The effectiveness of the investment project is evaluated during the calculation period covering the time interval from the beginning of the investment project to its termination. Billing period is divided into calculation steps, i.e. time intervals within which data is aggregated to calculate efficiency (month, quarter, year).
A project, like any financial transaction, i.e. a transaction related to the receipt of income and (or) the implementation of expenses, generates cash flows (flows of real money).
The cash flow (cash flow, CF) of an investment project is income Money and their equivalents, as well as payments for the implementation of the project, determined for the entire billing period.
At each step, the cash flow value is characterized by:
The total (final) cash flow is formed by cash flows from certain types of activities:
The components of cash flows are made up of the following inflows and outflows:
Financial activities include operations with funds external to the investment project, i.e. not coming from the implementation of the project. They consist of the company's own (share) capital and borrowed funds.
Cash flows from financial activities are taken into account, as a rule, only at the stage of evaluating the effectiveness of participation in the project. Relevant information is developed and provided in the project materials in conjunction with the development of the project financing scheme.
Cash flows can be expressed in current, forecast or deflated prices, depending on the prices in which their inflows and outflows are expressed at each step.
The current prices are those included in the project without taking into account inflation.
Forecast prices are prices that are expected (taking into account inflation) at future calculation steps.
Deflated are called forecast prices, normalized to the price level of a fixed point in time by dividing by a common underlying inflation index.
Cash flows can be expressed in terms of different currencies. It is recommended to calculate cash flows in the currencies in which receipts and payments are made, and then convert them to a single, final currency and then deflate using the underlying inflation index corresponding to this currency.
Along with the cash flow, when evaluating an investment project, the accumulated cash flow is also used - a flow whose characteristics are determined by the cumulative flow for a given and all previous steps).
When calculating performance indicators, discounted cash flow values are usually used. discounting cash flows is called the reduction of their multi-temporal (relating to different calculation steps) values to their value at a certain point in time, which is called the point of reduction. Discounting applies to cash flows denominated in current or deflated prices and in the same currency.
Cash flow from investment activities.
The cash flow from investing activities as an outflow includes, first of all, the costs distributed over the steps of the billing period for the creation and commissioning of new fixed assets and the liquidation, replacement or compensation of retired fixed assets. This also includes non-capitalized costs (for example, the payment of tax on land plot used during construction; expenses for the construction of external infrastructure facilities, etc.). In addition, cash flow from investing activities includes changes in working capital (an increase is treated as an outflow of funds, a decrease as an inflow). The outflow also includes own funds invested in the deposit, as well as the costs of purchasing securities of other economic entities intended to finance this investment project.
As an inflow, the cash flow from investing activities includes income from the sale of assets being disposed of.
Information on investment costs should include information classified by type of cost.
Estimation of costs for the acquisition of certain types of fixed assets can also be made on the basis of the results of the assessment of the relevant property. The distribution of investment costs over the construction period should be linked to the construction schedule.
Cash flow from operating activities.
The main result of operating activities is the receipt of profit on invested funds. Accordingly, cash flows take into account all types of income and expenses associated with the production of products, and taxes paid on these incomes. In particular, it takes into account the inflows of funds from the provision of own property for rent, the investment of own funds on a deposit, and income from securities of other business entities.
As cash inflows in the formation of cash flow from operating activities, the following are taken into account:
Volumes of production and sales of products and other income. Production volumes are recommended to be indicated in physical and value terms. The source of information is pre-project and design materials, as well as studies of the Russian and foreign markets.
The initial information for determining the proceeds from the sale of products is specified by calculation steps for each type of product, separately for sales in the domestic and foreign markets.
In addition to the proceeds from sales in inflows and outflows of real money, it is necessary to take into account income and expenses from non-sales operations that are not directly related to the production of products, which include:
As outflows of funds in the formation of cash flow from operating activities, the following are taken into account:
The cost of production and marketing of products. The source of information is pre-project and design materials. For each type of the main resources consumed during the implementation of the project, prices must be justified (market prices, agreed between the project participants, or others). If necessary, the effect of the project on the total demand for this type of resource (and, therefore, its price) in the relevant market should be taken into account. All indicators are recommended to be indicated with the allocation of VAT, as well as other taxes and fees included in the price.
If an enterprise carries out several types of activities for which different tax rates are established (in particular, income tax), income and expenses for each of these types of activities are determined separately.
Current expenses that at the time of implementation can neither be attributed to the cost price nor included in capital investments (expenses for the repair of fixed assets, for the development of production, paid in advance rent etc.), in the calculation of cash flows should be reflected in the step at which they are produced. However, in accounting they are reflected in the balance sheet item "deferred expenses" and are distributed to the cost of production in the subsequent period. The order of such distribution is determined accounting policy enterprise and must be specified in the initial information
Cash flow from financing activities.
Cash flows from financial activities are to a large extent formed during the development of the financing scheme and in the process of calculating the effectiveness of the project. Therefore, the initial information is limited to information about the sources of financing: the amount of equity capital, subsidies and subsidies, as well as the conditions for attracting borrowed funds (volume, term, conditions for obtaining, returning and servicing). The distribution by steps can be indicative in this case.
The form for calculating the total cash flow in the general case is presented in Table. 4.1. The amounts of cash receipts and payments related to financial activities are recommended to be set separately for payments in Russian and foreign currencies.
Table 4.1
Calculation of the total cash flow
|
Indicators |
Calculation step |
||||||
|
Calculation of the flow from operating activities |
|||||||
|
Revenue from product sales |
|||||||
|
Production costs |
|||||||
|
Taxes in cost |
|||||||
|
Depreciation |
|||||||
|
Gross profit |
|||||||
|
Non-operating income |
|||||||
|
non-operating expenses |
|||||||
|
Earnings before Interest |
|||||||
|
Interest on a loan included in the cost |
|||||||
|
Profit before tax |
|||||||
|
income tax |
|||||||
|
Profit use (decipher) |
|||||||
|
Undestributed profits |
|||||||
|
Depreciation |
|||||||
|
Flow from operating activities |
|||||||
|
Calculation of the flow from investment activities |
|||||||
|
Realization of fixed assets and intangible assets |
|||||||
|
investment |
|||||||
|
Growth of current assets |
|||||||
|
Liquidation value of the project |
|||||||
|
Project liquidation costs |
|||||||
|
Flow from investing activities |
|||||||
|
Calculation of the flow from financial activities |
|||||||
|
Loans received |
|||||||
|
Special-purpose financing |
|||||||
|
Issue of debt securities |
|||||||
|
Issue of own shares |
|||||||
|
Loan repayment |
|||||||
|
Interest payments |
|||||||
|
Dividend payments |
|||||||
|
Placement of funds on deposits |
|||||||
|
Withdrawal of funds from deposits |
|||||||
|
Receiving interest on deposits and deposits |
|||||||
|
Flow from financing activities |
|||||||
|
Total flow balance |
|||||||
|
Cumulative balance |
Receives after investing capital (investment) in enterprises, real estate or other forms of economic assets.
There are two main types of cash flow from investments according to the frequency of profit:
You can divide the income from investments into active and passive, depending on the participation of the investor in the activities of the object of his investment
Cash flow from investing activities is usually graphically an ascending line (if the investee develops, or if the investor reinvests his capital), in contrast to the linear income of an employee, whose income is most often at a constant level .
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The operations of the enterprise, including the acquisition and sale of intangible assets, shares of shares in the conditional capital of joint ventures, other securities (not being short-term investments), as well as the issuance of long-term loans to other enterprises and individuals and their subsequent return, are the main components of its investment activity. .
Investment activity is associated with the sale and acquisition of long-term property
The cash flow arising from investing activities reflects the level of production costs for resources intended to generate income and future cash flows.
Cash flow from investment activity summarized in the section "Investment activities"
Cash flows from investing activities include:
For example, an enterprise receives income from the operation of acquired fixed assets not immediately after their purchase, but during the entire period of their purchase, but during the entire period of their operation. Similarly, long-term securities may generate future dividend income and influence future cash flows through the amount of dividends received.
We will analyze the cash flow for investment activities at the Zhemchuzhina LLC enterprise for three years (2004-2006)
Table #2
Analysis of cash flows for investment activities
|
Indicators |
Off(+/-) 2004-2005 |
Off(+/-) 2005-2006 |
||||
|
Receipt of DS, total |
||||||
|
Interest received |
||||||
|
Dividends received |
||||||
|
Including from abroad |
||||||
|
Other supply |
||||||
|
DS expenses, total |
18 |
|||||
|
Cash payments for the acquisition of long-term assets |
||||||
|
Net receipts (disposals) of DC from investing activities |
- 18 |
138 |
-138 |
Table 2 and diagram 2 show that Zhemchuzhina LLC increased its sales income in 2005 compared to 2004 due to the disposal of long-term assets (81 thousand lei) and other income.
The expenditures of funds at the enterprise (- 6 thousand lei) associated with the acquisition of long-term assets also slightly decreased.
And in 2006, no operations were carried out on investment activities.
Income from an investment company Disposal from an investment company
Diagram #2. Analysis of cash flows for investment activities
As follows from Table 2, Zhemchuzhina LLC does not allocate the received funds to the acquisition of fixed assets, which would normally be reflected in the form of a negative cash flow from investing activities. Lack of proper attention to this aspect can provoke the emergence of difficulties in the implementation of operations due to insufficient technical capacity.
Financial activity of the enterprise is a set of operations related to raising capital to finance its activities. The result of financial activity is a change in the size and composition of the company's own and borrowed capital.
Financial activity is an activity, the result of which is a change in the size and composition of the company's own capital and borrowed funds.
It is considered that an enterprise carries out financial activities if it receives resources from investors and owners returns them, receives and returns loans and loans, and pays dividends.
Cash inflow and outflow related to financial transactions are singled out in a separate section of the report because this information allows you to predict the future amount of funds to which investors will be entitled.
Cash flows from financing activities are summarized in section "Financial activities".
Information about the cash flow from financial activities is very important, as it allows users to financial statements find out why the company's equity increased or decreased, what changes and why occurred in the size and composition of long-term and short-term liabilities. In addition, this information is useful in forecasting future cash flow requirements from investors and creditors. Financial activity is designed to increase the funds at the disposal of the enterprise for financial support operating and investment activities.
For each area of activity it is necessary to sum up the results. It is bad when cash outflows prevail in operating activities, this indicates that the cash received is insufficient to ensure the current payments of the enterprise.
Cash flows from financing activities include:
In this case, the lack of funds for current expenses will be covered by borrowed resources. If, in addition, there is an outflow of cash from investment activities, then the Financial independence enterprises.
We will analyze the cash flow for financial activities at the Zhemchuzhina LLC enterprise for three years (2004-2006)
The data provided in table No. 3 allows us to see that the receipt of funds from financial activities was associated only with obtaining loans and credits. This is due to the fact that, due to a shortage of funds for the operating activities of Zhemchuzhina LLC, it is necessary to attract additional funds to cover its expenses
Table #3
Analysis of cash flows for financial activities
|
Indicators |
Off(+/-) 2004-2005 |
Off(+/-) 2005-2006 |
||||
|
DS receipts, total |
12 588 |
12 260 |
- 328 |
- 4 923 |
||
|
Cash inflows in the form of credits and loans |
||||||
|
Cash flows from issuance of own shares |
||||||
|
DS spending, total |
9 589 |
10 810 |
+ 3 239 |
+ 1 221 |
||
|
Cash payments on loans and borrowings |
||||||
|
Dividend payments |
||||||
|
Including uncut. |
||||||
|
Cash payments on buyback of co-shares |
||||||
|
Other DS payments |
||||||
|
Net receipts (payments) DS |
6 237 |
21 671 |
+15 433 |
-6 144 |
Although it must be said that from year to year credits and loans decrease, in 2005 compared to 2004 by 327,770 lei, and in 2006 compared to 2005 by 4,922,790 lei. But as can be seen from the data in the table, this led to a negative net inflow (outflow) of cash from financial activities.
Income from financial institution Disposal from financial institution
activities (thousand liters) activities (thousand liters)
Diagram #3. Analysis of funds for financial activities.
From the diagrams above, it can be seen that the data balance sheet The enterprises confirmed that the received loans are of a short-term nature and cause their quick repayment. Consequently, due to a lack of funds, Zhemchuzhina LLC is not able to issue or redeem its own shares.
All three of the activities we have considered form a single amount of the enterprise's monetary resources, the normal functioning of which is impossible without a constant overflow of cash flows from one area to another. The very existence of the three areas of activity of the organization is aimed at ensuring its efficiency. Even profitable production - economic activity may not always bring in a sufficient amount of money to purchase non-current assets (real estate or equipment). In such situations, new loans are needed, the cost of which must be offset by future investment returns. In the conditions of the crisis of non-payments, enterprises are forced to seek additional short term financing working capital. But expenses for such purposes cannot be offset by future income, since the money was not used for investment.
Let's make a structural analysis of the cash flow at the enterprise Zhemchuzhina LLC.
Structural analysis provides users of financial statements with detailed information about the origin of cash receipts and their further use. The analysis examines the relationship between the various channels of receipt and disposal of funds. Structural analysis allows you to evaluate the contribution of each component of the cash flow in the formation of the overall flow.
AT economic theory and economic practice, two technical methods of implementation are used structural analysis cash flow. The essence of the first method consists in a separate study of the structure of cash receipts and payments with the calculation of the share of each component in the total amount of receipts and payments, respectively. When applying this method in the process of preparing analytical materials, pie charts are often constructed, with the help of which the structure of cash flows is presented in a more accessible form.
Based on the data of the cash flow statement for the last two years, we will compile an analytical table, build charts and interpret the results.
Using the data from column 6 of table No. 4, we will present the structure of cash flows at the Zhemchuzhina LLC enterprise in reporting year using diagram No. 4. In 2004, the main elements that form the cash flow at Zhemchuzhina LLC are sales receipts (44.84%). Receipts in the form of credits and loans make up 38.39%, and other income - 16.77%. it speaks about the effective functioning of the enterprise.
Table No. 4
Separate analysis of the structure of cash receipts and payments
|
Money |
|||||||
|
cash receipts |
|||||||
|
Sales proceeds |
|||||||
|
Other income from operations. |
|||||||
|
Receipts in the form of loans and borrowings |
|||||||
|
Cash receipts from disposal of non-current assets |
|||||||
|
Total cash receipts |
19 378 |
||||||
|
Cash payments |
|||||||
|
Payments to suppliers |
|||||||
|
Staff benefits |
|||||||
|
Payment of % |
|||||||
|
Income tax payments |
|||||||
|
Other operating payments |
|||||||
|
Payments on loans and borrowings |
|||||||
|
Cash payments for the acquisition of long-term assets |
|||||||
|
Total cash payments |
32 677 |
100 |
18 304 |
Diagram #4. cash receipts and payments at Zhemchuzhina LLC in 2006.
From the data of table No. 4 and the information presented in diagram No. 4, it follows that a significant part of the payments falls on the share of suppliers (61.25%), 19.45% - on the share of payments on loans and borrowings, 14.2% - these are other operating expenses, and the rest for the share of payments to personnel (2.11%), interest payments (2.55%)
In 2005, sales receipts decreased to 36.57%, while receipts from loans and borrowings increased to 56.11%.
In 2006, as in 2004, sales proceeds are higher (than proceeds from loans and borrowings (37.86%)
In 2005, most of the payments go to repay loans and borrowings (44.06%), and in 2006 this item accumulates the principal amount - 52.18% of total amount payments. Suppliers accounted for 39.97% in 2005 and 37.93% in 2006.
Among the structural changes, the appearance in the reporting year of payment for income tax, whose share amounted to 0.03% of the total amount of cash payments.
The political factor, as mentioned above, significantly affected the operating activity. Consequently, this is what provoked the Zhemchuzhina LLC enterprise to acquire a larger loan, which entails an annual increase in loan payments.
After analyzing the last three years of operation of Zhemchuzhina LLC, we can conclude that the situation with the inflow and outflow of funds is quite stable. This is due to the fact that the company has specialists who try to use funds efficiently, control both the flow and outflow, trying to keep the company during the crisis, to prevent its bankruptcy.
Among the structural changes, the emergence of income tax payments in the reporting year, the share of which amounted to 0.03% of the total amount of cash payments, stands out. In the long term, the direct method of calculating the amount of cash flows makes it possible to assess the level of liquidity of the enterprise.
Let's analyze the cash flow by the coefficient method. This method is often used in foreign analytical practice to assess the situation regarding cash flow. The peculiarity of the method is the calculation of financial ratios, which reflect the various ratios between received and used funds. These coefficients are very numerous and varied, but for the most part, they characterize the ability of an enterprise to satisfy certain needs due to the availability of funds.
In particular, using this method in the course of cash flow analysis, the coefficients presented in Table No. 5 can be calculated.
The results of the analysis (carried out in table No. 5) indicate that the level of cash flow adequacy has sharply increased at the Zhemchuzhina LLC enterprise.
Table number 5
Analysis of cash flow ratios for Zhemchuzhina LLC
Diagram #5
If in 2004 the company generated a net operating flow as a result of operating activities, which was one time less than the company required, then in 2006. There is a situation that the company almost 100% satisfies its needs. This is due to the fact that Zhemchuzhina LLC used a loan.
Diagram #6
As can be seen from diagram No. 6, the calculation of the degree of coverage of cash flow obligations shows that during 2004. and 2005 the situation is characterized by the absolute inability of the enterprise to repay debts without financing from outside. In 2006 Zhemchuzhina LLC, with the help of cash received from operating activities, covered 11% of the total amount of liabilities, exists at the end of the year. This indicates that the company has become more creditworthy.
The sufficiency ratio is at a very low level absolute liquidity assets at the Zhemchuzhina LLC enterprise.
Diagram #7
If in 2005 it increased by 3.74 days (from 1.66 in 2004 to 6.21 in 2005), then in 2006 dropped significantly at the end of 2006. Zhemchuzhina LLC has absolutely liquid assets in the amount that would allow the implementation of average operating payments within 0.70 days.
Diagram #8
From the calculations made in table No. 5 and diagram No. 8, it follows that the degree of reinvestment of funds in the Zhemchuzhina LLC enterprise in 2005. (18.01%) exceeded the recommended level (8-10%).
And in 2004 and 2006 reinvestment of funds did not take place at all due to the formation of an operating net flow from operating activities.
In the long term, the direct method of calculating the amount of cash flows makes it possible to assess the level of liquidity of the enterprise.
In operational financial management, the direct method can be used to control the process of generating proceeds from the sale of products (works, services) and draw conclusions regarding the sufficiency of funds for payments on financial obligations.
The disadvantage of this method is that it does not take into account the relationship of the obtained financial result(profit) and the change in the absolute amount of the company's cash.
According to the state of cash flow, it is possible to analyze the quality of enterprise (object) management. The dependence of these factors is shown in Fig. 102. The quality of enterprise management can be characterized as a harn if, according to the results of the reporting period, the net cash flow as a result of operating activities is positive, and the volume of these funds significantly exceeds the results of investment and financial activities, may even be negative (in extreme cases). This means that as a result of operating activities (from the sale of products, works (services)) the enterprise receives sufficient cash to make investments and pay for the use of loans at its own expense.
The positive value of the net cash flow as a result of all activities of the enterprise indicates that the management skillfully performs its functions.
If the cash flow as a result of operating and financial activities is positive, and as a result of investment - negative, then this indicates a normal quality of enterprise management. and additional investments of owners from financial activities for the acquisition of non-current assets for the renewal of fixed assets, capital investment in intangible assets and the implementation of long-term investments.
Financing the costs of investment activities at the expense of proceeds from financial activities is not always a negative phenomenon. Each enterprise wants to attract investments for the implementation of measures for scientific and technological progress and the renewal of fixed assets.
The negative value of cash flow from investment and positive - from financial activities may mean that the company received a loan at a small percentage and invested the funds received for more than favorable conditions. This situation is favorable for assessing the quality of enterprise management (normal), but management should pay attention to this fact in terms of improving the results of investment activity.
The situation at the enterprise is alarming if the movement of funds as a result of investment and financial activities is positive, and as a result of operating - negative. In this case, the state of the enterprise can be characterized as a crisis, and the quality of management in such a situation does not hold water.
The essence of such a capital structure is that the company finances the costs of operating activities at the expense of proceeds from investment and financial activities. This is before attracting loans, additional issue of shares, etc. Such a structure of cash flow is favorable only for newly created enterprises that have not earned their full potential, but are gradually developing their design capacities.
So, the quality of enterprise management will be favorable only if there is a positive result of cash flow in connection with operating activities, significantly exceeding the result of investment and financial activities. This means that the company receives timely payment for sold products, goods, services rendered and work performed from buyers and customers. In addition, the costs of production and sales are much less than the income received, and the company receives a profit from operating activities.
. Rice 102. Dependence of the quality of management on the structure of cash flows
General provisions for the analysis of financial and financial statements enterprises allow to assess the quality of enterprise management and develop a set of measures to improve the management of cash flows in enterprises.
On the basis of Form No. 3 "Cash Flow Statement" of OAO, the structure of cash flows for four years was determined (2001-2004 pp). Table 105 shows the generalized structure of the enterprise's cash
. Table 105. Structure of cash flows, thousand UAH.
Consequently, the quality of cash flow management in the enterprise. OJSC for the 1st year can be assessed as good, in the 3rd year - as normal, and in the 2nd and 4th years - as a crisis. Let us pay attention to certain differences in the structure of the overall quality of cash flows over four years. So, in 1, 2 and 3 years, the company directed the funds received as a result of operating activities, and borrowed funds for the transfer of non-current assets, that is, for investment activities.
Over the past three years, there has been a positive value of cash flow from the operating activities of the enterprise, while cash flow from financial activities has been negative over the past three years. Financial activities. JSC for three years has been associated with the return of previously borrowed funds, which entails an increase in the share of own funds in the structure of the company's akt norms and increase its financial stability.
The cash flow from investment activities in the 1st year has a positive value, and for the last three years - a negative value. This is due to the acquisition of non-current assets, but the lack of efficiency of their use for a sufficiently long time (three years) is alarming.
Net cash flow (the total result from all activities) was positive in the 1st and 4th years, and during the two years (2nd and 3rd) - negative. This indicates a deterioration in the financial and state support activities and inefficient use of financial and investment resources enterprise for four. Rokiv.
Determining the cash flow assessment allows you to determine the overall results for the three types of activities and make an assessment of the quality of enterprise management. For a more detailed view of investment and financial activities. The JSC needs to analyze what expenses and receipts the company had a positive or negative result of its activity.
Table 106 shows the cash flow for investment activities. OJSC for 4 years. In the 1st year, receipts (UAH 58.6 thousand) were the result of the sale of fixed assets, intangible assets and other non-current assets. In the 2nd year, proceeds from the sale of securities or debt obligations amounted to UAH 438,000, and from the sale of fixed assets, intangible assets and other long-term acts, proceeds amounted to UAH 10,000. In the 3rd year, receipts were observed as a result of the sale of financial investments in the amount of UAH 437 thousand and the sale of fixed assets, intangible assets and other non-current assets for UAH thousand. The proceeds of the 4th year amounted to UAH 2314 thousand from the sale of securities or debt obligations, and the receipts of UAH 44 thousand - from the sale of fixed assets, intangible assets and other long-term assets.
Admission. OJSC in the form of interest on advances, loans and transfers of non-current assets for financial lease amounted to: 1st year - UAH 5772.2 thousand, 2nd year - 6704 thousand, 3rd year - 5604 thousand; 4th isc hryvnia, and this phenomenon is positive in the activities of the enterprise.
Receipt of funds from the return of advances and loans granted third parties in the 1st and 2nd years, amounted to 35.0 and 17 thousand UAH, respectively, and in the 3rd year - 15 thousand UAH. In the 1st year. OJSC was tsy for 4 thousand UAH UAH.
. Table 106. Cash flow from investing activities
. Table ending 106
For four years, the enterprise acquired fixed assets: 1st year - for 2476.9 thousand UAH, 2nd year - for 1794 thousand, 3rd year - for 1494 thousand, 4th year - for 1988 thousand UAH 30 years. OJSC provided advances and loans for UAH 50 thousand (Year 1), UAH 18,500 thousand (Year 2), UAH 16,660 thousand (Year 3) and UAH 14,898 thousand (Year 4), innocence.
The acquisition of fixed assets in the 1st year and the low efficiency of their use reduced the results of investment activities (by 74%), but the overall results are generally positive for this year (UAH 3,335 thousand). Over the past three years, through the acquisition of fixed assets, the provision of advances (loans) and payments under contracts, the results of investment activity were negative and amounted to UAH 12,902 thousand, UAH 11,982 thousand and UAH 8,870 thousand, respectively. UAH
Table 107 shows cash flows from financial activities. JSC for four years, the company received loans from UAH 136,176.7 to 2960 thousand per year, and this created debentures. Other receipts related to financial activities were in the 1st and 4th years.
. Table 107. Cash flow from financial activities
In the 1st and 4th years. OJSC used more than UAH 2 million to repay loans for four years paid dividends in the amount of more than UAH 2 million per year
Payments for the redemption of previously issued securities and other payments amounted to: 1st year - 168,044.8 thousand; 2nd year - 96,677 thousand; 3rd year - 95,677 thousand; 4th year - 81 969 iya to a constant decrease in payments.
For four years, the financial results of the enterprise were negative, which should alert the management. JSC
Thus, over the four years, positive results from operating activities have been constantly decreasing. Negative is the loss during three years from the investment activity of the enterprise, which significantly affected the overall performance in the 2nd and 4th years (total loss). The financial activity of the enterprise did not ensure the effectiveness of investment activity, is a significant shortcoming in yoga activities and indicates a decrease in the business activity of the enterprise and its management. efficient use production, resource and financial potentials for three recent years. All this testifies to the threat to this enterprise due to its bankruptcy and losses from its operating activities.
After analyzing the cash flow of the enterprise for investment and financial activities, we can recommend the following activities to it:
1) constantly monitor and analyze the movement of funds for all types of activities;
2) the acquisition of fixed assets, intangible assets requires a certain justification and their effective use, taking into account the sources of their acquisition (own, borrowed and especially borrowed);
3) develop a plan for income and expenses at the enterprise for all types of activities for more short time than a year (quarters, months, decades);
4) to control receipts and expenses, and especially on loans, contracts, advances;
5) control the costs of paying dividends and purchasing previously issued securities
. test questions and tasks
1. How is an enterprise chosen for investment?
2. Tell us about the financial statements of the enterprise by type of activity
3. Describe financial statements cash flow of the enterprise
4. Name the methodological approaches regarding the cash flow of the enterprise
5. What is the financial flexibility of an enterprise?
6. Expand the relationship between the state of cash flow and enterprise management
. Literature
1. Economic Code of Ukraine / /. Official Gazette of Ukraine - 2003 - No. 11 -. C 303-458
2. Law of Ukraine "On securities and stock exchange"/ /. Vedomosti. Verkhovna. Rada of Ukraine - 1991 - No. 38 -. C 1069-1083
3. Law of Ukraine "On investment activity"/ /. Vedomosti. Supreme. Rada of Ukraine - 1991 - No. 47 -. From 1361-1359
4. National standards accounting:. Tutorial - X:. IPF "Epsilon" - 1999 -. H 1 - 44 s;. M 2 - 24 s
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Let's analyze the types of cash flows of the enterprise: economic sense indicators - net cash flow (NCF) and free cash flow, their construction formula and practical examples calculation.
Net cash flow (EnglishNetCashflow,Netvalue,NCF, present value) - is a key indicator of investment analysis and shows the difference between positive and negative cash flow for a selected period of time. This indicator determines financial condition enterprise and the ability of the enterprise to increase its value and investment attractiveness. Net cash flow is the sum of the cash flow from the operating, financial and investment activities of the enterprise.
Consumers of net cash flow indicator
Net cash flow is used by investors, owners and creditors to assess the effectiveness of investing in an investment project/enterprise. The value of the net cash flow indicator is used in assessing the value of an enterprise or an investment project. Since investment projects can have a long implementation period, all future cash flows lead to the value at the present time (discounted), resulting in the NPV indicator ( Netpresentvalue). If the project is short-term, then discounting can be neglected when calculating the cost of the project based on cash flows.
The higher the value of the net cash flow, the more investment attractive the project is in the eyes of the investor and lender.
Consider two formulas for calculating net cash flow. So net cash flow is calculated as the sum of all cash flows and outflows of the enterprise. And the general formula can be represented as:
NCF - net cash flow;
CI (Cash inflow) - incoming cash flow, which has a positive sign;
CO (cash outflow) - outgoing cash flow with a negative sign;
n is the number of cash flow evaluation periods.
Let us write in more detail the net cash flow by type of activity of the enterprise; as a result, the formula will take the following form:
where:
NCF - net cash flow;
CFO - cash flow from operating activities;
CFF - cash flow from financing activities;
Let's analyze in practice an example of calculating net cash flow. The figure below shows the way in which cash flows from operating, financial and investment activities are generated.
All cash flows of an enterprise that form a net cash flow can be divided into several groups. So, depending on the purpose of use by the appraiser, the following types of cash flows of the enterprise are distinguished:
A. Damodaran distinguishes two types of free cash flows of an enterprise:
A firm's free cash flow (FCFF) is used to assess enterprise value, while free cash flow to equity (FCFE) is used to assess shareholder value. The main difference is that FCFF measures all cash flows from both equity and debt, while FCFE measures cash flows from equity only.
The formula for calculating the free cash flow of a firm (FCFF)
EBIT ( Earnings Before Interest and Taxes) – earnings before taxes and interest;
СNWC ( Change in Net Working Capital) - change in working capital, money spent on the acquisition of new assets;
Capital Expenditure) .
J. English (2001) offers a variation of the free cash flow formula for a firm, which looks like this:
CFO ( CAshFlow from Operations)- cash flow from the operating activities of the enterprise;
Interest expensive - interest expenses;
Tax- interest rate income tax;
CFI - cash flow from investing activities.
The formula for calculating free cash flow from capital (FCFE)
The formula for estimating the free cash flow of capital is as follows:
N.I. ( Net Income) – net profit enterprises;
DA - depreciation of tangible and intangible assets;
∆WCR is net capital cost, also called Capex ( Capital Expenditure);
Investment - the amount of investments made;
Net borrowing is the difference between repaid and received loans.
Cash flows are used in investment analysis to evaluate various project performance indicators. Consider the main three groups of methods that are based on any type of cash flows (CF):
In all these models for evaluating the effectiveness of the project, cash flows are based on which conclusions are drawn about the degree of project effectiveness. As a rule, investors use the free cash flows of the firm (assets) to estimate these ratios. The inclusion of free cash flows from equity in the calculation formulas allows focusing on assessing the attractiveness of a project/enterprise for shareholders.
Summary
In this article, we examined the economic meaning of net cash flow (NCF), showed that this indicator allows us to judge the degree of investment attractiveness of the project. We considered various approaches in calculating free cash flows, which allows us to focus on the assessment, both for investors and shareholders of the enterprise. Increase the accuracy of investment project evaluation, Ivan Zhdanov was with you.
