Financial management in pdf tables. Why is it necessary to study financial management? Basic concepts and principles of financial management
11. Methods for managing the financial stability of the enterprise.
Financial condition (FS) is a complex concept that depends on many factors and is characterized by a system of indicators reflecting the availability and placement of funds, real and potential financial capabilities. The main indicators characterizing the FS of the enterprise, yavl. : provision with own circulating assets and their safety; condition of standardized stocks of material assets; the efficiency of using a bank loan and its material support; assessment of the stability of the company's solvency. Analysis of the factors that determine the financial condition helps to identify reserves and growth in production efficiency. F.S. depends on all aspects of the activities of enterprises: on the implementation of production plans, reducing the cost of production and increasing profits, increasing production efficiency, as well as on factors operating in the field of circulation and related to the organization of the turnover of commodity and monetary funds - improving relationships with suppliers of raw materials, buyers of products, improvement of sales and settlement processes In the analysis it is necessary to identify the reasons for the unstable state of the enterprise and outline ways to improve it. The stability of the financial position of the enterprise largely depends on the feasibility and correctness of investing financial resources in assets. The most general idea of \u200b\u200bthe qualitative changes that have taken place in the structure of funds and their sources, as well as the dynamics of these changes, can be obtained using vertical and horizontal analysis of reporting. Vertical analysis shows the structure of enterprise funds and their sources, the need and feasibility of this analysis is: -the transition to relative indicators allows for inter-farm comparisons of the economic potential and performance of enterprises that differ in the amount of resources used; relative indicators to a certain extent smooth out the negative impact of inflationary processes, which can significantly distort the absolute indicators of financial statements. Horizontal analysis of financial statements consists in constructing one or more analytical tables, in which absolute indicators are supplemented by relative growth (decline) rates. The degree of aggregation of indicators is determined by the analyst, as a rule, the basic growth rates for a number of years (adjacent periods) are taken, which allows analyzing not only changes in individual indicators, but also predicting their values. An important group of indicators characterizing the financial condition of an enterprise are liquidity indicators - they characterize the enterprise's ability to repay its short-term liabilities at the expense of its current assets. Among the liquidity indicators, the following indicators are calculated: 1. Absolute liquidity ratio - showing what part of the current debt can be repaid at the expense of cash and fast-selling securities (standard 20-30%). 2. The coefficient of urgent liquidity - showing what part of the current debt can be repaid not only at the expense of cash and fast-selling securities, but also the expected receipts from debtors (standard 70-80%). 3. Coeff-t of total liquidity - allows you to establish the extent to which current assets cover short-term liabilities (standard 200-250%). 4. Working capital - indicates the excess of current assets over short-term liabilities, about the overall liquidity of the enterprise. 5. Coeff-t of the liquidity of tangible assets - shows the extent to which tangible assets (reserves and costs) cover short-term liabilities. 6. Coefficient of liquidity of funds in the calculations - shows the extent to which expected receipts from debtors will be used to pay off short-term obligations. 7. The ratio of the ratio of accounts receivable and payable - shows the amount of accounts payable for 1 UAH. accounts receivable. 8. The coefficient of maneuverability - shows what part of own funds is invested in the most liquid assets (standard\u003e \u003d 0.5). Solvency characterizes the ability of an enterprise to make regular payments and fulfill monetary obligations at the expense of cash, as well as easily mobilized assets. Among the indicators of solvency, the following is calculated: 1. The coefficient of economic independence (autonomy) - characterizes a part of own funds in the total value of the property (\u003e 0.5). 2. Financing ratio - shows what part of the enterprise's activities is financed from its own funds (\u003e 1). 3. Debt ratio - shows what part of the enterprise's activities is financed by borrowed funds (<1). 4.Коэффициент обеспеченности запасов и затрат собственными средствами - показывает, какая часть материальных ценностей покрывается за счет собственных средств (>0.8). 5. Coefficient of availability of commodity stocks - shows what part of stocks is covered by own funds (\u003e 0.5). 6. Coefficient of provision of working capital - shows what part of working capital is covered by own funds (\u003e 0.5). The final conclusion about the financial condition of the enterprise can be made only after calculating the generalizing indicators of the financial stability of the enterprise characterizing the availability of resources at the enterprise, as well as their sufficiency for the formation of reserves and costs. When assessing the financial condition, it should be taken into account that: 1. If E1, E2, E3\u003e 0 then the company has absolute financial solvency; 2.If E1< 0, Е2 > 0, E3\u003e 0, then normal; 3.If E1< 0, Е2 < 0, Е3 > 0, then the precarious financial position; 4.If E1< 0, Е2 < 0, Е3 < 0, то кризисное положение,Е1 излишек (недостаток) собственных оборотных средств для формирования запасов и затрат; Е2 излишек (недостаток) собственных оборотных, долгосрочных заёмных средств для формирования запасов и затрат; Е3 излишек (недостаток) собственных оборотных, долгосрочных и краткосрочных заёмных средств для формирования запасов и затрат.
For the convenience of studying the material, we divide the article financial management into topics:
The financial manager acts in the circumstances set from the outside (taxes, interest on loans, foreign exchange 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, tax legislation, 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, since, depending on this and his qualifications, he receives not only wages, but also a percentage of the profit. For example, in the United States, 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 areas. In this area, narrow specialists have appeared - in insurance, securities transactions, audit, bill circulation, appraisal, bankruptcy management, tax optimization, real estate appraisal, 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, should have high qualifications, knowledge of the basics of financial management. Accounting data is an information base for management and financial analysis, which serves as a tool for internal financial management. In modern conditions, increased requirements are imposed on the quality of information on the financial position of an enterprise, the circle of external users of accounting (financial) statements has expanded. These include, for example, current and potential creditors, shareholders, investors, partners, the business press, and representatives of the information business. The latter compose and publish ratings of the largest and most stable companies, provide analytically processed data from 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 size of the company's cash turnover, the need for financial resources and the specifics of production activities. Of essential importance for the specification of these tasks and methods of their solution is the delineation of the job responsibilities of employees of the economic units of the enterprise, the organization of accounting with division into managerial and financial.
The structure and tasks of the financial service. In Western countries, financial management of companies and corporations has already acquired stable forms. In special 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 capabilities to raise capital for 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, CFO in a relatively smaller company) reports to two functional managers - the controller and the treasurer.
The functions of the controller are close to the functions of the chief accountant and consist mainly of working with accounting data and economic analysis of JSC activities. 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 JSC, drawing up cost estimates and taxes.
Financial management functions
Financial management functions determine the formation of the structure of the management system. There are two main types of financial management functions.1. Functions of the object of management - the organization of monetary circulation, the supply of financial resources and investment instruments (values), the supply of fixed and circulating assets (ie, equipment, raw materials, material), the organization of financial work, etc.
2. Functions of the subject of management - a general type of activity that expresses the direction of the impact on the attitude of people in the economic process and in financial work. These functions, that is, a specific type of management activity, consistently consist of collecting, systematizing, transferring, 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, an action program, for which plans of financial measures, income generation, and effective use of financial resources are developed. The management function - financial planning - covers the whole range of activities, both for the development of planned targets and for their implementation.
2. Forecasting (from the Greek. Prognosis - foresight) in financial management - the development for the long term of changes in the financial condition of an 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 projections represent an anticipation of related changes.
3. The function of an organization in financial management is reduced to uniting people who jointly implement a financial program on the basis of some rules and procedures. The latter include the creation of governing bodies, the construction of the structure of the management apparatus, the establishment of the relationship between management units, the development of norms, standards, methods, etc.
4. Regulation (from Lat. Regulate - submission to a certain order, rule) in financial management - the impact on the management object, 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. Co - together, ordinatio - arrangement in order) in financial management - consistency of the work of all links 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 incentives, the distribution of material and spiritual values \u200b\u200bis controlled depending on the quantity and quality of labor expended.
7. Control in financial management is reduced to checking the organization of financial work, performance, etc. Through control, information is collected on the use of funds and the financial condition of the facility, additional reserves and opportunities are revealed, changes are made to financial programs, to the organization of financial management.
Financial management methods
Financial management methods 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 techniques of financial management: loans, borrowings, interest rates, dividends, quotation of exchange rates, discounts, etc. The basis of information support for the financial management system is any information of a financial nature: messages from financial authorities, information from institutions of the banking system, information 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, netting, settlements using credit cards, etc.) are impossible without the use of computer networks, personal computers, and functional 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 decrees, orders and orders of ministries and departments, licenses, statutory documents, norms, instructions, guidelines, etc.
Along with indirect methods of regulation of finance, he uses methods of direct administrative influence on the financial activities of economic entities through:
BREI + labor costs \u003d DS.
The cost of labor can be taken from the journal order 10, in addition, you must use the cost estimate and the corresponding reporting forms (for example, Form 4 for payments to the Pension Fund).
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 added value (sales revenue - costs (external costs) + inventory change) for a period (year, quarter). Then it will deduct the cost of wages, the cost of restoring the means of production (means of labor) and receive the net result of the exploitation of investments
In addition, one should not forget the rule that requires, where possible, the calculation of average, average chronological and other values \u200b\u200bof the indicators of the enterprise's activity in order to increase the accuracy of the results obtained:
ER \u003d NREI xSh0.
Now we have everything to calculate the economic profitability of assets (formula 4.4). The denominator is the value of the balance sheet asset for the period. It should be remembered that balance sheet indicators are only “photographs” for a certain date, therefore the value of an asset for a period is determined as the average or average chronological value of the balance sheet values \u200b\u200bof 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). It is not difficult to find both the asset and the amount of accounts payable in the accounting documents (see the balance sheet of the enterprise).
It is very useful for making the right financial decisions to determine not only the value of the economic return on assets, but also to calculate what is called the commercial and transformation ratio. The names of these terms are also tracing copies from the English language. For our country, these are not yet well-established concepts, however, like the gross result of the exploitation of investments, the net result of the exploitation of investments, 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 КМ is the commercial margin; CT is the transformation ratio.
Commercial margin from an economic point of view shows the profitability of turnover (sales and non-operating income). It is expressed as a percentage. From an accounting point of view, the commercial margin is quite simply determined based on 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 is 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).
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 operating investments). Now it is important to correctly interpret economically the obtained data on the economic profitability of assets, commercial margin and transformation ratio. The very methodological approach to their definition shows that we are talking about the 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 exploitation of investments per unit of revenue, which is achieved by increasing the intensity of labor and the intensity of use of labor instruments ). 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-capital-intensive types of production cause different values \u200b\u200bof the commercial margin and transformation ratio).
However, two rules need to be formulated:
With a significant value of the asset per unit of turnover, it is much more difficult for an enterprise to move to another area of \u200b\u200bbusiness and vice versa (therefore, for entrepreneurs engaged in a capital-intensive type of business, it is much more difficult to switch to another product, to move to another industry, while entrepreneurs engaged in a non-capital-intensive type of business , for example, in the service sector, they can switch to the production of other products, move to another business sector without any serious losses). Thus, if the enterprise has a low value of the commercial margin (with rational business conduct), it needs to gain a foothold in the existing market segment. This is the most correct strategy for the company. If the value of the commercial margin (with the rational conduct of business) is large enough, you can follow the strategy of maximizing profits and safely move to other areas of business;
Commercial margins cannot be maximized at any cost. The transformation ratio will immediately remind you of this. The consequences of not paying attention to the transformation ratio can be catastrophic for the enterprise. Adjusting the transformation ratio is more difficult than the commercial margin.
Financial management objects
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 monetary 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 management, 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 minimizing risks. One of its main goals is to ensure maximum financial stability, stability of production development. Moderate management is a reasonable compromise between aggressive and conservative. Many financial and economic indicators in moderate financial management approach the normative, planned, average market, socially normal or industry average. There is also an ideal management, where, on the one hand, the long- and short-term goals and objectives of management are optimally verified and balanced, and on the other, the means of their implementation. There is also a distinction between current and strategic financial management. The first serves the current, tactical goals of the enterprise, and the second - long-term, strategic goals.Financial management development
There are four stages in the formation and development of financial management as a science.First step. The need for a conscious, purposeful activity in the management of economic, economic processes in the West arose a long time ago. However, it began to be realized in theory and practice only in the 1850s. (this time can be considered the beginning of the history of financial management). Eugene Brigham, a renowned American financial management specialist, connects its origins as an independent scientific discipline in the 1860s.
Until the 1860s. company finances were managed by practitioners. Their experience could not be effectively applied in all industries, used in every situation without exception. The knowledge was empirical. The development of the management sphere was slow. After the beginning of the first stage of the formation of financial management, science gradually took the place of experimental scientific instruments. 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 separation of financial management into an independent scientific discipline was caused by a number of prerequisites. The main ones are listed below:
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Why is it necessary to study financial management?
Today, one of the main conditions for the stable functioning of any enterprise is a competently and correctly chosen business strategy. And financial management plays a key role in creating this strategy.
The essence of financial management
Financial management is a financial science that studies methods of efficient use of equity and debt capital of a company, ways to get the most profit with the least risk, rapid capital growth. Financial management answers the question of how you can easily and quickly turn a company from an uninteresting to an attractive one for investors.
This is a certain system of principles, forms and methods that is used to correctly regulate the financial activities of an enterprise. It is financial management that is responsible for making investment decisions and finding financial sources for them. That is, by and large, it answers the questions of where to get money and what to do with it next. The relevance of the use of financial management is also due to the fact that modern economic realities and the requirements of the world market imply constant development. Today, a successful business cannot stand still, it must grow, expand, find new ways of self-realization.
Goals and objectives of financial management
The main goal of financial management is to maximize the value of the enterprise by increasing capital.
Detailed goals:
- effective functioning and strengthening of positions in the competitive market;
- preventing company ruin and financial insolvency;
- achieving market leadership and effective functioning in a competitive environment;
- achieving the maximum rate of growth of the organization's price;
- stable growth rate of the firm's reserve;
- maximum increase in the received profit;
- minimizing enterprise costs;
- guaranteeing profitability and economic efficiency.
Basic concepts of financial management
| Concept | Meaning |
| Cash flow |
|
| The trade-off between risk and reward | Any income in business is directly related to risk. That is, the higher the expected profit, the greater the level of risk that is associated with the non-receipt of this profit. Most often in financial management goals are set: maximizing profitability and minimizing costs. But achieving rational proportions between risk and reward is an ideal solution. |
| Capital cost | All sources of financial support of the organization have their own definite value. The cost of capital is the minimum amount that is necessary to recover the cost of maintaining a given resource and which ensures the profitability of the company. This concept plays an important role in the study of investments and the selection of backup options for funds. The manager's task is to choose the most effective and profitable project. |
| Efficiency of the securities market | The level of efficiency of the securities market depends on the degree of its information content and access to information for market participants. This concept is also called the market efficiency hypothesis. Market information efficiency occurs in the following cases:
|
| Asymmetric information | Some categories of persons may possess confidential information, access to which is closed for other market participants. The carriers of such information are often managers, managers, financial directors of firms. |
| Agency relations | Bridging the gap between ownership, management and control. The interests of a company manager do not always coincide with the interests of his employees. Business owners do not always need to have a thorough understanding of business management practices. This is due to the existence of alternative decision-making options, some of which are aimed at obtaining instant profits, while others are aimed at future income. |
| Opportunity Cost | Any financial solution has at least one alternative. And the acceptance of one option inevitably entails a rejection of the alternative. |
Thorough knowledge of the concepts of financial management and their interconnection entails the adoption of effective, balanced, profitable and rational decisions in the process of managing the financial flows of the enterprise.
Financial management functions
Any process or activity requires certain functions. Financial management functions are divided into 2 formats:
Financial management - what is this profession?
The relevance and demand for financial management in modern business leads to a huge demand for qualified specialists, which today significantly exceeds the supply existing on the labor market. This suggests that a person with knowledge in the field of financial management can count not only on guaranteed employment and consistently high earnings, but also on rapid career development.
So, what knowledge and skills should a specialist apply for the position of financial manager?
You can get the necessary knowledge, as well as systematize the existing knowledge without interrupting the main activity on the course Financial management and financial analysis... The first module of the course is provided free of charge.
Education from the Center "Aktiv" is a convenient distance format, highly qualified teaching staff and the opportunity to take an exam for an international diploma online.
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 is guided by the strategic goals of the company and quickly adapts to changes in the situation. The structure for managing financial flows is closely integrated with the departments of the company to control the amount of profit (loss) for each management decision.
Tasks
From a management point of view, 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 implementation of accounting software products, and constant monitoring of the company's performance. For example, the tasks of financial managers include building a budget, a system of material motivation for personnel.
- Financial management as a separate department manages financial assets and risks, monitors cash flows, selects investment projects to participate, and monitors information flows in the company. For example, the assessment of the 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 (draws up transactions for the purchase and 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, open data from banks and insurance companies, information from competitors, regulatory requirements of supervisors and the financial statements of an enterprise must 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 activities of a financial manager are aimed at solving strategic problems, achieving financial well-being in the long term.
- The trade-off of risk and return. Financial management considers opportunity costs, overall market efficiency, projected profitability 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 temporary value of information. Confidential information about the specifics of the market, obtained from counterparties or supervisors, can be beneficial in the short term. For example, a “tax holiday” for R&D companies can be valid for two years.
Financial management assumes an unlimited time of the company's functioning, seeks to meet the interests of business owners and employees, and fairly assess the available sources of funding.
Financial management - financial management of business entities, financial analysis, planning, as well as finding and allocating capital. It covers all major areas of finance and applies to all segments of the financial market. Financial management is also a type of management activity. It is a system of influence of the subject of financial management (financial manager) on his object in order to improve the latter. Moreover, financial management is a form of entrepreneurship.
Financial management is interconnected with cost accounting, marketing, planning.
Self-financing has had a significant positive impact on the economy of enterprises. However, its capabilities in an administrative environment are limited. Certain elements of cost accounting, in particular self-sufficiency and self-financing, ruble control, material responsibility, material interest, have achieved great development in a market economy. Cost accounting is necessary not only for a state enterprise in conditions of public ownership of the means of production, but also for a private enterprise, a commercial organization in conditions of private ownership.
Cost accounting as a method and style of management is in many ways similar to management. However, one should not assume that cost accounting cancels or replaces management, just as management does not cancel cost accounting. There is competition here, which creates a fertile ground for the development of cost accounting and management at the same time.
Marketing means market research, sales system. Marketing is not only the science of selling, but also of managing, it is a type of human activity aimed at meeting needs and wants through exchange. In the 50s of the last century, marketing theory merged with management theory. As a result, the applied science of company management on the principle of marketing arose, which was called "market management theory". Marketing is the concept of managing the development, production and distribution of a product. Marketing affects management, interacts closely with it and is intertwined. Their interconnection guarantees the success of entrepreneurship.
Planning is a system of planning decisions of a company, which, as a participant in the market system, is forced to obey the price mechanism, the law of supply and demand, since it cannot reverse their actions.
By using planning, the firm eliminates the costs that it could have if all actions within the firm were performed on the basis of purchase and sale. By canceling such a relationship, she avoids additional costs.
Planning is one of the functions of management. Financial management brings together the planning of material, technical, labor and financial resources, ensuring their balance. Financial planning in our case has an intra-company orientation and is reflected in a special section of the business plan.