The principles of organizing corporate finance in brief. Functions of corporate finance and principles of their organization

The emergence of a market economy in Russia objectively led to the emergence of private enterprises, an increase in their influence on the system of economic relations, and corporate finance for the entire set of economic relations in the country. This is confirmed by the growing influence of private enterprises (corporations) on the development of the country's economy and forming the corporate sector of the economy. The corporate form of doing business is the main one for any country with a market economy. The growth of the economic potential of enterprises (organizations) is directly related to an increase in revenues to the revenue side of the budget, with the possibility of creating new jobs, with an increase in the income of owners, the welfare of workers and the development of regional infrastructure. The relevance of research on corporate finance management is confirmed by a large number of scientific works in this area and the inclusion of this discipline in the training programs for financiers in different countries... This is confirmed by the facts of awarding the Nobel Prizes in the field of finance over the past 25-30 years to a number of scientists, including G. Markowitz, M. Miller, R. Merton, F. Modigliani, M. Scholes and others.

The phrase "corporate finance" can be viewed in a narrow and broad sense. In a narrow sense, this is the finance of private companies, corporations, enterprises, and in a broad sense, it is a science that studies financial security their activities.

Finance - a set of economic relations that determine the creation, distribution and control of funds

state (centralized) and individual economic entities (enterprises, organizations, institutions, corporations) (decentralized). Information about finance is directly related to information about income, expenses, capital, funds created, etc. The totality of monetary relations of private enterprises forms corporate finance.

Corporate finance (hereinafter referred to as CF) is a science that studies the totality of economic relations, principles and methods that arise in the process of formation, distribution and use of financial resources of companies (corporations, enterprises). This science uses, first of all, concepts, methods, techniques financial management taking into account the specific features of the conduct of activities by economic entities, as well as tools of related sciences and disciplines (economic analysis, micro- and macroeconomics, finance, etc.). Financial management of a corporation can be divided into two parts: management of financial and economic activities for the production of products (works, services), increasing profits, increasing value and other indicators and corporate governance, as a system of relationships between shareholders, managers, the Board of Directors, etc.

The essence of CF is disclosed in the process of cash flow when carrying out transactions between, for example, entities economic activity in the process of acquiring inventories, production of goods (works, services), capital investments; parent (head) and subsidiary (structural subdivisions) enterprises; founders (shareholders) and an enterprise in the process of organizing an enterprise and paying income; the enterprise and workers for wages; between the enterprise and the country's financial system when paying taxes and fees, etc.

Research object KF is the formation and use of capital, monetary funds, income and payments that make up the money turnover, assets and liabilities of enterprises in relation to specific conditions, types of activities and organizational and legal forms of economic entities.

Research subject KF are financial and economic relations that arise in the process of managing the finances of an enterprise (corporation) in a non-equilibrium economic environment during the conduct of activities.

Corporations conduct their activities using the principles of financial organization common to all companies (enterprises): planning, rationality, financial stability, flexibility, cost minimization, property safety and liability, etc. The distinctive and important principles of corporate finance organization include:

1. Publicity - availability and openness of information about activities and decisions made, in addition to confidential, public interest in the goals, objectives and areas of the corporation.
2. Scale - significant influence on the market of goods and factors of production, reflected in the operating (diversified business) and geographical segment of the corporation.
3. Planning - coordination of the volume of production of products (works, services) with the needs (conjuncture) of the market, which allows you to form using financial planning necessary resources and ensure the rhythmic work of the corporation.
4. Consolidation of financial statements - formation of general reporting in accordance with the level of control of the parent company over the activities of another (parent and subsidiary company, companies conducting joint activities, as well as associated and dependent companies).
5. Transfer pricing control - the price of a transaction between related parties, set not by the market, for example, by the parent company of a corporation for the sale of goods (works, services) to subsidiaries, often in order to reduce the tax burden on companies that are part of the corporation. Transfer price control does not apply to international transactions, but to transactions between related parties in Russia in accordance with, for example, Art. 20 and 40 of the Tax Code of the Russian Federation and with Federal law "On amendments to certain legislative acts Russian Federation in connection with the improvement of the principles for determining prices for tax purposes ”dated 18.07.2011 No. 227-FZ.
6. Self-regulation financial and economic activity - an independent response of the corporation to influencing factors and when the state intervenes in the affairs of the corporation in cases of great importance (consequences) for the country's economy. Self-regulation includes the right to independently choose a development strategy, financial planning, creation of reserves and formation of funds, sources of financing based on the current regulatory legal acts. Economic independence is combined with the corporation's acceptance of emerging risks and responsibility for obligations.
7. Self-sufficiency activities and the formation of reserves - reimbursement of the costs incurred by the corporation with the received proceeds (other income), as a means of covering possible losses of resources, due to the impact of the non-equilibrium economic environment, changes in market conditions and force majeure situations in the course of business. This is an indicator of the minimum efficiency of economic activity, providing simple reproduction.
8. Self-financing activities - the availability and sufficiency of equity capital (retained earnings, share capital) required for the organization of simple and extended reproduction. It characterizes the level of profitability of the corporation and its member companies. Self-financing provides greater independence of the corporation (company) than in the case of attracting borrowed funds increases the responsibility of employees and all divisions for possible (incurred) losses. However, the disadvantage in this case may be the comparatively lower rates of production growth and implementation of the development strategy than in the case when additional borrowed funds are attracted. Therefore, corporations in each specific case determine the optimal ratio of their own and borrowed funding sources.
9. Completeness of insurance coverage - a wide range of objects, operations, persons for whom insurance coverage is used in the conduct of the corporation's activities. Multidisciplinary activity and wide range operations carried out by companies belonging to the corporation, including operations in the Forex market, the stock market, the market for borrowed funds, determines high level used insurance coverage of corporations from insurance claims.
10. Providing protection property rights of shareholders (owners) of the corporation with all the variety of organizational forms of combining companies to conduct business.

The main tasks of the CF should include:

providing the corporation with the necessary financial resources;
determination of sources of financing for activities, their size, structure, sequence of attraction and optimization of their cost;
assessment of the feasibility of implementation and management of an investment project, cash inflow and outflow, capital investments;
formation of reserves to ensure smooth operation, settlements with shareholders and counterparties and cover losses in case of force majeure;
determination of the optimal ratio between the possible profitability and the emerging financial risks;
corporation valuation, etc.

The essence of CF is manifested in the functions they implement and is reflected in a number of categories, for example, “income”, “expense”, “profit”, “capital”, “price”, “profitability”, “business value”, etc. The definition of these categories is discussed in following chapters. There are a number of opinions on the number and nature of CF functions: M.V. Romanovsky. identifies three functions of finance: the formation of capital, income and funds; use of capital, income and funds; regulation of cash flows. VV Bocharov defines the economic essence of CF in three functions: the formation of capital, income and monetary funds; use of capital, income and funds; control function... Barannikova N.P., Volodin A.A. recognize two functions of finance: distribution and control. The discussion on this issue continues, since other functions are also distinguished, including stimulating, accounting, etc.

The following three functions of CF are presented as the main ones:

Formation of capital, income and funds ensures the continuity of the reproductive process. Attracting equity and debt capital, formation at the expense of net profit monetary funds (reserve, enterprise development, social development, etc.), accumulation of incoming income, attraction of targeted funding provides the opportunity to acquire resources (material, labor, information and intellectual, etc.) for conducting activities, etc.

Use of capital, income and funds to achieve the set goals of implementation by directing them to the implementation of investment projects, renewal of fixed assets, their use for the purpose of material incentives for employees, creation of reserves, etc. All this allows to increase the economic potential of the enterprise and its value.

Control function, which allows showing the results of the enterprise in the form of cost indicators, comparing the values \u200b\u200bof planned, actual and forecast indicators and identifying deviations in indicators, and the state to influence the results of the enterprise through the financial mechanism. As a result, it is possible to assess the solvency, business activity, financial (market) stability of the enterprise, etc.

Corporate finance is based on a number of concepts that describe the object under study (corporate funds, etc.), which must be taken into account when assessing the effectiveness of management decisions. Financial management concepts define general approaches, methods, assumptions for the formation and spending of funds. Corporate finance specifies these general approaches, methods, assumptions in relation to the conditions of the corporation's business, its form and type of activity. Let's take a quick look at the main concepts.

1. Wealth Maximization Theory, which consists in the fact that the criterion of the efficiency of the corporation is the maximization of equity capital (market value). It is the growth in the value of the business, in contrast to the indicators of the amount of paid dividends, profits, profitability, that currently determines the effectiveness of management decisions to the greatest extent.
2. Cash flow concept, which consists in the recognition of the fact of connection of any business transaction with cash flow (L.A. Bernstein, J. Brigham, J.C. Van Horn, 1950s). The controlled object must generate cash flows, the value of which at its output must be greater than at the input. It is necessary to determine and manage influencing factors, identify cash flow, choose valuation methods and management methods.
3. Resize and cost concept cash, which consists in justifying the shortfall in cash as a result of the accompanying business risks, a decrease in the rate of turnover of funds and changes in their purchasing power over time due to inflation (I. Fisher - 1930, J. Hirshleifer - 1958). According to this concept, risks are determined, discount rates are calculated and the current (present) value of money, indicators of the effectiveness of investment projects (J. Williamson -1938, M. Gordon - 1962, S. Bauman - 1969).
4. The concept of compromise between profitability and risk consists in the recognition of the fact that the higher the income, the higher the risk (F. Knight - 1921). The concept requires the establishment of criteria for the normal value of entrepreneurial risk and the development of measures aimed at minimizing possible loss of funds.
5. Capital price concept indicates the lack of free sources of funding for activities. The cost of the corresponding source determines the minimum level of income for the investor (J. Williamson - 1938, F. Modigliani, M. Miller - 1958-1963). According to this concept, funding sources are identified, their ratios, costs, timing and sequence of attraction are determined, the company develops a dividend and amortization policy, alternative options for the development and implementation of investment projects.
6. The concept of the priority of the interests of the owners enterprise in front of the interests of other participants (G. Simon - 1952) allows you to formulate an important goal of financial management - to maximize the welfare of owners and the market value of the enterprise. The concept defines the managerial decisions of managers.
7. Capital market efficiency concept (G. Roberts - 1967, Y. Fam - 1970) is that the borrowing of additional sources of financing in the capital market, the activity of operations in the securities market and pricing is determined by the saturation of the market with information. Under market efficiency understand the degree of its saturation with information and its availability for users. In an efficient market, the emergence additional information affects the price of financial assets. The influence of information on price changes and financial flows in the market is determined by its efficiency, which can be low, medium and high. With low market efficiency, current prices are completely determined by their dynamics in the previous period. The efficiency of the middle-level market determines the dependence of market prices on their level in the past period and on other publicly available information. With high efficiency, market prices are additionally dependent on information held by individuals.
8. Asymmetric information concept (S. Myers, N. Maidzhlaf - 1984) is associated with the concept of capital market efficiency and consists in the fact that each market participant has different information in terms of its reliability, completeness, verifiability, etc. The degree of asymmetry for each market participant - its own, and this is the meaning of asymmetric information. Buyers of a company's securities have less information than company managers. Managers use this circumstance to inflate the selling price of securities, as a result investors incur additional financial losses. Each market participant believes that the information available to him will give him additional benefits and generate more cash flow. The more participants take such a position, the more actively transactions are carried out in the market and the higher the turnover of funds.
9. Agency relations concept (M. Jensen, W. Meckling - 1976) establishes a gap between ownership and management of a company. Therefore, the owners of the company are not involved in its management, but entrust these functions to agents - finance managers. In this case, a conflict of interests of the parties is possible, which can be weakened if the achievement of a certain goal is accompanied by material stimulation of the activities of managers and their receipt of a part of the profit. In this case, it is necessary to organize control over the activities of managers. This circumstance determines the presence of financial flows aimed at paying for the work of managers, monitoring their activities and audits, creating a system of protection against unwanted decisions of managers, including by introducing constituent documents paragraphs on the procedure major transactions and etc.
10. Opportunity Cost Concept determines how acceptance occurs management decision, namely, by choosing one of several alternative solutions. At the same time, the manager compares the costs for all possible options. Opportunity cost is defined as the income that an enterprise could receive if it had adopted a different use of its resources. This concept is important when considering investment options, raising capital, etc.
11. Going concern concept the enterprise is used in the work of a financial manager, accountant and auditor. Clause 25 of IFRS 1 (M5) "Presentation of Financial Statements" states that financial statements must be prepared on the basis of going concern assumptions, except in certain cases 1. In the event that an enterprise (paragraph 14 of IFRS 10 (/ 45) "Events after the end of the reporting period") decides to suspend or liquidate its work, the principle of going concern is violated. Therefore, the company should not prepare financial statements based on this principle, but is obliged to change the accounting methods, which should be taken into account by the financial manager when making decisions. IN auditor's report an opinion is expressed on compliance financial condition enterprises his intention to continue working in the future. Thus, interested users are given a signal about the opportunity to continue cooperation with this enterprise. In a bankruptcy situation, it must be borne in mind that

IAS - International Accounting Standards. Since April 2001, these standards have been issued under a new name - IFRS (International Financial Reporting Standards).

the cash flows from the sale of property will be less than from their sale under normal business conditions.

12. Decision making concept subdivided into outsider and insider. The outsider concept assumes that the capital of an enterprise is distributed among many owners, holders of shares and bonds, who practically do not participate in the management of the enterprise and also do not control cash flows. This helps to accelerate the growth of the market value of the enterprise. The insider concept defines the ownership of the capital of an enterprise by banks, which influence decision-making. In this case, the question of investor profitability becomes the determining factor.

These concepts complement each other in real life. Assessment of their joint influence in combination with the art of the manager allows to take into account the influence of external and internal factors, and the ability to use the capabilities of the workforce allows you to sustainably provide the company with financial resources.

Directory of the enterprise financier / N.P. Barannikova, L.A. Burmistrova, A.A. Volodin et al. M .: INFRA-M, 2002.

The principles of organizing the finances of enterprises and corporations are closely related to the goals and objectives of their activities, determined by the constituent documents. The principles of organizing finance include:

self-regulation of economic activity;

self-sufficiency and self-financing;

division of sources of formation working capital for own and borrowed;

availability of financial reserves.

Self-regulation principle is to provide enterprises (corporations) with full independence in making and implementing decisions on production and scientific and technical development, based on the available material, labor and financial resources. An enterprise (corporation) directly plans its activities and determines development prospects based on the demand for its products (services). The basis of operational and current plans are agreements (contracts) concluded with consumers of products (services) and suppliers of material resources. Financial plans are designed to provide financial resources for the activities provided for in production plans (business plans), as well as to guarantee interests budget system state.

To attract additional financial resources, corporations issue equity securities (stocks and bonds) and participate in stock exchanges.

Self-sufficiency principle assumes that the funds invested in the development of the corporation should pay off at the expense of profits and other own financial resources. These funds are designed to provide a minimum of standard economic efficiency of the equity capital owned by the enterprise (corporation). With self-sufficiency, it finances simple reproduction from its own sources and brings taxes to the budget system. The implementation of this principle in practice requires the profitable operation of all enterprises and the elimination of losses.

Unlike self-sufficiency, self-financing presupposes not only profitable work, but also the formation on a commercial basis of financial resources that provide not only simple, but also expanded reproduction, as well as revenues of the budget system.

The development of the principle of self-financing involves strengthening the material responsibility of enterprises (corporations) for compliance with contractual obligations, credit and settlement and tax disciplines. Payment of penalties for violation of the terms of business contracts, as well as compensation for losses caused to other organizations does not relieve the enterprise (without the consent of consumers) from fulfilling its obligations to supply products (works, services).

Division of sources of formation of working capital into own and borrowed is determined by the peculiarities of technology and organization of production in certain sectors of the economy. In industries with a seasonal nature of production, the share of borrowed sources of the formation of working capital is increasing.

In industries with a non-seasonal nature of production (heavy industry, transport, communications), own circulating assets prevail in the composition of sources of formation of working capital.

Formation of financial reserves it is necessary to ensure the stable operation of enterprises (corporations) in the face of possible fluctuations in market conditions, increased liability for failure to fulfill their obligations to partners.

In joint stock companies, financial reserves are formed by law from net profit. In other business entities, their formation is regulated by constituent documents.

The implementation of these principles in practice should be carried out in the development of financial policy and organization of the financial management system of an economic entity. In this case, it is advisable to take into account:

scope of activity (commercial and non-commercial activity);

types (directions) of activity (export, import);

industry affiliation (industry, agriculture, transport, construction, trade, etc.);

organizational and legal forms of entrepreneurial activity.

Compliance with these principles in practice ensures financial stability and profitability of enterprises (corporations).

What is meant by corporate finance? What role do they play within the same organization? What are the principles of their use? What tools have been invented for better and more efficient use of them?

general information

Let's first understand the terminology. What is corporate finance? This concept is used for a relatively independent sphere of the system, which includes monetary relations associated with the formation and subsequent use of capital, income and funds during the circulation of funds. It is here that a large (even the main) part of financial resources is formed, which are used as a source for economic growth. An important point is the formation of income, funds, as well as their subsequent distribution. The source of their formation is profit, which remains at the disposal after the payment of all mandatory payments such as covering costs and taxes.

How it all began

Let the reader know that corporate finance is an independent scientific direction... True, it is relatively young - it was formed around the 1950s. The term "organization finance" means a synthetic scientific discipline that is based on economic theory and analysis, accounting and audit, as well as on a number of other areas. The main task is to make optimal decisions in different areas activities.

Impact of legislation

This is not to say that corporate finance is an exclusive business of the organization itself. IN modern world they are quite strongly regulated by civil law and are under the supervision of the relevant government agencies... So, the procedure and the amount of formation of the authorized / reserve capital for organizations with different legal forms, share placement and redemption, mergers and liquidations, write-offs and bankruptcy. It also requires a certain financial independence of the enterprise. Indeed, even at the stage of creation, it is necessary to have certain funds that will allow you to make a profit in the future. So, part of the funds should be directed to wages and material costs. In the future, this money will be compensated by making a profit. At the same time, one should not discount the process of redistribution, especially the moments enshrined at the legislative level. Take, for example, the wages received by an employee. When it is transferred to his bank account, the process of distribution of profits goes on. But taxes are also collected in parallel. And this is a redistribution of profits received by the organization. Corporate finance should take this into account. Now let's move on to another question.

Principles of corporate finance

What is the whole work of this area based on? Corporate finance is based on the following principles:

They should always be associated with the actual turnover of funds and cash flows of the organization that arise during economic activities and in the implementation of operations.
The work procedure is largely regulated by the state;
As a result of cash flows, various monetary funds of the enterprise arise, are formed and are used, which have the form of financial resources and can be invested in the assets of the enterprise.

Functions

Microeconomics studies them. The functions of the organization's finance are directly related to the creation, formation and use of funds and capital of the enterprise. If multiple, then these include:

Regulation of cash flows in the organization itself;
Formation of capital, income and funds;
Use of available resources.

At the same time, one important point should be noted. IN modern conditions not all finances of the organization can be considered as cash funds due to the lack of characteristic features... True, this applies only to the private sector - in the public sector everything is stricter.

Specific features of functions

First, let's talk about cash flow regulation. After reviewing its data, you can get information about the purpose of finance, their formation and use. To a large extent, the state of affairs depends on the existing regulation. Also, the available data can be used to plan finances for future periods. A small example: if we spend a significant amount of money on the production of new goods, then it is expected that they will be sold and make a profit. The formation and use of resources allows for high-quality corporate finance management. The principle also works here feedback... That is, we can influence the salaries of employees, the prices of goods, the terms of loans (looking for a bank with more advantageous offer), profitability (advertising the product among a significant target group), etc. It should be understood that such detailing of functions is very conditional. Indeed, in practice they are extremely strongly intertwined and carried out almost simultaneously. So, they are of interest to financial services and specific specialists, which use a number of tools, methods and techniques in their activities. What are they doing? They analyze the finances of the organization, give recommendations on their use and monitor their application in the field.

A small example of an activity cycle

How is corporate finance managed in practice? To answer this question, consider a small example. Let's say that we have a company that is successful. Let's consider one of its work cycles. Initially, data from the previous period is collected. On their basis, financial planning is carried out. In other words, theoretical calculations are being made about how much money the organization will earn in the future period. Based on how successful the formation of finance is, organizations make a decision about the success of the chosen strategy and the correctness of calculations. These data allow us to judge how well the management team is coping with their tasks. Control over how the use of funds is carried out is also important. An experienced specialist, even without seeing the situation, but only having true figures, can find where the arrears, shortages and abuse (or simply ineffective use of resources) are.

What else is of interest to us?

In general and in general, what corporate finance is, we have already examined. But for the full disclosure of the topic, this is not enough. Of course, an exclusively specialized book can give the most complete picture, but within the framework of this article there is a desire to pay attention to aspects that were not mentioned in the title. So, the concept of capital (within the framework of the topic), relations and activities will be additionally considered. All this will allow you to understand corporate finance very well.

Let's say a word about capital

There are many different divisions. But we are primarily interested in the authorized capital. It is formed during the creation of the organization by means of property and material values, which are transferred by the owner in favor of the structure. The procedure for the formation of the authorized capital largely depends on the legislation and the established regulations. So, most often, attention is paid to the minimum amount of contributions, the timing of their transfer in favor of the organization and additional fundraising. The authorized capital is intended to receive non / circulating assets. Sometimes it can be targeted funding received from various extra-budgetary funds, other organizations, or even individuals. In general, the total capital is formed thanks to share premiums and, sometimes, gratuitous receipts. One should not discount the sources that act as special reserves. Also, when doing business, it is popular to attract short and long-term loans and the acquisition of other forms of accounts payable. In all these processes, financial relations arise, which express the economic component of the activity. It should be noted that there are many of them. And they are all of interest to corporate finance. Let's take a look at some examples.

Financial relations

What are they like? There are a great many classifications and approaches to their identification. The article will show the most popular relationships:

Between the organization and shareholders, participants, owners, investors. In this case, the issues of formation, and subsequently - the effective use of capital and the payment of dividends are being resolved.
Between suppliers and buyers. Most topical issues in this case, these are the forms, methods, terms of settlements, as well as ensuring the fulfillment of obligations.
With financial investment organizations.
Subsidiaries and parent structures. Most often, they decide on an intracorporate redistribution of funds.
With financial institutions. In this case, the most popular is the attraction and subsequent placement of free funds in the form of loans, insurance payments and compensations, loans and so on.
Founders of trust and beneficiaries.
Copyright holders.
Employer and employees. Most often, this refers to wages and payments from the consumption fund.
The state and the taxpayer. The most popular is the interaction regarding the formation of the taxable base with the subsequent calculation and implementation of fees and taxes.

Regulation of relations

It is easy to guess that the state is represented here as well. All of these relations are regulated to some extent by the state. All working moments that arise during the formation and movement of funds are of interest. After all, navigating the data streams, you can notice a lot of misalignments. That is why the state requires that a large amount of information be transmitted to it. Indeed, according to the declaration, there may be some numbers, but according to tax invoices - completely different. And then it becomes clear - here he is, the violator!

A few words about the activity

In order to fully understand such a difficult matter as corporate finance, you still need to know about:

Current activity. This means cash flows, which represent the proceeds from the sale of works, services, goods, inventories of material resources, products, rent and receipt of advances. The spectrum is very wide. You can also recall the payment of wages, settlements with social funds and the budget, receipt and return of targeted loans and credits, payment of interest and so on.
Investment activity. This is understood as the movement of funds that are associated with capital investments. Most often, they are understood as the acquisition of equipment, intangible assets, other fixed assets (including their construction), the sale of existing assets, the receipt and repayment of targeted investments, as well as interest on them.
Financial activities. This means the movement of funds, which is associated with the formation and subsequent use of authorized and additional capital, distribution of profits, investments, sale of corporate securities, obtaining loans and borrowings, as well as interest payments. It also includes the repayment of debts in non-traditional ways, such as innovation, compensation, change of persons in obligations.

Summing up, we can say that corporate finance is a set of monetary relations that are associated with the real turnover of an organization's funds, its flows, capital, income and funds.

The principles of organizing the finances of enterprises and corporations are closely related to the goals and objectives of their activities. The principles of organizing corporate finance include the following:

Self-regulation of economic activities;

Self-sufficiency and self-financing;

Division of sources of formation of working capital into own and borrowed;

Availability of financial reserves.

The principle of self-regulation is to provide enterprises (corporations) with complete independence in making and implementing decisions on production and scientific and technical development based on the available material, labor and financial resources. To attract additional financial resources, corporations issue equity securities (stocks and bonds) and participate in stock exchanges.

The principle of self-sufficiency assumes that the funds invested in the development of the corporation will be recouped through net income and depreciation charges. These funds are designed to provide a minimum of standard economic efficiency of the equity capital owned by the enterprise (corporation). With self-sufficiency, the enterprise finances simple reproduction from its own sources and pays taxes to the budget system. The implementation of this principle in practice requires the profitable operation of all enterprises and the elimination of losses.

In contrast to self-sufficiency, self-financing involves not only profitable work, but also the formation on a commercial basis of financial resources that provide not only simple, but also expanded reproduction, as well as the income of the budget system. The principle of self-financing implies strengthening the material responsibility of enterprises (corporations) for compliance with contractual obligations, credit and settlement and tax discipline. To implement the principle of self-financing, a number of conditions must be met:

Accumulation of equity capital in an amount sufficient to cover costs not only for current, but also for investment activities;

Selection of rational directions for capital investment;

Constant renewal of fixed assets;

Flexible response to the needs of the commodity and financial markets.

The application of the principle of self-financing is an important factor in preventing the bankruptcy of an economic entity and creates an opportunity for effective use of financial management.

The division of sources for the formation of working capital into own and borrowed funds is determined by the peculiarities of technology and organization of production in certain sectors of the economy. In sectors with a seasonal nature of production, the share of borrowed sources of formation of working capital increases (for example, trade, food processing, agriculture). In industries with a non-seasonal nature of production (for example, heavy industry, transport, communications), own circulating assets prevail in the composition of the sources of formation of working capital.

The formation of financial reserves is necessary to ensure the stable operation of enterprises (corporations) in the face of possible fluctuations in market conditions, increased material responsibility for failure to fulfill their obligations to partners. In joint-stock companies, financial reserves are formed in accordance with the charter of the enterprise from net profit. The implementation of these principles in practice should be carried out in the development of financial policy and organization of the financial management system of business entities, which ensures their financial stability, solvency, profitability (profitability) and business activity.

The set of connections is formed in the conditions of formation, redirection and targeted use of the money supply, which arises as a natural result of the production and sale of goods or the provision of services.

As an important link in a holistic system, they:

play the role of a foundation for building a source of income that can subsidize the state budget;
are the "zero point of coordinates" when creating the gross national product;
prepare the ground for the coming scientific and technological revolution.

There is no doubt that corporate finance, in addition to all of the above, also serves as a donor - it is with their help that the “wallet” of households is filled (in fact, the population is sponsored by increasing the number of vacancies).

Solving specific tasks

Economic relations at the corporate level are reminiscent of the work of a complex mechanism - the breakdown of a single part can provoke a shutdown of the entire unit. To forestall such a scenario, among other things, it is necessary to solve two problems. Namely - to correctly distribute and control their development by the subjects.

Specifically, corporate finance (this rule is relevant for any type of inter-farm and inter-production relations) should:

structure the working capital in such a way that neither at the manufacturing stage, nor at the consumption stage there is no downtime caused by a lack of funds or a shortage of consumables (an example of the opposite situation: the attracted investments were spent on the purchase of a new technological line, however, the untimely purchase of raw materials for it led to a delay wages and retardation of modernization);
not only monitor the chain of "formation, distribution and use of money", but also monitor compliance Labor Code, to deal closely with the problem of optimizing the available capacities, etc.

Fundamental principles

A corporation is an organization that enjoys the rights of a legal entity. Its strength and power lies in the unification of a multitude of equity capital managed by a small group of people.

In terms of material and monetary freedoms and responsibilities, corporate finance is:

complete independence, expressed in covering current expenses, both on the basis of short-term business plans and long-term strategies;
open access to its own circulating reserve;
100% payback (including and taking into account modernization);
the possibility of attracting a bank loan;
responsibility for miscalculations and failures;
building relations with the state (that is, control of income and budget contributions, analysis of general indicators, etc.).

Features of corporate finance: is the stake on large-scale activities always justified?

The presence of production assets is one of the main conditions for the emergence of financial relations. However, despite the fact that the share of the economic turnover of corporations has long ago exceeded 80%, today there are less than seven dozen organizations on the international market that conduct truly large-scale activities. The lion's share of legal entities are small-sized enterprises.

So corporate finance is, first of all, the separation of property from management (with the mandatory centralization of capital in the hands of directors), and not at all an exorbitant concentration of capacities. In addition, you need to understand that the separation of powers between management and owners de facto ensures the stability of the economic and production structure.

Nuances of interaction

An economic model based on corporate finance is not at all the merit of a single country. Yes, the United States, in a sense, served as a benchmark, but globalization has erased the boundaries, and now joint-stock company and its founders may well be on opposite sides of the Atlantic ...

Over the past 20-30 years, the relations between the participants have not undergone significant changes: as before, there are two large, but not equal groups, which are integrated into the corporate body and cannot exist without each other. Their composition is shown below:

management and large shareholders;
"Minority shareholders", as well as owners of other securities, business partners, lenders and local (federal) authorities.

Economic integration involves the development of one of three scenarios:

1. Vertical merge, that is, the union of several companies involved in the production of a certain product (the role of "goods" is sometimes assigned to a service). After the conclusion of an alliance, all stages of manufacturing / provision of something follow each other within the framework of the functionality of one organization.

2. Horizontal combination - financial relations are established between similar enterprises in order to increase their share in the market and increase capacities.

3. Conglomerate "commonwealth" - the corporation joins various technological lines. The goal is to expand the range in order to meet demand and ensure higher stability of cash flows.

Basic rules for accounting for revenue

The volume of sales is a certain amount of funds or other benefits accumulated over a specific period of time: a month, quarter, six months, and so on (meaning the "materialization" of services provided and / or income from the sale of manufactured goods).

Corporate finance management is, among other things, maintaining accounting... And here options are possible:

in particular, it is based on the fact that it positions the proceeds as the money supply recorded in the company's accounts at the time of the reconciliation transaction (in barter relations, the material benefit from trading activities often takes the form of a product);
the accrual scheme, in turn, provides that turnover control is carried out after the fact, that is, the amounts are at the disposal of the company when consumers have financial obligations and are immediately identified as profit.

Accounting recognizes revenue as such, provided that:

its value can be specified;
the right to receive is spelled out in detail in the contract;
the growth of the corporation's income based on the results of the operation is guaranteed.

The Role of Transfer Prices

The principles of corporate finance that underlie the formation of strong economic ties cannot be viewed separately from the issue of transfer pricing. We are talking about the so-called special cost of goods (raw materials, services), which is set for related institutions (organizations). Simply put, all structural branches, striving for the ultimate goal, operate with internal prices for components and other types of resources. Thus, the problem of increasing the profits of both divisions and the entire enterprise as a whole is solved.

Transfer pricing information falls under the definition of "trade secret" because it actually sets the "competitive cap" level for the final product produced.

Why is liquidity analysis so important?

As noted earlier, a competent organization of corporate finance implies a timely diagnosis of the available reporting. Liquidity analysis is one of the mechanisms for visualizing the “degree of viability” of a structure engaged in trade and / or production and economic activities. It gives an idea of \u200b\u200bthe potential of an enterprise in the context of short-term liabilities: whether or not a corporation, by selling the assets available to it, will fulfill the promises made to its partners (creditors, customers).

For preliminary analysis, a special coverage table and calculation formulas for the coefficients of the current, fast and absolute liquidity... But full diagnostics requires taking into account a large number of indicators and should be carried out by highly professional personnel.

Financial stability

The corporate finance system needs regular monitoring. Even short-term interruptions in the flow of working capital pose a threat to a well-oiled scheme of work (especially if there are no duplicate structural units in the production chain).

From a financial point of view, the stability of the organization corresponds to the level of its independence from the sources of “replenishment of the treasury”. As you know, there are two of them: equity and attracted investments. The structure of assets and liabilities is determined either by calculating the coefficients (autonomy, flexibility of funds, etc.), or by a table comparison. But in any case, during the analysis, an answer to the question of the magnitude of financial risk should be obtained.

More about external and internal sources of income

The division of working resources into external and internal is necessary due to the specifics of individual production processes... In particular, it is advisable to use the assets of an economic entity in a year-round cycle of manufacturing goods and / or providing services; it is more profitable to launch seasonal technological lines by “borrowing” capacities and funds.

If the development of financial policy and its adaptation to legal realities is not accompanied by amendments to the scope of activity and the import-export direction, then, regardless of the reliability of domestic and external sources income, the risk of financial destabilization increases, and management efficiency decreases.

Is self-regulation good or bad?

The essence of corporate finance is often viewed in terms of capitalization (scale of production). However, the difference from the same sole proprietorship lies somewhat differently - in the actual separation (legal and functional separation) of the management apparatus from the group of founders. That is, minority shareholders, in fact, are minimized: they only vote for the members of the governing body, who develop a strategy for the future and turn over billions in the interests of the corporation. Since lower-level members are limited in information, directors' elections tend to be limited to supporting proposals from the current governors.

Conclusion: Absolute self-regulation is a true boon for an enterprise with many structural units, because this mechanism avoids intracorporate bureaucracy. At the same time, there remains a high likelihood of abuse by "temporary but non-replaceable" bosses.