The principles of organizing the finances of enterprises and corporations are closely related to the goals and objectives of their activities. The principles of organization of corporate finance include the following:
Self-regulation economic activity;
Self-sufficiency and self-financing;
Division of sources of formation working capital on own and borrowed;
Availability of financial reserves.
The principle of self-regulation is to provide enterprises (corporations) with full independence in making and implementing decisions on industrial and scientific and technical development based on the available material, labor and financial resources. To attract additional financial resources, corporations issue equity securities (stocks and bonds) and participate in stock exchanges.
The principle of self-sufficiency assumes that the funds invested in the development of the corporation will pay off through net profit and depreciation charges. These funds are designed to provide a minimum of regulatory economic efficiency owned by the enterprise (corporation) own capital. With self-sufficiency, the enterprise finances simple reproduction from its own sources and pays taxes to the budget system. The implementation of this principle in practice requires the cost-effective operation of all enterprises and the elimination of losses.
In contrast to self-sufficiency, self-financing involves not only cost-effective work, but also the formation of commercial basis financial resources that provide not only simple, but also expanded reproduction, as well as revenues of the budget system. The principle of self-financing involves strengthening liability enterprises (corporations) for compliance with contractual obligations, credit and settlement and tax discipline. To implement the self-financing principle, a number of conditions must be met:
Accumulation of own capital in an amount sufficient to cover the costs not only for current, but also for investment activities;
Choice of rational directions for capital investment;
Constant renewal of the fixed capital;
Flexible response to the needs of the commodity and financial markets.
The application of the principle of self-financing is an important factor in preventing the bankruptcy of an economic entity and creates an opportunity for the effective use of financial management.
The division of sources of formation of working capital into own and borrowed is determined by the peculiarities of technology and organization of production in certain sectors of the economy. In sectors with a seasonal nature of production, the share of borrowed sources of working capital formation increases (for example, trade, food industry, Agriculture). In sectors with a non-seasonal nature of production (for example, heavy industry, transport, communications), own working capital prevails as sources of working capital.
The formation of financial reserves is necessary to ensure the stable operation of enterprises (corporations) in the face of possible fluctuations in market conditions, increased liability for failure to fulfill their obligations to partners. In joint-stock companies, financial reserves are formed in accordance with the charter of the enterprise from net profit. The implementation of these principles in practice should be carried out when developing a financial policy and organizing a financial management system for economic entities, which ensures their financial stability, solvency, profitability (profitability) and business activity.
Corporate finance is a collection economic relations arising in the process of formation, distribution and use of funds of funds generated in the process of production and sale of products, works and services.
Meaning corporate finance lies in the fact that, on the one hand, it is in this link of the financial system that the main part of the national wealth of society and the gross national product are created; on the other hand, it is within the framework of corporate finance that main source state budget revenues - tax payments of legal entities; at the same time, it is here that the foundation is laid for the development of technologies, scientific and technological progress, since it is here that the bulk of industrial, economic and financial relations society; and there is no doubt that it is here that the main jobs are created, which serve as the main source of income for another link in the financial system - household (population) finance.
A feature of corporate finance is the presence of production assets, the functioning of which determines the features of emerging financial relations.
Corporate finance perform following features:
distributive - expressed in the distribution of funds between various stages of production and consumption (for example, funds raised in the authorized capital are directed to the purchase of equipment and the purchase of raw materials, which in turn participate in the production of a new type of product, after the sale of which the incoming money is sent to further production and for example payment wages); *
control - through corporate finance, control is exercised not only over the process of formation, distribution and use of funds, but also over the process of production and sale, compliance with production technologies, supply issues, compliance with the conditions labor law etc.
The organization of corporate finance is based on the following principles:
The principle of commercial calculation:
o self-sufficiency - payback of money invested. The principle of self-sufficiency assumes that the funds invested in the development of the corporation will pay off through net profit and depreciation. These funds are designed to ensure a minimum of the normative economic efficiency of the company's (corporation's) own capital.
o self-financing - full payback of costs not only for the production of products, but also for the expansion of the production and technical base. At the same time, attracting bank loans is considered as the company's ability to repay not only the loan received, but also the interest for servicing. With self-sufficiency, the enterprise finances simple reproduction from its own sources and pays taxes to the budget system. The implementation of this principle in practice requires the cost-effective operation of all enterprises and the elimination of losses. The principle of self-financing implies strengthening the liability of enterprises (corporations) for compliance with contractual obligations, credit, settlement and tax discipline. Payment of penalties for violation of the terms of business contracts, as well as compensation for losses caused to other organizations, does not release the enterprise (without the consent of consumers) from fulfilling its obligations to supply products (works, services). To implement the principle of self-financing, a number of conditions must be met:
§ accumulation of own capital in an amount sufficient to cover the costs of not only current, but also investment activities;
§ choice of rational directions for capital investment;
§ constant renewal of fixed capital;
§ flexible response to the needs of the commodity and financial markets.
Let's consider these conditions in more detail. The content of the first condition is the segregation of funds to finance current and investment activities. These cash are concentrated on the settlement accounts of the economic entity until their further distribution. From the position of financial management, it is important to carry out the periodization of cash, i.e., its distribution according to the time spent in real circulation for short-term and long-term funds.
The second condition implies the identification of such ways of investing capital that lead to the strengthening financial condition enterprise and increase its competitiveness in the commodity and financial markets. Compliance with this condition is associated with an assessment of the level of self-financing, the development of criteria for such an assessment, with an analysis of the movement of capital by type of activity of the enterprise.
The third condition for self-financing is to ensure the normal process of renewal of fixed capital. An increase in the value of fixed assets as a result of their revaluation is beneficial for the enterprise, since no additional payments are made in the form of dividends and interest, and the amount of equity increases.
The fourth condition of self-financing involves the implementation of such a financial policy in which the enterprise can function normally in conditions of fierce competition in the commodity and financial markets. This policy is aimed at reducing the costs of production of circulation and increasing profits. Self-financing, based on high yen, contributes to an increase in the money supply and becomes a generator of inflationary processes in national economy. Therefore, in order to increase the level of self-financing, economic entities are obliged to clearly respond to market needs for relevant goods (services). The mechanism for responding to market needs involves specialization, diversification and concentration of production. The orientation of this mechanism should be linked to the tax, price and investment policy of the state. The application of the principle of self-financing is an important factor in preventing the bankruptcy of an economic entity and creates an opportunity for the effective use of financial management.
The principle of planning is mandatory. It ensures that the volume of sales and costs, investments correspond to the needs of the market, taking into account the conjuncture, and in our conditions, effective demand, i.e. the possibility of making normal calculations. This principle is most fully realized when implementing modern methods intracompany financial planning(budgeting) and control; Plan Implementation Fact
· The principle of dividing working capital into own and borrowed. The division of sources of formation of working capital into own and borrowed is determined by the peculiarities of technology and organization of production in certain sectors of the economy. In sectors with a seasonal nature of production, the share of borrowed sources for the formation of working capital (trade, food industry, agriculture, etc.) is increasing. In sectors with a non-seasonal nature of production (heavy industry, transport, communications), own working capital prevails as sources of working capital.
· Creation of financial reserves. The formation of financial reserves is necessary to ensure the stable operation of enterprises (corporations) in the face of possible fluctuations in market conditions, increased liability for failure to fulfill their obligations to partners. In joint-stock companies, financial reserves are legally formed from net profit. For other economic entities, their formation is regulated by constituent documents.
The principle of demographic centralization - management style, management
Income as the main source of cost coverage. Factors determining it
Income is the total finished products shipped to the side, the volume of work performed and services rendered is confirmed by issued invoices, shipping documents and simply waybills.
In accordance with IFRS, income is reported on an accrual basis, and the cash basis is also used in accounting. The value of income not only as a result of the financial and economic activities of an economic entity, but also as economic indicator in general is as follows:
timely receipt of funds in payment for shipped products ensures complete and timely
payment of current and long-term expenses of the company, which ensures the continuity of the production process and sales of products;
The presence of income confirms the recovery of funds spent on production, the completion of the main production cycle and the creation necessary conditions to resume the next circulation of funds;
· the presence of income makes it possible to judge the role of a given company in a given market, the feasibility of its creation and prospects for the future;
timely receipt of funds within the income received ensures the timeliness of settlements with the budget (timely payment of salaries to teachers, doctors and pensions for pensioners, etc.), with company employees (high productivity of their labor), with suppliers their industries), etc.
The company's income includes:
income from the sale of goods (works, services);
income from the increase in value from the sale of buildings, structures, as well as assets that are not subject to depreciation;
income from writing off liabilities;
Income from doubtful liabilities;
Income from the rental of property;
· Income from reducing the amount of provisions created by banks;
income from the assignment of a debt claim;
· income from the excess of the value of retired fixed assets over the book value of assets;
income received from the distribution of income from common shared ownership;
property received free of charge, work performed, services rendered;
Dividends remuneration;
· excess of the amounts of positive exchange rate difference over the amount of negative exchange rate difference;
· winnings.
The main factors determining income are:
production: production volume, product quality, assortment, rhythm of release, production technology, seasonality of production;
marketing: rhythm of shipment, terms of document circulation, forms of payment, terms of delivery, advertising, related services, etc.;
· not dependent on the activities of the company: political factors, natural and climatic, legal and others.
financial corporate income cost
The composition and structure of costs included in the cost of production
Costs are the expenses of the company aimed at organizing its production, economic and commercial activities. The cost of production and sales of products occupy the largest specific gravity in all company expenses. They consist of the costs associated with the use in the production process of products (works, services) of fixed assets, raw materials, materials, components, fuel and energy, labor and other costs. The amount of profit depends on the formation of this group of expenses. The costs of production and sale of products (works, services) are reimbursed after the completion of the circulation of funds at the expense of proceeds from the sale of products (works, services).
Production costs are diverse and classified according to certain criteria, the main of which are the method of attribution to the cost price, the relationship with production volumes, the degree of cost homogeneity.
Depending on the methods of attribution to the cost of production, costs are divided into direct and indirect, while direct costs are understood as costs that can be directly and directly included in the cost. This is the cost of raw materials, basic materials, purchased semi-finished products, the basic wages of production workers, etc.
TO indirect costs include the costs associated with the production of different products, and therefore they cannot be directly attributed to the cost price a certain kind products. These are the costs of maintenance and operation of equipment, maintenance and repair of buildings, salaries of AUP, etc.
Depending on the relationship of costs with the volume of production, conditionally fixed and conditionally variable costs are distinguished. Conditionally fixed costs include costs, the total value of which does not change significantly with a decrease or increase in the volume of output, as a result of which their relative value per unit of output changes. This is the cost of heating and lighting the premises, salaries of the AUP, depreciation, administrative and business expenses, etc. semi-variable costs depend on the volume of production, they grow or decrease in accordance with the change in the volume of output. These include the cost of raw materials and basic materials, process fuel, the basic wages of workers.
In the basis of costing products use the classification of costs according to the degree of cost homogeneity. Thus, elemental costs have a single economic content for a given link, regardless of their purpose.
This material costs, wages, depreciation, sales costs, non-production payments and other expenses. The ratio between these cost elements is the cost structure for the production of products. Complex costs include several cost elements, i.e. diverse in composition, but united in economic purpose. These are general shop expenses, losses from marriage and others.
The composition of costs attributable to the cost of production includes all types of expenses associated with the production of this type of product, and confirmed by the relevant documents, except for: travel and hospitality expenses; expenses for the payment of remuneration, in the form of interest on a loan, discount or coupon; expenses on paid doubtful obligations; expenses for research, design, exploration, experimental design and geological exploration, charitable and sponsorship assistance, fines and penalties and similar expenses. Part of said expenses is deductible as expenses of the period, and reduces taxable income, and part is covered by profit.
Company expenses that are not included in the cost of production and are deductible
The company's expenses that are not included in the cost of production and are deductible include expenses that are defined as expenses of the period. The significance of this group of expenses lies in the fact that, despite the fact that they are not included in the cost of production, they reduce the amount of taxable income, and hence the amount of corporate income tax payable to the budget. These expenses include:
· compensation for business trips and hospitality expenses within the limits established by the Government of the Republic of Kazakhstan;
· Expenses on paying interest on loans received (including financial leasing), except for loans received for construction, as well as on paying a discount or coupon on debt securities and on the payment of interest on deposits (deposits) within the limits established Tax Code RK;
Expenses related to the payment of doubtful obligations that were previously recognized as income (outstanding accounts payable);
Expenses for writing off doubtful claims arising from the sale of goods (works, services) and not satisfied within three years from the date of the claim or bankruptcy of the debtor (unredeemed receivables);
expenses on deductions to reserve funds made by subsoil users to eliminate the consequences of development at its completion, as well as banks and other organizations engaged in banking operations to create provisions for doubtful and bad assets (loans granted, deposits placed, receivables, contingent liabilities) ( these entities only)
· Expenses for research, design, survey and development work, except for the acquisition of fixed assets and other capital expenditures;
· Expenses on payment of insurance premiums under insurance contracts, except for funded insurance, within the established norms, as well as mandatory and other contributions made by banks participating in the collective deposit guarantee system;
expenses for social benefits for temporary disability, for maternity leave, for compensation for harm caused at work, for deductions to the State Fund social insurance, voluntary professional pension contributions within the limits;
· expenses for geological survey and preparatory work for the extraction of natural resources are deductible in the form of depreciation deductions according to the norms of the subsoil user, not exceeding 25%;
· excess of the amounts of negative exchange rate difference over the amount of positive exchange rate difference;
fines and penalties associated with the receipt of total annual income, with the exception of those payable to the state budget;
· taxes paid in the current period, except for taxes excluded before the determination of the SRS (for example, VAT, property taxes, individual income tax, social tax), corporate income tax, net income tax paid by non-residents and excess profit tax paid by subsoil users.
These expenses are deductible if there are documents confirming these expenses, provided that they were made to receive the total annual income of the given tax period.
These costs are united by the fact that:
they cannot be attributed to the cost of a particular type of product; -
they are associated with the receipt of total annual income in general and are a production, legal or social necessity; -
some of them are related to long-term costs; -
they are not stable in size; -
are not permanent -
They pay off over a long period of time.
Profit distribution and use system
Profit as an economic category reflects the net income generated in the material production in progress entrepreneurial activity. The formation of profit as a result of the process of production and sale of products indicates the recognition of the social utility of these products. Profit is the result of the excess of income received from the production and sale of products, works and services over the costs invested in the production and sale of these products. Profit performs the following functions: characterizes the economic effect; confirms the feasibility this business; reflects the final financial results- shows what was eventually achieved; performs a stimulating function, since it is it that serves as a source of self-financing; serves as a source of formation of budgets of different levels, both in the form of taxes, and in the form of various sponsorships or other areas of redistribution.
The object of distribution in the enterprise is the balance sheet profit. The distribution of profit is understood as its direction to the state budget and according to the items of use in the enterprise. Legislatively, the distribution of profits is regulated in that part of it that goes to the budgets of different levels in the form of taxes and other obligatory payments. Determining the directions of spending the profit remaining at the disposal of the enterprise, the structure of the articles of its use is within the competence of the enterprise.
The distribution of profits is based on the following principles:
profit received by the enterprise as a result of production, economic and financial activities, distributed between the state and the enterprise as an economic entity;
· profit for the state comes to the state budget in the form of taxes, the rates of which cannot be arbitrarily changed. The composition and rates of taxes, the procedure for their calculation and contributions to the budget are established by law. Corporate income tax, net income tax paid by non-residents, excess profit tax paid by subsoil users, as well as fines, penalties and forfeits accrued to the state budget are paid from profits to the budget;
· the value of the enterprise's profit remaining at its disposal after paying taxes, should not reduce its interest in the growth of production volume and improvement of the results of financial and economic activities; *
The profit remaining at the disposal of the enterprise, in the first place, is directed to accumulation, which ensures its further development, and only in the rest of it for consumption.
At the enterprise, net profit is subject to distribution, i.e. profit remaining at the disposal of the enterprise after paying taxes. The distribution of net profit reflects the process of formation of funds and reserves of the enterprise to finance the needs of production and development social sphere.
The distribution of net profit is one of the directions of intra-company planning. The procedure for the distribution and use of profits at the enterprise is fixed in the charter of the enterprise and is determined by the dividend policy, which is developed by the relevant divisions of economic services and approved by the governing body of the enterprise (management board, board of directors, meeting of shareholders). In accordance with the statute or regulations dividend policy the enterprise can draw up cost estimates financed from profits, or form special-purpose funds: a fund for production and scientific and technical development fund social development, financial incentive fund. All profit remaining at the disposal of the enterprise is divided into two parts. The first increases the property of the enterprise and participates in the process of accumulation. The second characterizes the share of profit used for consumption. At the same time, as a rule, not all profit allocated for accumulation is used in full. The rest of the profit not used to increase the property has an important reserve value and can be used in the future to cover possible losses, finance various costs. Retained earnings indicate financial stability company, about the availability of an internal source for further development.
Corporate finance is a set of economic relations that arise in the process of formation, distribution and use of funds of funds generated in the process of production and sale of products, works and services.
The significance of corporate finance lies in the fact that, on the one hand, it is in this link of the financial system that the main part of the national wealth of society and the gross national product are created; on the other hand, it is within the framework of corporate finance that the main source of state budget revenues is formed - tax payments of legal entities; at the same time, it is here that the foundation is laid for the development of technologies, scientific and technological progress, since it is here that the bulk of the production, economic and financial relations of society are formed; and there is no doubt that it is here that the main jobs are created, which serve as the main source of income for another link in the financial system - household (population) finance.
A feature of corporate finance is the presence of production assets, the functioning of which determines the features of emerging financial relations.
Corporate finance performs the following functions:
Distribution - expressed in the distribution of funds between various stages of production and consumption (for example, funds raised in the authorized capital are directed to the purchase of equipment and the purchase of raw materials, which in turn participate in the production of a new type of product, after the sale of which the incoming money is sent to further production and such as payroll).
Control - through corporate finance, control is exercised not only over the process of formation, distribution and use of funds, but also over the process of production and sale, compliance with production technologies, supply issues, compliance with labor laws, etc.
The organization of corporate finance is based on the following principles:
commercial calculation principle:
self-sufficiency - payback of money invested. The principle of self-sufficiency assumes that the funds invested in the development of the corporation will pay off through net profit and depreciation. These funds are designed to ensure a minimum of the normative economic efficiency of the company's (corporation's) own capital.
self-financing - full payback of costs not only for the production of products, but also for the expansion of the production and technical base. At the same time, attracting bank loans is considered as the company's ability to repay not only the loan received, but also the interest for servicing. With self-sufficiency, the enterprise finances simple reproduction from its own sources and pays taxes to the budget system. The implementation of this principle in practice requires the cost-effective operation of all enterprises and the elimination of losses. The principle of self-financing implies strengthening the liability of enterprises (corporations) for compliance with contractual obligations, credit, settlement and tax discipline. Payment of penalties for violation of the terms of business contracts, as well as compensation for losses caused to other organizations, does not release the enterprise (without the consent of consumers) from fulfilling its obligations to supply products (works, services). To implement the principle of self-financing, a number of conditions must be met:
accumulation of own capital in an amount sufficient to cover the costs not only for current, but also for investment activities;
choice of rational directions for capital investment;
constant renewal of fixed capital;
flexible response to the needs of the commodity and financial markets.
Let's consider these conditions in more detail. The content of the first condition is the segregation of funds to finance current and investment activities. These funds are concentrated on the settlement accounts of an economic entity until their further distribution. From the position of financial management, it is important to carry out the periodization of cash, i.e., its distribution according to the time spent in real circulation for short-term and long-term funds.
The second condition implies the definition of such ways of investing capital that lead to strengthening the financial condition of the enterprise and increasing its competitiveness in the commodity and financial markets. Compliance with this condition is associated with an assessment of the level of self-financing, the development of criteria for such an assessment, with an analysis of the movement of capital by type of activity of the enterprise.
The third condition for self-financing is to ensure the normal process of renewal of fixed capital. An increase in the value of fixed assets as a result of their revaluation is beneficial for the enterprise, since no additional payments are made in the form of dividends and interest, and the amount of equity increases.
The fourth condition of self-financing involves the implementation of such a financial policy in which the enterprise can function normally in conditions of fierce competition in the commodity and financial markets. This policy is aimed at reducing the costs of production of circulation and increasing profits. Self-financing, based on high yens, contributes to an increase in the money supply and becomes a generator of inflationary processes in the national economy. Therefore, in order to increase the level of self-financing, economic entities are obliged to clearly respond to market needs for relevant goods (services). The mechanism for responding to market needs involves specialization, diversification and concentration of production. The orientation of this mechanism should be linked to the tax, price and investment policy of the state. The application of the principle of self-financing is an important factor in preventing the bankruptcy of an economic entity and creates an opportunity for the effective use of financial management.
The principle of planning is a must. It ensures that the volume of sales and costs, investments correspond to the needs of the market, taking into account the conjuncture, and in our conditions, effective demand, i.e. the possibility of making normal calculations. This principle is most fully implemented in the implementation of modern methods of intra-company financial planning (budgeting) and control;
Plan Implementation Fact
The principle of dividing working capital into own and borrowed. The division of sources of formation of working capital into own and borrowed is determined by the peculiarities of technology and organization of production in certain sectors of the economy. In sectors with a seasonal nature of production, the share of borrowed sources for the formation of working capital (trade, food industry, agriculture, etc.) is increasing. In sectors with a non-seasonal nature of production (heavy industry, transport, communications), own working capital prevails as sources of working capital.
Creation of financial reserves. The formation of financial reserves is necessary to ensure the stable operation of enterprises (corporations) in the face of possible fluctuations in market conditions, increased liability for failure to fulfill their obligations to partners. In joint-stock companies, financial reserves are legally formed from net profit. For other economic entities, their formation is regulated by constituent documents.
The set of connections is formed in the conditions of formation, redirection and intended use the money supply that arises as a natural result of the production and sale of goods or the provision of services.
Being an important link in a holistic system, they:
- play the role of a foundation for building a source of income that can subsidize the state budget;
- are the "zero point of coordinates" when creating the gross national product;
- prepare the ground for the coming scientific and technological revolution.
There is no doubt that corporate finance, in addition to all of the above, also performs the function of a donor - it is with their help that the "purse" of households is filled (in fact, the population is sponsored by increasing the number of vacancies).
Solving specific problems
Economic relations at the level of corporations resemble the work of a complex mechanism - the failure of a single part can provoke a shutdown of the entire unit. To prevent such a scenario, among other things, it is necessary to solve two problems. Namely - competently distribute and control their development by the subjects.
Speaking specifically, corporate finance (this rule is relevant for any type of inter-farm and inter-production relations) should:
- structure revolving fund in such a way that there is no downtime at either the production stage or the consumption stage due to lack of funds or shortages Supplies(example of the opposite situation: attracted investments were spent on the purchase of a new production line, but the untimely purchase of raw materials for it led to a delay in wages and a slowdown in modernization);
- not only to monitor the chain of "formation, distribution and use of money", but also to monitor compliance with the norms Labor Code, to deal closely with the problem of optimizing the available capacities, etc.
Fundamental principles
A corporation is an organization that enjoys the rights legal entity. Its strength and power lies in the pooling of many equity capitals managed by a small group of people.
In terms of financial freedoms and responsibilities, corporate finance is:
- complete independence, expressed in covering current expenses, both on the basis of short-term business plans and long-term strategies;
- open access to own working capital;
- 100% payback (including and taking into account modernization);
- the possibility of attracting a bank loan;
- responsibility for miscalculations and failures;
- building relationships with the state (i.e., control of revenues and contributions to the budget, analysis of general indicators, etc.).
Features of corporate finance: is it always justified to bet on large-scale activities?
The presence of production assets is one of the main conditions for the emergence of financial relations. However, despite the fact that the share of the economic turnover of corporations has long ago exceeded 80%, international market today there are less than seven dozen organizations that are engaged in truly large-scale activities. The lion's share of subjects of legal law are enterprises of modest size.
So corporate finance is, first of all, the separation of ownership from management (with the mandatory centralization of capital in the hands of directors), and not at all an exorbitant concentration of capacities. In addition, it must be understood that the division of powers between management and owners de facto ensures the stability of the economic and production structure.
Nuances of interaction
An economic model based on corporate finance is not at all the merit of a single country. Yes, the United States in some sense served as a benchmark, but globalization has erased the boundaries, and now Joint-Stock Company and its founders may well be on opposite sides of the Atlantic...
Over the past 20-30 years, relations between the participants have not undergone significant changes: as before, there are two large, but not equal groups that are integrated into the corporate body and cannot exist without each other. Their composition is given below:
- management and major shareholders;
- "minority shareholders", as well as owners of other securities, business partners, lenders and local (federal) authorities.
Economic integration provides for the development of one of three scenarios:
1. vertical merging, that is, the union of several companies involved in the production of a particular product (the role of a “good” is sometimes assigned to a service). After the conclusion of the alliance, all stages of manufacturing / providing something follow each other within the framework of the functionality of one organization.
2.Horizontal combination- financial relations are established between enterprises of the same type in order to increase the market share and increase capacity.
3. Conglomerate "commonwealth"- various technological lines are poured into the corporation. The goal is to expand the range in order to meet demand and ensure higher stability of cash flows.
Basic rules for accounting for revenue
The volume of sales is a certain amount of funds or other benefits accumulated for a specific period of time: a month, quarter, half a year, and so on (meaning the “materialization” of the services rendered and / or income from the sale of the goods produced).
Corporate finance management is, among other things, accounting. And here are the options:
- in particular, it is based on the fact that it positions the proceeds as the money supply fixed on the accounts of the enterprise at the time of the reconciliation operation (in barter relations, the material benefit from trading activities often takes the form of a product);
- the accrual scheme, in turn, provides that the control of turnover is carried out after the fact, that is, the amounts are at the disposal of the company when consumers have financial obligations and are immediately identified as profit.
Accounting recognizes revenue as such, provided that:
- its value can be specified;
- the right to receive is detailed in the contract;
- Guaranteed growth in corporate income based on the results of the operation.
The role of transfer prices
The principles of corporate finance that underlie the formation of strong economic ties, cannot be considered separately from the question transfer pricing. We are talking about the so-called special value of goods (raw materials, services), which is set for related institutions (organizations). Simply put, everything structural branches, striving for the ultimate goal, operate with internal prices for components and other types of resources. Thus, the problem of increasing the profits of both departments and the entire enterprise as a whole is solved.
Information about transfer prices fall under the definition of "trade secret" because they actually set the level of "competitive margin" for the released final product.
Why is liquidity analysis so important?
As noted earlier, a competent organization of corporate finance implies a timely “diagnosis” of the existing reporting. Liquidity analysis is one of the mechanisms for visualizing the "degree of viability" of a structure engaged in trading and/or production and economic activities. It gives an idea of the potential of the enterprise in the context of short-term obligations: whether or not the corporation, by realizing the assets available to it, will be able to fulfill the promises made to partners (creditors, customers).
For preliminary analysis a special coverage table and calculation formulas for current, quick and absolute liquidity ratios are used. But a complete diagnosis requires accounting a large number indicators and should be carried out by highly professional personnel.
Financial stability
The corporate finance system needs regular monitoring. Even short-term interruptions in the flow of working capital pose a threat to a well-established scheme of work (especially if there are no duplicating structural units in the production chain).
From a financial point of view, the stability of the organization corresponds to the level of its independence from the sources of "replenishment of the treasury". As you know, there are two of them: equity and attracted investments. The structure of assets and liabilities is determined either by calculating coefficients (autonomy, agility of funds, etc.) or by tabular comparison. But in any case, in the course of the analysis, an answer should be obtained to the question of the magnitude of financial risk.
Learn more about external and internal sources of income
The division of working capital into external and internal is necessary due to the specifics of individual production processes. In particular, it is advisable to use the assets of an economic entity in the year-round cycle of manufacturing goods and / or providing services; it is more profitable to launch seasonal production lines by “borrowing” capacities and funds.
If the development of financial policy and its adaptation to legal realities is not accompanied by amendments to the scope of activities and the import-export direction, then, regardless of the reliability of internal and external sources income, the risk of financial destabilization increases, and the effectiveness of management decreases.
Is self-regulation good or bad?
The essence of corporate finance is often viewed from the standpoint of capitalization (scale of production). However, the difference from the same sole proprietorship lies in something else - in the actual separation (legal and functional separation) of the management apparatus from the group of founders. That is, minority shareholders, in fact, are reduced to a minimum: they only vote for members of the governing body who develop a strategy for the future and turn over billions in the interests of the corporation. Since the participants lower level limited in information, the election of directors, as a rule, is limited to supporting proposals coming from current managers.
Conclusion: absolute self-regulation is a true boon for an enterprise with many structural divisions, because this mechanism allows you to avoid intra-corporate bureaucracy. At the same time, there remains a high likelihood of abuse by "temporary but non-replaceable" bosses.
Introduction ................................................ ................................................. .2
Chapter I. Essence of corporate finance
1.1 The concept and functions of corporate finance...............................................4
1.2 Financial management of the organization………………….......................12
1.3 properties of corporate securities...............................................................16
Chapter II. Principles of organizing corporate finance of business entities of various forms of ownership
2.1 Basic principles of organizing corporate finance ..........17
2.2 business finance functions.................................................21
Conclusion................................................. .........................................23
Appendix a.................................................. ................................................25
Annex b.................................................................. ......................................26
List of references ..........................................................27
INTRODUCTION
In modern corporate practice Considerable attention is paid to the interaction between shareholders and the company, which is formalized by corporate securities. Regulation of relations between issuers, investors, buyers, sellers, others stakeholders, including the issue, circulation, observance of property rights for corporate securities is based on the law.
Current trends in the development of the world and Russian economy testify to the rapid development of corporate forms of management, the importance of state and non-state corporations in the formation of the country's financial resources, their effective redistribution, and provision of the social sphere. This necessitates the allocation of corporate finance as an independent area of research.
The topic under consideration is extremely relevant due to the fact that corporateFinance is, in short, a set of economic relations in the process of reproduction, as a result of which the newly created social product converted into monetary form is formed into monetary funds for various purposes. The essence of finance lies in the continuous movement of the value of a social product in the formation of this value into targeted funds.
A feature of corporate finance is the presence of production assets, the functioning of which is determined by the peculiarity of emerging financial relations.
The spontaneous generation of finance occurs precisely at the stage of material production, and this means that the fundamental root of financial relations is precisely the finances of corporations, enterprises, business entities, which are essentially two feathers of the same bird. The main thing is that the finances of enterprises are the basis of financial relations in general. By definition, enterprise finance is: the totality of monetary relations between enterprises, their workers, the state, off-budget funds And financial institutions. Thus, enterprise finance is the main source of financial resources that for public finance, for example, in the form of tax revenue, and household finance in the form of wages. It should be noted that this connection is two-way, because the state can provide enterprises with various subsidies or subsidies, just as households can influence the formation of the financial resources of an enterprise through individual investment, but, nevertheless, in terms of volume, enterprise finance remains the main flagship in financial system any country. That is, forming the definition of the essence of enterprise finance, we can say that they are the basis in relations that arise in the process of production and sale of finished products, and their transformation into a monetary form with subsequent formation into targeted funds.
