Topic 6. Financial planning and forecasting

Question 1. Strategic, long-term and short-term financial planning

Kreinina M.N. Financial management: Proc. settlement - M .: Delo and Service, 1998. - 304 p., P. 195-212.

9.1. Planning of income and expenses of the enterprise

Financial planning covers the most important aspects of the enterprise; it provides the necessary preliminary control over the formation and use of material, labor and financial resources, creates the necessary conditions for improving the financial condition of the enterprise.

Financial planning at the enterprise is interconnected with the planning of economic activity and is based on other indicators of the plan (volume of production and sales, cost estimates for production, capital investment plan, etc.). However, drawing up a financial plan is not a simple arithmetic conversion of production indicators into financial indicators.

In the process of drawing up a draft financial plan, a critical approach is taken to the indicators of the production plan, intra-economic reserves not taken into account in them are identified and used, methods are found for more efficient use of the production potential of the enterprise, more rational use of material and monetary resources, improving the consumer properties of products, etc. .

In the process of developing a financial plan, the following are determined: the costs of products sold, sales proceeds, cash savings, depreciation, the volume and sources of financing of investments planned for the planned period, the need for working capital and sources of its coverage, the distribution and use of profits, relationships with the budget, extrabudgetary funds, banks.

Financial planning at the enterprise has the following target orientation:

1. Providing financial resources and funds for the activities of the enterprise.

2. Increasing profits from core activities and other activities, if any.

3. Organization of financial relationships with the budget of extra-budgetary funds, banks, creditors and debtors.

4. Ensuring a real balance of planned income and expenses.

5. Ensuring the solvency and financial stability of the enterprise.

The traditional form of a financial plan is the balance of income and expenses. The work on drawing up a financial plan is carried out in several stages:

the first stage is an assessment of the fulfillment of the financial plan for the previous period;

the second stage is the consideration of projected production indicators, on the basis of which a financial plan will be drawn up;

the third stage is the development of a draft financial plan.

In order to be more efficient and take into account inflation, it is advisable to draw up a balance of income and expenses by quarters of the planned year.

To draw up a balance of income and expenses, it is necessary to have the following calculations as a base: sales proceeds; profit and directions of its spending; needs for own working capital; the amount and use of depreciation; sizes and directions of use of the repair fund, etc.

The balance of income and expenses can be drawn up in the context of the following items.

I. Income and receipts.

1. Revenue from the sale of products (works, services)

including: 1.1. Profit from sale.

2. Income from non-operating transactions.

3. Other operating income.

4. Depreciation.

5. Repair fund.

6. Funds deducted from the cost of production:

6.1. To pay taxes and other obligatory payments attributable to cost.

6.2. To pay interest on loans.

7. Growth of sustainable liabilities.

8. Surplus working capital at the beginning of the planning period.

9. Income from the initial issue of shares.

10. Other income.

Total income and receipts.

11. Expenses and deductions.

1. Costs for sold products and services at full planned cost, including losses from sales.

2. Value added tax paid to suppliers.

3. Capital investments.

4. The cost of repairing fixed assets.

5. Deductions from profits for accumulation and consumption.

6. Rent.

7. Contributions to the reserve and other special funds.

8. Other operating expenses.

9. Other non-operating expenses.

Total expenses and deductions.

III. Relations with the budget, off-budget funds and banks.

1. Income tax.

2. Value added tax.

3. Property tax.

4. Other taxes included in the cost and paid out of financial results.

5. Payments to off-budget funds.

6. Repayment of long-term bank loans.

7. Payment of interest on loans.

Total payments.

1. Income and receipts of funds.

2. Expenses, deductions and payments.

The balance of income and expenses is formed on the basis of an analytical generalization of the results obtained in the process of calculations for each of its items. Therefore, the work of compiling a balance of income and expenses is not a simple filling of its articles with the corresponding numerical data obtained as a result of calculations and summing up for each of the sections. With such work, it is impossible to achieve a balance between income and expenses and ensure the targeted and efficient use of financial resources.

In the process of forming the balance of income and expenses, the following tasks should be solved:

• identification of the enterprise's reserves and mobilization of on-farm resources, which make it possible to increase profitability, solvency, accelerate the turnover of assets and capital and solve other issues related to improving the financial condition of the enterprise;
• more efficient use of profits and other income;
• increasing the efficiency of investments and the investment attractiveness of the enterprise.

The work should begin with the compilation of the "Revenues and Receipts of Funds" section, with the determination of their total size, analysis of the composition, structure and rate of change in comparison with similar data for the corresponding period preceding the planned one. In the event of a decrease in any types of income and receipts, it is necessary to analyze the reasons for this, as well as check the calculations in order to avoid errors.

In the process of compiling the "Expenses and deductions" section, it is necessary to check, for a number of its articles, the relationship between the planned amounts of expenses and deductions with the sources of covering them with the corresponding income and receipts of funds provided for in the first section of the balance of income and expenses. The costs of products and services sold, provided for in the second section of the balance sheet, must be fully covered by the proceeds from their sale. If the proceeds from the sale of products and services are less than the costs of the products sold, then in the first section there will be no profit from the sale, and in the second section, in the amount of planned costs for the sold products, losses appear as part of these costs in the amount of excess costs over revenue.

The cost of repairing fixed assets should be equal to the amount of the repair fund shown in the first section of the balance of income and expenses. In the case of planning expenses for the repair of fixed assets in an amount less than the amount of the repair fund, an additional item is provided in the second section of the balance of income and expenses - "Free balance of the repair fund", which reflects the amount of excess of the repair fund over repair costs.

If capital investments are not provided for the planned period or their planned amount is less than the depreciation contained in the first section of the balance sheet, then the free balance of these funds cannot be used to cover other planned costs and payments. Not used for its intended purpose, this balance of funds is shown in the second section of the balance of income and expenses under the item "Balance of funds earmarked for investments".

After filling in all the items of the balance of income and expenses and summing up the results for each of the sections, the degree of balance between them is checked. To do this, you need to compare the result of the first section "Incomes and receipts" with the sum of the results of the second and third sections. In the absence of equality, it is necessary either to find additional sources of income and receipts, or to revise the expenses and deductions planned for the second and third sections of the balance sheet in the direction of their reduction.

9.2. Drawing up a planned balance sheet of an enterprise

The value of assets and liabilities in the planned period may change compared to the baseline under the influence of a number of factors. Each article of assets and liabilities should be calculated taking into account the factors affecting precisely its value. In this case, it is important for us to take into account those factors that are associated with changes in sales proceeds in general, prices for products sold, natural volume of sales, profits from sales and other activities, prices for raw materials, materials and services consumed in the course of the enterprise’s activities, terms of settlements with debtors and creditors.

These factors have a direct impact on the most dynamic elements of assets and liabilities - stocks, receivables, cash, accounts payable. Non-current assets are less affected by these factors, but may also change for some other reason.

Intangible assets, and especially long-term and short-term financial investments, are not directly affected by the dynamics of sales proceeds, prices for the Company's products and raw materials, etc. Fixed assets and construction in progress may change, for example, under the influence of changes in production volume, but this should be very significant qualitative shifts in technology, volume and range of products, etc.

Capital and reserves, long-term liabilities and short-term bank loans also change for reasons of a different nature, however, it is necessary to keep in mind a possible increase in capital and reserves due to the direction of part of the profit received in the planning period.

Considering the balance sheet planning of an enterprise, let's leave aside possible changes in its investment policy, in relations with banks, etc. Let's take into account only those factors that change most often and are directly related to the main activity.

Let's assume that in the planning period it is assumed that prices for the company's products will increase and that the natural volume of production equal to the base volume will be sold. Then the sales revenue will increase by 10%, and the profit from sales will be:

24021 x 1.1 -21599 = 4824 thousand rubles.

Such a calculation is correct if the prices for raw materials, materials and services consumed by the enterprise in the course of its activities, and the level of remuneration of the employees of the enterprise do not change. But, according to experts, prices for consumed resources will be higher than in the base period, on average by 2.7%, and labor costs for various reasons will increase by 23.6%. Deductions to off-budget funds will also grow to the same extent. The rest of the cost elements will not change, since they are not associated with either a change in sales proceeds or a change in prices.

Material costs as part of the cost of sold products are planned in the amount of 4950 thousand rubles, i.e. 18.7% of sales proceeds; labor costs and deductions to off-budget funds - 10,882 thousand rubles, i.e. 41.2% of sales proceeds; depreciation of fixed assets will remain at the base level, amounting to 2,330 thousand rubles, or 8.8% of sales proceeds. Thus, data on the dynamics of sales proceeds and its components can be summarized in the following table.

Table 9.1. – Change in sales revenue, costs of products sold and profit from sales in the planning period compared to the base

Indicators	Base period, thousand rubles	Planned period, thousand rubles	Gr. 3 as a percentage of gr. 2
1. Sales proceeds
2. Costs of products sold - total
2.1. Material costs
2.2. Labor costs and deductions to off-budget funds
2.3. Depreciation of fixed assets
2.4. Other costs
3. Profit from sales (p. 1 - p. 2)

1. The state of the company's stocks: is there a surplus or shortage of stocks compared to the required need, and is it supposed to eliminate the surplus or shortage in the planning period, if they occur in the base period.

2. The state of receivables: are there any overdue or bad debts in it, and is repayment of the overdue expected. In addition, does the composition of debtors or the terms of settlements with them change, leading to an acceleration or slowdown in the turnover of receivables in general.

3. The state of accounts payable: is there any overdue in its composition and is it expected to be repaid, if any. In addition, does the composition of supplier creditors and the terms of settlements with them change, leading to an acceleration or slowdown in the turnover of accounts payable to suppliers. Finally, are there any overdue accounts payable to other creditors (the budget, off-budget funds, etc.).

Depending on the listed circumstances, the planned amounts of stocks of receivables and payables may vary significantly.

In view of the foregoing, we determine the planned size of stocks If, as in our enterprise, the vast majority of stocks are raw materials, then the entire basic balance sheet value of stocks can be calculated without a large error based on the rate of change in material costs and replenishment of stocks. If significant stocks are represented by finished products or goods shipped, then they must be planned by direct account based on the prospects for selling and paying for the company's products (Table 9.2).

Table 9.2 - Calculation of the planned size of the company's stocks

Indicators		Basic period	Planned period
				maximum
1. Book value of stocks
1.1. Excess inventory
2. Lack of inventory
3. Normal inventory value:
a) page 1 - page 1.1.
b) page 1 + page 2
4. Material costs for sold products
5. Inventory turnover (page 4: page 3)	speed

Explanations for the calculation.

1. In page 5, the normal inventory turnover is calculated, provided that the lack of inventory on the balance sheet is eliminated. Without changes in the technology and composition of products, such a turnover is maintained in the planned period.

2. Required stocks for the planned period in p. 3 gr. 4 and 5 are determined by dividing material costs by normal inventory turnover (4950: 3.55 = 1394 thousand rubles).

3. In the event that the shortage of reserves is eliminated, the balance sheet value of the reserves will be equal to the normal value (line 1, column 5); while maintaining a shortage of stocks, their balance sheet value should, at a minimum, increase in proportion to the growth of material costs for products sold: 1155 x 4950/4818 = 1187 thousand rubles. (This is due to rising prices for raw materials and materials).

If there were excess stocks on the balance sheet of the enterprise, the calculation would be similar, but the minimum result would correspond to the normal, and the maximum - to the actual state of stocks.

We now calculate the planned amount of receivables. Since here it is necessary to take into account both the actual composition and turnover, we will make two calculations.

Table 9.3 - Calculation of the planned amount of receivables, taking into account its condition

Indicators	Base period	Planned period
			maximum
1. Balance value of receivables, thousand rubles.
1.1. Overdue
1.2. Hopeless
2. Sales proceeds, thousand rubles.
3. Turnover of receivables in the base period (number of turnovers) (p. 3: p. 1):
a) actual
b) excluding overdue and bad Accounts Receivable

Explanations for the calculation.

1. The calculation is made on the basis of unchanged contractual terms with Debtors and the previous composition of debtors.

2. It is assumed that the minimum amount of receivables in the planning period is possible in the absence of overdue and bad debts (the first will be repaid, the second will be written off). Page 1 gr. 3 received: (4500 - 300 - 10) x 26423/24021 = 4510 thousand rubles; page 1 gr. 4: 4500 x 26423/24021 = 4950 thousand rubles.

Let's introduce another factor into the calculation of the planned value of receivables: a change in the composition of debtors or the terms of settlements with previous debtors changed the turnover of receivables and eliminated overdue and bad debts. Suppose the turnover will be 6.5 times in the planning period instead of 5.9 times in the base period. Comparison of the planned turnover with the base one in the absence of overdue and bad debts requires taking into account exactly 5.9 times, and not 5.3 times. Then the minimum planned value of receivables is equal to: 4510 x 5.9 / 6.5 = 4094 thousand rubles. instead of 4510 thousand rubles.

Taking into account similar factors, accounts payable to suppliers are planned (Table 9.4).

Table 9.4 - Calculation of the planned amount of accounts payable to suppliers

Indicators	Base period	Planned period
			maximum
1. The balance sheet value of accounts payable to suppliers, thousand rubles.
1.1. Overdue
2. Material costs for sold products, thousand rubles.
3. Turnover of accounts payable to suppliers (number of turnovers; p. 2: p. 1):
a) actual
b) excluding overdue

Explanation for the calculation.

Page 1 gr. 3 and 4, taking into account the same turnover and the absence of overdue accounts payable to suppliers, is calculated as follows: 281 x 4950/4818 = 289 thousand rubles.

If in the planning period the composition of suppliers or the contractual terms of settlements with them change, which leads to a change in the turnover of accounts payable, then the calculated value changes inversely with the application of the number of revolutions in the same way as we calculated receivables above.

Accounts payable for wages, social insurance and security, as a rule, depend on the established frequency of settlements, respectively, with employees of the enterprise and extra-budgetary funds. Therefore, it can be calculated for the planning period based on the amount at the end of the base period, increased in proportion to the growth of labor costs and deductions to off-budget funds as part of the costs of products sold in the planning period. The basic value of accounts payable for deductions to off-budget funds and wages in accordance with our balance sheet data and the growth rate of these costs is: (384 + 180) x 123.6 / 100 = 697.1 thousand rubles.

It is more difficult and time-consuming to determine the planned amount of accounts payable to the budget with a sufficient degree of accuracy. If the enterprise has no overdue debts to the budget, then the base amount reflects the required amount of debts corresponding to the established frequency of payments to the budget for various types of taxes. However, due to the change in sales proceeds and profits in the planning period compared to the base period and the preservation of the size of all other objects of taxation, it is necessary to calculate the increase in income tax, VAT and all Other taxes, the amounts of which depend on sales proceeds, the profit of the wage fund. This is done by direct account, based on the specific data of each enterprise. In our case, the increase in income tax, VAT, transport tax, deductions for the maintenance of housing stock and social and cultural facilities will total 236.5 thousand rubles. Then, for the Calculation, it is necessary to determine the percentage of accounts payable for these taxes to the total amount of payments due on them in the base period. At our enterprise it is equal to 11.5%. This means that the increase in accounts payable to the budget is 236.5 x 11.5/100 == 27.2 thousand rubles. Of course, this value is calculated with some tolerance. But for the preparation of the planned balance, the error can be ignored, since the debt to the budget, as a rule, is not a quantitatively decisive part of the accounts payable of the enterprise.

Thus, we calculated the planned size of assets and liabilities, which change under the influence of changes in sales proceeds, prices for purchased raw materials, materials and services, and the level of wages. These factors operate at each enterprise constantly, therefore, they must be taken into account when drawing up any planned balance.

As noted above, other reasons are possible under the influence of which assets and liabilities change, but they are of a different nature and are mainly related to changes in the investment and financial policy of the enterprise. If such reasons exist, non-current assets, capital and reserves, long-term liabilities, bank loans, short-term financial investments may change.

In our calculation, we proceed from the fact that there were no such changes in the planning period compared to the base period. If they were, then the calculation of changes in the named elements of assets and liabilities is carried out by direct account and is not difficult.

Based on the calculations made, we will draw up the planned balance sheet of the enterprise. At the same time, it must be borne in mind that in the planned balance sheet, compiled on the basis of only changes in assets and liabilities, the total amounts of the value of property and sources of financing do not necessarily coincide. On the contrary, as a rule, they do not coincide, and either a surplus or a shortage of funding sources is revealed in comparison with the required amount of assets. Only after that it is possible to decide on the direction of the planned profit to replenish the sources of financing, if it turns out that this is necessary. Therefore, for now, at this stage of planning, we do not consider in more detail the size of the planned profit of the enterprise. When compiling the balance sheet, we will also take into account that capital and reserves in the base period occupy a very large share in the sources of financing. The company uses very few borrowed sources. It is hardly advisable to increase capital and reserves even more, even if such a possibility exists.

When drawing up the planned balance, we will take into account that we calculated the stocks and receivables at the minimum and maximum levels. VAT on purchased materials will increase in proportion to the increase in the cost of inventories, i.e., it will be equal to 163 x 1187/1155 = 168 thousand rubles, or 163 x 1394/1155 = 197 thousand rubles. We accept the growth of cash in proportion to the growth in sales proceeds, i.e. 84 x 1.1 \u003d 92 thousand rubles.

Table 9.5 - Estimated planned balance of the enterprise at the end date of the planning period (thousand rubles)

		Maximum
1. Non-current assets
2. Current assets (p. 2.1.-2.6)
2.1. Stocks
2.2. VAT on purchased assets
2.3. Accounts receivable
2.4. Short-term financial investments
2.5. Cash
2.6. Other current assets
1- Capital and reserves
2. Long-term liabilities
3. Short-term liabilities (p. 3.1. - 3.3)
3.1 Credits and loans
3.2. Accounts payable (lines 3.2.1 - 3.2.4.)
3.2.1. Suppliers
3.2.2. For wages, social insurance and security
3.2.3. budget
3.2.4. Other creditors and advances
3.3. Other short-term liabilities (funds and reserves of the enterprise)
Total assets
Total liabilities
Excess:
assets over liabilities
liabilities over assets

The calculation shows that if all the parameters of the planned balance are determined correctly, then the financial situation in the coming period will be favorable for the enterprise: the amount of funding sources exceeds the cost of the necessary assets, and if the stocks and receivables have a minimum estimated value, then this excess is significant increases. This means that the enterprise does not need to seek additional sources of financing even in the face of an increase in sales proceeds and prices for acquired material resources.

Obviously, there is no need to direct any part of the profit to increase capital and reserves; profits can be used entirely for other purposes.

With a different balance sheet structure, a different increase or decrease in sales proceeds and certain types of costs for sold products, a different cost structure, etc., the conclusions could be completely different. It could turn out that the excess of funding sources over assets is even more significant, or, conversely, the company needs additional sources. Then it would be necessary to increase equity capital, attract credits and loans, or change the contractual terms of settlements with suppliers.

9.3. Change in financial and cash flows due to changes in sales proceeds

Consider the relationship between changes in sales proceeds, costs and profits, on the one hand, and changes in the assets and liabilities of the enterprise, on the other, according to the largest factor. Such a discussion will be somewhat sketchy, but will allow a clearer understanding of the decisive factors that influence this dependence.

We accept the following conditions.

1. Accounts receivable turnover - 45 days;
2. Accounts payable turnover -40 days;
3. Inventory turnover - 30 days;
4. Material costs - 50% of sales proceeds;
5. Free profit - 6% of sales proceeds.

Under all these conditions, it is planned to increase the proceeds from sales by 100 thousand rubles. What will happen to balance sheet data?

Accounts receivable will naturally increase. If the additional annual cost of sold products is 100 thousand rubles, then the additional receivables will be:

100 x 45/360 = 12.5 thousand rubles.

Stocks will increase in proportion to the increase in material costs as part of sales proceeds, and taking into account their turnover, the increase in stocks is equal to: 50 x 30/360 = 4.2 thousand rubles.

Accounts payable, formed mainly during the acquisition of material resources, will increase by 50 x 40/360 = 5.5 thousand rubles.

Thus, the increase in assets under the influence of an increase in sales proceeds will be 12.5 + 4.2 = 16.7 thousand rubles; the increase in sources of financing in the form of accounts payable - only 5.5 thousand rubles. The enterprise needs additional sources of financing in the amount of 16.7 - 5.5 = 11.2 thousand rubles. Even if the free profit of the enterprise is used to increase its own sources, the need for additional borrowed funds will be equal to 11.2 - 6 = 5.2 thousand rubles.

Under the same initial conditions, sales revenue does not increase, but decreases by 100 thousand rubles. in the planning period compared to the base period. Then accounts receivable will respectively decrease by 12.5 thousand rubles, inventories - by 4.2 thousand rubles, and accounts payable - by only 5.5 thousand rubles. Available sources of financing in the amount of 11.2 thousand rubles. turn out to be redundant in comparison with the need for assets, and the profit in full can be directed to other purposes.

The given example does not mean that in all cases the increase in the volume of sales creates the problem of additional sources of financing, and the decrease eliminates this problem. Consider other options in which the situation is different (Tables 9.6 and 9.7).

Table 9.6 - Change in the assets and liabilities of the enterprise when changing the terms of settlements with buyers and suppliers and the growth of sales proceeds

Indicators	Options
6. Increase in receivables (line 1 x line 2: 360), thousand rubles.
7. Increase in stocks (line 1 x line 5: 100) x line 3: 360, thousand rubles.
8. Increase in accounts payable (line 1 x line 5: 100) x line 4: 360, thousand rubles.
9. Lack of funding sources (line 6 + line 7 - line 8), thousand rubles.
10. Excess funding sources (p. 8 - p. 6 - p. 7)

The calculation shows that with the same increase in sales volume and the same annual inventory requirement, the shortage or surplus of funding sources is determined only by the ratio of the turnover of receivables and payables and stocks. We repeat the conclusion that has already been made earlier: for the financial condition of the enterprise in the case of a prospect of increasing its sales volume, it is favorable when the turnover of receivables is faster than the turnover of accounts payable. The lower the share of material costs in the composition of sales proceeds, the greater the gap in the number of days of turnover of receivables and payables is required to ensure that funding sources cover assets associated with an increase in sales volume. To illustrate this conclusion, in the next calculation, we will take options II and III of the previous table as initial data, where funding sources exceed assets. Let's change only one condition: the share of material costs in the sales proceeds is 40% instead of 55%.

Table 9.7 - Change in the assets and liabilities of the enterprise with a change in the share of material costs in sales proceeds

Indicators	Options
1. Increase in sales proceeds, thousand rubles
2. Accounts receivable turnover, days
3. Inventory turnover, days
4. Accounts payable turnover, days
5. Material costs as part of sales proceeds, %
(^Increase in accounts receivable, thousand rubles
7. Increase in accounts payable, thousand rubles.
8 - Increase in stocks, thousand rubles.
^Lack of funding sources
Y. Surplus funding sources

Comparison of the last rows of the two previous tables shows that the decrease in the share of material costs, while maintaining all other calculation conditions, led to a deterioration in the ratio of assets and sources of financing.

It is clear that in each individual case, the growth in sales proceeds will lead either to a shortage or to an excess of sources of financing, depending on other indicators of the enterprise. The same conclusion can be drawn for the case of a decrease in sales proceeds.

Therefore, when forecasting an increase or decrease in sales proceeds, it is necessary to consider whether the available sources are sufficient to cover the growing assets (or whether the decrease in sources will be greater than the decrease in assets). If this is the case, then it is necessary to provide for specific additional sources of financing, or borrowed.

When compiling the planned balance, it is advisable to calculate the planned level of solvency of the enterprise. In our enterprise, as we have seen, the total coverage ratio and the current ratio are quite high in the base period. According to the planned balance, the current liquidity ratio is (minimum) 5957: 2489 = 2.393. This level of solvency does not cause concern, and from this point of view, the balance can not be corrected, especially since the company's need for material reserves is small.

The calculation of the increase in assets and liabilities or their decrease contains information on the increase or decrease in solvency ratios. For example, if current assets increase by 16.7 thousand rubles, and short-term debts by 5.5 thousand rubles, this is a factor in the growth of solvency. And vice versa, with a faster increase in short-term debt compared to the growth of current assets, it is necessary to check how much the overall coverage ratio or current liquidity ratio decreases.

In general, it should be borne in mind that with any improvement in the terms of settlements with creditors compared to the terms of settlements with buyers, i.e., with an acceleration in the turnover of accounts receivable or a slowdown in the turnover of accounts payable, the level of solvency of the enterprise decreases. If before that it was on the verge of being critical, it is dangerous for the enterprise; in other cases, a faster turnover of receivables compared to accounts payable is favorable from the point of view of its financial condition.

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is the management of the company's finances, aimed at achieving the strategic and tactical goals of the functioning of this company in the market.

The main issues of financial management are related to the formation of the enterprise's capital and ensuring its most efficient use.

Currently, the concept of "financial management" implies a variety of aspects of financial management of the enterprise. A number of areas of financial management have received in-depth development and stand out as relatively independent scientific and educational disciplines:

• higher financial computing;
• investment analysis;
• risk management;
• crisis management;
• company valuation.

A Brief History of Financial Management

Financial management as a scientific direction originated at the beginning of the last century in the United States and, at the first stages of its formation, considered mainly issues related to the financial aspects of creating new firms and companies, and later - financial investment management and bankruptcy problems.

It is generally accepted that the beginning of this direction was laid by G. Markowitz, who developed in the late 1950s. portfolio theory, on the basis of which W. Sharp, J. Lintner and J. Mossin created a model for assessing the return on financial assets (CAPM) a few years later, linking the risk and return of a portfolio of financial instruments. Further development of this area led to the development of the concept of an efficient market, the creation of the theory of arbitrage pricing, the theory of pricing of options, and a number of other models for evaluating market instruments. Around the same time, intensive research began on the structure of capital and the price of funding sources. The main contribution to this section was made by F. Modigliani and M. Miller. Year of publication of their work “The cost of capital. Corporate Finance. Theory of Investments” in 1958 is considered a milestone, when FM emerged as an independent discipline from applied microeconomics. The portfolio theory and the theory of capital structure can be called the core of financial management, since they allow answering two main questions: where to get money from and where to invest it.

The role of financial management in the management of the organization

Financial management is carried out through financial mechanism, which can be defined as a system of action of financial methods, expressed in the organization, planning and stimulation of the use of .

There are four main elements of the financial mechanism:

1. State normative-legal regulation of the financial activity of the enterprise.
2. Market mechanism for regulating the financial activity of an enterprise.
3. The internal mechanism for regulating the financial activities of the enterprise (charter, financial strategy, internal standards and requirements).
4. The system of specific techniques and methods used in the enterprise in the process of analysis, planning and control of financial activities.

represent a system of economic relations associated with the formation, distribution and use of funds in the process of their circulation. The market environment, the expansion of independence of acceptance have led to a sharp increase in the importance of financial management in the management of any economic structure.

The concept of "management" can be considered from three angles:

• as a system of economic management of the company;
• as a governing body;
• as a form of business activity.

The development of market relations in our country, which made it possible for enterprises to independently make management decisions and manage the final result of their activities, along with a fundamental change, the emergence, introduction of new forms of ownership, and the improvement of the accounting system, led to the realization of the importance of financial management as a scientific discipline and the possibility of using it theoretical and practical results in the management of Russian enterprises and organizations.

Objectives of financial management

The main objectives of financial management:

• increase in the market value of the company's shares;
• increase in profit;
• fixing the company in a particular market or expanding an existing market segment;
• avoiding bankruptcy and major financial failures;
• improving the well-being of workers and/or management personnel;
• contribution to the development of science and technology.

In the process of implementing the goals set, financial management is aimed at solving the following tasks:

1. Achieving high financial stability of the company in the process of its development. This task is implemented by forming an effective policy for financing the economic and investment activities of the company, managing the formation of financial resources from various sources, and optimizing the financial structure of the company's capital.

2. Optimization of the company's cash flows. This task is achieved through effective management of solvency and absolute liquidity. At the same time, the free balance of cash assets should be minimized in order to reduce the risk of impairment of excess cash.

3. Ensuring the maximization of the company's profits. This task is implemented by managing the formation of financial results, optimizing the size and composition of the financial resources of the company's non-current and current assets, and balancing cash flows.

4. Minimization of financial risks. This task is achieved by developing an effective system for identifying risks, qualitative and quantitative assessment of financial risks, determining ways to minimize them, and developing an insurance policy.

Some goals and criteria for managing company finances

	Increasing the welfare of company owners	Consolidation in the market, financial balance	Maximizing the current arrived	The economic growth
Criteria	Increase in market value shares. Increasing return on equity	Positive dynamics and stability of liquidity indicators, financial independence and sustainability	Growth of indicators of profitability of turnover and assets. Growth of indicators of business activity	Positive dynamics and stability of capital growth rates, turnover and arrived. Growth of economic profitability. Stability of financial indicators sustainability

Functions of financial management

Financial management includes the following aspects of activity:

• organization and management of relations of the enterprise in the financial sector with other enterprises, banks, insurance companies, budgets of all levels;
• formation of financial resources and their optimization;
• placement of capital and management of the process of its functioning;
• analysis and management of the company's cash flows.

Financial management includes management strategy and tactics.

Management strategy- the general direction and method of using funds to achieve the goal. This method corresponds to a certain set of rules and decision-making constraints. Management tactics- these are specific methods and techniques for achieving the set goal within certain conditions of the economic activity of the enterprise in question.

Functions of financial management:

Planning function:

• development of the company's financial strategy; formation of a system of goals and main indicators of its activities for the long and short term; carrying out long-term and short-term financial planning; preparation of the company's budget;
• formation of pricing policy; sales forecast; analysis of economic factors and market conditions;

The function of forming the capital structure and calculating its price:

• determination of the total need for financial resources to ensure the activities of the organization; formation and analysis of alternative sources of financing; formation of an optimal financial structure of capital that provides the value of the company;
• calculation of the price of capital;
• formation of an effective flow of reinvested profits and depreciation.
• investment analysis;

Investment Policy Development Function:

• formation of the most important areas for investing the company's capital; assessment of the investment attractiveness of individual financial instruments, selection of the most effective of them;
• formation of an investment portfolio and its management.

Working capital management function:

• identifying the real need for certain types of assets and determining their value based on the expected growth rate of the company;
• formation of an asset structure that meets the company's liquidity requirements;
• increasing the efficiency of working capital use;
• control and regulation of monetary transactions; cash flow analysis;

Financial risk analysis function:

• identification of financial risks inherent in the investment and financial and economic activities of the company;
• analysis and forecasting of financial and business risks;

Evaluation and consultation function:

• formation of a system of measures to prevent and minimize financial risks;
• coordination and control over the execution of management decisions within the framework of financial management;
• organization of a monitoring system for financial activities, implementation of individual projects and management of financial results;
• adjustment of financial plans, budgets of individual departments;
• holding consultations with heads of departments of the company and developing recommendations on financial matters.

Information support of financial management

Specific indicators of this system are formed from external and internal sources, which can be divided into the following groups:

1. Indicators characterizing the general economic development of the country (used in making strategic decisions in the field of financial activity).
2. Indicators characterizing the financial market situation (used in the formation of a portfolio of financial investments, the implementation of short-term investments).
3. Indicators characterizing the activities of competitors and counterparties (used in making operational management decisions).
4. Regulatory indicators.
5. Indicators characterizing the results of the financial activity of the enterprise (balance sheet, income statement).
6. Normative and planned indicators.

For the convenience of studying the material, the article financial management is divided into topics:

The financial manager acts in circumstances specified from the outside (taxes, interest on loans, currency legislation, the state of the financial and foreign exchange markets, etc.) and proceeds from the possibilities that are determined by the current legislation in the country. Financial management requires not only a highly qualified manager - an understanding of the basics, professional education in the field of finance and credit, knowledge of tax laws, features of banking and exchange activities, the ability to analyze the financial statements of an enterprise, but also appropriate thinking and intuition.

Usually the financial manager is not the owner of the enterprise, but an employee under the contract. But he is interested in the results of the enterprise, because, depending on this and his qualifications, he receives not only wages, but also a percentage of profits. For example, in the US, top managers own a stake in the companies where they work.

All aspects of financial management, specificity and scope of job responsibilities cannot be covered by one person. Currently, financial management is developing in many directions. Narrow specialists have appeared in this area - in insurance business, securities transactions, auditing, bill circulation, valuation, bankruptcy management, tax optimization, real estate valuation, etc., who can be involved on a contractual basis to perform certain work. Many banks and audit firms also provide financial management consulting services.

At the same time, the chief accountant of any commercial organization, regardless of its organizational and legal form, must have high qualifications and knowledge of the basics of financial management. Accounting data is the information base for management and financial analysis, which serves as a tool for internal financial management. In modern conditions, there are increased requirements for the quality of information about the financial position of the enterprise, the circle of external users of accounting (financial) statements has expanded. These include, for example, current and potential creditors, shareholders, investors, partners, business press, representatives of the information business. The latter compile and publish ratings of the largest and most stable companies, provide analytically processed data on the financial statements of a particular enterprise to interested users, thereby contributing to the formation of its image.

The list of specific tasks in the field of financial management is determined by the value of the enterprise's cash turnover, the need for financial resources and the specifics of production activities. Essential for the specification of these tasks and ways to solve them is the delineation of job responsibilities of employees of the economic divisions of the enterprise, the organization of accounting with a division into managerial and financial.

Structure and tasks of the financial service. In Western countries, financial management of companies and corporations has already acquired stable forms. In the specialized and educational literature, financial management is usually considered on the example of an open joint-stock company (JSC), since it is this type of enterprise that has all the possibilities in raising capital and is characterized by the most complex structure of financial relations.

For example, in the United States, the division of functions in the field of financial management occurs in two directions. Financial managers differ in functions and levels of management. The chief financial manager (vice president - in a large corporation, financial director - in a relatively smaller company) reports to two functional managers - the controller and the treasurer.

The functions of the controller are similar to the functions of the chief accountant and consist mainly in working with accounting data and economic analysis of the JSC. The duties of the controller include the organization of production and financial accounting, reporting, planning and control of the on-farm activities of the Academy of Sciences, processing of internal information about the activities of the company in order to use it for/assessing the financial condition of the joint-stock company, drawing up cost estimates, and taxes.

Functions of financial management

The functions of financial management determine the formation of the structure of the control system. There are two main types of financial management functions.

1. The functions of the management object are the organization of money circulation, the supply of financial resources and investment instruments (values), the supply of fixed and working capital (i.e., equipment, raw materials, material), organization of financial work, etc.
2. Functions of the subject of management - a general type of activity that expresses the direction of the implementation of the impact on the attitude of people in the economic process and in financial work. These functions, i.e., a specific type of management activity, sequentially consist of collecting, systematizing, transmitting, storing information, developing and making a decision, transforming it into a team.

In addition, the following functions are distinguished.

1. Planning is essential. After all, in order to give a command, it is necessary to draw up a task, a program of action, for which plans for financial measures, income generation, and effective use of financial resources are developed. The management function - financial planning - covers the entire range of activities, both in the development of plan targets and in their implementation.
2. Forecasting (from the Greek prognosis - foresight) in financial management - the development of long-term changes in the financial condition of the object as a whole and its various parts. Forecasting, unlike planning, does not set the task of directly implementing the developed forecasts in practice. These forecasts represent a prediction of the corresponding changes.
3. The function of an organization in financial management is to bring together people who jointly implement a financial program on the basis of some rules and procedures. The latter include the creation of management bodies, the construction of the structure of the management apparatus, the establishment of relationships between management units, the development of norms, standards, methods, etc.
4. Regulation (from lat. regulate - obedience to a certain order, rule) in financial management - the impact on the object of management, through which the state of stability of the financial system is achieved in the event of a deviation from the specified parameters.
5. Coordination (lat. with - together, ordinatio - arrangement in order) in financial management - the consistency of the work of all parts of the management system, the management apparatus and specialists. Coordination ensures the unity of relations between the object of management, the subject of management, the management apparatus and the individual employee.
6. Incentives in financial management are expressed in encouraging employees of the financial service to be interested in the results of their work. Through stimulation, the distribution of material and spiritual values ​​is managed depending on the quantity and quality of labor expended.
7. Control in financial management is reduced to checking the organization of financial work, implementation, etc. Through control, information is collected on the use of funds and on the financial condition of the object, additional reserves and opportunities are revealed, changes are made to financial programs, to the organization of financial management.

Financial management methods

Methods of financial management are diverse. The main ones are: forecasting, planning, taxation, insurance, self-financing, lending, settlement system, financial assistance system, financial sanctions system, depreciation system, incentive system, principles, trust operations, pledge operations, transfer operations, factoring, rent, leasing. An integral element of the above methods are special methods of financial management: loans, loans, interest rates, dividends, exchange rate quotation, discount, etc. commodity, stock and currency exchanges, other information.

The technical support of the financial management system is an independent and very important element of it. Many modern systems based on paperless technology (interbank settlements, mutual settlements, settlements with credit cards, etc.) are impossible without the use of computer networks, personal computers, and functional application software packages.

The functioning of any financial management system is carried out within the framework of the current legal and regulatory framework. This includes laws, presidential decrees, government resolutions, orders and orders of ministries and departments, licenses, statutory documents, norms, instructions, guidelines, etc.

Along with indirect methods of financial regulation, it uses methods and direct administrative influence on the financial activities of economic entities through:

BREI + labor costs = DS.

Labor costs can be taken from order journal 10, in addition, cost estimates and appropriate reporting forms (for example, form 4 for payments to the Pension Fund) must be used.

A thoughtful and meticulous financial manager will not be lazy with calculations and, most likely, will check the results obtained in a “direct” way, starting with value added (sales proceeds - costs (external costs) + change in stocks) for the period (year, quarter). Then subtract the cost of wages, the cost of restoring the means of production (means of labor) and get the net result of the exploitation of the investment.

In addition, one should not forget the rule requiring, where possible, the calculation of average, average chronological and other values ​​​​of the enterprise's performance indicators to improve the accuracy of the results obtained:

ER = NREI xSh0.

Now we have everything to calculate the economic return on assets (formula 4.4). In the denominator, the value of the balance sheet asset for the period. It must be remembered that the balance sheet figures are only “photos” for a certain date, therefore the value of the asset for the period is determined as the average or average chronological value of the balance sheet values ​​of this parameter known to the financial manager. The same applies to the need to deduct from the value of the asset the amount of accounts payable for the period). In accounting documents, it is not difficult to find both the asset and the amount of accounts payable (see the balance sheet of the enterprise).

Very useful for making the right financial decisions is to determine not only the value of the economic profitability of assets, but also the calculation of what is called the commercial and transformation ratio. The names of these terms are also tracing paper from the English language. For our country, these are not yet well-established concepts, however, like the gross result of investment exploitation, the net result of investment exploitation, and many others. The economic meaning of the commercial margin and the transformation ratio is quite easy to determine:

NREI NREI Turnover
ER \u003d x 100 \u003d x 100 x -; (4.5)
Asset Turnover Asset
ER \u003d KM x KT, (4.6)
where KM - commercial margin; CT - transformation ratio.

The commercial margin from an economic point of view shows the profitability of turnover (sales proceeds and non-operating income). It is expressed as a percentage. From an accounting point of view, the commercial margin is quite simply determined on the basis of the indicators of the appendix to the balance sheet of the enterprise - the Profit and Loss Statement.

The transformation ratio from an economic point of view shows the efficiency of using an enterprise asset (how many rubles of revenue are obtained from one ruble of an asset). The financial statements of the enterprise make it possible to accurately determine the value of the transformation ratio (we take the numerator from the Profit and Loss Statement, the denominator - from the balance sheet of the enterprise itself).

In a specific work, it will be useful to calculate indicators close to the commercial margin and the transformation ratio, which differ from the latter by the value of the numerator (for example, instead of the net result of the operation of investments). Now it is important to correctly economically interpret the data obtained on the economic profitability of assets, commercial margin and transformation ratio. The very methodological approach to their definition shows that we are talking about an inverse relationship between the commercial margin and the transformation ratio. That is, the higher the commercial margin, the lower the transformation ratio, and vice versa. This means in practice that in order to achieve a higher value of profitability, we cannot (without negative consequences for the enterprise) increase the commercial margin (at any cost increase the net result of the operation of investments per unit of revenue, which is achieved by increasing the intensity of labor and the intensity of the use of labor means ). It is equally unsafe to increase the transformation ratio at any cost (by reducing the asset, freeing from everything that does not immediately work to increase revenue).

It is clear that the specifics of the industry business affects the value of the commercial margin and the transformation ratio (for example, capital-intensive and non-asset-intensive types of production cause different values ​​of the commercial margin and the transformation ratio).

However, two rules must be formulated:

With a significant amount of assets per unit of turnover, it is much more difficult for an enterprise to move to another area of ​​business and vice versa (hence, for entrepreneurs engaged in a capital-intensive type of business, it is much more difficult to switch to the production of other products, move to another industry, while entrepreneurs employed in a non-fund-intensive type of business , for example, in the service sector, can, without any serious losses, switch to the production of other products, move to another business sector). Thus, if the company has a low value of the commercial margin (with rational business management), it needs to gain a foothold in the existing market segment. This is the most correct strategy of the company. If the value of the commercial margin (with rational business management) is large enough, you can follow the profit maximization strategy and boldly move to other areas of business;

You cannot maximize commercial margin at any cost. The transformation ratio will immediately remind you of this. The consequences of neglect in the transformation ratio can be catastrophic for the enterprise. Adjusting the transformation ratio is more difficult than the commercial margin.

Objects of financial management

Financial management as a management system consists of two subsystems:

Controlled subsystem (control object);
control subsystem (subject of control).

The object of management is a set of conditions for the implementation of money circulation, the circulation of value, the movement of financial resources and financial relations between enterprises and their divisions in the economic process.

The subject of management is a separate group of specialists (financial directorate, financial manager), which, through various forms of managerial influence, ensures the purposeful functioning of the object, i.e. enterprise finance.

Types of financial management

The types of financial management include aggressive management, associated with high risks, for example, the task of achieving the goals of the enterprise in the shortest possible time with the maximum use of external sources of financing, primarily borrowed. Conservative management is based on risk minimization. One of its main goals is to ensure maximum financial stability, stability of production development. A reasonable compromise between aggressive and conservative is moderate management. Many financial and economic indicators in moderate financial management approach the normative, planned, average market, socially normal or industry average. There is also ideal management, where, on the one hand, long- and short-term goals and objectives of management are optimally adjusted and balanced, and on the other hand, the means of their implementation. There are also current and strategic financial management. The first serves the current, tactical goals of the enterprise, and the second - long-term, strategic goals.

Development of financial management

In the formation and development of financial management as a science, four stages can be distinguished.

First stage. The need for conscious, purposeful activity in the management of economic, economic processes in the West arose a very long time ago. However, it began to be realized in theory and practice only from the 1850s. (this time can be considered the beginning of the history of financial management). Eugene Brigham, a well-known American specialist in the field of financial management, connects its emergence as an independent scientific discipline since the 1860s.

Until the 1860s the finances of the companies were managed by practitioners. Their experience could not be effectively applied in all industries, used in every situation without exception. Knowledge was empirical. The development of the sphere of management was slow. After the beginning of the first stage of the formation of financial management, the place of experimental scientific instruments was gradually taken by science. With its help, it was necessary to organize the use of limited amounts of capital to identify effective ways to manage certain types of resources.

The selection of financial management as an independent scientific discipline was caused by a number of prerequisites. The main ones are listed below:

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The object of regulation is the existing financial resources of the enterprise, debt obligations, liquid assets. The task of financial management is to reduce losses and maximize business profitability.

Financial management focuses on the strategic goals of the company, quickly adapts to changes in the situation. The cash flow management structure is closely integrated with the departments of the company in order to control the amount of profit (loss) for each management decision.

Tasks

In terms of management, financial management is seen as part of the overall management of the business and a separate department in the company that performs a narrow list of functions.

• Financial management as a management system includes the creation of a financial strategy, the construction of an accounting policy, the introduction of accounting software products, constant monitoring of the company's performance. For example, the tasks of financial managers include building a budget, a system of material motivation for staff.
• Financial management, as a separate department, manages financial assets and risks, monitors cash flows, selects investment projects for participation, monitors information flows in the company. For example, the assessment of acquired fixed assets is carried out after studying the accompanying documentation.

The financial manager determines the investment policy of the company (a list of projects in which assets are invested), manages tangible assets (executes transactions for the sale of fixed assets), calculates and pays dividends to shareholders. The constant task of financial management is the classification and accounting of the company's income and expenses, the preparation of analytical reports for management.

The effectiveness of financial management depends on the quality of external sources of information that are used to collect and analyze indicators. For example, public data from banks and insurance companies, information from competitors, regulatory requirements from supervisory authorities, and the financial statements of an enterprise should be checked for completeness and accuracy.

Principles

Regardless of the specifics of the company, current and strategic goals of its development, financial management is a systematic activity aimed at solving specific problems by distributing cash flows. The activity of a financial manager is aimed at solving strategic problems, achieving financial well-being in the long term.

• A compromise of risk and return. Financial management considers opportunity costs, overall market performance, projected returns and associated risks before making management decisions. For example, investing in startups brings high returns and is accompanied by the risk of losing investments.
• Asymmetry and time value of information. Confidential information about market characteristics obtained from counterparties or supervisory authorities can be beneficial in the short term. For example, "tax holidays" for R&D companies may be valid for two years.

Financial management assumes an unlimited period of operation of the company, strives to meet the interests of business owners and employees, and fairly evaluate the available sources of financing.