The essence of financial management as a science.
SECTION 1. Conceptual aspects of financial management.
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Topic 1. Goals, objectives, subject and methods of studying financial management
2. Goals and objectives of studying the course "Financial Management"
One of the most important areas of reforming the domestic economy is the financial and credit sector, especially its links and sub-links, which are closely related to financial management, both at the state level and at the level of a particular enterprise. The need to change the system for managing financial resources and relations is caused, first of all, by the emerging opportunity for enterprises and entrepreneurs to independently make decisions in various areas of their activities. In this regard, it should be noted that the problems of managing finances, funds, credit resources are extremely wide and diverse, therefore, research in these areas is carried out by a wide range of specialists who have their own, sometimes different from others, understanding of the goals, objectives, objects and methods. financial management in enterprises.
It is obvious that in the last decade, the profession of a financial manager as a specialist in the field of financial management of an economic entity has become increasingly popular and in demand among company leaders. The reason for this is quite obvious: the financial flows at the enterprise make up its circulatory system, and how well this system functions, the results of its activities are so successful. Thus, financial management is gradually becoming the most relevant direction of management activity in an enterprise, and people are interested in its development as practical management tools, focusing on considering financial management as a science of managing an enterprise's finances, aimed at achieving its strategic and tactical goals. At present, the following can be distinguished character traits national school of financial management:
· The Russian school of financial management combines Western European pragmatism in specific financial calculations with the American conceptual approach to risk reduction;
· It is based on the idea of complex interference of short-term and long-term phenomena of the life of an enterprise and considers these phenomena in their inextricable relationship;
· She began to master the areas of financial management that were not sufficiently studied abroad, such as the financial policy of an enterprise in conditions of inflation, the features of financial management in conditions of falling production and overcoming the crisis, etc.
· The Russian School of Financial Management has begun to identify the features of financial management of various business entities - banks, insurance companies, and various investment institutions.
When considering the essence of financial management, it is necessary, however, first of all to pay attention to the fact that it is necessary to draw clear boundaries between the concepts of "finance", "management" (or "management") and "financial management" (or "financial management"). Traditionally enterprise finance are considered as "economic, monetary relations arising as a result of the movement of money and the cash flows formed on this basis and associated with the functioning of the funds created at enterprises."
Financial management, in view of the foregoing, can be considered as a kind of apparatus or organizational subsystem engaged in the management of financial resources.
Immediately there is a need to answer the question: is it possible to consider control financial activities science or is it art?
First of all, science is systematized knowledge. To what extent does financial management meet this criterion? It is quite difficult to answer this question, since there are different ideas about the essence of financial management and, as a result, various knowledge is systematized. In general, activities related to financial management can be structured as follows:
1. General the financial analysis and planning
2. Providing the company with financial resources (management of sources of funds)
3. Distribution financial resources(investment policy and asset management).
Within the framework of the first direction, a general assessment is carried out:
Company assets and sources of their financing;
the size and composition of the resources necessary to maintain the achieved economic potential of the company and expand its activities;
Sources of additional funding;
· systems of control over the state and efficiency of the use of financial resources.
The second direction involves a detailed assessment of:
· volume of required financial resources;
Forms of their presentation (long-term or short-term credit, cash);
degree of accessibility and time of presentation;
the cost of owning this type of resource;
• the risk associated with this source of funds;
The third direction provides for the analysis and evaluation of long-term and short-term investment decisions:
optimal transformation of financial resources into other types of resources (material, labor, monetary)
· expediency and efficiency of investments in fixed assets, their composition and structure;
Optimal working capital;
efficiency of financial investments.
1. Organizational aspect, or creation of financial and legal conditions for financial management
2. The choice of specific financial indicators of profit and profitability as a criterion for management decisions
3. Permanent monitoring of the effectiveness of any positive activity, in particular through the balance of income and expenses.
At the same time, considerable attention, according to other authors, should be paid to:
forecasting and planning;
investment and financial decisions;
coordination and management of financial flows
organization of interaction with capital markets
Thus, it can be stated that active work is underway to systematize knowledge related to financial management at enterprises, which is typical for a science that is in its infancy.
Science presupposes the existence of theories, which include a set of logically related statements. In order for this complex of forming theories to be characterized as a science, it must meet two criteria of K. Popper: verification and falsification
Verification is confirmation by practical verification of certain statements. Here the argument of pragmatists fully works - "practice is the criterion of truth." “Science,” wrote M. Blok, “will always seem to us inferior if sooner or later it does not help us live better.”
Falsification is another criterion, the essence of which boils down to the fact that each theoretical statement, being confirmed by many facts, can never explain and thereby confirm all the facts.
Satisfying two criteria, our knowledge becomes scientific, but then some difficulties arise. Thus, it is usually assumed that every science has a goal, an object, and a method.
The purpose of studying financial management is to substantiate the patterns and objective trends in financial relationships based on a theoretical and practical analysis of the financial management process of an enterprise. To achieve this goal, the following tasks are solved:
· Consideration of the theoretical content of financial management, and related concepts;
· Analysis of the interaction of various factors in the management of the total cost estimate of funds;
· Formation of principles, methods and forms of financial support for entrepreneurial activity under the current state regulation and legal framework.
· Identification and analysis of trends in the relationship of enterprises with state authorities and administration, financial and tax authorities, commercial banks, etc.
· Development of mechanisms for applying financial management methods in various organizational and legal forms.
· Analysis of the factors regulating the total valuation of funds involved in reproduction processes, and the total monetary capital of the enterprise.
· Definition functional duties financial managers of enterprises.
The object of study of financial management is practical experience accumulated in the real sector of the economy, management of financial resources and the formation of financial relations, as well as a mechanism for adapting theoretical knowledge to existing practice.
Essence of financial management.
Financial management is an important part of management, or a form of management of business financing processes.
Financial management, or financial management of an enterprise, means the management of funds, financial resources in the process of their formation, distribution and use in order to obtain the optimal end result.
Financial management is the financial management of an enterprise aimed at optimizing profits, maximizing the share price, maximizing business value, net income per share, dividend level, net assets per share, as well as maintaining the competitiveness and financial stability of an economic entity.
Financial management as a science of financial management is aimed at achieving the strategic and tactical goals of an economic entity.
Financial management as a management system consists of two subsystems:
1) controlled subsystem (control object)
2) control subsystem (subject of control).
Financial management implements a complex system of managing the total value of all funds involved in the reproduction process, and the capital that provides financing for entrepreneurial activity.
object management is a set of conditions for the implementation of cash flow and cash flow, the circulation of value, the movement of financial resources and financial relations that arise in the internal and external environment of the enterprise. Therefore, the following elements are included in the control object:
1) Money turnover;
2) Financial resources;
3) Circulation of capital;
4) Financial relations.
Subject of management- a set of financial instruments, methods, technical means, as well as specialists organized in a certain financial structure, which carry out the purposeful functioning of the control object. The elements of the subject of control are:
1) Personnel (trained personnel);
2) Financial instruments and methods;
3) Technical controls;
4) Information support.
Purpose of financial management- is the development of certain solutions to achieve optimal end results and finding the optimal balance between short-term and long-term goals for the development of the enterprise and decisions made in the current and prospective financial management.
main goal financial management is to ensure the growth of the welfare of the owners of the enterprise in the current and prospective period. This goal is given concrete expression in ensuring the maximization market value business (enterprise) and implements the ultimate financial interests of its owner.
Tasks solved with the help of management: - current; - strategic.
Financial strategic objectives- maximizing the profit of the enterprise, ensuring the investment attractiveness of the enterprise, ensuring financial stability in the long term.
Current goals (tasks)- Ensuring the balance of cash receipts (solvency and liquidity of the enterprise), ensuring a sufficient level of profitability and sales through a flexible pricing policy and cost reduction.
Profitability- an indicator of the competitiveness of the enterprise in a short period of time. Return on equity is a strategic indicator.
For current tasks include avoiding bankruptcy and major financial setbacks.
All tasks are closely related to each other, and are solved within the framework of the financial policy of the enterprise.
financial policy consists of the followingelements (parts):
1. accounting policy;
2. credit policy - policy in relations with banks, or in relation to loans in general;
3. cost management policy (method of cost control, cost classification, share of fixed costs in prime cost);
4. tax policy and tax planning, (it is necessary to minimize tax payments but not to the detriment of other areas, industries);
5. dividend policy;
6. cash management policy (including current assets);
7. investment policy (most effective from a financial point of view).
The main tasks of financial management:
1). Ensuring the formation of a sufficient amount of financial resources in accordance with the needs of the enterprise and its development strategy.
2). Ensuring the effective use of financial resources in the context of the main activities of the enterprise.
3). Optimization of cash flow and settlement policy of the enterprise.
4). Profit maximization with an acceptable level of financial risk and a favorable taxation policy.
5). Ensuring a constant financial balance of the enterprise in the process of its development, i.e. ensuring financial stability and solvency.
In practice, financial management makes decisions on the calculation of the profitability of possible investments and the choice of a long-term investment project.
There is a need to determine the total cost of capital for the business. Cost of capital consists of the cost of financing, determined taking into account the weighted average cost of the loan, and the cost of shares and securities. This cost of capital is the basis for determining the accounting rate used in calculating the present value of future cash inflows and return on investment.
The financial manager must be able to determine a rational scheme for financing the organization, i.e., choose the appropriate strategic directions.
Financial management includes: the process of planning decisions aimed at maximizing the welfare of entrepreneurs. Financial managers solve the problems of controlling and regulating monetary transactions, acquiring funds, mobilizing and distributing financial capital, and taking into account the relationship between risk and reward: In the performance of their duties, a financial manager comes into contact with accounting and financial information.
The purpose of any organization, as a rule, is:
1) maximization of shareholding;
2) profit maximization;
3) maximization of managerial remuneration;
4) social responsibility.
Financial managers must know the pricing of goods, products, works and services, planning and analysis of deviations from standard costs, how to manage funds and optimize the income rate
The responsibilities of the financial manager include:
Financial analysis and planning;
Determination of the amount of funds required by the organization;
Making investment decisions;
Allocation of funds for certain real estate (property owned by the organization) .;
Making decisions on financing and capital structure (obtaining loans on favorable terms, i.e. at a reduced interest rate or with very few restrictions);
Management of financial resources;
Manage cash, receivables and inventory to generate more profit without taking unnecessary risks;
Determination of accounting policy, preparation of financial statements, internal audit, accounting system and procedure, etc.;
Protection of property (insurance, establishment of reliable internal control);
Determination of tax policy and methodology, preparation of tax reporting, tax planning;
Maintaining relationships with investors;
MINSK BRANCH
STATE EDUCATIONAL INSTITUTION
HIGHER PROFESSIONAL EDUCATION
MOSCOW UNIVERSITY OF ECONOMICS, STATISTICS AND INFORMATICS
Department of Accounting and Finance
TEST
BY DISCIPLINE"FINANCIAL MANAGEMENT"
Option 0
Completed by: Sachishina Yu.V.
4th year student
group no. ZMO - 08/45
Checked:
Associate Professor Busygin Yu.N.
Minsk 2011
Content
INTRODUCTION 31. Essence and functions of finance in social production 4
2. Financial management as a science of financial management 11
Task 1. 15
Task 2. 16
Task 3……………………………………………………………………………… ...18
References……………………………………………………………………20
INTRODUCTION
Finances play a huge role in the structure of market relations and in the mechanism of their regulation by the state. They are an integral part of market relations and at the same time an important tool for implementing state policy. That is why today, more than ever, it is important to know the nature of finance well, to deeply understand the peculiarities of their functioning, to see ways to use them to the fullest in the interests of the effective development of social production.A good knowledge of the financial sphere of activity is also necessary today because the country is going through a deep economic and financial crisis. The government needs to develop a clear financial strategy. It is important to highlight the main trends in the development of finance, to formulate the basic concepts of their use, to outline the principles for organizing financial relations.
The problems of financial recovery worry literally everyone today. After all, what is currently happening in the financial sphere of activity is closely related to the personal well-being of everyone. The amount of profits and taxes, contributions to social insurance and pensions, the price of shares and bonds, forms of investment in production and social sphere etc. - such issues are being discussed today not only in government circles, they are of deep concern to each of us.
1. Essence and functions of finance in social production
The essence of finance is manifested in their functions. Functions refers to the “work” that finances perform. The question of the number and content of functions is debatable. Some well-known financiers, such as, for example, A. M. Birman, singled out three main functions of finance: providing the process of managing with money, controlling the ruble, and distributing. A. M. Alexandrov and E. A. Voznesensky argued that finance is expressed in the formation of monetary funds, the use of monetary funds and control. I. T. Balabanov believes that with the transition to market relations, finances have lost their distributive purpose.However, no one denies that finances are monetary relations that arise in the process of distribution and redistribution of the value of the gross social product and part of national wealth in connection with the formation of cash incomes and savings from business entities and the state using them for expanded reproduction, material incentives for workers , satisfaction of social and other needs of society. Finance cannot exist without money. But if the availability of money is a prerequisite for the functioning of finance, then the reason that gives rise to their appearance can be considered the needs of business entities and the state in resources that ensure their activities. This need for resources without finance cannot be satisfied not in the sphere of management, not in the sphere of public administration.
If we consider finance as a whole, then, apparently, it should be considered that they perform two main functions: distributive and control.
The action of the distributive function of finance follows from the essence of finance: ensuring relations related to the distribution and redistribution of the total social product, national income and net income; formation of income and savings; creation of cash funds.
Finance through net income not only mediates the entire process of social production, but they themselves actively participate in the circulation of funds at all its stages, directly ensuring the process of expanded reproduction.
Net income ensures the circulation of funds, taking into account their expanded reproduction; through net income, the process of expanded reproduction is serviced, the movement of the total social product. In this capacity, net income is a form of practical use in relations of reproduction, i.e., reflects its specific role, which is the essence of finance.
If one part of net income ensures the process of expanded reproduction, then its other part is redistributed and sent to the centralized monetary funds of the state. As a result of redistribution processes and the withdrawal of a part of net income, state revenues and financial resources are formed that are necessary to fulfill the functions assigned to it.
The distribution directly affects the fundamental interests of the state, business entities, institutions and individual members of society. The nature of distribution is the most important indicator of the economic maturity of a society. In the sphere of distribution, the political, economic and social interests of all social groups of society are intertwined.
The distributive function of finance is realized in the process of primary and secondary distribution (redistribution) of a part of the total product (net income). But before starting the distribution process, it is necessary to determine the form and boundaries of the movement of the total social product. Without such a definition, it is impossible to consider distributive processes, since they are abstract in nature and their practical application is impossible. The form of expression of the movement of the total social product is the price. However, the price is not a form of expression of those financial relations that mediate the movement of the constituent elements of the total social product and are financial. But since the main object of financial relations - net income - actively influences all elements and components of the total social product, providing them with expanded reproduction, in this role the price can be considered as a form of expression of financial relations. Without solving the problem of interaction and the relationship between price and finance, it is impossible to determine the essence and functions of finance. Traditional arguments about the essence, functions, nature and place of finance are not in demand in practice, because they are of the most general nature.
The price is not only a quantitative form of expression of the movement of the total product mediated by financial relations, but also the basis for the primary distribution of all elements of the total social product. The state or through the mechanism of the market determines the price, which includes all elements of the movement of the total product. The price also includes the main object of financial relations - net income, the size of which should ensure the process of expanded reproduction of all elements of the total product of an economic entity and the formation of a centralized state fund in the established amounts. Those economic entities whose net income is less than the socially necessary level enjoy the regime of state financial support or must be declared financially insolvent or bankrupt. In this case, the net income included in the price corresponds to those signs of the primary distribution of the aggregate product, in which there is a place for all its constituent elements, taking into account their expanded reproduction and the formation of centralized funds of funds.
Secondary distribution (or redistribution) begins at the moment of splitting off part of the net income and directing it to monetary funds for expanded reproduction of the fund for the reimbursement of spent funds, production for the reproduction of labor power.
For the other part of net income, the beginning of redistribution is the moment when deductions from net income of taxes and other payments to the centralized fund of state monetary resources (to the state budget and extrabudgetary funds).
Through the price level, the state produces distribution and redistribution processes, influencing the level of costs and accumulation. In the implementation of the financial policy of the state, the price acts as the most important lever for the distribution and redistribution of a part of the total social product (net income). Practice shows that, depending on the specific economic conditions in certain periods, the state in to a large extent they resorted to regulating distribution processes with the help of prices (the period of industrialization and crisis phenomena, social conflicts and wars, etc.). Price, acting as a monetary expression of value, mediates the process of value distribution, acting as the initial, basic condition that determines the income and expenses of participants in social production in the process of distribution. The price should be considered as a factor that directly affects the content of distribution relations, the satisfaction of the economic interests of the participants in production.
Finance and the form of their expression - the price satisfy the same social needs in the system of distribution relations, that is, without them it is impossible to carry out the very process of distributing the value of a social product, to measure the satisfaction of economic interests between its participants.
But the primary distribution of the total product through price satisfies not only the needs of expanded reproduction, but also serves as a prerequisite and basis for secondary distribution.
(redistribution) and the creation of centralized monetary funds of the state (state budget) sufficient for the development of priority sectors and industries, ensuring defense capability, as well as the development of non-productive areas where the social product is not created (development of culture, education and science, health care, public administration, social insurance and social security, etc.).
The redistribution of a part of the total social product is also necessary for the inter-territorial and inter-industry redistribution of funds, the redistribution of income between various social groups of the population.
The further course of the redistributive reproduction process, its structure is determined by the state. There are many stages and redistribution relationships. Breaking away from the stage of primary distribution, where the total social product and its net income were created, redistribution processes take place according to their stages. First, the stage of mobilization and formation of monetary funds (revenues) of the state budget follows, then the stage of using the same funds (revenues) - the allocation of a part to the development of priority sectors of the economy, social and cultural events, management, etc. Each stage of the movement of financial resources has its own redistributive functions. From this follow the relations of the secondary, tertiary, etc. orders of redistribution. After going through a long redistributive cycle, one part of the redistributed monetary resources, through the mechanism of budgetary financing of priority sectors, again enters the sphere of material production in order to start a new cycle of primary distribution of the total social product with its subsequent redistribution; the other part of the redistributed monetary resources goes into the sphere of consumption (enlightenment, health care, culture, science, defense, public administration, etc.).
Along with the distribution function, finance plays a control function. The control function is generated by the distribution function and manifests itself in the control over the distribution of the total social product, national income and net income among the relevant monetary funds and their targeted spending. If the essence, nature and content of finances are determined by the movement of a part of the total social product, mainly net income, its distribution, the creation of monetary funds and the subsequent direction for the expanded reproduction of the turnover of funds in the process of material production, on the one hand, and the creation of centralized state monetary funds, with on the other hand, then the control function of finance properly serves both the entire reproduction process in the sphere of material production and the process of formation and use of the centralized fund of the state's monetary resources. This is the dialectical unity and interconnection of the two functions of finance.
The control function quantitatively reflects the economic processes associated with the distribution and redistribution of the total social product through the movement of financial resources. It has already been noted that the distribution of the social product is carried out in value (monetary) form, it is expressed in the formation of financial resources, the formation and use of special-purpose funds. At the same time, the movement of financial resources in specific forms is the basis for state control over the processes of value distribution of the social product. Without such control, a balanced development of the economy cannot be ensured.
The control function is due to the normative nature of monetary relations. The distributive nature of monetary relations is characterized by their preliminary planning, determination of specific subjects, volumes and terms of implementation, targeted use of monetary resources in fixing in regulations. Regulations regulate both the conditions for the distribution of income and profits allocated for expanded reproduction, and the conditions for payments to the budget (establishing categories of payers, facilities, taxation units, rates, benefit funds for payments, the procedure for calculating them, etc.), financing from the budget ( the procedure for opening budget financing and its use), lending, formation and use of various monetary funds of economic entities. It is control over compliance with regulations that express the essence of the distributive function of finance, which in turn reflects the content of the control function of finance. This is the dialectical and inextricable relationship between the two functions of finance. At the same time, the distribution function of finance is primary in their interaction, and outside of it the control function does not exist, since there is no object of control. Among the variety of monetary relations that express the essence of finance, there is not one that would not be associated with the control and use of funds of funds. For example, the opening of budget financing is served by finance in the distributive function. But all these factors form the basis of control. This implies the specificity of the control function - the control function is a derivative of the distribution function.
The role of the control function of finance in the reproduction process can be implemented and is associated with the state of financial discipline, compliance with established norms and rules, and the fulfillment of financial obligations.
2. Financial management as a science of financial management
Financial management represents an important part of management, or a form of management of business financing processes. There are many different definitions of financial management. Here are the most famous of them:is the science of financial management of an enterprise, aimed at achieving its strategic and tactical goals (Stoyanova E.S.)
- this is the science of managing relations that are formed in the production process (Kreinina M.N.)
- this is the view professional activity aimed at managing the financial and economic activities of the company on the basis of modern methods (Gerchikova I.N.)
is the science of the criteria for making the most important financial decisions (Stoyanova E.S., Stern M.G.)
Finance is a set of monetary relations that arise in the process of production and sale of products (works, services) and include the formation and use of cash income, ensuring the circulation of funds in the reproduction process, organizing relationships with other enterprises, the budget, banks, insurance organizations, etc.
Financial management- the science of managing all these processes. Financial management of an enterprise involves the development of methods that an enterprise sets for itself in order to achieve certain goals, the final of which is to ensure a strong and stable financial condition.
Financial management includes the development and selection of criteria for making the right financial decisions, as well as the practical use of these criteria, taking into account the specific conditions of the enterprise.
The initial basis for managing the finances of an enterprise is its financial condition, which has actually developed. It provides an opportunity to answer questions about how effective was the management of financial resources and property, whether the structure of the latter is rational; how borrowed and own sources of financing are combined, what is the return on production potential, asset turnover, return on sales, etc.
Financial management involves multivariate approaches to assessing the consequences of the occurrence of certain situations, depending on what the conditions accompanying these situations are.
Financial management as a science of financial management is aimed at achieving the strategic and tactical goals of an economic entity.
Financial management as a management system consists of two subsystems:
1) controlled subsystem (control object)
2) control subsystem (subject of control).
Financial management implements a complex system of managing the total value of all funds involved in the reproduction process, and the capital that provides financing for entrepreneurial activity.
object management is a set of conditions for the implementation of cash flow and cash flow, the circulation of value, the movement of financial resources and financial relations that arise in the internal and external environment of the enterprise. Therefore, the following elements are included in the control object:
1) Money turnover;
2) Financial resources;
3) Circulation of capital;
4) Financial relations.
Subject management - a set of financial instruments, methods, technical means, as well as specialists organized in a certain financial structure, which carry out the purposeful functioning of the management object. The elements of the subject of control are:
1) Personnel (trained personnel);
2) Financial instruments and methods;
3) Technical controls;
4) Information support.
aim financial management is the development of certain solutions to achieve optimal end results and find the optimal balance between short-term and long-term goals of the enterprise development and decisions made in the current and prospective financial management.
main goal financial management is to ensure the growth of the welfare of the owners of the enterprise in the current and prospective period. This goal is concretely expressed in ensuring the maximization of the market value of the business (enterprise) and realizes the ultimate financial interests of its owner.
Main goals financial management:
1) Ensuring the formation of a sufficient amount of financial resources in accordance with the needs of the enterprise and its development strategy.
2) Ensuring the effective use of financial resources in the context of the main activities of the enterprise.
3) Optimization of cash flow and settlement policy of the enterprise.
4) Profit maximization with an acceptable level of financial risk and a favorable taxation policy.
5) Ensuring a constant financial balance of the enterprise in the process of its development, i.e. ensuring financial stability and solvency.
Financial management is a science, since the adoption of any financial decision requires not only knowledge of the conceptual foundations of the company's financial management and scientifically based methods for their implementation, but also the general laws of the development of a market economy, as well as other related disciplines. On the other hand, it is an art, since most financial decisions are focused on the future success of the company, which sometimes involves a purely intuitive combination of financial management methods, undoubtedly based on a high level of professional knowledge and knowledge of the intricacies of the market economy.
Task 1
ConditionThe proceeds from the sale of products at the enterprise amounted to (N) 1000 million rubles. at variable costs (P) 500 million rubles. and fixed costs (C) 450 million rubles. Determine the strength of the impact of the operating lever and give it an economic interpretation.
Solution:
Operational leverage is manifested in the fact that any change in sales revenue always generates a stronger change in profit. The effect is due to varying degrees of influence of the dynamics of fixed and variable costs on the formation of financial results. The higher the level of fixed costs, the higher the operating leverage.
Gross margin acts as an interim financial result in determining the effect of operating leverage.
Gross Margin = Sales Revenue – Variable Costs
Gross margin = 1000 - 500 = 500 million rubles.
The strength of operating leverage is calculated as the ratio of gross margin to profit and shows how many percent of the change in profits each percent change in revenue gives. This indicator is calculated for a certain sales proceeds. With the change in sales revenue, the strength of the operating leverage also changes.
Let's determine the force of the impact of the production (operational) lever (SPR):
Operating Leverage = Gross Margin / Profit = (Sales Revenue - Variable Costs) / (Sales Revenue - Variable Costs - Fixed Costs)
Operating leverage strength = (1000 - 500) / (1000 - 500 - 450) = 500 / 50 = 10.
This means that with a possible increase in sales revenue, say, by 3%, profit increases by 3% * 10 = 30%; with a decrease in sales revenue by 10%, profit will decrease by 10% * 10 \u003d 100%, and an increase in revenue by 10% will give an increase in profit by 10% * 10 \u003d 100%.
Task 2
The company's assets for the reporting period amounted to (A) 1,000 million rubles. For the production of products, it used (B) 500 million rubles. own funds and (C) 500 million rubles. borrowed. As a result of production activities, the enterprise's profit before paying interest on the loan and income tax amounted to (D) 200 million rubles. At the same time, financial costs for borrowed funds amounted to (K) 50 million rubles. In the reporting period, income tax amounted to 18%.It is required to calculate for this enterprise:
Income subject to tax.
net profit.
Net return on equity.
The level of effect of financial leverage.
Solution:
- Profit subject to tax:
- 200 million rubles - 50 million rubles. = 150 million rubles.
- 2. Income tax will be:
- 150 million rubles * 0.18 = 27 million rubles
- 3. Net profit will be:
- 150 million rubles - 27 million rub. = 123 million rubles
- 4. Net return on equity = Net profit / Asset (own equity) * 100
- Net profitability of own funds =123 million rubles. / 500 million rubles * 100 = 24.6%
- 5. Economic profitability = Profit before paying interest on the loan and income tax / Asset * 100
- Economic profitability = 200 million rubles. / 1000 million rubles * 100 = 20%.
- 6. The effect of financial leverage is an increase in the return on equity obtained through the use of a loan, despite the payment of the latter.
Leverage Effect Level = Tax Adjuster *Financial Leverage Differential *Financial Leverage Leverage = (1 - Income Tax Rate) *(ER - IFRS) * (LA/LA),
etc.................
Financial management as a science
Financial men-t as a science, it is a system of principles, methods for developing and implementing management decisions related to the formation, distribution and use of the financial resources of an enterprise and the organization of its cash flow.
Fin. men-t is directly related to the management of the fin. the state of the enterprise.
Fin. state of the enterprise- this is his eq. a state characterized by a system of indicators reflecting the presence, placement and use of fin. the resources of the enterprise necessary for its economic activity.
Thus, fin. men-t- this is a purposeful activity of the subject of management (the top management of the enterprise and its financial services), aimed at achieving the desired financial. the state of the managed object (enterprise).
Stages of development of financial management in Russia
1. Formation of an independent region of fin. men-ta(1985 - 1994).
Main postulates: the strictest control over all processes at the enterprise; cost optimization; correct conduct of financial operations.
2. functional approach(1990 - 1996).
Main postulates: allocation of functions fin. planning, organization and control.
3. Systems approach(1993–present).
Main postulates: development of universal procedures for decision-making; selection of elements of the financial system. men-ta, the definition of their relationships.
3. Purpose and objectives of financial management
The purpose of Fin. men-ta– maximization of the wealth of owners with the help of rational fin. policies based on:
Long-term profit maximization;
Maximization of the market value of the firm (the main goal of the activity of the enterprise and the financial department).
Finnish tasks. men-ta:
1) Ensuring the formation of the volume of financial. resources necessary to ensure the intended activity;
2) Ensuring the most efficient use of financial resources. resources;
3) Optimization of cash flow;
4) Cost optimization;
5) Ensuring the maximization of the profit of the enterprise;
6) Ensuring the level of financial minimization. risk;
7) Ensuring a permanent financial. equilibrium of the enterprise (financial stability and solvency of the enterprise);
8) Ensuring sustainable growth rates eq. capacity;
9) Evaluation of potential fin. the company's capabilities for the coming periods;
10) Ensuring target profitability;
11) Bankruptcy avoidance (anti-crisis management);
12) Ensuring the current financial. the sustainability of the organization.
4. Basic principles of fin. men-ta:
1) The principle of fin. independence of the enterprise;
2) The principle of self-financing;
3) The principle of material interest;
4) The principle of liability;
5) The principle of security risks fin. reserves.
Financial functions. men-ta
Financial functions. men-ta are divided into two groups:
I. Functions of fin. men-ta how control system:
1. Financial development function. enterprise strategies - priority development tasks are determined, etc.
2. Organizational function;
3. Analysis function;
4. Planning function;
5. Stimulating function;
6. Control function.
II. Financial functions. men-ta as a special area of enterprise management:
1. Asset management (OA, VOA);
2. Capital management (SK, ZK);
3. Investment management (real investments, financial investments);
4. Money management flows (operating, investment, financial activity);
5. Financial management risks;
6. Anti-crisis financial. control.
Information support of financial management.
1. The system of indicators of information support fin. men-ta, formed from external sources:
macro indicators economic development;
Industry development indicators.
2. Indicators characterizing the financial market situation:
Indicators characterizing the conjuncture of individual segments stock market;
Indicators characterizing the conjuncture of individual segments of the credit market and other indicators for various fin. markets.
3. Indicators characterizing the activities of counterparties and competitors:
Investment companies and funds;
Product suppliers;
Buyers of products;
Competitors.
4. Regulatory indicators:
Regulatory indicators for various aspects of fin. activities of the enterprise;
Normative and regulatory indicators on the functioning of individual segments of the fin. market.
5. Financial indicators. enterprise reporting:
Indicators characterizing the composition of assets and the structure of capital used;
Indicators characterizing the main. results of the economic activity of the enterprise;
Indicators characterizing the movement of money. Wed-in the enterprise.
6. Indicators characterizing the fin. results in the main areas of financial activity:
Indicators characterizing the Fin. results in the main areas of fin. activities;
Indicators characterizing the Fin. results in the main areas of activity in the regional context;
Indicators characterizing the Fin. results in the main areas of activity of individual "responsibility centers".
7. Normative and planned indicators related to the financial development of the enterprise:
The system of internal regulations governing the fin. enterprise development;
The system of planned indicators fin. enterprise development.
Organizational support system for financial management.
Organizational support system for financial management is a collection of internal structural services and divisions of the enterprise, providing the development and adoption of management decisions on certain aspects of its financial. activities and responsible for the results of these decisions.
General principles formation of the organizational system of enterprise management provide for the creation responsibility centers.
Responsibility Center(or the center of financial responsibility) is a structural unit of an enterprise that fully controls certain aspects of finance. activities, and its leader independently makes management decisions within these aspects and bears full responsibility for the implementation of the planned (normative) indicators entrusted to him.
Classification of responsibility centers:
Responsibility centers:
a) Cost centers:
cost control centres;
Centers of partially regulated costs.
b) Profit centers.
c) Revenue centers.
d) Investment centers.
The most commonly used in practice are: principles of allocation of responsibility centers in the enterprise:
Functional;
Territorial;
Compliance with the organizational structure;
Cost structure similarities.
On a functional basis The following centers of responsibility are identified:
Service (for example: cleaning, food, etc.);
material;
Production;
managerial;
Marketing.
8. Basic concepts of financial management:
1. The concept of ideal capital markets;
2. The concept of cash flow;
3. The concept of a compromise between risk and return;
4. The concept of the cost of capital;
5. The concept of market efficiency;
6. The concept of asymmetric information;
7. The concept of agency relations;
8. The concept of opportunity costs.
Cash flow concept
Cash flow concept means that with any financial transaction some cash flow may be associated (cash flow), i.e., a set of time-distributed payments (outflows) and receipts (inflows), understood in a broad sense. An element of cash flow can be cash receipts, income, expenses, profits, payments, etc.
In the vast majority of cases, we are talking about expected cash flows. It is for such flows that formalized methods and criteria have been developed that allow making sound financial decisions supported by analytical calculations.
Key points federal law No. 127-FZ of October 26, 2002 "On insolvency (bankruptcy)"
Insolvency (bankruptcy) - the inability of the debtor, recognized by the arbitration court, to fully satisfy the claims of creditors for monetary obligations and (or) fulfill the obligation to make mandatory payments
The bankruptcy procedure is, first of all, the procedure for the implementation, application of something in relation to a faulty debtor, and the impact on him. It can be argued that almost all legally permitted options for influencing the debtor fit into the concept of "measures (measures) applied to the debtor." All the variety of relations in the field of bankruptcy can be reduced to three groups:
a) determining whether there are grounds for "placement" of the entity in the scope of the insolvency law, or, in other words, whether it has signs of bankruptcy;
b) in the presence of the latter, the application to him of certain measures provided for by legal acts (protection of his property, provision of financial assistance, forgiveness of part of the debt, sale and division of his assets, etc.);
c) resolving issues of an organizational nature (training insolvency practitioners, coordinating the activities government agencies authorized to represent public law entities in competitive processes, etc.).
The impact on the debtor at different stages of proceedings, in the case of his bankruptcy, is associated with the use of certain, strictly established (permitted) measures by law.
Signs of bankruptcy
A sign of bankruptcy of a legal entity is the inability to satisfy the claims of creditors for monetary obligations and (or) fulfill the obligation to make mandatory payments, if the relevant obligations and (or) obligation are not fulfilled by him within three months from the date when they must be fulfilled.
Bankruptcy cases are considered in an arbitration court, and may be initiated by arbitration courts, provided that the claims against the debtor (legal entity) in the aggregate amount to at least 100,000 rubles.
In the event of signs of bankruptcy, the head of the debtor's organization is obliged to send information to the founders (participants) of the debtor about the presence of signs of bankruptcy.
Bankruptcy of developers
Entity regardless of its organizational and legal form, including a housing cooperative, or individual entrepreneur to which there are claims for the transfer of residential premises or monetary claims;
1. The arbitration court establishes the existence of claims for the transfer of residential premises or monetary claims
2. From the date of the introduction of supervision in relation to the developer, the debtor may conclude, only with the consent of the temporary administrator, contracts providing for the transfer of residential premises, as well as make other transactions with real estate, including land plots.
3. Expenses of an arbitration manager for notifying creditors about the presentation of claims for the transfer of residential premises and (or) monetary claims shall be borne by him at the expense of the debtor.
4. The opening of bankruptcy proceedings against the developer is the basis for the unilateral refusal of the construction participant to execute the contract providing for the transfer of residential premises.
Bankruptcy of a citizen
A citizen is a person legally belonging to a particular state. G. has a certain legal capacity, endowed with rights, freedoms and burdened with duties.
1. An application for declaring a citizen bankrupt may be filed with an arbitration court by a citizen - a debtor, a creditor, as well as an authorized body.
2. The bankruptcy estate does not include the property of a citizen, which, in accordance with the civil procedural legislation, cannot be levied.
3. From the moment the arbitration court adopts a decision on declaring a citizen bankrupt and on opening bankruptcy proceedings, the following consequences occur:
The deadlines for fulfilling the obligations of a citizen are considered to have come;
The accrual of penalties (fines, penalties), interest and other financial sanctions on all obligations of a citizen is terminated;
Recovery from a citizen for all executive documents is terminated, with the exception of executive documents for claims for compensation for harm caused to life or health, as well as for claims for the recovery of alimony.
4. The decision of the arbitration court on declaring a citizen bankrupt and on opening bankruptcy proceedings and a writ of execution on foreclosure on the property of a citizen are sent to the bailiff - executor for the sale of the debtor's property.
Composition of current assets
Industrial stocks of the enterprise;
Stocks of finished and shipped products;
Accounts receivable;
Cash Wed-va at the box office and den. Wed-va on the accounts of the enterprise.
In terms of liquidity, there are:
1. Highly liquid assets - den. Wed Islands and short-term Finn. Attachments
2. Marketable assets - DZ less than 12 months.
3. Slowly realizable assets - long-term DZ, stocks, WIP.
By the nature of the sources of formation:
1. Gross current assets (VOA) - characterize the total volume of all assets of the enterprise, formed both at the expense of the SC and at the expense of the SC.
2. Net current assets (NOA)
CHA = BOA - KKZ
KKZ - short-term (current) loans and borrowings
3. Own current assets (SOA) - those assets that are formed at the expense of own. pr-tion assets.
SOA = BOA - KKZ - DKZ
By the nature of participation in the operational process:
current assets, serving the production cycle of the enterprise (materials, stocks, WIP, finished products)
Current assets serving the financial (cash) cycle of the enterprise (cash, DZ).
Composition of working capital:
1. Revolving funds (are normalized):
Productive reserves,
Future expenses.
2. Funds of circulation (non-standardized):
Finished products in stock m.b. and normalized;
Products shipped, unpaid;
Cash in settlements per RS.
The financial cycle of the enterprise
The 2nd part of the operating cycle is the financial cycle of the enterprise. This is the period of full turnover of funds.
PFC = PPV + Podz - Pokz
PFC - the duration of the financial cycle (cycle of money circulation) of the enterprise (days)
PPC - The duration of the production cycle of the enterprise (days)
PODz - cf. DZ turnover period (days)
POkz - cf. short circuit turnover period (days)
Inventory rationing policy:
Development and implementation integrated automation according to calculations of the optimal value of reserve standards;
Scientifically based rationing of the optimal value of reserves for each type material resources;
Clarification of the norms and standards of working capital in case of changes in technology and organization of production, changes in prices, tariffs and other indicators.
In order to optimize the value of reserves during normalization, it is necessary:
Do not include in the valuation material and production stocks (IPZ) that are in warehouses without movement for more than a year, as well as those PIs that exceed the annual period of their use.
Do not include excesses of inefficiently used property in the valuation of inventories and inventories.
A set of measures to optimize inventory management:
Rationing of stocks for each type of material resources for structural and functional divisions and services of the enterprise;
Creation of a data bank of underutilized reserves in the context of functional units;
Develop measures to involve in the production and sale of unused stocks by the functional services of the enterprise
Bringing to the structural and functional divisions and services of a tough task for the sale of illiquid assets
Conducting quarterly inventories of stocks with a shelf life of more than 1 year in warehouses in order to identify excessive excess, inefficient used property;
Based on the results of the inventory and technological audit, carry out work to involve in the production of MPZ with a wound period of more than a year on the terms of the possibility of replacement;
Periodic (at least once a quarter) analysis of inventory turnover, compliance with inventory standards;
Determining the need for financial resources for the purchase of goods and materials to ensure control over the targeted and rational use of working capital and stock standards;
Ensuring further improvement of the planning of commodity-money flows
Attracting creditors
Conducting a tender for the purchase of MPZ directly from suppliers:
The goal is to achieve the optimal ratio: price, quality, timeliness of deliveries.
During the tender for the purchase of MPZ, special attention should be paid to the following aspects:
Compliance with the required level of quality of supplied values by suppliers;
Checking the reliability of suppliers;
Minimum price supplied materials;
Compliance of the supplied materials with the technological requirements of regulatory documentation for products;
Optimal payment terms for the enterprise.
Traditional approach
An enterprise that attracts borrowed capital (up to a certain level) is valued by the market higher than an enterprise without long-term financing.
Ks is the cost of the SC source
Kd - the cost of the source of SC
kd< Ks =>the capital structure is optimal => the market value of the firm is maximum.
Compromise approach
The optimal capital structure is determined by the ratio of the benefits from the tax shield (the possibility of including the fee for the LC in the cost price) and the losses from a possible bankruptcy.
According to this theory, with the growth of financial leverage, the cost of borrowed and equity capital increases.
The price of the enterprise exceeds the market value of the “leverless” firm, i.e. not using financial leverage, by the amount of tax savings (PVn) minus the costs of bankruptcy (PVb):
Vl = Vu + PVn – PVb
where Vu is the market value of a financially independent organization U (the value of an organization without debt obligations).
Vl is the market value of a financially dependent organization L (the value of an organization with debt obligations).
According to the compromise approach:
An entity should set a target capital structure such that the marginal cost of capital and marginal effect from financial leverage were equal.
100% debt capital OR exclusively own financing - suboptimal financial management strategies.
When justifying the target capital structure, one should be guided by the following recommendations:
The higher the risk of the results obtained when making decisions, the less the value of financial leverage should be.
Enterprises whose asset structure is dominated by tangible assets may have a higher financial leverage compared to enterprises where a significant share of assets is presented in the form of patents, trademarks, and various rights of use.
For corporations with income tax benefits, the target capital structure does not play a role.
The compromise approach assumes that enterprises in the same industry have a similar capital structure because:
Assets of the same type;
Commercial risk (nature of demand, pricing for manufactured products, consumed materials, operating lever);
Close values of activity profitability and tax conditions.
Ross model
Ross model (1977):
It is assumed that the manager's financial decisions can influence the perception of risk by investors.
The actual risk level of cash flows may not change, but managers, as monopolists on information about future cash flows, can choose signals about development prospects.
The Ross model substantiates the choice of signals from the point of view of managers (their well-being).
Managers are expected to receive performance-based compensation as a percentage market value the entire company.
There are two real development options for the company:
Bankruptcy:V<0
The manager's remuneration (M) is:
M = (1+k)* f0V0 + f1* (V-C)
where D is the nominal value of the SC;
K is the market interest rate for the period;
C - payments upon declaring the company bankrupt;
f 0 and f1 - the share due to the manager at the beginning and end of the period;
V0 and V1 - the company's assessment at the beginning and end of the period.
Normal operation: V>0
M= (1+k) *f0V0 +f1V
Conclusions:
In the signal model good prospects the company is a high financial leverage;
A large VC value will lead a company in trouble financial position, to bankruptcy.
The manager's remuneration at the end of the period will depend on the this moment signal. This signal can be true (reflecting the true state of affairs in the company and prospects) or false.
A true signal will be given if the marginal benefit of the false signal, weighted by the share of the manager's remuneration, is less than the cost of bankruptcy borne by the manager.
If the benefit to the manager outweighs the cost of bankruptcy, then managers will choose to send a false signal.
Basic theories of DP
Dividend irrelevance theory;
Theory of DP materiality;
Theory of tax differentiation;
Dividend Signaling Theory;
Clientele Theory.
1. Dividend irrelevance theory:
=> does not exist!
There are no taxes;
2. Theory of DP materiality:
M. Gordon and J. Lintner;
3. Theory of tax differentiation:
4. Dividend Signaling Theory:
5. Theory of the clientele (or the theory of the correspondence of the DP to the composition of the shareholders):
111. Dividend irrelevance theory:
F. Modigliani and M. Miller (1961):
The value of a firm is determined solely by the return on its assets and its investment policy;
The proportions of income distribution between dividends and reinvested earnings do not affect the total wealth of shareholders.
=> optimal DP as a factor in increasing the value of the enterprise does not exist!
F. Modigliani and M. Miller build their assumptions on the following premises:
There are only perfect capital markets (free and equally accessible information for all investors, no transaction costs, rational behavior of shareholders);
A new issue of shares is fully placed on the market;
There are no taxes;
Equivalence for investors of dividends and capital gains.
F. Modigliani and M. Miller developed three options for paying dividends:
1) If the investment project provides a level of profitability that exceeds the required one, shareholders will prefer the option of reinvesting profits;
2) If the expected return on investment is at the required level, then none of the options is preferable for the shareholder;
3) If profit from inv. project does not provide the required level of profitability, shareholders will prefer to pay dividends.
The sequence of determining the size of the company's dividends according to M-M's opinion:
An investment budget is drawn up and the required amount of investment is calculated with the required level of profitability;
The structure of project financing sources is formed, subject to the maximum possible use of net profit for investment purposes;
If not all profits are used for investment purposes, the rest is paid to the owners of the company in the form of dividends.
112. Theory of DP materiality:
M. Gordon and J. Lintner;
Theory "Titmouse in the hands" ("bird in the hand theory");
DP significantly affects the value of the total wealth of shareholders.
By increasing the share of profits allocated to dividend payments, the company can increase the wealth of shareholders.
113. Theory of tax differentiation:
R. Litzenberger and K. Ramswami, late 70s and early 80s. 20th century
For shareholders, it is not the dividend yield that is more important, but the income from capitalization of value (at that time in the United States, the tax on dividends was higher than the tax on capitalization).
114. Dividend Signaling Theory:
The basis for assessing the market value of shares is the amount of dividends paid on them;
An increase in the level of dividend payments causes an increase in the market value of shares, which, when sold, brings additional income to shareholders;
The payment of high dividends signals that the company is on the rise and expects earnings growth in the coming period.
115. The theory of clientele (or the theory of the correspondence of DP to the composition of shareholders):
The company must implement a DP that is consistent with the expectations of the majority of shareholders;
If the majority of shareholders prefer current income, then the DP should proceed from the priority direction of profit for current consumption purposes and vice versa;
That part of the shareholders who do not agree with such a DP reinvests their capital in the shares of other companies.
116. Stages of forming the dividend policy of JSC:
1) Assessment of the main factors that determine the formation and implementation of the DP;
2) Determining the type of DP and the methodology for paying dividends;
3) Development of a profit distribution mechanism in accordance with the chosen type of DP;
4) Evaluation of the effectiveness of the ongoing DP.
1) Assessment of the main factors that determine the formation and implementation of the DP.
Main factors:
Legal regulation dividend payments;
Ensuring sufficient investment resources;
Maintaining a sufficient level of liquidity of the company;
Comparison of the cost of equity and borrowed capital;
Compliance with the interests of shareholders;
Information value of dividend payments.
2) Determining the type of DP and the methodology for paying dividends:
Forms of dividend payments:
Residual Dividend Methodology.
Dividends are paid last, after financing all possible effective investment projects of the company. The amount of dividend payments is determined after a sufficient amount of financial resources has been formed from the profit of the reporting year, which ensures the full implementation of the investment opportunities of the enterprise.
If the level of internal rate of return for investment projects proposed for financing exceeds the company's weighted average cost of capital, then the profit is directed to finance these projects, since they provide high rates of growth in the value of equity capital.
Benefits of the Residual Dividend Method are to ensure high rates of development of the enterprise, increase its market value, maintain financial stability.
This technique Dividend payments are usually used during periods of increased investment activity of companies in the initial stages of their development.
Disadvantages of the Residual Dividend Method:
The payment of dividends is not guaranteed, regular;
The amount of dividends is not fixed, it varies depending on the fin. results of the past year and the volume of own resources allocated for investment purposes;
Dividends are paid only if the company has profits unclaimed for capital investments.
As a rule, the market value of shares of enterprises paying dividends on a residual basis is low.
Fixed Dividend Method (or Stable Dividend Method).
The Company pays regular dividends per share in the same amount for a long time, regardless of the change in the market value of the shares. At high inflation rates, the amount of dividend payments is adjusted for the inflation index. If the firm is doing well and the amount of annual earnings exceeds the amount of funds needed to pay dividends at a stable level, then the fixed dividend payout per share can be increased.
When conducting a dividend policy using this methodology, enterprises also use the dividend yield indicator (Kdv), i.e. the ratio of dividend per ordinary share (Add. share) to profit (P vol. share). due per ordinary share. This indicator serves as a benchmark for the company in determining the size of a fixed dividend for the future.
The advantage of this technique is a sense of reliability, which gives shareholders a sense of confidence in the invariability of the amount of current income, regardless of various circumstances, and avoids fluctuations in the stock price on the stock market.
The disadvantage of this technique is a weak connection with the financial results of the company, therefore, during periods of unfavorable conjuncture and a decrease in the profit of the current year, the company may not have enough own funds for investment, financial, and even core activities. To avoid negative consequences the fixed amount of dividends is set, as a rule, at a relatively low level in order to reduce the risk of a decrease in the financial stability of the enterprise due to insufficient growth in equity capital.
Method of constant percentage distribution of profits (or method of a stable level of dividends).
It implies a stable percentage of net profit for a long time, directed to the payment of dividends on ordinary shares.
At the same time, one of the main analytical indicators characterizing DP is the dividend yield ratio (Kdv), i.e. the ratio of the dividend per one ordinary share (Add. share) to the profit (P vol. share) due per one ordinary share:
Kdv = Add. share / P about. share
This type of dividend policy assumes a stable dividend yield per common share over a long period of time. It should be noted that the profit due per ordinary share is determined after the payment of income to holders of bonds and dividends on preferred shares (the yield of these securities is negotiated in advance, regardless of the amount of profit and is not subject to adjustment).
In accordance with this methodology, dividends on ordinary shares are not paid in cases where the company ended the current year with a loss or all profits must be directed to the owners of bonds and preferred shares. In addition, the amount of dividends determined in this way may fluctuate significantly from year to year depending on the profit of the current year, which cannot but affect the market value of the share.
a) development of features and principles of management in an unstable economic situation
b) a system of knowledge on the effective management of funds and financial resources of enterprises to achieve strategic goals and solve tactical problems and improve performance
c) the process of developing the goal of financial management and exercising influence on them with the help of financial methods the art of managing financial resources
d) a type of professional activity aimed at managing the financial and economic activities of an enterprise based on modern methods
The tasks of financial management include all items except
a) cash flow optimization
a) ensuring the constant financial balance of the enterprise
b) maximizing the market value of the enterprise
c) ensuring the formation of a sufficient amount of financial resources in accordance with the objectives of the development of the enterprise in the coming period
3.The subjects of financial management cannot be
a) officials of the financial service, or employees who carry out purposeful management cash flows, circulation of value and financial resources of the enterprise
b) a set of conditions for the implementation of cash flow, the circulation of value, the movement of financial resources and financial relations
c) cash flows and financial resources of the enterprise
d) financial infrastructure of the enterprise
4.An enterprise financial management system is
a) financial apparatus
b) financial mechanism
c) financial policy
d) financial strategy
The cost is defined as
a) the cost of acquiring securities
b) the cost of raw materials, materials, wages to employees
a) costs of the enterprise for the production and sale of products
6. The financial policy of the enterprise is
a) financial mechanism, which is an integral part of the production management system
b) the totality of areas of financial relations in the enterprise
c) activities of the enterprise for the purposeful use of finance
7. Financial strategy is
a) development of new forms and methods of distribution of enterprise funds
b) solving the problems of a specific stage in the development of enterprise finance
c) determination of a long-term course in the field of enterprise finance, aimed at solving large-scale problems
The object of financial management are
financial scorecard
a) income from all activities
b) legal and information support, financial relations, financial instruments, financial methods and financial indicators
c) a group of persons implementing the movement of financial resources and financial relations
d) assets and liabilities of the enterprise, formed in the course of current activities and investments
Financial management functions do not include
a) fiscal function
b) financial risk management
c) money management
The main goal of financial management is
a) minimization of financial risks
b) profit maximization
c) increase in the market value of shares
d) ensuring the welfare of the owners of the enterprise
Not included in the financial management mechanism
a) enterprise financial regulation system
b) system of financial instruments
c) system of financial leverage
d) system of financial methods
The financial resources are
b) insurance payments
c) budget and off-budget funds, accumulation and consumption funds, national income
d) cash invested in fixed assets, intangible assets, current production assets and funds circulation profit
The main purpose of financial control over the activities of the enterprise by its owners is
a) provision
protection of own property interests
b) redistribution of financial resources of enterprises in accordance with the constituent documents
c) organizing, planning, stimulating the use of financial resources
d) efficiency of enterprise financial management
Stages of development of financial management
The evolution shown in fig. 1.1 is an objective development of the theoretical substantiation of financial management, caused by the needs of practice.
However, this approach does not take into account the need to adapt the financial management system commercial organization, adaptation to the cyclical development of the organization.
In fact, under the influence of change external environment at each historical stage of the transition process to a market economy, the organization changes, moving from one phase of its life cycle to another. Consequently, the system of financial management (situational approach) should also change in it.
The functioning of any economic entity in the phases of its development cycle consists of a large number of different processes and sub-processes. Depending on the phase of the cycle, the type of subject, its size and type of activity, individual processes may occupy a leading place in it, while some may either be absent or carried out on a very small scale. However, despite the huge variety of processes, it is possible to single out the main ones that cover the activities of any commercial organization.
Thus, financial management is a system that has certain patterns and features, more precisely, a subsystem in the enterprise management system. Its implementation is aimed at achieving the overall goals of enterprise management. Being a managed system, financial management is largely subject to state regulation through taxes, licenses, tariffs, refinancing rates, etc. A controlled system means that financial management is an object of management that is affected by the flow of managerial decisions. Therefore, the main principle in substantiating the method of forming a financial management system will be the principle of consistency.
On the other hand, financial management itself is a system of interrelated elements. Within its framework, the following elements can be distinguished: organizational structure, personnel, methods, tools, information support, technical means that have an impact on the solution of strategic and operational issues of financial management, thereby forming the financial policy of the organization, which mediates the solution of production issues and relationships with budget, investors, owners and contractors. The decisions of the latter, in turn, correct the functioning of the financial management system, which is necessary to adapt to changes in the external environment.
It is important to note that the elements of the financial management system should not work separately, but in combination, taking into account the phases of the life cycle of the organization's development. Only then can we talk about a system, and then a synergistic effect arises, which will lead to an increase in labor productivity and (or) a decrease in production costs. This effect of joint action is greater than the simple sum of individual efforts.
When building a financial management subsystem, several principles must be taken into account:
§ adaptability - the subsystem of financial management is not isolated within the framework of enterprises, but constantly takes into account changes in the external environment and makes timely adjustments to the system;
§ functionality - compliance of the implementation of the financial management mechanism (and changes in it) with the set general goals of the organization;
§ complexity - complementarity of individual techniques and methods of each other.
Building a financial management system through the allocation of its main elements and the definition of their relationships is a necessary but not sufficient condition for effective management in the field of finance. Although the general composition of the elements is the same, the specific techniques that a leader must use to effectively achieve the goals of the organization can vary greatly.
The dynamism of the financial management system is due to the fact that it is affected by the constantly changing amount of financial resources, expenses, income, fluctuations in supply and demand for capital. These changes are largely determined by the cyclical nature of the economic development of each production and the dependence of the functioning of the organization on this factor.
An enterprise needs to take into account the wavelike nature of its economic development and adapt to changing conditions and phases of the external environment cycle.
Financial management as a science
The crisis in the organization is evidence that the economic system has faced serious limitations in its development. Minor changes within the existing management system economic entity during a crisis they do not work.
In its development, any organization goes through several phases.
0th phase. Registration, formation of a new product, new technology, new fixed assets, new personnel, new management system. The organization develops the market. From point of view economic indicators this phase is characterized by high costs and low return on capital, i.e. possible negative returns. The purpose of the phase is the survival of the organization in a competitive environment, the implementation of innovations. In financial subgoals, it is implemented as risk optimization in the implementation of innovations.
1st phase. Growth in production, revenues, profits, growth of the organization itself (reorganization), increase in the number management personnel, expansion of their functions, there is a decentralization of powers. The organization gains a foothold in the market and increases its market share. The goal of the phase is to increase revenue, increase profits to pay dividends and implement future innovations. Financial subgoals - profit optimization, organization of financial control.
2nd phase. Stabilization production process and management process. The growth of revenue and profit slows down and gradually stops with slightly changing production volumes. Large cash flows remain, but, unable to increase sales, the organization does not invest in expanding existing production, therefore, has a positive cash flow, which makes it possible to increase the payment of dividends. The organization is looking for options for diversification and innovation, centers of financial stability are identified, and corporate relations are established. The purpose of the phase is to reduce current costs, maintain acceptable sales volumes to load the equipment. Financial subgoals - organization of financial control, ensuring financial flexibility.
3rd phase. A crisis in the development of an organization, expressed in a decrease in production volumes, a decrease in revenue, an increase in costs, a decrease and lack of profit, which is expressed in a negative cash flow or an increase in the organization's debt.
With the further development of the organization, the above phases are repeated.
Moreover, the zero phase for innovations can coincide in time with the phases of stabilization and crisis.
This coincidence provides an upward trend in economic results and maintains the decline in indicators not below the level of the maximum of the previous cycle.
At each phase of the life cycle of an organization, almost all methods and tools of financial management work. But the most important of them can be distinguished based on the goals of the stage.
For each organization from this set, you must select methodological support corresponding to the phase it is in.
The ranking of methods and tools of financial management by phases of the organization's life cycle in terms of the priority of using each of them is shown in Table 1.2. For this, the theory of "inaccurate statements" was used, where 4 ranking levels were identified based on "fuzzy premises":
§ very important (1);
§ important (2);
§ rather important (3);
§ possibly important (4).
Table 1.2
Russian State University for the Humanities
Institute of Management Economics and Law
Management department
Abstract on the discipline "financial management"
Features of financial management as a science.
Done by FU student
5 groups, Hasan Aidiev
Moscow 2009
Introduction………………………………………………………………………………….……………………………………………… ………………………………………………………………………3
2. Areas of management science and practice most closely related to financial management…………………………………….……………….4
3 . Goals, objectives and principles of financial management………………………………………………………………………………………………………………… …………………………………………………………………………..5
4. Functions of financial management….…………………………………………………………….…………………………………………………… ……………………………………………………………………….6
Book: Financial management. Crib
The contour of the financial condition of the organization…..…………………………………………………………………….………………………………………… …………………………………………………………………………………7
Conclusion….…………………………………………………………………………………………………………………………… …………………………………………………………….12
List of used literature…………………………………………………………………………………….……………………………………… ……………….……………………………………………………13
Introduction.
If you follow the literal translation of the English word “management” (manage) - financial management - financial management, i.e. the process of managing cash flow, the formation and use of financial resources of enterprises. It is also a system of forms, methods and techniques by which the management of money circulation and financial resources is carried out. It should be immediately noted that the term “financial management” in relation to financial management will be somewhat inaccurate, because. financial management is one of the management methods, not an all-encompassing financial management system.
Financial management - the art of managing the finances of enterprises - is confidently entering the domestic practice of managing, using a rich arsenal of methods accumulated by a market economy. This sphere of the economy is made up of quite significant achievements, as well as quite significant economic disasters. In terms of achievements, the largest number of Nobel Prizes have been awarded for the development of effective methods of financial management. Catastrophes can also include catastrophes of the “local” level of each economic entity - their bankruptcy, and, if foreign practice is based precisely on poorly organized and inefficient enterprises, then the domestic list of bankrupt organizations is primarily made up of former state enterprises(mainly from the military-industrial complex), which, after the transfer of the economy to a market economy, could not organize effective work and the production of products that are in demand. Global catastrophes include shocks affecting the entire state (it is worth remembering the August crisis in Russia in 1998, when the consequences affected every person in the country and foreign clubs of creditors), as well as the entire world financial system in general (the crisis in Asian countries, the consequences of which were felt on the other side of the planet).
Domestic financial management, in contrast to the Western one, “established” in a market economy, is characterized by the dynamism of its approaches and methods (in fact, like everything else in Russia, it is characterized by dynamism and unpredictability), determined by rapid changes in the external and internal conditions for managing enterprises.
Those managerial decisions that yesterday provided the enterprise with financial success, today can lead to the opposite result. In this regard, the art of enterprise financial management requires present stage timely adjustment of its financial ideology and strategy, constant search for new methodological methods for substantiating management decisions, new financial instruments for implementing these decisions.
However, despite the high dynamism of financial management, it also has its own stable principles, without knowledge of which it is rather risky to make decisions in the conditions of the Russian market economy. This applies to the principles of formation of the capital structure and composition of assets, methods of managing cash flows and financial risks, the mechanism of financial management in the conditions of the crisis development of the enterprise. Knowledge and practical use of modern principles and mechanisms, methods of effective management of the financial activities of enterprises makes it possible to ensure their relatively painless transition to a new quality of economic development in market conditions.
The transition to a market economy and the use of new forms in financial management contributed to the birth of a new specialty in the field of management - a financial manager. The head of the financial service of the enterprise (financial manager) must be a highly educated, creative, thinking specialist with a broad outlook, who knows and is able to apply in his work the results of the development of such sciences as: finance, statistics, accounting, financial and economic analysis, pricing, taxation, etc. .
Every business starts with asking and answering three key questions:
1. What should be the value and optimal composition of the assets of the enterprise, allowing to achieve the goals and objectives set for the enterprise?
2. Where to find funding sources and what should be their optimal composition?
3. How to organize the current and future management of financial activities, ensuring solvency and financial stability enterprises?
These issues are resolved within the framework of financial management - one of the key subsystems of the overall enterprise management system.
Exists whole line definitions of financial management, in particular, financial management is understood as:
Management system for the formation, distribution and use of financial resources of an economic entity and the effective circulation of its funds
The system of relationships between various entities regarding the attraction and use of financial resources
The science and practice of enterprise financial management aimed at achieving its tactical and strategic goals
Management of financial resources and property of the enterprise
Management of the system of monetary relations (finances), expressed in the formation of income (cash funds and resources), the implementation of expenses (the distribution and redistribution of funds, resources), monitoring the effectiveness of these processes
Management of the assets and liabilities of the enterprise in order to maintain the balance of payments and ensure the necessary liquidity of the enterprise
Management of financial flows of the enterprise.
Financial management as a science is a system of principles, methods for developing and implementing management decisions related to the formation, distribution and use of financial resources of an enterprise and the organization of its cash flow.
The definitions given are very broad, as they include fundraising management, sales assurance, settlement acceleration, financial planning, inventory and cost management, and other issues dealt with by financial managers enterprises.
Financial management - is directly related to the management of the financial condition of the enterprise (FSP).
The financial condition of an enterprise is its economic condition, characterized by a system of indicators reflecting the availability, placement and use of the financial resources of an enterprise necessary for its economic activity.
The financial condition of the enterprise is the most important characteristic of its activity. It determines the competitiveness, potential in business, assesses the degree of guarantee of the economic interests of the enterprise and its partners. From the point of view of the ability of the enterprise to pay taxes in a timely manner, the financial condition of the enterprise is also of interest to the tax authorities. The financial condition of the enterprise is the main criterion for banks when deciding on the appropriateness and conditions for issuing a loan. The financial condition of the enterprise is affected by all the components of management, which can be conditionally divided into financial management, personnel management, production, marketing, R&D,1 logistics. Being the result of the interaction of all elements of the system of financial relations of the enterprise, its financial condition is determined by the totality of production and economic factors. In this case, both absolute and relative indicators are used (financial ratios - see below).
In relation to financial management, the following concepts are used: financial management, financial management and financial condition management. With some assumptions, these concepts can be considered identical. However, the latter still seems to be broader and more capacious, since it implies the integration of various components of management and an indication of feedback in management.
It is advisable to distinguish between financial management in the narrow sense of the word, as the management of financial resources or financial flows (traditional understanding) and financial management in the broad sense, as financial management or management of the financial condition of an enterprise, that is, management of an enterprise as a whole, the interconnection of all components (areas) of management in terms of achieving the desired financial result.
Thus, financial management can be defined as a purposeful activity of the subject of management (top management of the enterprise and its financial services), aimed at achieving the desired financial condition of the managed object (enterprise) in other words, managing the enterprise to achieve its intended financial results and their effectiveness. Therefore, financial management can be understood as the financial management of an enterprise, that is, management in terms of achieving the desired financial result or managing the financial condition of an enterprise.
2. Areas of management science and practice most closely related to financial management.
Financial management primarily includes the following areas of management science and practice:
— financial and management accounting;
— investment and financial analysis;
— financial planning (budgeting);
Financial management is related to the following disciplines:
— marketing;
- Accounting;
- personnel management, etc.
At the same time, strategic management forms a long-term, first of all, qualitatively defined description of the area, directions, mechanisms and prospects for the development of the organization as a whole, the system of relationships within the organization, as well as its position in environment, ensuring the maintenance of competitiveness and leading the organization to its long-term goals. It is very important that, following the chosen strategy, the organization receives a single direction of development, the opportunity to concentrate resources in this direction, in order to develop its key competencies, reduces development risks.
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More and more popular in the business environment is the management of the company, which puts value management at the forefront. Cost management is an integrating process aimed at qualitatively improving strategic and operational decisions at all levels of the organization by focusing common efforts on key value drivers.
“The first concept suitable for practical use is the concept of value management based on economic value added (EVA), which in 1982 was registered as a trademark by D. Stern and D. Stewart. The main idea of this concept is that in order to create value, the return on capital used by a company must exceed its cost of raising capital (cost of capital). If this does not happen, then the value of the company decreases.
From the start of the boom in the financial market in the 1980s to the present, attempts have been made to extend market value measurements from the company level to the business unit level and below. For the first time in world practice, this task was successfully solved using the EVA indicator, which has become the most widely used in business circles due to the most accurate assessment of whether the company's rate of return is below, at or above the market average. So EVA replaced EPS (net earnings per share) - a measure that has been used in practice for several decades.
However, despite the advantages of EVA, this concept turned out to be of little use in the context of the increasing role of intangible assets in business valuation. This problem is partly solved in the Olson model.
“The Ohlson model (Edwards-Bell-Ohlson valuation model, EBO model), developed in 1995, is one of the most promising modern developments in the theory of company valuation. It allows you to use the advantages of income and property approaches, to some extent minimizing their disadvantages. According to this model, the company's value is expressed through the current value of its net assets and the discounted flow in excess of income - deviations from "normal" profit, i.e. average in the industry"
“The approach used in the Ohlson model is closely intertwined with the concept of economic value added - EVA.
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Both of these concepts are based on the concept of residual income. The difference between EVA and EBO is that EVA covers all capital invested in the company (equity and debt), while EVO covers only its own (equity)”.
However, the Olson model has a number of advantages over traditional methods of company valuation. In particular, it reflects the process of creating shareholders' wealth, rather than its distribution, which distinguishes this model favorably from the method of discounting dividends. More than a quarter of U.S. publicly traded companies pay no dividends at all, and yet their share price does not drop to zero.
3.4. The third direction of the evolution of financial management
The third direction in the evolution of financial management, associated with the knowledge of risks and ways to measure them, ran through the securities market. The uncertainty of obtaining income or danger, the possibility of loss or damage is the essence of risk.
“The CAPM model developed in the 1960s by the American scientist William F. Sharp, Nobel Prize winner in economics. The Sharp model in a number of interpretations is successfully used today in practice, for example, in calculating the discount rate using the cumulative method.
Another well-known concept, called the Black-Scholes option model, has found much greater application in practice.
In 1973, F. Black and M. Shols developed a model for determining the equilibrium value of an option.
The idea of the model is to define a fully hedged position that eliminates the risk of buying a stock option by replacing the option with a loan, or buying a stock with a loan.
Using the model, you can find: the current share price; expiration date of the option; option exercise price; short term interest rate.
Keep in mind, however, that the only unknown in the model is the standard deviation, which is determined from historical earnings per share data. The resulting value of the standard deviation is taken for the future. But this is the main weakness of the model. It was the new risks that emerged in Southeast Asia in 1997 that the model failed to capture.
“The advantage of the Black-Scholes model is that it takes into account agency costs that accompany management decisions and do not contribute to the growth of shareholders' wealth. The motives for these costs are: managers abuse privileges; their decisions may result in the transfer of some of the wealth from shareholders to bondholders or vice versa.”
More attractive for these purposes is the arbitrage model proposed by the American scientist S. Ross in 1976.
The American economist S. Myers cites as an example a set of the following factors: the level of industrial development, the rate of inflation, the difference between the rates of short-term and long-term loans, the difference in the yield of low-risk and high-risk corporate bonds. But this is only as the first results of the practical use of arbitration theory.
3.5. Features of modern financial management in Russia
In our country, there are no common methods for all enterprises to assess their financial condition. The threshold values of indicators used to assess the financial condition of enterprises, their liquidity, and return on assets were drawn from Western practice and are not adequate to Russian conditions. Moreover, due to the different level of development of individual enterprises in the industry, as well as entire industries, the results of the analysis carried out using Western methods do not reflect the true financial condition of enterprises. This comes from the fact that the same values of indicators can mean a stable financial condition for some companies and a crisis for others. Some banks issue loans only to those enterprises whose financial management is carried out according to Western models, but it is not always possible to ensure the implementation of the company's strategic objectives, guided by foreign experience.
In Russia, there are no traditions of financial management, since financial management was formed spontaneously, sporadically, and the methods of financial management used in Russia are very different. Thus, financial management specialists of some companies created a domestic school of financial management and developed their own approaches to financial management, other experts adapted American financial management models, and still others - European ones. The insufficient development of the legislative and legal framework in Russia also affects the specifics of financial management in Russian companies. IN modern conditions company management often puts tax management and tax optimization in the forefront, rather than increasing the company's value and profitability. Given this, we can draw the following conclusion: financial management in Russia is forced to solve the problem of minimizing the tax burden for the enterprise, on the one hand, as well as increasing the company's market value and maximizing the financial result, on the other.
The development of Russian financial management in modern conditions is affected by the lack of the required number of qualified managers and specialists in managing the finances of companies. The professional level of the latter is extremely low, despite the fact that in many Russian universities you can get a specialty related to financial management. The process of international recognition of the qualifications of specialists educated in Russia is associated with serious difficulties.
The reasons for the unsuccessful application of Western methods of financial management at Russian enterprises can be attributed to low financial discipline, lack of accounting, and data recorded in financial statements that do not correspond to reality. Financial statements, on the basis of which the assessment of the financial condition of enterprises is carried out, often do not reflect the real state of affairs. Unclear financial management mechanism different types resources in the enterprise and the policy of soft budget constraints hinders the development of financial management.
3.6. Ways to improve financial management
Financial management has become the most important area of activity for any subject of the social market economy, especially enterprises and joint-stock company leading industrial and commercial activities. Changing production technology, entering new markets, expanding or curtailing production volumes are based on deep financial calculations, on a strategy for attracting, distributing, redistributing and investing financial resources. Trends in the development of the local and global general market situation (hardly predictable changes in demand, increased price competition in traditional markets, diversification and gaining new market niches, increased risks in transactions) will underlie the growing role of specific financial matters management.
Analysis of the effectiveness of management at the enterprise:
1. In modern conditions, the key to the success of enterprises and firms is flexibility, adaptability to changing non-standard situations, the ability to fundamentally change organizational and economic behavior. The most important condition for achieving production efficiency and competitiveness of the enterprise's products is the transition to a new type of labor management.
2. A feature of modern management is its focus on efficient management of the economy in conditions of scarcity of resources, a gradual decrease in the regulation of production by administrative methods, and the intensification of production.
3. Directions for improving the efficiency of management in enterprises are very diverse. As a rule, measures to increase efficiency are based on the use of scientific and technological progress, improvement of the organization of production, introduction of resource-saving and modern high technology, including management.
4. Specific areas that contribute to improving management efficiency are:
- a clear distribution of functions at all levels (federal, regional, local and intracompany) and management levels;
– structural changes in the field of management, the optimal ratio of centralization and decentralization of powers, effective restructuring of enterprises, the use of modern “flat” organizational structures;
- investing in human capital(improvement of personnel policy and personnel work at enterprises, the use of various modern forms of labor motivation of employees);
- complex and effective use of various methods of management (economic, socio-psychological), administrative (organizational and administrative);
– introduction of modern information technologies; adaptation of effective foreign forms of management to the working conditions of domestic enterprises (management accounting, controlling, reengineering, etc.);
– improvement of the regulatory and legal framework for management, strengthening the economic, legal, ethical, environmental responsibility of managers for the consequences of managerial decisions.
Important conditions for solving the problem of effective management and creating mechanisms for the natural rotation of personnel of enterprises is the presence, on the one hand, of a system of control and responsibility, and on the other, a system of motivation. Management efficiency control should be carried out by the owners of the enterprise.
One of the most important factors determining the potential Russian enterprises, is the skill level of the staff. Availability of qualified personnel is a significant advantage that contributes to the competitiveness of enterprises.
In striving for success, an enterprise has to solve the great dilemma of financial management: profitability or liquidity? - and often sacrifice either one or the other in an attempt to combine dynamic development with the availability of a sufficient level of funds and high solvency. Sometimes low values of the current liquidity ratio may indicate not financial ill health and insolvency, but the dynamic development of the enterprise, the rapid increase in turnover and the rapid development of the market.
For efficient operation enterprises need to combine operational management with a general financial strategy. And here there are two main directions:
- Investments - fixed and variable costs - current financial needs - capital structure.
- The financial stability of the enterprise - solvency, liquidity of the balance sheet, creditworthiness, profitability - financial ratios.
Within the framework of this problem, the financial strategy matrices are a concrete practical embodiment of the integrated asset and liability management of an enterprise. Considering them, it is possible in the most general form to make a forecast of the financial and economic state of the enterprise, to identify adverse factors and phenomena. For this, the following indicators are used:
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