribution, when value breaks down into its constituent elements and, accordingly, various shapes income - both from the organization itself and from other business entities and the state. The point is that when revenue is generated, deductions are made for the wages of workers, the profit of the organization, deductions for state social needs, and payments are made for insurance and the banking sector. All other relations are redistributive in nature, since they affect the distribution of the generated above-mentioned income. These are deductions from profits to the state, taxes on income individuals, distribution of profits to organizations, etc. Levchaev P.A. Financial resources of economic entities: essence, economic nature of the category, laws of functioning // "Investment Banking", 2006, No. 5.
This is how finance is formed at the level of the primary link of the economy - organization. Position of the financial system of organizations Levchaev P.A., Imyarekov S.M. Formation, evolution and prospects of financial and cost relations of economic entities in Russia: Monograph. - M.: Academic project, 2006. 608 p. in the national system of finance is due to their priority role in the creation of new value, which then “feeds” all other systems of financial resources, and therefore acts as the basis for subsequent distribution relations and even the existence of the state as an institution that organizes and streamlines them. Financial resources in the form of direct and reverse flows enter one or another system of financial resources.
So, finance is a relationship related to the distribution of created value. They represent a tool for both the distribution (redistribution) of GNP and the formation and use of the finances of business entities and the state formed with their participation.
So, what is the purpose of finance in organizations? Since the provision (through the distribution mechanism operating in the field of finance of organizations) of all areas of the organization’s activity is determined by the amount of cost necessary for this, then, presumably, the main functions are the following Levchaev P.A. Financial resources of economic entities: essence, economic nature of the category, laws of functioning // "Investment Banking", 2006, No. 5:
1) production - the main function that realizes the purpose of finance in the organization. The point is that they act as a means of ensuring its activities. This provision is based on the fact that the main goal of the organization is production material goods, services to meet public details. At the expense of finances, the organization generates property and replenishes working capital. The priority of this function is due to the fact that the receipt of its own financial resources, which are the basis of its activities, and therefore the pace of economic development economic entity, and the social well-being of workers;
2) the non-productive function is due to the fact that not all financial resources serve the sphere of activity of the organization, because since we are talking about the reproduction process, the organization has certain obligations to the financial and credit system and employees. Resources in this area: reserve capital, accumulation fund, consumption fund, etc. The emergence of the function is due to the organization’s obligations and the need to expand its activities. Its role is no less important, since its activities depend on how timely and fully the organization’s obligations are fulfilled.
The development of market relations has led to the fact that today any economic entity is interested in the profitable use of available resources, therefore, part of the financial resources serving the non-productive sphere of the organization is directed to expanded reproduction, that is, they perform an investment subfunction, which is implemented through profitable short-term and long-term financial investments. The desire of business entities to implement it emphasizes the previously justified capitalist nature of financial resources. This function is not necessarily associated with the creation (in the classical sense) of surplus value and may well be implemented (including in financial markets) through speculative transactions.
To ensure liquidity, the other part of the organization’s finances must be kept in cash or in funds and reserves that do not generate income. This part of the resources performs a consumption subfunction, which, unlike the investment one, does not increase the cost of existing finances.
It is necessary to emphasize the importance of the optimal ratio of resources located in the organization, generating income or consumed, which will allow, on the one hand, to ensure the progressive development of the organization, and on the other hand, to fully fulfill external and internal obligations, not forgetting about liquidity and profitable use of available resources . It should be noted that the more resources are involved in profitable turnover, the more effective all economic activities of the organization are, and, consequently, the mechanism for the reproduction of economic growth is implemented.