Enterprise cash flow management. The cash flow of an enterprise The cash flow of an organization represents
In international, and in recent decades in Russian business, the definition of cash flow (from English cashflow - cash flow) is increasingly common. It characterizes the activities of an organization or enterprise, as a result of which an outflow or inflow of means of payment is generated, and is an important criterion for the company's financial balance. Let's study in more detail what is cash flow.
The concept of cash flow and its varieties
Let's take a quick look at the cash flow definition. This is the movement of money through accounts or cash through the cash desk within the framework of one project or enterprise in different directions.
The process, which results in an increase in the amount of money, is a positive cash flow (inflow, receipt). The reverse direction process is an outflow (payment, expense, cost).
From the above, we can conclude that this indicator can ultimately have both positive and negative values.
As part of the overall financial policy of the company, management requires skill in managing cash flows () for its stable development. is the analysis and regulation of the company's financial flows in order to optimize costs and maximize income, in particular:
- development of schedules for receipts and expenditures of means of payment in the context of types; study of the factors influencing the formation of the enterprise's cash flow;
- forecasting a possible shortage of money and sources to cover it;
- determination of directions for investing funds that have been temporarily released.
Financiers distinguish types from the total cash flow depending on the activity that produces them. In particular, the cash flow of the project consists of the following flows:
- from operating activities (operating cash flow, CFO);
- from financial activities (cash flow from financing activities, CFF);
- from investment activity (cash flow from investing, CFI).
In separate undertakings, it is not possible to separate all the movements of finance by type of activity; in such cases, they can be combined all or some of them. In addition, cash flow is classified according to a number of indicators, such as the direction of movement (negative or positive), the level of sufficiency (deficit or excess), scale (by operations, lines of activity), time (future or present), etc.
Clean and free cash flow
The difference between receipts and payments for a certain time period is called net cash flow ( , NCF). This criterion is often taken into account by investors when deciding on the prospects of investing in an investment project. The formula for calculating this indicator looks like this:
- CO - outgoing (negative) flow;
- CI - incoming (positive) flow;
- n is the number of steps.
If we take into account the types cash flows, then in this case the formula can represent the aggregate value of indicators from different directions, i.e. total balance for different types of activities: 
For owners or investors, the free cash flow indicator is of great importance. Money). These are the amounts that are accumulated in the accounts and in cash after paying taxes and deducting the cost of capital investments. A higher figure opens up room for the owner to maneuver in terms of investment, increasing the size of dividends, expanding the range of products, and modernizing production.
There are two types, which are calculated differently:
- FCF from the firm's assets (free cash flow to the firm). This is the movement of finances within the framework of the main activity, excluding investment in fixed assets. In fact, FCFF = FCF, it gives an understanding of how much financial resource an enterprise has after capital expenditures. The criterion is more often used by investors.
- FCF on equity (free cash flow to equity, FCFE). This is the money that remains after the exclusion of expenses in part of the company's core business, tax payments and bank interest. This indicator is used to assess the value of the company by shareholders.
FCFF is calculated using the following formula:
- EBIT - earnings before interest and taxes;
- Tax - income tax (interest rate);
- DA - depreciation;
- NCWC - the cost of owning new assets;
- ∆WCR - capital expenditures.
- NI is the value of the company's net profit;
- DA - depreciation of intangible and tangible assets;
- ∆WCR - capital expenditures;
- Net borrowing - an indicator of the difference between loans taken and already repaid;
- Investment - the amount of investment.
If the FCF at the end of the step is above zero, then this, in general, indicates the financial attractiveness of the company and the increase in the value of its shares. The negative value of the calculated criterion may be a consequence of the unprofitability of the enterprise or significant investments in its development.
How is the calculation made
Cash flow is usually calculated in relation to the analyzed time intervals (steps), the accepted rules provide for its forecasting monthly in the first year of undertaking, quarterly - in the second year, and then annually. The countdown is made from the basic fixed moment, which can be either the beginning or the end of the zero segment.
You can open cash flow and calculate it in various prices:
- current (base), prevailing on the market at the moment, not taking into account the level of inflation;
- forecast prices that are expected in the future and take into account inflation rates are calculated by multiplying the base price by the inflation index;
- deflated (calculated), these are forecast prices reduced to current moment time by dividing them by the base inflation index.
Cash flow can be calculated in different currencies. The rules recommend calculating the movement of funds in the currencies in which payments are made, and then bringing them all to the final single currency. In Russian statistical reports, the final currency is the Russian ruble, but if there is a need, then individual calculations can be reflected in the final additional currency.
Cash flows are calculated by two main methods - direct and indirect.
The direct method is directly related to constituent parts accounting, such as order journals, general ledger, analytical accounting, which is closer to Russian specialists. This method is convenient to calculate benchmarks for spending and receiving money. Here, the inflow is the predominance of income over expenses, and the outflow is the excess of payments over income. The starting element is sales revenue.
The data for this technique is taken from the Balance of the enterprise (form No. 1), as well as from the Cash Flow Statement (form No. 4), which is analyzed "top down". In particular, NPV from financial activities are calculated exclusively by this method. Such an analysis makes it possible to approximately explain the discrepancy between the value of the company's cash flow for the reporting period and the profit received during the same time. At the same time, he is not able to reveal the relationship between the magnitude of the change in money and the financial result.
Cash flow calculation example by direct method:
| Name of indicator | Period 1 | Period 2 | Period 3 | Period 4 |
|---|---|---|---|---|
| 1. Balances at the beginning of the period under review | ||||
| 2. Receipts, including: | ||||
| advances and proceeds from the sale of goods; | ||||
| interest, dividends and other inflows; | ||||
| loans and credits | ||||
| 3. Payments, including: | ||||
| payment for services, works, goods, advance payments; | ||||
| budgetary payments (transfers of taxes and contributions to obligatory funds); | ||||
| remuneration of personnel; | ||||
| financial investments; | ||||
| expenses for fixed assets; | ||||
| repayment of loans | ||||
| 4. Cash flow (receipt - payments) | ||||
| 5. Balances at the end of the period |
The indirect method is more suitable for analytics, it is based on sequentially adjusting recorded profits by subtracting expenses and adding non-cash flow income. This method gives an understanding of the relationship between working capital and financial results. In this case, form No. 4 of the balance sheet is disclosed "from the bottom up". The adjustments mentioned include:
- balance sheet items that are not of a monetary nature (losses and profits of previous periods, depreciation, exchange rate differences);
- change in the amount of inventories, receivables, short-term financial liabilities and investments (except for loans and credits);
- other items that can be classified as financial or investment activities.
An example of calculating cash flow using the indirect method:
| Moving money | Period 1 | Period 2 | Period 3 | Period 4 |
|---|---|---|---|---|
| Operating activity | ||||
| Growth: | ||||
| net profit; | ||||
| growth of accounts payable; | ||||
| depreciation | ||||
| Decrease: | ||||
| rising costs and inventories; | ||||
| growth in accounts receivable | ||||
| Cash flow from operating activity | ||||
| Investment activity: | ||||
| sale of fixed assets; | ||||
| acquisition of fixed assets | ||||
| Cash flow from investment activity | ||||
| Financial activity: | ||||
| payment of dividends; | ||||
| dynamics of credits and loans; | ||||
| bill dynamics | ||||
| Cash flow from financial activities | ||||
| Total cash flow | ||||
| Financials at the start date of the period | ||||
| Financials at the end date of the period |
The accuracy of the forecast regarding the future movement of funds depends, first of all, on the accuracy and correctness of the calculations of such indicators:
- the amount of capital expenditures for initial stage and during the life cycle of the project;
- expenses for the production and sale of products intended for release, as well as a forecast of expected sales volumes;
- stepwise need for third-party finance.
Qualitative cash flow forecasting enables potential investors to foresee the potential and expected profitability of the initiative under consideration with a high degree of probability.
Enterprise cash flow is a set of cash receipts and payments distributed over separate intervals of the considered period of time, generated by its economic activity, the movement of which is associated with time, risk and liquidity factors.
Consider the following classifications of cash flows:
1. According to the scale of servicing the economic process, there are:
cash flow for the enterprise as a whole (represents the most aggregated type of cash flow, which accumulates all types of cash flows serving the business process of the enterprise as a whole)
cash flow for individual structural divisions enterprises (an independent object of management in the system of organizational and economic construction of an enterprise);
cash flow for individual business transactions (consider it as the primary object of independent management.)
2. By type of economic activity in accordance with international standards accounting distinguish:
cash flow from operating activities (includes cash transactions that provide operating activities and its maintenance);
cash flow from investment activities (characterizes payments and receipts of funds associated with the implementation of real and financial investment);
cash flow from financial activities (characterizes the receipts and payments of funds associated with the attraction of additional equity and share capital, the receipt of long-term and short-term loans and borrowings, the payment of dividends and interest on deposits of owners, etc.).
3. According to the direction of cash flow, there are:
positive cash flow (characterizes the totality of cash inflows to the enterprise from all types of business transactions); otherwise it is called cash inflow;
negative cash flow (characterizes the totality of cash payments by the enterprise in the process of carrying out all types of its business operations); otherwise – cash outflow;
4. According to the variability of the direction of cash flow:
standard cash flow (characterizes a type of cash flow in which its direction changes no more than once (beginning or completing it, for example, investing capital in a long-term bond without reinvesting income on it in the acquisition of similar financial instruments);
non-standard cash flow (characterizes a type of cash flow in which its direction changes more than once, for example, investing capital in a portfolio of financial instruments with reinvestment of the income received in its subsequent expansion).
5. According to the volume calculation method, the following types of enterprise cash flows are distinguished:
Gross cash flow (the totality of receipts or expenditures of funds in the period under review);
net cash flow (the difference between positive and negative cash flows, i.e. between the receipt and expenditure of funds, in the period under review); is the most important result of the economic activity of the enterprise.
6. By the nature of the cash flow in relation to the enterprise:
internal cash flow (the totality of receipts and expenditures of funds within the enterprise; associated with operations due to the monetary relations of the enterprise with personnel, founders, subsidiaries, etc., occupies a small share in the total cash flow of the enterprise);
external cash flow (serves the operations of the enterprise related to its monetary relations with economic partners and government bodies; its volume is the predominant part of the total cash flow of the enterprise).
7. According to the level of volume sufficiency:
Excessive cash flow (when cash receipts significantly exceed the real need of the enterprise for purposeful spending);
· deficient cash flow (when cash receipts are significantly lower than the actual needs of the enterprise in their purposeful spending).
8. According to the level of balance of the volumes of interrelated cash:
· balanced cash flow (a type of total cash flow for a separate business transaction, structural unit or enterprise as a whole, for which a balance is ensured between the volumes of their positive and negative types);
unbalanced cash flow (a type of total cash flow for which there is no balance between the volumes of their positive and negative types; Within the framework of the enterprise as a whole, both deficit and excess total cash flow are unbalanced).
9. By the period of time allocate:
short-term cash flow (with a period from the beginning of cash receipts or payments to their complete completion of no more than one year);
long-term cash flow (with a period from the beginning of cash receipts or payments to their complete completion of more than one year).
This classification is used, as a rule, to characterize individual business operations of an enterprise. Short-term cash flow is typical for most of the business transactions associated with the operating and partly with the financial activities of the enterprise. Long-term cash flow is typical for the predominant part of business transactions related to investment activities.
10. According to the forms of use of funds:
cash flow (part of the total cash flow of the enterprise, which is serviced directly in cash);
· non-cash cash flow (part of the total cash flow of the enterprise, which is serviced by a variety of credit and deposit instruments of the financial market).
There is a close relationship between the cash and non-cash cash flows of an enterprise, since cash and non-cash money are constantly moving from one sphere of monetary circulation to another, while changing its form.
11. By type of currency used:
cash flow in national currency;
cash flow in foreign currency.
12. By importance in the formation of the final results of economic activity:
priority cash flow (characterizes a type of cash flow that generates a high level of net cash flow formation; cash flow associated with the sale of products, the implementation of highly profitable investment operations, etc. is considered a priority);
Secondary cash flow (characterizes a type of cash flow that, due to its functional orientation or insignificant volume, does not have a significant impact on the formation of the final results of economic activity; an example of such a cash flow is the issuance of a report and the return of funds by accountable persons).
13. According to the predictability of occurrence:
· fully predictable cash flow (its volume and time of implementation can be fully determined in advance, for example, depreciation flow, cash flow for servicing and returning received credit funds, etc.);
Insufficiently predictable cash flow (its volume and time of implementation cannot be fully determined in advance due to possible changes in environmental factors, for example, receipt of funds from the sale of products, receipt of dividends on shares, etc.);
unpredictable cash flow (associated with extraordinary events in the course of the enterprise's operating, investment or financial activities, as well as individual operations that are not planned in advance, for example, the payment of fines).
The classification of enterprise cash flows according to the predictability of their occurrence is usually used in the process of their planning and optimization.
14. If possible, regulation in the management process:
cash flow, which can be regulated (it can be changed in time or in volume at the request of managers, if such a change is expedient in the course of economic activity, for example, selling the company's products on credit, issuing shares or bonds, etc.);
cash flow that cannot be regulated (it cannot be changed in time or in volume by the managers of the enterprise without negative consequences for the final results of its economic activity, for example, tax payments by the enterprise, payments for servicing and repaying its debt, etc.).
This classification of cash flows is used at the enterprise in the process of optimizing them in time or in volume.
15. As far as possible to ensure solvency, the following two types of enterprise cash flow are distinguished:
liquid cash flow - for it the ratio of its positive and negative types is equal to or exceeds one in each interval of the considered period of time:
where RAP is the sum of the gross positive cash flow of the enterprise in each of the intervals of the considered period of time;
ODP - the sum of the gross negative cash flow of the enterprise in each of the intervals of the considered period of time;
· illiquid cash flow - for it the ratio of its positive and negative types is less than one in certain intervals of the considered period of time, i.e. condition is met:
16. According to the method of evaluation over time:
real cash flow (characterizes the cash flow of the enterprise as a single comparable value, reduced by value to the current point in time);
· future cash flow (characterizes the cash flow of the enterprise as a single comparable value, reduced in value to a specific future point in time).
The considered types of cash flow of the enterprise reflect the content of the concept of estimating the value of money in time in relation to the business operations of the enterprise.
17. According to the continuity of formation in the period under review:
regular cash flow (characterizes the flow of receipt or expenditure of funds, which in the considered period of time is carried out constantly at separate intervals of this period; most types of cash flows generated by operating activities, flows associated with loan servicing, cash flows that ensure the implementation of long-term real investment projects, etc.);
Discrete cash flow (characterizes the receipt or expenditure of funds associated with the implementation of individual business operations of the enterprise in the period under review, for example, a one-time expenditure of funds associated with the acquisition of a property complex by an enterprise).
With a certain minimum time interval, all cash flows of the enterprise can be considered as discrete. And vice versa - within the framework of the life cycle of an enterprise, the predominant part of its cash flows is of a regular nature.
18. According to the stability of time intervals of formation, regular cash flows are divided as follows:
regular cash flow with uniform time intervals within the period under review;
regular cash flow with uneven time intervals within the period under review.
The considered classification allows you to purposefully carry out accounting, analysis and planning of cash flows various kinds at the enterprise.
Cash flow management is a system of principles and methods for the development and implementation management decisions associated with the formation, distribution and use of funds and the organization of their turnover, aimed at ensuring the financial balance of the enterprise and its sustainable growth.
As part of the management of cash flows of the enterprise, the following tasks are solved.
1. Formation of a sufficient amount of financial resources of the enterprise in accordance with the needs of its future economic activity. This task is realized by determining the need for financial resources of the enterprise for the coming period, establishing a system of sources of their formation, minimizing the cost of their attraction.
2. Optimization of the distribution of the formed volume of the enterprise's monetary resources by types of economic activity and areas of use. In the process of implementing this task, the necessary proportionality of the use of financial resources for the development of the operating, investment and financial activities of the enterprise is ensured; within the framework of each type of activity, the most effective directions for the use of financial resources are selected, ensuring the achievement of the best final results of economic activity and strategic goals for the development of the enterprise as a whole.
3. Ensuring a high level of financial stability of the enterprise in the process of its development. Such financial stability of the enterprise is ensured by the formation of a rational structure of sources of raising funds, first of all, by the ratio of equity and borrowed capital; optimization of the volume of attraction of funds in terms of the forthcoming terms of their return; the formation of a sufficient amount of financial resources attracted on a long-term basis, etc.
4. Maintaining the constant solvency of the enterprise. This task is solved primarily through the effective management of the balances of cash assets and their equivalents; formation of a sufficient amount of their insurance part; ensuring the uniformity of cash flow to the enterprise; ensuring the synchronism of the formation of incoming and outgoing cash flows; choosing the best means of payment in settlements with counterparties for business transactions.
5. Maximize net cash flow to keep pace economic development self-financing enterprises. The implementation of this task is ensured by the formation of the cash turnover of the enterprise that generates the largest amount of profit in the course of its activities; selection of an effective depreciation policy of the enterprise; timely disposal of unused assets; reinvestment of temporarily free cash.
6. Ensuring the minimization of losses in the value of funds in the process of their economic use at the enterprise. Monetary assets and their equivalents lose their value under the influence of time factors, inflation, risk, etc. Therefore, in the process of organizing cash flow at an enterprise, one should avoid the formation of excessive cash reserves, diversify the directions and forms of their use, avoid certain types of financial risks or ensure their insurance.
The considered tasks of managing the cash flows of an enterprise are closely interrelated, although some of them are of a multidirectional nature (for example, maintaining a constant solvency and minimizing losses in the value of funds in the process of their use). Therefore, in the process of managing the cash flows of an enterprise, individual tasks should be optimized among themselves for the most effective implementation of its main goal.
Enterprise cash flow planning
The plan for the receipt and expenditure of funds is developed for the coming year on a monthly basis in order to ensure that seasonal fluctuations in the enterprise's cash flows are taken into account. It is compiled according to certain types economic activity and the enterprise as a whole. Taking into account the fact that a number of business transactions are of a poorly predictable nature, the plan is usually drawn up in three versions - optimistic, realistic and pessimistic. In addition, the development of this plan is multivariate in nature and the methods used to calculate its individual indicators.
The main purpose of developing a plan for the receipt and expenditure of funds is to forecast gross and net cash flows and ensure its constant solvency in the planning period.
The plan for the receipt and expenditure of funds is developed at the enterprise as follows:
receipt and expenditure of funds for the operating activities of the enterprise, a number of performance indicators of this plan serve as an initial prerequisite for the development of other components of it;
receipt and expenditure of funds for the investment activities of the enterprise (taking into account the net cash flow from its operating activities);
· the receipt and expenditure of funds for the financial activities of the enterprise, which is designed to provide sources of external financing for its operating and investment activities in the coming period;
· gross and net cash flows, as well as the dynamics of cash balances for the enterprise as a whole.
I. Forecasting the receipt and expenditure of funds for the operating activities of the enterprise can be carried out in two ways - based on the planned volume of sales of products and from the planned amount of net profit.
When forecasting the receipt and expenditure of funds for operating activities based on the planned volume of sales of products, the calculation of individual indicators of the plan is carried out as follows.
1. Determination of the planned volume of product sales is based on the developed production program (production plan), taking into account the potential of the commodity market. The base indicator for calculating the planned amount of sales of products is in this case the planned volume of production of marketable products. The model for calculating the planned volume of sales of products is as follows:
where OR pl is the planned volume of sales of products in the period (month) under consideration;
ZGP n - the amount of stocks of finished products at the beginning of the planning period;
GWP n - the total volume of production of finished products in the considered planning period;
ZGP k - the amount of stocks of finished products at the end of the period under review.
The planned volume of product sales is differentiated in terms of sales for cash and with the provision of a commercial loan, taking into account established business practices.
2. The calculation of the planned coefficient of collection of receivables is carried out on the basis of its actual level in the reporting period, taking into account the planned measures to change the policy of providing a commercial loan.
3. The calculation of the planned amount of cash receipts from the sale of products is carried out according to the following formula:
- the planned volume of sales of products for cash in the period under review;
- the volume of sales of products on credit in the planned period;
CI - coefficient of the current collection of receivables, expressed as a decimal fraction (the share of receivables paid in the planning period);
BUT pl - the amount of the previously uncollected balance of receivables to be returned in the planning period.
The calculated indicator of the planned amount of cash receipts from the sale of products characterizes the planned amount of positive cash flow of the enterprise for operating activities.
4. Determining the planned amount of operating costs for the production and sale of products is one of the most time-consuming steps in forecasting the cash flows of an enterprise. It is based on the calculation of the cost of certain types of products (production and complete). The composition of the planned cost of a particular type of product includes all direct and indirect costs for its production and sale. In the most general form, the planned amount of the total operating costs of the enterprise can be represented as follows:
where
n- the number of types of products manufactured by the enterprise;
- the planned amount of direct costs for the production of a unit of output i-th type;
- the planned amount of overhead costs for the production of a unit of output i-th type;
– planned production volume i
- the planned amount of costs for the sale of a unit of production i-th type;
– planned sales volume i th type of product in physical terms;
ZOH pl - the planned amount of general business expenses of the enterprise (administrative and management expenses for the enterprise as a whole).
5. Calculation of the planned amount of taxes, payable at the expense of income (included in the price of products), is carried out on the basis of the planned volume of sales of certain types of products and the corresponding rates of value added tax, excise duty and other similar taxes.
6. The calculation of the planned amount of the gross profit of the enterprise for operating activities is made according to the following formula:
where VP pl is the planned amount of the enterprise's gross profit from operating activities in the period under review;
OR pl - the planned volume of sales in the period under review;
OZ pl - the planned amount of operating costs for the production and sale of products;
NP d - the planned amount of tax payments paid at the expense of income (included in the price of products).
7. Calculation of the planned amount of taxes paid at the expense of profit is carried out according to the following formula:
where NP pl is the planned amount of taxes paid at the expense of profit;
VP pl - the planned amount of the gross profit of the enterprise for operating activities;
SNP pl - income tax rate in the planning period, expressed as a decimal fraction;
PNP pl - the amount of other taxes and fees of the planned period, paid at the expense of profit.
8. Calculation of the planned amount of net profit of the enterprise for operating activities is carried out according to the formula:
where PE pl is the planned amount of the enterprise's net profit from operating activities in the period under review;
VP pl - the planned amount of the gross profit of the enterprise for operating activities in the period under review;
NP pl - the planned amount of taxes paid at the expense of profit.
9. Calculation of the planned amount of funds spent on operating activities is carried out according to the following formula:
where RDS pl is the planned amount of funds spent on operating activities in the period under review;
OZ pl - the planned amount of operating costs for the production and sale of products;
ND pl - the planned amount of taxes and fees paid at the expense of income (included in the price of products);
NP pl - the planned amount of taxes paid at the expense of profit;
AMO pl - the planned amount of depreciation from fixed assets and intangible assets.
The calculated indicator of the planned amount of spending money characterizes the planned amount of negative cash flow of the enterprise for operating activities.
10. Calculation of the planned amount of net cash flow can be carried out in any of the following ways:
Or , (10.23)
where NPV pl - the planned amount of net cash flow of the enterprise in the period under review;
PE pl - the planned amount of the enterprise's net profit from operating activities;
AmO pl - the planned amount of depreciation;
PDS pl - the planned amount of cash receipts from the sale of products;
RDS pl - the planned amount of funds spent on operating activities.
When forecasting the receipt and expenditure of cash for operating activities based on the planned target amount of net profit, the calculation of individual indicators of the plan is carried out as follows:
1. Determination of the planned target amount of the net profit of the enterprise is the most difficult stage in the system of forecast calculations of cash flows. The target amount of net profit is the planned need for financial resources generated from this source, which ensures the implementation of the development goals of the enterprise in the coming period.
2. The calculation of the planned target amount of the gross profit of the enterprise is carried out according to the following formula:
, (10.24)
where VP c - the target amount of the gross profit of the enterprise in the period under review;
PE c - the target amount of net profit of the enterprise in the period under review;
NPS pl - the consolidated rate of income tax and other taxes paid at the expense of profit, expressed as a decimal fraction.
3. Calculation of the planned amount of taxes paid at the expense of profit is made according to the formula:
, (10.25)
where NP pl is the planned amount of taxes paid from profit
VP c - the target amount of the gross profit of the enterprise in the period under review;
PE c - the target amount of net profit of the enterprise in the period under review.
4. The determination of the planned amount of operating costs for the production and sale of products with this forecasting method is of a generalized nature, since it assumes that the production program for the target amount of profit has not yet been formed. In a simplified form, their value is estimated by the formula:
, (10.26)
where
O3 post - the actual amount of fixed operating costs in the same previous period;
O3 lane - the actual amount of variable operating costs in the same previous period;
VP c - the planned target amount of the gross operating profit of the enterprise;
VP f - the actual amount of gross operating profit of the enterprise in the same previous period.
As part of the planned operating costs, a separate item reflects the amount of depreciation.
5. The calculation of the planned amount of cash receipts from the sale of products is carried out according to the following formula:
, (10.27)
where PDS pl is the planned amount of cash receipts from the sale of products in the period under review;
VP c - the target amount of the gross operating profit of the enterprise;
О3 pl - the planned amount of operating costs for the production and sale of products in the period under review;
ND pl - the consolidated rate of value added tax and other taxes and fees paid at the expense of income, expressed as a decimal fraction.
6. Calculation of the planned amount of tax payments paid at the expense of income (included in the price of products) is made according to the formula:
where SND pl is the planned amount of taxes and fees paid at the expense of income (included in the price of products);
PDS pl - the planned amount of cash receipts from the sale of products in the period under review;
О3 pl - the planned amount of operating costs for the production and sale of products in the period under review;
VP c - the target amount of the gross operating profit of the enterprise.
7. The calculation of the planned amount of cash spending on operating activities is based on the planned operating costs of the enterprise (without the amount of depreciation) and the planned amount of taxes and fees paid from income and profit - formula (10.22).
8. The calculation of the planned amount of net cash flow is carried out according to the formulas (10.23): by summing the target amount of net profit and depreciation charges or as the difference between the amount of receipt and expenditure of funds in the planned period.
II. Forecasting the receipt and expenditure of funds for investment activities is carried out using the direct account method. The basis for these calculations are:
· a real investment program that characterizes the amount of money invested in ongoing or planned investment projects;
· a portfolio of long-term financial investments to be formed; if it has already been formed, then the necessary amount of funds is determined to ensure its growth or the volume of sale of long-term financial investment instruments;
· the estimated amount of cash receipts from the sale of fixed assets and intangible assets; the calculation should be based on a plan for their renewal;
the projected amount of investment profit; this section forecasts the amount of profit only for long-term financial investments - dividends and interest receivable.
Calculations are summarized in the context of positions provided by the standard of the statement of cash flows of the enterprise for investment activities.
III. Forecasting the receipt and expenditure of funds for financial activities is carried out by the direct account method based on the enterprise's need for external financing, determined by its individual elements. The basis for the implementation of these calculations are:
· the planned volume of additional issue of own shares or attraction of additional share capital; the cash flow plan includes only that part of the additional issue of shares that can be sold in a specific upcoming period;
· the planned volume of attraction of long-term and short-term financial credits and loans in all their forms;
· the amount of the expected receipt of funds in the order of gratuitous targeted financing; these indicators are included in the plan on the basis of the approved state budget or the corresponding budgets of other state and non-state bodies;
· the amount of the principal debt on long-term and short-term financial credits and loans provided for payment in the planned period; the calculation of these indicators is carried out on the basis of specific loan agreements of the enterprise with banks or other financial institutions;
· the expected amount of dividend payments to shareholders (interest on share capital); this calculation is based on the planned amount of the enterprise's net profit and its dividend policy.
Calculations are summarized in terms of positions provided by the standard of the statement of cash flows of the enterprise for financial activities.
The indicators of the developed plan for the receipt and expenditure of funds serve as the basis for the operational planning of various types of cash flows of the enterprise.
Cash flow management has become the most important area of activity for any subject of the market economy. This is especially important for enterprises engaged in industrial and commercial activities. Making decisions about changing production technology, entering new markets, expanding or curtailing production volumes is based on deep financial calculations, on a strategy for attracting, distributing, redistributing and investing financial resources. Trends in the development of the Russian and global market situation: unpredictable changes in demand, tougher competition, diversification and the conquest of new market niches, increased risks in transactions - necessitate a detailed study of the principles of formation and management of cash flows of enterprises.
A more rational and efficient management of cash flows can ensure the constant solvency of the enterprise, reduce the risk of non-payment of debts to suppliers and employees, increase investment attractiveness, free up additional financial resources, and so on. In market conditions of management, these aspects are the most important financial and economic characteristics of companies, reflecting financial stability and their economic growth potential.
1. The concept of cash flow
One of the areas of enterprise financial management is effective management its cash flows. Full score financial condition enterprise is impossible without analyzing its cash flows. One of the tasks of cash flow management is to identify the relationship between cash flows and profit, i.e. whether the profit received is the result of effective cash flows or is it the result of some other facts.
All activities of any commercial organization are associated with the movement of funds, with their receipt and disposal. The movement of funds in the enterprise occurs continuously. This particular continuous process the movement of money and is essentially the concept of "cash flow".
There are concepts such as cash flow and cash flow. The movement of funds is their transfer to someone, both in cash and non-cash, it is all the gross receipts of the enterprise and payments.
The general definition of cash flow is: "money coming into the company from sales and other sources, as well as money spent by the company on purchases, wages, etc."
"Cash flow - a set of time-distributed receipts and payments of funds generated by the economic activity of the enterprise."
V economic importance cash flow is the difference between the income and costs of an economic entity, expressed as the difference between payments received and payments made. In general, this is the sum of the firm's retained earnings and its depreciation deductions saved to form its own source of cash.
In other words, "cash flow is the net amount of money actually received by the firm in a given period."
There are two main approaches to the analysis of the definitions of the concept of "cash flow". According to the first approach, cash flow is the difference between all cash inflows and outflows over a certain period of time. This definition is more suitable for the term "net cash flow", which is equal to the difference between the sum of cash inflows and outflows of the organization. The second approach is more common among economists. Cash flow is considered as the sum of cash inflows and outflows for the period. At the same time, most authors do not include cash equivalents in the composition of cash flows.
It is also possible to single out an approach in which cash flows are considered in a broad sense as the sum of retained earnings and depreciation, which is closely related to the first approach to determining cash flow.
Summarizing approaches to determining the essence of cash flows, we can define this economic category as a set of real inflows and outflows of cash and their equivalents, distributed at each specific point in time of the period under review and serving all the processes of the organization's business activities.
The process of managing the cash flows of an enterprise also does not have an unambiguous interpretation. Some economists reduce this process to determining the optimal level of cash balance and its use in the financial activities of the organization.
Summarizing the definitions of various economists related to the category of "management", one can characterize the management of the enterprise's cash flows as the organization of a targeted and systematic impact of the management system on financial and economic relations that arise in the process of the movement of the organization's money capital. This impact is aimed at fulfilling the tasks set, as well as ensuring the effective formation, use and distribution of the financial capital of the enterprise using the appropriate principles, functions and methods of management.
The value of the cash flow indicator in the analysis of the company's activities is very large: it shows the company's ability to pay for the goods and services it needs, to pay dividends to shareholders, and business valuation is often built on its basis.
"Cash flow is not equal to profit: a situation is quite real when a company makes a profit, but is not able to continue settlements with suppliers, because it does not have enough money in circulation. When assessing the effectiveness of capital investments, cash flow is an indicator that characterizes the difference between inflow and outflow cash from investment and operating activities in each period of the project.
Cash flows, as opposed to a simple transfer of money, are:
- the result of the monetary relations arising at the enterprise, which are the result of the movement of money;
– organized and managed processes;
- processes not in general, but limited to a certain period of time, i.e. have time limits - the beginning and the end;
- as an indicator, the cash flow has a number of economic characteristics, such as intensity, liquidity, profitability, sufficiency, etc.
The advantages and necessity of cash flow management are as follows.
1. Improving cash flow management is tantamount to involving additional cash in circulation. Moreover, this problem is often presented to managers as secondary.
2. For large, long-term enterprises, management is beneficial in terms of both increasing the efficiency of the funds used, and obtaining additional profit, increasing profitability.
3. For young, small enterprises, management is especially important, because they must rely on their own sources of funds, since external sources are not always affordable for them, both in terms of price and availability.
4. Professional cash flow management has a positive effect on the relationship of the enterprise with banks, suppliers, buyers, etc.
The financial cycle of an enterprise or the cash flow cycle includes the following points:
- payment for raw materials and materials;
- sale (shipment of finished products, provision of services, performance of work);
- receipt of money finished products services rendered, work performed.
And only by managing cash flows can the problem of the gap between the amount of payments and the amount of receipts be solved, i.e. liquidity problem of the enterprise. For these purposes, it is necessary to increase the amount of own or borrowed funds in the turnover of the enterprise.
When implementing the cash flow management policy, the following results are achieved:
1. Improving the efficiency of enterprise financial management.
2. Balance of positive and negative cash flows over time; unbalanced flows make at some points the flow as a whole illiquid, and the enterprise insolvent. It is quite obvious that the more often such situations and the longer they last, the worse the financial position of the enterprise.
3. Determination of the directions of cash flows and control over them in accordance with. classification as a whole for the enterprise, by types of activity, by structural divisions and responsibility centers, by stages and periods of the enterprise's activity, by sources of funds (own, borrowed, etc.).
4. Optimization of cash flows and the structure of sources of funds in order to ensure efficient operation enterprises.
5. Increasing the efficiency of the use of funds in the turnover of the enterprise, accelerating their turnover.
6. Expansion of sales volume based on the expansion of control over cash flows and improvement of their management.
7. Obtaining additional profit and increasing the profitability of the enterprise.
8. Improving the efficiency of planning and forecasting the activities of the enterprise.
9. Reducing the risk of insolvency of the enterprise and preventing its bankruptcy.
2. Types and classification of cash flows of the enterprise
On fig. 1 shows the classification of cash flows of the enterprise. Conditional figures are used to visualize the relationship of cash flows.
Rice. 1. Classification of cash flows
The cash flow of an enterprise is the totality of all its receipts and payments for a certain period of time.
Cash inflows (receipts) and outflows (payments) over a period of time are components of the cash flow. The totality of inflows or receipts is a positive cash flow, and the totality of outflows or cash payments is a negative cash flow.
Net cash flow is the difference between the sum of inflows and outflows. Net flow refers to the financial results of the enterprise. Net flow can be either positive or negative.
Positive net flow, may be excess or deficient. Excess flow means a significant excess of cash receipts over demand. Deficient cash flow characterizes the opposite phenomenon, when receipts are not enough to cover the need. Negative flow, of course, is always scarce.
A time estimate defines the cash flow as present and future. The present flow is determined in the estimation of the present time, and the future flow is determined in the estimation of some future specific point in time by discounting, i.e. ghosts of future cash flows in a comparable form with the present.
From the point of view of constancy, cash flows are regular and discrete. A regular flow goes constantly for a certain period of time, and a discrete flow is a single receipt and expenditure of money, an enterprise for any period. Most cash inflows and outflows are regular. Discrete flows are the acquisition of property, obtaining a long-term loan, proceeds from the payment of a large bill, the purchase of a license, etc. Regular cash flows can be both with uniform monetary intervals and with uneven ones.
Depending on the scale, cash flows are:
- in general for the enterprise;
- for certain types of economic activity (main, investment, financial);
- by individual structural divisions or responsibility centers of the enterprise";
- for individual business transactions or stages in the activities of the enterprise, for example, from the moment a joint-stock company was established, the launch of new products, the completion of reconstruction, etc.;
– own and borrowed funds;
– gross flows and flows based on financial results.
3. Efficiency of cash flows of the enterprise
The cash flow statement for the whole enterprise and for individual types of activities is part of the financial statements.
The efficiency of using cash flows is determined by the speed of their movement - the speed of turnover, or turnover. The faster the circulation of DS is made, the smaller their amount will be required by the enterprise for the successful implementation of the production program.
The period of capital in cash (Pdn) is determined as follows:
The following formula can be used to calculate the projected cash balance:
4. Cash flow management of the enterprise
The main goal of cash flow management is to ensure the financial balance of the enterprise in the process of its development by balancing the volume of receipts and expenditures of funds and their synchronization in time.
The main tasks of cash flow management are as follows:
– forecast of incoming and outgoing cash flows and their management;
– ensuring the liquidity of the enterprise;
– evaluation of various types of investments and placement of surplus funds;
– identifying sources of short-term financing;
– risk management on interest rates and exchange;
- determination of the plan for the receipt of funds and their use.
The cash flow management process can be represented as the following steps:
1. Full and reliable accounting of cash flows and the formation of the necessary reporting.
2. Analysis of cash flows in the previous period.
3. Planning of cash flows in the context of their various types.
4. Optimization of cash flows.
5. Ensuring effective control over cash flows.
5. Accounting for the cash flows of the enterprise
Complete and reliable accounting of cash flows is based on the following principles:
1. The principle of informative reliability
2. Principle of balance
3. The principle of ensuring efficiency
4. The principle of providing liquidity
A distinctive feature of modern Russian reality is that cash flows are not an independent object of accounting. As an accounting object in Russia, cash is considered that is not highly sensitive to possible unforeseen financial problems. The cash category is static and does not reveal the cash flow, despite the fact that the implementation of almost all types of operations of enterprises and organizations causes the cash flow in the form of their receipt or expenditure. For the reasons mentioned above, it is necessary to separate cash flows into an independent accounting object and form a cash flow accounting system, which includes managerial, financial and strategic accounting of cash flows.
The main purpose of the cash flow accounting system is to provide, first of all, internal users with reliable information on cash flows, necessary and sufficient for the development and timely adoption of adequate management decisions. This goal is achieved through the formation of a reporting system that will allow information users to objectively evaluate and make appropriate decisions on cash flow management.
The objects of the cash flow accounting system are:
– system of cash and non-cash payments;
– working capital management;
– management of capital invested in fixed assets (fixed capital);
– policy of attracting new financial resources;
– management of the capital structure of the enterprise;
- the level and dynamics of the financial results of the enterprise.
- property and financial condition of the enterprise;
- business activity and efficiency of the enterprise.
The cash flow accounting system is designed to provide:
1. Coverage of all financial transactions, i.e. be continuous and continuous, reflect all operations on the movement of the financial resources of the enterprise and its funds for all receipts, payments, balances in various monetary forms - cash on hand, non-cash funds in bank accounts, letters of credit, settlements, securities and any other places of their storage or location;
2. Reflection of business processes directly related to the financial operations of the enterprise, for example, the production of commercial products and their shipment to customers, the preparation and sending of payment documents, the timeliness and completeness of the receipt of funds from buyers, refusals of acceptance, transfer of delivered products by the buyer to safekeeping due to its incompleteness, incomplete delivery and for other reasons, other production and economic facts of the enterprise;
3. Reflection of information on the timeliness of settlements with the budget and off-budget funds and on other non-commodity operations of the enterprise;
4. Control over the state and targeted use of working capital of the enterprise.
The purpose of cash flow reporting is to provide users with useful information. At present, the expediency and necessity of meeting the information needs of numerous users is obvious, which can be grouped into three main groups:
– directly engaged in business at this enterprise;
- located outside the enterprise, but having a direct financial interest in the business;
– having an indirect financial interest in the business.
The first group of users are the management of the enterprise, who are responsible for the conduct of business and for achieving the objectives of the enterprise.
The second category of users of reporting information represents a fairly large number of people who do not work at the enterprise, but who have a direct financial interest in the results of its activities. These are, first of all, the founders of the enterprise, as well as various creditors - suppliers or banks, from which the enterprise takes long-term and short-term loans.
The third circle of persons with an indirect financial interest is made up of a wide variety of users of accounting (financial) statements. These are the tax service, state statistics bodies, various financial advisers, etc.
In the reporting of Russian enterprises there are forms that reflect the movement of funds. This:
– statement of changes in equity – Form No. 3;
– cash flow statement – Form No. 4;
- the movement of borrowed funds - part of the appendix to the balance sheet, form No. 5.
6. Cash flow analysis
The next stage of cash flow management is the analysis of cash flows in the previous period.
As a result of the analysis of cash flows, the enterprise should get an answer to the main question: where does the money come from, the role of each source and for what purposes are they used? Conclusions should be drawn both for the enterprise as a whole and for each type of its activity: core, investment and financial. On this basis, conclusions are drawn about the sources and security of each type of activity with the necessary funds. As a result, decisions are made to ensure the excess of cash receipts over payments, sources of payment for current liabilities and investment activities, sufficiency of profits, etc.
Thus, the main objects of cash flow analysis are:
– positive flow – inflows;
– negative flow – outflows;
- cash balance.
Analysis of cash flows is associated with finding out the reasons that influenced the following processes:
– increase in cash inflow;
– decrease in their inflow;
– increase in their outflow;
- reduction of their outflow.
The analysis can be done both for a long period (several years) and for a short one (quarter, year). Such an analysis will be of undoubted interest if it is done for a period reflecting some stage in the activity of the enterprise.
Analysis of cash flows should be carried out both on the basis of reporting and planned indicators. The data of primary accounting and regular reporting of the enterprise are used as calculated indicators.
7. Cash flow planning
Cash flow planning is carried out in the form of multivariate planned calculations of these indicators under various scenarios for the development of initial factors (optimistic, realistic, pessimistic). The object in this case is the fulfillment of the established planned targets for the formation of the amount of funds and their spending in the prescribed areas; uniformity of formation of cash flows in time; liquidity of cash flows and their efficiency. These indicators are controlled in the process of monitoring the current financial activities of the enterprise.
The planned indicators of the cash flow of the enterprise are calculated in the form of an operational financial plan, the so-called payment calendar. It is developed for a month with a frequency of 5, 10 or 15 days.
The peculiarity of the payment calendar is that the company first determines all its cash expenses for the month, and then seeks financial resources to cover expenses if cash income is not enough.
Planning possible payments and sources of their coverage is associated with daily control over the receipt of sales proceeds and the payment of incoming material assets as the main directions of cash flows. The development of an economically sound payment calendar is one of the prerequisites for effective cash flow management. It allows you to provide the company with the necessary funds, identify opportunities to increase sales and profits, and improve the efficiency of the structure of funds used.
Along with the payment calendar of enterprises, a special journal is maintained, which reflects all indicators of the payment calendar in dynamics, as well as indicators of the cash flow statement.
When using the payment calendar, enterprises have the opportunity to apply the analysis, which is called ABC. Its meaning is that, using natural and cost indicators, cash flows are divided into three groups (A, B and C) depending on the amount of funds or other factors and the possibility of applying appropriate management methods to each of these groups.
Cash flow planning for a longer period than 1 month is carried out using the cash flow budget. Budgets at the enterprise are developed, as a rule, for 1 year, but this can be done for 3 or 6 months. The cash flow budget, on the one hand, reflects income and receipts of funds, and on the other hand, expenses and payments. But unlike the payment calendar, planning in the budget of cash flows is carried out for three types of activities: core, investment and financial. With the help of the cash flow budget, the company solves the problem of cash deficit in certain months during the year.
There are two methods for calculating cash flow: direct and indirect. The differences between these methods follow from the principles of calculations. At direct method the calculation of flows is carried out on the basis of the accounting accounts of the enterprise, and in case of indirect - on the basis of the indicators of the balance sheet of the enterprise (F-1) and the income statement (F-2).
As a result, with the direct method, the enterprise receives answers to questions about cash inflows and outflows and their sufficiency to ensure all payments. The indirect method shows the relationship between various types of activities of the enterprise, as well as the impact on profits of changes in the assets and liabilities of enterprises. In addition, the calculation basis for the direct method is the proceeds from the sale of products, and for the indirect method - profit.
Under the direct method, cash flow is defined as the difference between all the inflows of funds in the enterprise for three types of activities and their outflows. The balance of funds at the end of the period is defined as their balance at the beginning, taking into account their flow for a given period.
With the indirect method, the basis for the calculation are retained earnings, depreciation, as well as changes in the assets and liabilities of the enterprise.
At the same time, an increase in assets reduces the company's cash, and an increase in liabilities increases it, and vice versa.
8. Cash flow optimization
Cash flow optimization is a selection process the best forms their organization at the enterprise, taking into account the conditions and features of the implementation of its economic activities. Mechanisms for minimizing financial risks play an important role in optimizing cash flows.
Cash flow optimization is one of the most important functions of cash flow management aimed at improving their efficiency in the coming period.
The most important tasks to be solved during this stage of cash flow management are:
- identification and implementation of reserves, allowing to reduce the dependence of the enterprise on external sources of raising funds;
– ensuring a more complete balance of positive and negative cash flows in time and volume;
- ensuring a closer relationship of cash flows by types of economic activity of the enterprise;
– increase in the amount and quality of the net cash flow generated by the economic activity of the enterprise.
The basis for optimizing the cash flows of an enterprise is to ensure a balance between the volumes of their positive and negative types. The results of economic activity of the enterprise are negatively affected by both scarce and excess cash flows.
Methods for optimizing the scarce cash flow depend on the nature of this scarcity - short-term or long-term.
Balance of deficit cash flow in short term is achieved by using the "System of acceleration - deceleration of the payment turnover". The essence of this system is to develop organizational measures at the enterprise to accelerate the attraction of funds and slow down their payments.
In the system of optimizing the cash flows of an enterprise, an important place belongs to their balance in time. In the process of such optimization, two main methods are used - alignment and synchronization. Equalization of cash flows is aimed at smoothing their volumes in the context of individual intervals of the period under consideration. This optimization method eliminates, to a certain extent, seasonal and cyclical differences in the formation of cash flows (both positive and negative), while simultaneously optimizing the average cash balances and increasing the level of absolute liquidity. The results of this method of optimizing cash flows over time are evaluated using the standard deviation or coefficient of variation, which should decrease during the optimization process.
The growth of net cash flow ensures an increase in the pace of economic development of the enterprise on the principles of self-financing, reduces the dependence of this development on external sources of formation of financial resources, ensures growth market value enterprises.
The negative consequences of a deficit cash flow are manifested in a decrease in the liquidity and solvency of an enterprise, an increase in overdue accounts payable to suppliers of raw materials and materials, an increase in the share of overdue debts on financial loans received, delays in paying wages (with a corresponding decrease in the level of staff productivity), an increase in the duration of the financial cycle , and, ultimately, in reducing the profitability of using equity and company assets.
The negative consequences of excess cash flow are manifested in the loss of the real value of temporarily unused funds from inflation, the loss of potential income from the unused part of monetary assets in the field of their short-term investment, which ultimately also negatively affects the level of return on assets and equity of the enterprise.
9. Controlling the cash flow of the enterprise
Ensuring effective control over cash flows can significantly reduce the risk of insolvency of the company. Even companies that successfully economic activity and generating a sufficient amount of profit, insolvency may arise as a result of the imbalance of various types of cash flows over time. Synchronization of receipts and payments of funds, achieved in the process of managing the cash flows of the enterprise, allows to eliminate this factor in the occurrence of its insolvency.
The main goal of managing the cash flows of an enterprise is to ensure its financial balance in the development process by balancing the volumes of receipts and expenditures of funds and their synchronization in time.
Responsibility for ensuring control over cash flows lies with the financial director of the enterprise. To ensure effective control over cash flows, it is necessary to documentation support all transactions related to cash flows, which would provide complete information for the financial director. To do this, you must enter documents regulating the spending of funds, for example, an application for payment, it can also be office notes, payment registers, etc. The minimum set of details of such a document includes the following sections:
– payment initiator (department, employee);
– payment code in accordance with the classifier of payment items or projects;
- payment term;
– signatures of the initiator of the payment, the head of the division, the head of the company.
Applications for payment serve as a tool for collecting factual information. The "Payment Initiator" requisite allows you to track which division of the company carries out certain types of expenses. In this case, it is necessary to authorize the application with the head of the department and CEO to avoid misappropriation of company funds.
Applications are easy to classify by departments and expense items, even in Excel. Having accumulated information on actual payments for two or three months, you can proceed to limiting expenses and compiling a payment calendar.
To control payments, it is useful to analyze the reasonableness of spending money and the system for recording costs. Analytical indicators must be added to the payment request: inventory turnover ratio (instant, 30- and 90-day), amounts of accounts payable to each supplier and overdue receivables from buyers, as well as the period of delay. It is also useful to introduce an indicator of the rate of payments to suppliers as a share of sales revenue. Thus, special forms for financial management are created, and these indicators (usually 3-5) allow you to understand how and when to spend money.
The financial director must be given the right to sign documents regulating payments. Typically, this right is granted by order of the CEO, but in some cases - by decision of the business owner or the board of directors.
Since such innovations threaten the top officials of the company with some weakening of their influence on financial flows, it is necessary to explain to the management the need for delegation of authority, and also to convince them to introduce a budgeting system, under which the financial director or employees controlled by him will receive the right of decisive signature in terms of payments approved in budget.
By signing payment documents, the financial director will be able to receive timely information about the company's activities, including its expenses, acquire the status of a top manager, which will avoid conflicts with the heads of functional units, and will also begin to gradually introduce budget procedures.
Thanks to the effective organization of control over cash flows, it is possible to develop effective solutions to increase the volume of positive cash flow and reduce the volume of negative cash flow in the long term.
At the same time, the growth in the volume of positive cash flow in the long term can be achieved through the following activities:
– attraction of strategic investors in order to increase the volume of own capital;
– additional issue of shares;
– attracting long-term financial loans;
– sale of a part (or the entire volume) of financial investment instruments;
– sale (or lease) of unused types of fixed assets.
Reducing the volume of negative cash flow in the long run can be achieved through such measures as:
– reduction in the volume and composition of real investment programs;
– refusal of financial investment;
- reduction of the amount fixed costs enterprises.
It is no secret that it is in financial activities that abuses are not uncommon, which negatively affect the entire economic activity of the enterprise and infringe on the rights of owners. Therefore, ensuring efficiency financial control over the cash flow of an enterprise is a key stage in cash flow management.
10. The need for cash flow management
Thus, it should be noted that cash flows make up the bulk of the financial resources used by commercial organizations in the course of their business activities. The state of cash flows largely determines the financial well-being of both individual organizations and the economic system as a whole.
The constant movement of funds is the basis for an uninterrupted process of production and circulation. This is the most important function of money - production.
Cash is one of the main financial categories that have a significant impact on the sphere of production, the sphere of circulation, the state of settlements in the national economy and, thus, on money turnover in the country, perform their second function - payment and settlement.
Cash flow management is directly related to the mechanism for determining the planned needs of the enterprise for them, their rationing. It is important for the enterprise to correctly determine the optimal need for cash, which will allow, with minimal costs, to receive the profit planned for a given volume of production. Understatement of the amount of funds entails an unstable financial condition, interruptions in manufacturing process and, consequently, a decrease in output and profits. In turn, overestimation of the amount of funds reduces the ability of the enterprise to make capital expenditures to expand production.
conclusions
Methods for managing the cash flow of enterprises contribute to making more informed and rational decisions financial managers organizations. The use of the considered principles of formation and management of cash flows in the practical activities of enterprises will optimize the structure of payments of enterprises. The optimization of the company's payments is achieved, first of all, by the balance of cash payments, as a result of which the solvency increases and it becomes possible to maintain it at the required level.
Effective cash flow management allows you to accelerate the turnover of funds, reduce the need to attract additional borrowed funds, free up additional funds that can be directed to the turnover of the enterprise.
Literature
Textbooks and monographs
1. Balabanov I.T. Fundamentals of Financial Management: Textbook for Specialized Secondary educational institutions. - M.: Finance and statistics, 2006.
2. Bertonesh M., Knight R. Cash flow management. - St. Petersburg: Peter, 2005.
3. Blank I.A. Cash flow management. - K .: Nika-Center, Elga, 2007.
4. Borodina E.I. Enterprise finance. - M.: Finance and statistics, 2005.
5. Bocharov V.V., Leontiev V.E. Corporate Finance. - St. Petersburg: Peter, 2005.
6. Kovalev V.V. Finance of enterprises - M .: Prospekt, 2006.
7. Likhacheva O.N. financial planning at the enterprise. - M .: OOO "TK Velbi", 2006.
8. Polovinkin S.A. Financial management of an enterprise - M .: FBK-Press, 2007.
9. Cherkasov V.E. Financial management. - Tver: Tver Institute of Economics and Management, 2005.
Periodicals
10. Mityakova O.I. Cash flow optimization as a tool crisis management enterprise // Finance and credit. - 2005. - No. 30. - S. 44-50.
11. Khorin A.N. Cash flow statement // Accounting. - 2005 - No. 5. - S.: 24-29.
12. Burtsev V.V. Revision of the financial system of the enterprise // Management in Russia and abroad. - 2004. - No. 3. – P. 35-40.
One of the directions of financial management of enterprises is the effective management of cash flows. A complete assessment of the financial condition of an enterprise is impossible without an analysis of cash flows. One of the objectives of managing these flows is to identify the relationship between them and profit, for which it is necessary to know whether the profit received is the result of effective cash flows or is it the result of some other factors.
To understand this issue, it is necessary to understand what is meant by the terms "cash flow" and "cash flow".
Flow of funds - This is the transfer of money to someone, both in cash and non-cash. The movement of money is the fundamental principle, as a result of which finances arise, i.e. financial relations, cash funds, cash flows.
cash flow An enterprise is the aggregate of all its receipts and payments for a certain period of time. In world practice, cash flow is called "cash flow" (English cash flow, although the literal translation of this term means "cash flow").
Cash flows differ from a simple transfer of money in a number of ways:
- o this is the result of the monetary relations arising in the enterprise, which are the result of the movement of money;
- o organized and managed processes;
- o processes limited to a certain period of time, that is, having time limits - the beginning and end;
- o cash flow as an indicator has a number of economic characteristics: intensity, liquidity, profitability, sufficiency.
Degree cash flow intensity - this is an increase or decrease in its value over a certain period of time, i.e. the maximum flow is intense.
Cash flow liquidity - it is the excess of positive (receipt) over negative (payments). Return on cash flow is not its important characteristic, it is calculated, for example, as the ratio of net cash flow to inflows or outflows. Sufficiency of cash flow determined by its excess or deficiency.
Cash inflows (receipts) and outflows (payments) over a period of time are components of the cash flow. A set of inflows or receipts is a positive cash flow, and a set of cash outflows or payments is a negative cash flow.
Net cash flow - is the difference between the sum of inflows and outflows. The net flow is one of the financial results of the enterprise along with such indicators as profit and profitability. Note that this is a specific result, since the company should not set as its goal the growth of net cash flow unnecessarily. Net flow can be either positive or negative. A positive cash flow is a positive net flow, and a negative cash flow is a negative net flow.
A positive net flow, or a positive cash flow, can be either excess or deficit. Excess flow means a significant excess of cash receipts over demand. Deficient cash flow characterizes the opposite phenomenon, when receipts are not enough to cover the need. Negative flow, of course, is always scarce. The excess and scarcity of cash flow are indicators that are similar in content to indicators such as profitability and unprofitability (the use of the latter is also quite legitimate).
A time estimate defines the cash flow as present and future. The present flow is determined in the estimation of the present time, and the future flow is determined in the estimation of some future specific point in time by discounting, i.e. bringing future cash flows into a comparable form with the present.
The goal of cash flow management is to balance positive and negative cash flows over time, synchronizing them on a weekly, ten-day basis, or as needed.
Unbalanced flows make at some point the cash flow as a whole illiquid, and the company insolvent. Obviously, the main ways to balance threads are:
- o increase in funds in the turnover of the enterprise and, above all, its own;
- o increase in revenue through additional sales;
- o reduction in payments.
Balanced cash flow is liquid. The indicator is the liquidity ratio, which is defined as the ratio of positive flow (inflows) to negative flow (outflows). Minimum value this indicator equal to one.
The balance of the cash flow is ensured by its planning, primarily through the development of an operational financial plan, the so-called payment calendar. It is developed for a month with a frequency of 5, 10, 15 days. The peculiarity of the payment calendar is that the company first determines all its cash expenses for the month, and then seeks sources of funds to cover expenses if cash income is not enough. The development of an economically sound payment calendar is one of the prerequisites for effective cash flow management.
As already noted, cash flows are associated with cash inflows and outflows (Table 8.1).
Table 8.1. Cash inflows and outflows by type of activity
|
tributaries |
Outflows |
|
Primary activity |
|
|
|
|
Investment activities |
|
|
|
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The need to divide the activities of the enterprise into three types (main, investment, financial) is explained by the role of each of them and their relationship. If the main activity is the main source of profit, then investment and financial activities are designed to contribute, on the one hand, to the development of the main activity, on the other hand, to provide it with additional funds.
By and large, the division of the enterprise into types is one of the ways to ensure a balance in the income and payments of the enterprise. For these purposes, enterprises develop a cash flow plan for the quarter (Table 8.2).
Table 8.2.
Thus, the main objects of cash flow management are:
- o positive flow - tributaries;
- o negative flow - outflows;
- o cash balance.
Cash flow planning for the year is carried out using the so-called cash budget, which is also called the cash flow budget or, as it is often called, the cash flow budget, abbreviated as KB, BDP, BDDS. Budgets at the enterprise are developed, as a rule, for one year, but this can be done for three, six months, and for another period.
Some enterprises plan cash flows for certain types of income and expenses, assets and liabilities, etc.
The main ways to strengthen the finances of enterprises are related to the optimization of the funds used by them and the elimination of their deficit.
Corporate finance is the most important category market economy. They play a decisive role in the system of financial relations of the state, therefore professional management they contribute to solving not only the problems of enterprise finance, but also such problems as inflation, budget deficit, monetary policy, stock market development, corruption, etc.
One of the areas of enterprise financial management is the effective management of cash flows. A complete assessment of the financial condition of an enterprise is impossible without an analysis of cash flows. Currently, most enterprises (more than 80%) have a lack of working capital. At the same time, many of them operate at a profit. One of the tasks of cash flow management is to identify the relationship between these flows and profit, i.e. whether the income generated is the result of effective cash flows or is it the result of some other factors.
When analyzing the financial condition of an enterprise, it is necessary to clearly understand that the profit for the reporting period and the cash received by the enterprise during the period are not the same.
What is the difference between cash flow and profit?
Revenue- accounting income from the sale of products or services for a given period, reflecting both monetary and non-monetary forms of income.
Profit- the difference between accounting income from sales and accrued expenses for products sold.
cash flow- the difference between all the funds received and paid by the enterprise for a certain period of time.
Profit is an increase in the company's cash for a period, which characterizes the effectiveness of enterprise management. The presence of profit does not mean that the enterprise has free cash available for the share of use.
There are such concepts as "cash flow" and "cash flow".
Under cash flow refers to all gross cash receipts and payments of the enterprise.
cash flow is associated with a specific period of time and represents the difference between all the funds received and paid out by enterprises during this period.
The movement of money is the fundamental principle, as a result of which finances arise, i.e. financial relations, cash funds, cash flows.
Cash flow management involves:
Analysis of these streams,
cash flow accounting,
Development of a cash flow plan.
In world practice, cash flow is denoted by the concept "cash flow"(cash flow), although the literal translation (from English) of this term is cash flow. A cash flow in which outflows exceed inflows is called a “negative cash flow”, otherwise it is a “positive cash flow”.
Since the main activity of the company is the main source of profit, it should also be the main source of cash.
Since the successful conduct of business, the enterprise seeks to expand and modernize its production capacity, investment activity in general leads to a temporary cash outflow.
Financial activity is designed to increase the cash at the disposal of the company for financial support core and investment activities.
As already noted, cash flows are associated with cash inflows and outflows:
| Receipt (inflow) of funds | Kind of activity | Cash withdrawal (outflow) |
| Proceeds from the sale of products Receipt of receivables Receipt from the sale of material assets, barter Advances from buyers | Primary activity | Payments to suppliers Payment of wages Payments to the budget and extra-budgetary funds Payments of interest on a loan Payments on the consumption fund Repayment of accounts payable |
| Sale of fixed assets, intangible assets, construction in progress Proceeds from the sale of long-term financial investments Dividends, interest on long-term financial investments | Investment activities | Capital investments for production development Long-term financial investments |
| Short-term loans and borrowings Long-term loans and borrowings Proceeds from the sale and payment of promissory notes Proceeds from the issuance of shares Target financing | Financial activities | Repayment of short-term credits and loans Repayment of long-term credits and loans Payment of dividends Payment of promissory notes |
The need to divide the activities of the enterprise into three of its types is explained by the role of each and their relationship. If the main activity is designed to provide the necessary funds for all three types and is the main source of profit, while investment and financial activities are designed to contribute, on the one hand, to the development of the main activity, on the other hand, to provide it with additional funds.
Cash flow analysis associated with the clarification of the causes that influenced:
Increased cash flow;
Reduction of their inflow;
Increase their outflow;
Reducing their outflow.
This can be done both for a long period (several years) and for a short one (quarter, year). Such an analysis will be of undoubted interest if it is done for a period that reflects some stage in the activity of the enterprise, for example, from the moment a joint-stock company was created, the launch of new products, the completion of reconstruction, etc.
There are two methods for calculating cash flow:
direct and indirect.
The differences between these methods follow from the principles of calculations.
At direct method :
Calculation of flows is carried out on the basis of accounting accounts of the enterprise;
The calculation basis for the direct method is the proceeds from the sale of products;
Cash flow is defined as the difference between all the inflows of funds in the enterprise for three types of activities and their outflows;
The balance of funds at the end of the period is defined as their balance at the beginning, taking into account their flow for a given period.
As a result, the company receives answers to questions about cash inflows and outflows and their sufficiency to ensure all payments.
at indirect method:
- the calculation is carried out on the basis of the balance sheet indicators of the enterprise (F-1) and the report on financial results(F-2);
The basis for the calculation is retained earnings, depreciation, as well as changes in the assets and liabilities of the enterprise. Here, an increase in assets reduces the company's cash, and an increase in liabilities - increases, and vice versa;
Shows the relationship of various activities of the enterprise, as well as the impact on profits of changes in the assets and liabilities of the enterprise.
Types and forms of payments
Carrying out business activities, the company is faced with the need to produce cash settlements both within the enterprise itself and outside it. Internal settlements are related to the payment of wages and accountable amounts to employees, dividends to shareholders, etc. External settlements are due to financial relationships regarding the supply of products, the performance of work, the provision of services, the purchase of raw materials and materials, the payment of taxes, contributions to extra-budgetary funds, the receipt and repayment of a loan and etc.
All calculations of the enterprise can be divided into groups:
1. Payments for commodity transactions - operations related to the movement of goods, settlements with suppliers and contractors, buyers and customers, commission agents and consignors.
2. Settlements for non-commodity transactions - transactions not caused by the movement of goods and associated only with the movement of funds - settlements with the budget and extra-budgetary funds, founders, shareholders, accountable persons, trustees and attorneys, credit organizations
Settlements for commodity transactions are carried out by the following types of payments:
payment orders;
Planned payments:
Payment requests-orders;
Letters of credit;
Settlement checks;
Set-off of mutual requirements;
bills;
Oncoming movement of goods (barter transactions).
For non-commodity transactions, settlements are carried out only with the help of payment orders.
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