Financial plan of the enterprise. How to draw up a financial plan - step-by-step instructions. Business plan financial plan: detailed calculation
In modern conditions, when enterprises are completely independent in developing their production programs, sales plans, production plans and social development, in choosing a pricing policy, responsibility for management decisions made lies entirely with managers. To develop effective and prompt decisions, managers need reliable information about both the production and financial position of the enterprise, both currently and in the short term, and in many cases in the long term. Any enterprise that has reached medium size and has an organizational structure in which the enterprise's services have a certain level of independence needs financial planning and control.
Financial planning allows a company to:
Make realistic forecasts of financial and economic activities;
Timely detect the most bottlenecks in enterprise management using multivariate analysis tools;
Quickly calculate the economic consequences of possible deviations from the planned plan using financial models and make effective management decisions;
Coordinate the work of structural units and services to achieve the set goal;
Increase the company's manageability through prompt monitoring of deviations of actuals from plans and timely decision-making.
Financial planning allows you to achieve better organizational performance by increasing the efficiency of management processes.
The presented final qualifying work examines one of the most relevant topics - the financial plan of the organization. In this work, the main emphasis is shifted to the construction of financial planning in a trading organization.
The purpose of the thesis is to improve financial planning and control in the organization's management system.
Achieving this goal involves solving the following interrelated tasks:
1. Explain the essence and identify trends in the development of financial planning in the organization’s management system;
2. Consider the system of financial and economic indicators used in financial planning in organizations in modern Russian conditions, as well as analyze the economic entity DTS LLC in their context;
3. Construct a financial plan model using the example of DTS LLC;
4. Propose mechanisms for improving the financial planning system at DTS LLC.
The object of study in the presented work is the company DTS LLC, which was taken as an example for constructing a financial planning model.
The subject of the study is financial planning in the company DTS LLC.
The legislative and regulatory acts of the Russian Federation regulating the activities of enterprises, materials from periodicals and educational publications, materials obtained from information searches on the Internet, as well as data from the accounting and internal reporting of the company DTS LLC were used as the information base for the thesis.
The thesis consists of an introduction, a main part including three chapters, a conclusion, a list of references of 40 titles, and 7 appendices. The main text is presented on 83 pages.
The main part of the thesis covers issues of financial planning in an organization, examines the main tools of financial planning, and analyzes the main financial and economic indicators necessary for the formation of a financial plan using the example of a specific company. The problems and ways to improve financial planning in modern Russian organizations are also outlined using the example of the trading company DTS LLC.
CHAPTER 1. THEORETICAL FOUNDATIONS OF FINANCIAL PLANNING IN A COMPANY
1.1. The essence of financial planning in an organization. Basic budgets required to formulate an organization’s financial plan
Having a goal to regulate or improve regular management, any company certainly faces, among many problems, one of the most pressing ones - the problem of financial management. Such management begins with financial planning, or budgeting. The experience of Russian companies shows that due to the lack of accurate and systematic knowledge about their finances, companies lose up to a fifth of their income. The head of a company should always know how much money he will have tomorrow, in a month, in six months. And if you consider that many companies live off loans, and, as a rule, interest rates are quite high, it is not always possible to immediately imagine big picture the financial condition of the organization, as well as accurately determine the structure of incoming and outgoing financial flows.
According to Selezneva N.N. and Ionova A.F. Financial planning is an integral part of planning the financial and economic activities of an enterprise, aimed at implementing the strategy and operational objectives of the enterprise.
For a business entity, financial planning:
Translates developed strategic goals into the form of specific financial indicators;
Provides financial resources for the economic development proportions laid down in the production plan;
Makes it possible to determine the viability of an enterprise project in a competitive environment;
Serves as a tool for obtaining financial support from external investors.
Planning is associated, on the one hand, with preventing erroneous actions in the field of finance, and on the other, with reducing the number of unused opportunities.
Business practice in a market economy has developed certain approaches to planning the development of an individual enterprise in the interests of its owners and taking into account the real situation on the market.
Providing the necessary financial resources for production, investment and financial activities;
Determining ways to effectively invest capital, assessing the degree of its rational use;
Identification of internal reserves for increasing profits through the economical use of funds;
Establishing rational financial relations with the budget, banks and counterparties;
Respect for the interests of shareholders and other investors;
Control over the financial condition, solvency and creditworthiness of the enterprise.
The financial plan is the most important element of a business plan, drawn up both to justify specific investment projects and programs, and to manage current and strategic financial activities. This document provides a link between enterprise development indicators and available resources.
The financial plan should be aimed at providing financial resources for the entrepreneurial plan of the business entity; it has a great impact on the economy of the enterprise. This is due to a number of circumstances.
Firstly, in financial plans, the planned costs for carrying out activities are compared with real possibilities and, as a result of the adjustment, material and financial balance is achieved.
Secondly, the articles of the financial plan are related to all economic indicators of the enterprise and are linked to the main sections of the business plan: production of products and services, scientific and technical development, improvement of production and management, increasing production efficiency, capital construction, logistics, labor and personnel, profit and profitability, economic incentives, etc. Thus, financial planning influences all aspects of the activity of an economic entity through the selection of financing objects, the direction of financial resources and promotes the rational use of labor, material and monetary resources.
Financial planning is closely related to the marketing, production and other plans of a business entity. No financial forecasts will acquire practical value until production and marketing areas of activity have been worked out. Financial plans will be unrealistic if marketing goals are not specific and therefore difficult to achieve.
Financial planning is also closely related to the organization's purpose and overall strategy. The comprehensive nature of financial planning is presented in Figure 1.1.
Figure 1.1Comprehensive nature of financial planning of an organization
A financial plan is a quantitative plan in monetary terms prepared and adopted before a specified period, usually showing the projected amount of income to be achieved, the expenses to be incurred during that period, and the capital to be raised to achieve the given goal.
According to Selezneva N.N. and Ionova A.F. a quantitative plan in monetary terms, showing the planned amount of income, expenses and capital that must be attracted to achieve the goal, is called a budget, or estimate.
The budget is an operational financial plan, developed for a period of up to one year, reflecting expenses and cash receipts in the process of business activities. It is the main planning document communicated to responsibility centers of all types.
Budgeting underlies the formation of a business plan and includes direct planning and monitoring (control, supervision) of current business activities.
The company's budget (Main Budget) is a system of interconnected budgets that represents in a structured form managers' expectations regarding sales, expenses and other financial transactions in the forecast (planned) period. The main budget includes two blocks: a system of operating budgets and a system of financial budgets.
In the budgeting process, the company's budget is calculated for the entire set of operating and financial budgets (with the exception of the capital investment budget) and the projected financial condition of the company is assessed. If the resulting financial indicators calculated on the basis of the company’s budget system (such as liquidity, profit, profitability, etc.) are unsatisfactory, it is necessary to implement a “what-if” scenario to assess the impact of the main parameters of budgets and standards laid down during planning.
The budget is a quantitative expression of the plans for the activities and development of the organization, coordinating and specifying in numbers the projects of managers. As a result of its preparation, it becomes clear what profit the enterprise will receive if this or that development plan is approved. Using a financial plan creates undeniable advantages for the organization.
The budget system is used by managers as a means of managing the activities of the enterprise, monitoring the real state of affairs and comparing it with the goals and objectives laid down in the plan.
Planning, both strategic and tactical, helps control the production situation. Without a plan, a manager is usually left to react to the situation rather than control it. The financial plan, being an integral part of the plan, contributes to the clear and targeted activities of the enterprise.
The financial plan, being an integral part of management control, creates an objective basis for assessing the performance of the organization as a whole and its divisions. In the absence of a financial plan, when comparing the indicators of the current period with previous ones, you can come to erroneous conclusions, namely: indicators of previous periods may include the results of low-productivity work. Improving these By indicators means that the enterprise has begun to work better, but it has not exhausted its capabilities. When using indicators from previous periods, new opportunities that did not exist in the past are not taken into account.
The financial plan, as a means of coordinating the work of various divisions of the organization, encourages managers of individual units to build their activities taking into account the interests of the organization as a whole. It is also the basis for assessing the implementation of the plan by responsibility centers and their managers: the work of managers is assessed based on reports on budget implementation; Comparison of actual results achieved with budget data indicates areas where attention and action should be directed.
Western financial science considers financial planning not only as the main function of financial management, but also as an indicator of the effectiveness of all activities of the organization. Most Russian enterprises have not yet become involved in financial management through the financial planning mechanism. This is due to a number of reasons:
Lack of clear goals and understanding of the organization’s mission by its management;
The difficulties of many economic entities in determining the real need for current resources (production, labor, etc.);
The lack of a well-functioning system for presenting reliable information at the right time in modern enterprises, to the right people, at the right time.
Large companies have great opportunities for effective financial planning. They have sufficient financial resources to attract highly qualified specialists to ensure the implementation of large-scale planned work in the field of finance.
Small businesses, as a rule, do not have the funds for this, although the need for financial planning is greater than for large ones. Small firms more often need to raise borrowed funds to support their business activities, while the external environment of such enterprises is less controllable and more aggressive. And as a result, the future of a small enterprise is more uncertain and unpredictable.
According to Savitskaya G.V. The object of financial planning of an organization is all types of its activities: current (operational), investment and financial and their individual elements:
Revenue from sales of products;
Profit and its distribution;
The volume of payments to the budget system in the form of taxes and fees;
Contributions to state extra-budgetary funds in the form of a single social tax;
The volume of borrowed funds raised from the credit market;
The volume of capital investments and sources of their financing;
Planned need for working capital and financing of their increase.
According to Bolshakov S.V., there are two options for constructing financial plans:
1. Budgeting "down up" starts with the sales budget. Based on the amount of sales and corresponding costs, financial indicators of the enterprise’s activities are obtained. If their values do not suit top management, then the budgets included in the operating budget are revised.
In the practice of financial planning, the following methods are used: economic analysis, regulatory, balance sheet calculations, cash flows, multivariate method, economic and mathematical modeling.
Economic analysis method allows you to determine the main patterns, trends in the movement of natural and cost indicators, and the internal reserves of the enterprise.
Essence normative method is that based on advance established standards and technical and economic standards, the need of an economic entity for financial resources and their sources is calculated. Such standards are tax rates and fees, depreciation rates, etc. There are also standards for an economic entity - these are standards developed directly at the enterprise and used by it to regulate production and economic activities, control the use of financial resources, and other goals for the effective investment of capital. Modern costing methods, standard costing and marginal costing, are based on the use of internal business standards.
Usage balance calculation method to determine the future need for financial resources, it is based on the forecast of the receipt of funds and costs for the main balance sheet items at a certain date in the future.
Discounted Cash Flow Method universal when drawing up financial plans; This is a tool for forecasting the size and timing of receipt of the necessary financial resources. The theory of cash flow forecasting is based on expected receipts of funds on a certain date and budgeting for all costs and expenses. This method will provide more voluminous information than the balance sheet method.
Method of multivariate calculations consists in developing alternative options for planned calculations in order to select the optimal one, and different selection criteria can be specified.
Methods of economic and mathematical modeling allow us to quantitatively express the close relationship between financial indicators and the main factors that determine them.
According to Likhachev O.N. The financial planning process includes several stages.
At the fifth stage, the financial planning process ends with the practical implementation of plans and monitoring their implementation.
Unlike financial statements (balance sheet, form No. 2, etc.), the forms of financial plans are not standardized. Their structure depends on the object of planning, the size of the organization and the degree of qualification of the developers.
Financial plan is developed by the financial or economic service together with the heads of responsibility centers; the development process, as a rule, goes from the bottom up.
The financial plan can be developed on an annual basis (broken down by months) and on the basis of continuous planning (when during the first quarter the estimate for the second quarter is revised and an estimate is drawn up for the first quarter of the next year, i.e. the financial plan is always projected for the year ahead)
Despite the unified structure, the composition of the elements of the financial plan (especially its operating part) largely depends on the type of activity of the organization.
In the financial planning system, there is also such a concept as Strategic financial planning, which determines the most important indicators, proportions and rates of expanded reproduction. As part of strategic planning, long-term development guidelines and goals of the enterprise, a long-term course of action to achieve the goal and allocate resources are determined.
The need for strategic planning of any business entity consists in choosing the goals of the organization in such a way that an increase in the value of the enterprise is achieved, profits are maximized and its financial structure is optimized. With the help of strategic financial planning you can achieve:
Optimal distribution and use of production, financial and labor resources;
Dominant position in the market;
Adaptation to the external market environment by analyzing the strengths and weaknesses of the organization, using its advantages, and assessing potential risks.
In modern conditions, strategic financial planning covers a period from one to three years. However, such a time interval is conditional, since it depends on economic stability and the ability to predict the volume of financial resources and the directions of their use;
Strategic planning includes developing a financial strategy for an enterprise and forecasting financial performance.
According to V.V. Kovale, the development of a financial strategy is a special area of financial planning, since being an integral part of the overall economic development strategy, it must be consistent with the goals and directions formulated by the overall strategy. In turn, the financial strategy has; influence on the overall strategy of the enterprise. A change in the situation in the financial market entails adjustments to the financial and then the general development strategy of the business entity.
Financial strategy involves determining long-term financial goals and choosing the most effective ways to achieve them.
The goals of the financial strategy must be subordinated to the overall development strategy and aimed at maximizing the market value of the enterprise.
When developing a financial strategy, it is important to determine the period of its implementation, which depends on a number of factors:
Dynamics of macroeconomic processes;
Trends in the development of the domestic financial market (taking into account dependence on global financial markets);
The industry affiliation of the enterprise and the specifics of its decisions. For example, the policy of financing the creation of a new product through the use of equity capital should be based on reinvesting all net profit received only in this development.
The basis of strategic planning is forecasting, which embodies the company's strategy in the market. Forecasting consists of studying the possible financial condition of an enterprise over the long term. Unlike planning, forecasting tasks do not include the implementation of developed forecasts in practice, since they represent only a prediction of possible changes. Forecasting includes the development of alternative financial indicators and parameters, the use of which, given the emerging (but pre-predicted) trends in the market situation, allows us to determine one of the options for the development of the financial position of the enterprise.
The range of forecast indicators may differ significantly from the range of future plan indicators. In some ways, the forecast may seem less detailed than calculations of planned targets, but in others it will be worked out in more detail.
The basis of forecasting is the generalization and analysis of available information, followed by modeling of possible options for the development of situations and financial indicators. Forecasting methods and techniques must be dynamic enough to allow for these changes to be taken into account in a timely manner.
The starting point for forecasting is the recognition of the fact of stability of changes in the main performance indicators of an economic entity from one reporting period to another. This position is all the more true since the information base for forecasts is provided by accounting and statistical reporting enterprises.
According to Shokhin E.I. strategic financial planning includes the development of three main forecast financial documents:
Income statement forecast;
Cash flow forecast;
The main purpose of developing these documents is to assess the financial position of the enterprise at the end of the planning period.
The financial plan includes several components, such as a forecast balance sheet, a profit and loss plan, and a cash flow plan. In turn, to form these plans, it is necessary to determine the following indicators (For a trade organization):
Procurement of goods
Operating expenses
Payment of interest on loans
The list of listed planning documents meets the requirements of global business planning practice, which reflect all the most important quantitative and qualitative financial indicators.
Sales volume forecast. To draw up forecast financial documents, it is important to correctly determine future sales volume(volume of products sold). This is necessary for organizing the production process, efficient distribution of funds, and inventory control. The sales volume forecast gives an idea of the market share that they expect to win with their products.
Typically, sales forecasts are made for three years. Annual sales forecasts are broken down by quarter and month. The shorter the sales forecasts, the more accurate and specific the information contained in them should be. This is due to the fact that in the first year of production the buyers of the products are already known; calculations for the second and third years are in the nature of forecasts, which are compiled on the basis of marketing research.
Sales forecasts are expressed in both monetary and physical units, they help determine the impact of price, production volume and inflation on the cash flows of the enterprise (Table 1.1).
Table 1.1
Sales volume forecast
Index | Actual meaning, 2005 | Predicted values |
||||||||
2006. (by month) | 2007. (by quarter) | 2008. |
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Sales volume in physical terms | ||||||||||
Price per sales unit, rub. | ||||||||||
Price index, % | ||||||||||
Sales volume in monetary terms | ||||||||||
Budget of finished goods inventories at the end of the reporting period in physical and monetary terms.
Inventories of finished products in kind at the end of the reporting period at the planning stage of the enterprise's activities are determined by its management. In order to evaluate inventories in monetary terms, it is necessary to calculate the planned cost per unit of production.
Forecast income statement.
Using the forecast income statement, the amount of profit in the upcoming period is determined.
The income statement forecast contains the following items:
1. Revenue from sales of products (minus VAT and excise taxes).
2. Cost of sales of products.
3. Selling expenses.
4. Administrative expenses.
5. Profit (loss) from sales (Article 1 - Article 2 - Article 3 - Article 4).
6. Interest receivable.
7. Interest payable.
8. Income from participation in other organizations.
9. Other operating income.
10. Other operating expenses.
11. Profit (loss) from financial and economic activities (Article 5+Article 6-Article 7+Article 8+Article 9-Article 10)
12. Other non-operating income.
13. Other non-operating expenses.
14. Profit (loss) of the planning period (Article 11 + Article 12 - Article 13)
15. Income tax.
16. Diverted funds.
17. Retained earnings (losses) of the planning period (Article 14 - Article 15 - Article 16).
The forecast income statement shows how much income the company earned during the planning period and what costs were incurred. Most of the input data comes from operating budgets. An approximate form of the budget of income and expenses is presented in Appendix 1.
In general, the expected profit from sales (p. 1.6) is determined with sufficient accuracy for practical purposes, since sales revenue and cost are calculated directly. It is more difficult to plan operating income and expenses, which mainly reflect the results of operations related to the movement (sale and disposal) of the organization's property. When determining the expected revenue from the sale of fixed assets and materials (p. 2.4), previously acquired for production purposes, but which turned out to be unnecessary, the actual amounts of funds received under contracts or draft contracts with customers are taken into account. As part of operating expenses, you can accurately calculate the amount of tax payments, such as property taxes (page 2.5), as well as the amount of interest payable on borrowed funds (page 2.2). Other items of operating expenses, as well as non-operating income/expenses, are calculated approximately or taken at the level actually existing in the previous period.
The bottom line shows retained (reinvested) earnings on an accrual basis, which is automatically included in the balance sheet forecast.
When carrying out predictive profit analysis, the cost-volume-profit method is widely used in practice, which allows:
Determine the volume of production and sales of products in order to ensure their break-even;
Set the amount of desired profit;
Increase the flexibility of financial plans by taking into account various options for changing situations (price factors, dynamics of sales volumes).
Tax plan. For a number of enterprises, the Tax Plan is drawn up separately. Such a plan may be developed by the tax division of the central accounting department. It reflects the planned level (income and expenditure budget) and repayment terms (cash flow budget) of taxes and other obligatory payments to the budget and extra-budgetary funds. The breakdown of payments by periods must be determined by legal requirements. The volume of repayment of obligations in the planned period must be necessary and sufficient to prevent overpayment or the occurrence of overdue debts for all types of taxes and other obligatory payments. The planned level of tax receivables is determined, as a rule, only by VAT (refund from the budget) and is calculated by the relevant division of the central accounting department based on planned data on taxable/non-taxable turnover, as well as on the planned level of VAT write-offs by types of expenses provided to this division by the plan department. The planned level of repayment of restructured debt is determined by the terms of the relevant agreements with tax and other government regulatory authorities.
- a financial document that receives in Russian practice in last years increasingly widespread. It reflects the movement of cash flows from current, investing and financing activities. Delineating areas of activity when developing a forecast allows you to increase the effectiveness of cash flow management. The balance for each type of activity is formed as the difference between the total values of the three sections of the revenue part of the plan and the corresponding sections of the expenditure part. Using this form of cash flow budget, an enterprise can check the reality of sources of funds and the validity of expenses, the synchronicity of their occurrence, and determine the possible amount of need for borrowed funds in the event of a shortage of funds. The budget is considered finalized if it provides sources for covering the deficit.
The expected balance at the end of the period is compared with the minimum amount of cash in accounts and on hand, which is advisable to have as a safety stock, as well as for possible profitable investments predicted in advance (the size of the minimum amount is determined by the financial manager of the organization).
A cash flow forecast helps the financial manager in assessing the company's use of cash and determining its sources. In addition to examining accounting information, forecast data allows one to estimate the future flows and therefore the growth prospects of the enterprise and its future financial needs.
BDDS cash flows can be classified as follows:
- According to the scale of servicing the economic process:
For the enterprise as a whole or total cash flow (Fig. 7.8);
For certain types of economic activity of the enterprise;
For individual structural divisions (financial responsibility centers) of the enterprise;
For business transactions.
This classification is necessary for subsequent analysis of the efficiency of use of funds.
- In the direction of cash flow:
Positive cash flow is an influx of cash (cash flow, CIF), which is caused by their receipts by the enterprise in the process of carrying out business operations;
Negative cash flow is an outflow of funds (cashoutflow, COF) caused by payments by the enterprise in the process of carrying out business operations.
If the difference between the amounts of inflows and outflows is positive, it is called net cash inflow (netcash flow). If this difference is negative, it is called a net cash outflow.
3. By type of economic activity, cash flows are assessed in the context of operating, investment and financial activities.
Cash flow for main (operating) activities includes inflows and outflows. The most typical sources of cash in this section are:
Receipts from the sale of goods and provision of services;
From rent, fees, commissions and other income;
From the insurance company in the form of insurance compensation for incidents that have occurred.
Typical areas of cash outflows under this section include:
Cash payments to suppliers of goods and services;
Employees of the enterprise;
Tax;
Interest on loans and borrowings;
Insurance company in the form of insurance premiums, etc.
According to Likhacheva O.N. The activity of an enterprise is characterized positively if the main cash inflow is related to operating activities.
Investment activities, usually results in an outflow of cash. This happens when a company expands and modernizes production facilities. Expenses for investment activities are covered by income from operating activities. If there is a lack of income from operating activities, external sources of financing are attracted, which leads to changes in the capital structure.
Sources of cash flow from investment activities:
Cash receipts associated with the sale of property, machinery and equipment, intangible and other non-current assets;
From sales of equity or debt instruments of other companies and interests in joint ventures (except for proceeds from these instruments considered as cash equivalents and for those held for commercial and trading purposes), etc.
Cash outflows from investing activities:
Cash payments related to the acquisition of property, machinery and equipment, intangible and other non-current assets;
Relating to equity and debt instruments;
Long-term financial investments, i.e. cash payments to acquire equity or debt instruments of other entities and interests in joint ventures (other than payments for those instruments considered to be cash equivalents and for those held for dealing or trading purposes).
Financial activities should contribute to the growth of the enterprise’s funds for financial support of core and investment activities.
The sources of income (inflows) of this section reflect the attraction of capital in the form of bank loans (long-term and short-term), sales of own securities (shares, bonds, etc.), receipt of leasing payments from the lessee, etc.
Cash outflows from financing activities:
Payments to shareholders (founders) in the form of dividends, as well as in the form of payment for shares purchased by them;
Payments to the company's creditors in the form of repayment of the principal debt;
Cash payments by the tenant to reduce finance lease debt, etc.
There is no consensus regarding the classification of flows associated with the movement of interest and dividends.
Interest paid and interest and dividends received may be classified as operating cash flows because they fall within the definition of net income or loss. At the same time, interest paid and interest and dividends received can be classified as financial flows (being the costs of attracting financial resources) or investment cash flows (being income on investments).
Total cash flow is the sum of cash flows from operating, investing and financing activities. It is also adjusted for gains from exchange rate changes.
After the financial service has drawn up a cash flow budget, the organization's payment calendar is developed. The payment calendar is a more detailed budget and is developed for the purpose of operational control of funds for the upcoming month (quarter) broken down by decade or day.
Payment schedule - This is a plan for organizing the production and financial activities of an enterprise, in which all sources of cash receipts and expenses for a certain period of time are calendar-related. It completely covers the organization’s cash flow, makes it possible to link cash receipts and payments in cash and non-cash form, and allows for constant solvency and liquidity.
The payment calendar is compiled by the financial service; planned cash flow budget indicators are concentrated and divided into months and smaller periods (15 days, ten days, five days). The terms are determined based on the frequency of the organization’s main payments. In the process of compiling a payment calendar, the following tasks are solved:
Organization of temporary correspondence between cash receipts and upcoming expenses of the organization;
Formation of an information base on the movement of cash inflows and outflows;
Daily recording of changes in the information base;
Analysis of non-payments (by amounts and sources of occurrence and organization of specific measures to eliminate their causes);
Calculation of the need for short-term financing (loan) in cases of temporary discrepancies between cash receipts and liabilities and prompt acquisition of borrowed funds;
Calculation (by amounts and terms) of the organization’s temporarily available funds;
Analysis of the financial market from the perspective of the most reliable and profitable placement of temporarily free funds.
The preparation of the payment calendar is carried out in several stages:
Stage 1 . Entering planned payments and receipts from operating activities
Stage 2. Entering data for payment and income from investment activities
Stage 3. Entering planned payments and receipts from financial activities
Stage 4. Formation of an interim cash flow balance
Stage 5. Determining the need for additional financing or short-term investment opportunities
Stage 6. Formation of the final cash balance
The payment calendar is compiled on the basis of a real information base about the organization’s cash flows. The constituent elements of the cash flow information base are the documentary source of information, the amount and timing of payments and receipts of funds.
Documentary sources of information for compiling an organization’s payment calendar:
Agreements with counterparties, banks, and other organizations
Acts of reconciliation of settlements with counterparties
Certificates of delivery and acceptance of products (works, services)
Invoices for payment for products (works, services)
Invoices (issued and received)
Bank documents confirming receipt of funds to accounts
Customs declarations
Money orders
Price agreement documents
Product shipment schedules
Payroll schedules
Status of settlements with debtors and creditors
Legislatively established payment deadlines for financial obligations (to the budget, extra-budgetary funds, counterparties)
Internal orders
Based on incoming primary documents, a calendar of the priority of payments and receipts (accounts payable and receivable for repayment) is filled out, scheduled by dates within the accounting period (usually a calendar month). A possible form of such a calendar is presented in Table 1.2.
Table 1.2
Sequence of payments and receipts
The form and methodology for compiling the payment calendar is similar to the cash flow budget (Appendix 2). However, this table only shows a list of some possible payments and receipts. A real calendar should include not only the inflows/outflows of funds by type of activity, but also the specific date of each payment.
One of the possible forms of the payment calendar by type of activity and dates is shown in the table. The payment calendar is compiled automatically based on the payment sequence calendar. The operational financial plan is linked to the cash flow budget through an item code (each payment and receipt of the payment calendar is assigned a corresponding code). The criterion for the quality of operational financial planning is the timely fulfillment of obligations with a zero final balance in operating activities.
Expenses exceeding expected revenues mean that the organization's own capabilities are insufficient to cover them.
In order to prevent a budget deficit (negative balance in the payment calendar), the order of payment of bills must be decided in advance (at the stage of developing the budget execution process). To do this, all planned payments are divided into groups according to their degree of importance.
First-priority payments or mandatory payments in most cases include:
Employees' wages;
Tax payments;
Repayment of accounts payable to major suppliers (for raw materials, supplies, electricity);
Repayment of loans received from the bank;
Other payments (dividend payments, leasing payments, payments on restructured debt, etc.).
The group of payments of the second stage, as a rule, includes:
Bonuses and rewards based on the results of the year;
Payments to other creditors;
Purchases for non-core activities and some other payments.
In order to eliminate the budget deficit, a decision may also be made to revise (adjust) the budget. The revision of the expenditure side of the budget is considered collectively: with the participation of the organization’s management and the heads of financial reporting centers.
If there is a “surplus” of cash, this to a certain extent indicates the financial stability and solvency of the organization. However, excess cash flow also has negative side, which manifests itself in the depreciation of temporarily unused funds due to inflation, the loss of lost profits from the profitable placement of free monetary assets in the field of short-term investment. Ultimately, this negatively affects the organization's return on assets and equity. Therefore, it is necessary to use the opportunity to generate additional income by investing “excess” funds, say, in highly liquid short-term securities.
Balance Forecast completes the organization's budgeting process. This document shows how the book value of the organization will change as a result of financial and economic activities during the planning period. Unlike the balance sheet, the balance sheet forecast can be compiled not only for the organization as a whole, but also for a separate type of business, structural unit (independent legal entity or branch), investment project.
The balance sheet is a summary table and consists of two main sections - assets and liabilities, which must be equal to each other . The balance sheet of assets and liabilities is necessary in order to assess what types of assets funds are directed to and through what types of liabilities it is intended to finance the creation of these assets. The assets of the balance sheet highlight the most active part of funds: current assets (bank account, cash, accounts receivable), inventories and fixed assets. The liability reflects the enterprise's own and borrowed funds, their structure and forecasts of their changes for the planned period.
Unlike the income statement forecast, which shows the dynamics of the enterprise's financial operations, the balance sheet forecast reflects a fixed, statistical picture of the enterprise's financial balance.
The structure of the projected balance sheet corresponds to the generally accepted structure of the reporting balance sheet of the enterprise, since the reporting balance sheet as of the last date is used as the initial one.
With a planned increase in sales volume (sales volume), the assets of the enterprise must be proportionally increased, since increasing production and sales requires additional funds for the purchase of equipment, raw materials, materials, etc. An increase in the volume of product sales, as a rule, leads to an increase in accounts receivable, as enterprises provide customers with longer deferred payments and expand the practice of selling goods on consignment terms.
The growth of an enterprise's assets must be accompanied by a corresponding increase in liabilities, as accounts payable (obligations to pay for supplies of raw materials, energy, and various services) grow and the need for borrowed and raised funds increases.
The balance sheet forecast is based on the balance sheet at the beginning of the period, taking into account the expected changes in each balance sheet item. To determine changes in balance sheet items, the information contained in the budget of income and expenses (BDR) and the cash flow budget (CFB) is used in accordance with formula 1:
The development of this document begins with asset planning .
To link the budget of income and expenses with the balance sheet forecast, the change in the amount of current assets is analyzed depending on the increase (decrease) in sales volumes. The cash balance is the difference between the amount of financing (profit, targeted financing, loans, etc.) and the required investments. In general, the items “Cash, current accounts” and “Accounts payable” are balancing in the preparation of: a balance sheet forecast, whereby assets and liabilities are brought into balance.
The future carrying amount of non-current assets can be calculated by adding the planned expenses for fixed assets and intangible assets to the existing carrying amount and subtracting from this amount depreciation for the period and the carrying amount of sold fixed assets. Data on the acquisition of fixed assets in the planning period are provided in the investment budget. When planning a balance sheet liability, the following items are assessed:
Accounts payable to material suppliers;
Wages arrears;
Accrued taxes (settlements with the budget);
Own capital at the end of the planning period;
Amount of authorized capital;
Retained earnings;
Long-term liabilities.
The asset and liability items are summarized in the balance sheet forecast.
An organization's budget is always developed for a specific time period, which is called the budget . The correct choice of the duration of the budget period is very important for the effectiveness of the organization's budget planning.
As a rule, the organization's consolidated budget is drawn up and approved for the entire budget period (usually one calendar year). This is explained by the fact that over such a period of time, seasonal fluctuations in the market conditions are leveled out. In addition, this period of time complies with the legal requirements for the reporting period. Indicatively, i.e. Without approval as a system of targets and mandatory standards, some budget indicators may be set for a longer period (three to five years). In addition, within the budget period, each budget is divided into subperiods. The planning interval is established by the budget regulations of a particular enterprise. Usually, maximum duration the planning interval within the budget period is a month, and in the first quarter - a decade or even a week.
1.2. Factors influencing the effectiveness of financial planning in a company
Since in this work the main emphasis is shifted to the construction of financial planning in a trading organization, consideration of the influence of factors on the effectiveness of planning will be considered in relation to a trading organization.
Factors influencing the financial planning of an organization should be considered holistically. External and internal, political and economic factors are interconnected and inseparable from the current and planned financial condition of any company. Since the organization is an open socio-economic system, maintaining and developing its activities requires coordination of the organization's internal capabilities with the needs and changes in the external environment.
For example, in such an unstable economic situation in Russia, as it is now, during a period of global economic crisis, unemployment, when the national currency is weakening against the dollar and the euro, it is quite difficult to give a clear forecast for product prices and sales volumes for the long term in a falling market. We can definitely say that, most likely, there will be either a reduction in sales volumes, or, at best, they will remain at the same level. Unstable government monetary policy also has a significant negative impact on the effectiveness of financial planning.
It is also necessary to take into account the influence of the following internal factors:
- Organizational structure
- Strategic goals and objectives of the enterprise
- Tactics for achieving your goals
- Information basis for financial planning
- Methodological support for financial planning
- Control and stimulation of departments and their managers
The more complex the organizational structure, the more strategic goals and objectives, the more difficult it is to plan and control. More resources are needed, more internal regulatory documents governing the financial planning and control procedure in the organization. To determine the order of information movement within the company, it is necessary to project the planning processes onto the organizational structure of the company, that is, distribute the responsibilities associated with ensuring the functioning of the system among the organization's managers, and also appoint a body responsible for the operation of the system as a whole. As for methodological support, a whole complex of internal company documents is needed to coordinate the various links in the financial planning chain:
Organizational regulations
Time regulations
Format and composition of management plans required for financial planning.
The control and incentive factor is based on the results of the plan; it is best if the company’s structural divisions are rewarded for positive deviations from the planned budget indicators (exceeding sales volumes, reducing business expenses, etc.) Thus, the management of the divisions will be interested in maximizing the company’s performance indicators and will be responsible for the planned indicators. Otherwise, the principle of “feedback” is violated - the head of the department, when summing up the results, can always refer to unforeseen circumstances that arose during the budget period, and, thus, the budget turns from a mandatory plan into a set of good wishes.
In trade organizations, business development is primarily limited by market capacity, so the sales plan plays the main role in the formation of the financial plan.
The following factors influence the forecast of sales volumes:
Sales volume of previous periods;
Dependence of sales on general economic indicators, employment levels, prices, and the level of personal income of consumers;
Relative profitability of products, market research, advertising campaign;
Pricing policy, product quality;
Competition;
Seasonal variations;
Long-term sales trends for various products.
The level of business expenses depends on the following factors:
Product life cycle stages
Type of consumer market
If the product is completely new, but has great prospects, and you plan to enter a new market, then it is absolutely logical to invest significant amounts in promoting the product. At the same time, the level of commercial expenses can reach 5 or more percent of sales. If the product is at the stage of reducing its sales due to a shrinking market, then commercial costs can be reduced to 0.
If a product is intended for the consumer market, then the costs of its promotion will be higher than if this product was intended for the industrial market, which is associated with bringing the product to the individual consumer.
1.3. System of financial and economic indicators used in financial planning
This chapter will discuss the most significant and relevant financial and economic indicators:
Financial stability;
Liquidity;
Profitability;
Business activity.
The equity capital concentration ratio determines the share of funds invested in the activities of the enterprise. The higher the value of this coefficient, the more financially sound, stable and independent of external creditors the enterprise is.
The agility coefficient characterizes what proportion of sources of own funds is in mobile form and is equal to the ratio of the difference between the sum of all sources of own funds and the value of non-current assets to the sum of all sources of own funds and long-term loans and borrowings.
The long-term borrowing ratio shows what part of the sources of formation of non-current assets at the reporting date comes from equity capital, and what part from long-term borrowed funds. A particularly high value of this indicator indicates a strong dependence on attracted capital and the need to pay significant amounts of money in the future in the form of interest for using loans.
To calculate financial stability indicators, the following formulas are used:
Equity concentration ratio (autonomy) = Capital / Balance Sheet Currency | ||
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Liquidity assessment
Liquidity analysis is an assessment of the extent to which an organization's liabilities are covered by its assets, the period of conversion of which into money corresponds to the maturity of the obligations.
The current ratio gives overall rating asset liquidity, showing how many rubles of the enterprise’s current assets account for one ruble of current liabilities.
The quick (intermediate) liquidity ratio is similar in meaning to the current liquidity ratio; however, it is calculated based on a narrower range of current assets, when the least liquid part of them, industrial inventories, is excluded from the calculation.
The absolute liquidity ratio is the most stringent criterion for the liquidity of an enterprise; shows what portion of short-term debt obligations can be repaid immediately if necessary.
To calculate indicators liquidity the following formulas are used:
Profitability assessment
The most important indicator reflecting the final financial results of an organization is profitability. The calculation of this indicator allows you to analyze the efficiency of using certain assets of the enterprise. Profitability characterizes the profit received from each ruble of funds invested in an enterprise or other financial transactions.
To calculate profitability indicators, the following formulas are used:
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Return on equity ( ROE ) = Net profit / Average capital | |
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Return on assets ( ROA ) = Net profit / Average assets of the enterprise | |
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Net rate of return ( ROS ) = Net profit/Proceeds from sales of products |
Business activity assessment
The most important part of an organization's financial resources is its current assets. They include inventories, cash, short-term financial investments, and accounts receivable. The success of the organization’s production and operating cycle depends on the state of current assets, since a lack of working capital paralyzes the organization’s activities and can lead to the inability to pay its obligations and to bankruptcy. The analysis of business activity indicators is mainly based on the analysis of the turnover of current assets, since it determines not only the size of the minimum working capital required for business activities, but also the amount of costs associated with the ownership and storage of inventories.
To calculate business activity indicators, the following formulas are used, where the period is 365 days:
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Share of accounts receivable in balance sheet currency = Accounts receivable / Balance sheet currency | |
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So, we have examined the main indicators that characterize the position of the enterprise and are the basis for financial planning of activities. The initial data for the calculation are Form No. 1 “Balance Sheet”, Form No. 2 “Profit and Loss Statement”.
An analysis of financial stability should show the presence or absence of the enterprise’s ability to attract additional borrowed funds, the ability to pay off current obligations using assets varying degrees liquidity. Financial stability ratios characterize the degree of possibility of bankruptcy of an enterprise due to the use of borrowed resources.
As a result of liquidity analysis, it is determined to what extent current liabilities are secured by various types of current assets of the enterprise.
To analyze profitability, two groups of profitability ratios are calculated: return on capital and return on activity. In addition, an assessment of the profitability (profitability) of the enterprise can be carried out, which characterizes the efficiency of capital flow of the enterprise.
Business activity (turnover) ratios characterize the turnover of all assets and provide information about the efficiency of the enterprise as a whole. The results of turnover analysis make it possible to identify positive or negative trends in the structure of working capital in terms of the duration of turnover. In addition, an increase in the rate of capital turnover reflects, other things being equal, an increase in the potential of the enterprise.
Conducting financial analysis is the basis for identifying possible problems in the activities of an enterprise and helps to outline measures to overcome them.
CHAPTER 2. ANALYSIS OF THE FINANCIAL PLANNING SYSTEM OF DTS LLC
2.1. General characteristics of the company DTS LLC
DTS LLC is a subsidiary of the Japanese Sumitomo Rubber Industries, Ltd. in Russia. Sumitomo Rubber Industries, Ltd. manufactures and markets tires under brands such as Dunlop, Falken, Goodyear, Sumitomo and Ohtsu. In addition to Representative Offices in China and Indonesia, Sumitomo Group, together with The Goodyear Tire and Rubber Company, has manufacturing and sales operations in Europe and North America. The main activity of DTS LLC in Russia is the sale of high-quality tire products to large wholesale dealers.
Since DTS LLC is a trade organization associated with foreign economic activity, the company’s income and expenses are generated in foreign currency and rubles. Settlements with the parent company in Japan are carried out in US Dollars, settlements with suppliers regarding the transportation of goods by international transport and storage at the destination are carried out in Euros, settlements with buyers and suppliers in Russia, as well as with Customs authorities regarding the import clearance of goods are carried out in rubles .
The basis for planning cash income and expenses of DTS LLC are: import plan (plan for purchasing goods from the parent company), rates of transportation costs, warehousing costs, insurance and customs payments; redistribution costs (studding of winter tires). The main difficulty is planning payments to customs for the import of goods. In addition to the established rates and customs value, their overall size is also influenced by other factors, for example, the time the cargo remains at customs, as well as adjustments to the customs value of goods, which can amount to up to 6% of the value of the goods.
Expenses at DTS LLC are distributed as follows:
About 90% of the company's expenses are variable costs, about 10% are fixed.
The variable costs of DTS LLC are as follows:
Customs duties and fees;
Warehouse storage services;
Transport services;
Tire tucking services.
The fixed costs of DTS LLC are as follows:
Leasing of machinery and equipment;
General running costs;
Administrative and management expenses;
Business expenses (including advertising and marketing expenses);
Salaries of employees of DTS LLC;
An analysis of the financial condition of the company DTS LLC will be carried out over a period of 4 years in the context of the most current indicators:
Financial stability;
Liquidity;
Profitability;
Business activity.
The main information sources for the financial analysis of DTS LLC are financial statements - balance sheet and profit and loss statement (Appendix 3 and 4)
The results of the analysis of financial stability, liquidity, profitability and business activity of DTS LLC are presented in Appendix 5. The dynamics of the coefficients are clearly shown in Figures 2.1, 2.2, 2.3.
Financial stability assessment
Financial stability indicators for DTS LLC were calculated as follows:
Coefficient of concentration of equity capital (autonomy) = Capital / Balance sheet currency
Equity concentration ratio (autonomy) 2005 = 113893/559556 = 20.35%
Equity concentration ratio (autonomy) 2006 = 315828/1018508 = 31.01%
Ratio of concentration of equity capital (autonomy) 2007 = 595730/1840492 = 32.37%
Equity concentration ratio (autonomy) 2008 = 833122/2715028 = 30.69%
Working capital ratio = Current assets - short-term liabilities / Current assets
Working capital ratio 2005 = 517771-445379/ 517771 = 13.98%
Working capital ratio 2006 = 972821-702126/ 972821 = 27.83%
Working capital ratio 2007 = 1793962-1244761/ 1793962 = 30.61%
Working capital ratio 2008 = 2672044-1880467/ 2672044 = 29.62%
Equity agility ratio = Capital and reserves - Non-current assets / Capital and reserves
Own funds maneuverability ratio 2005 = 113893-41785/ 113893 = 63.31%
Own funds maneuverability ratio 2006 = 315828-45688/ 315828 = 85.53%
Own funds maneuverability coefficient 2007 = 595730-46530/ 595730 = 92.19%
Own funds maneuverability ratio 2008 = 833122-42984/ 833122 = 94.84%
Long-term gearing ratio = Long-term loans and borrowings/ (Long-term loans and borrowings + Equity)
Long-term leverage ratio 2005=284/(284+113893)=0.25%
Long-term borrowing ratio 2006=553/(553+315828)=0.17%
Long-term leverage ratio 2007=0/ (0+595730)=0.00%
Long-term leverage ratio 2008= 1493/ (1493+833122)= 0.17%
Gearing Ratio = Long-term and short-term loans and borrowings/Equity
Debt to equity ratio 2005=
(284+445379)/ 113893=391,30%
Debt to equity ratio 2006= (553+702126)/ 315828=222.49%
Debt to equity ratio 2007=
(0+1244761)/ 595730=208,95%
Debt to equity ratio 2008=
(1439+1880467)/ 833122=225,89%
Figure 2.1 Dynamics of financial stability ratios
Financial stability indicators are quite unstable for the period from 2005 to 2008:
Liquidity assessment
Liquidity indicators for DTS LLC were calculated as follows:
Current ratio = Current assets / Current liabilities
Current ratio 2005=517771/ 445379=116.25%
Current ratio 2006=972821/ 702126=138.55%
Current ratio 2007=1793962/ 1244761=144.12%
Current ratio 2008=2672044/ 1880467=142.09%
Quick ratio = Cash + Marketable securities + Accounts receivable/Current liabilities
Quick liquidity ratio 2005=(75159+305059)/ 445379=85.37%
Quick liquidity ratio 2006=(64296+668019)/ 702126=104.30%
Quick liquidity ratio 2007=(360663+556576)/ 1244761=73.69%
Quick liquidity ratio 2008=(663047+639857)/ 1880467=69.29%
Absolute liquidity ratio = Cash + Marketable securities/ Short-term debt
Absolute liquidity ratio 2005=305059/ 445379=68.49%
Absolute liquidity ratio 2006=668019/ 702126=95.14%
Absolute liquidity ratio 2007=556576/ 1244761=44.71%
Absolute liquidity ratio 2008=639857/ 1880467=34.03%
The assessment of liquidity indicators, in general, showed good results:
The absolute liquidity ratio throughout the analyzed period was at high level and increased from 68.49% in 2005 to 124.88% in 2008. The quick ratio was higher than normal in 2006 and 2008 at 104.30% and 254.29% respectively. The current liquidity ratio in 2008 showed a result higher than the recommended value and amounted to 254.50%.
Figure 2.2 Dynamics of liquidity ratios
Profitability assessment
Profitability indicators for DTS LLC were calculated as follows:
Total profitability = Profit before tax / Revenue from sales of products
Total profitability 2005=122334/1282782=9.54%
Total profitability 2006=273417/2053246=13.32%
Total profitability 2007=372414/2825354=13.18%
Total profitability 2008=346133/3601789=9.61%
Return on sales = Profit from sales / Revenue from sales of products
Return on sales 2005=100881/1282782=7.86%
Return on sales 2006=263479/2053246=12.83%
Return on sales 2007=388429/2825354=13.75%
Return on sales 2008=378649/3601789=10.51%
Return on Equity (ROE) = Net Profit / Average Equity
Return on equity (ROE) 2006=201935/0.5*(113893+315828)=93.98%
Return on equity (ROE) 2007=279903/ 0.5*(315828+595730)=61.41%
Return on equity (ROE) 2008=237393/ 0.5*(595730+833122)=33.23%
Return on assets (ROA) = Net profit / Average assets of the enterprise
Return on assets (ROA) 2006=201935/ 0.5*(559556+1018508)=25.59%
Return on assets (ROA) 2007=279903/ 0.5*(1018508+1840492)=19.58%
Return on assets (ROA) 2008=237393/ 0.5*(1840492+2715028)=10.42%
Net rate of return (ROS) = Net profit/Proceeds from sales of products
Net rate of return (ROS) 2005= 101763/ 1282782=7.93%
Net rate of return (ROS) 2006= 201935/ 2053246=9.83%
Net rate of return (ROS) 2007= 279903/ 2825354=9.91%
Net rate of return (ROS) 2008= 237393/ 3601789=6.59%
The profitability indicators of DTS LLC for the period from 2005-2008 were at a fairly high level:
Overall profitability was at the level of 9.54% - 13.32%
Return on sales was at the level of 7.86% - 13.75%
Return on equity (ROE) fell from 93.98% in 2006 to 33.23% in 2008.
Return on assets (ROA) fell slightly from 25.59% in 2006 to 14.90% in 2008.
The net profit margin was in the range of 6.59% - 9.91%.
Figure 2.3 Dynamics of profitability indicators
Business activity assessment
Business activity indicators were calculated based on the selected period of 365 days:
Receivables repayment period (days) = Average receivables/Sales revenue* Period
Receivables repayment period 2006 = 0.5*(75159+64296)/ 2053246*365=12 days
Receivables repayment period 2007 = 0.5*(64296+360663)/ 2825354*365=27 days
Receivables repayment period 2008 = 0.5*(360663+663047)/ 3601789*365=52 days
Payables repayment period (days) = Average payables/Sales revenue* Period
Payables repayment period 2006 = 0.5*(445379+702126)/2053246*365=102 days
Payables repayment period 2007 =0.5*(702126+1244761)/2825354*365=126 days
Payables repayment period 2008 =0.5*(1244761+1880467)/3601789*365=158 days
Inventory and cost turnover period (days) = Average value of inventory and cost / Product cost* Period
Inventory and cost turnover period 2006 = 0.5*(136899+654+238132+2375)/
/1584717*365= 44 days
Inventory and cost turnover period 2007= =0.5*(238132+2375+872444+1477)/2145026*365=95 days
Inventory and cost turnover period 2008= =0.5*(872444+1477+1368106+955)/2796693*365=146 days
Asset turnover period (days) = Sales revenue/ Average asset value
Asset turnover period 2006 = 365/(2053246/(0.5*(559556+1018508)))=140 days
Asset turnover period 2007 =365/(2825354/(0.5*(1018508+1840492)))=185 days
Asset turnover period 2008 =365/(3601789/(0.5*(1840492+2715028)))=231 days
Ratio of accounts payable to accounts receivable = Accounts payable / Accounts receivable
Ratio of accounts payable to accounts receivable 2005 = 445379/ 75159 = 592.58%
Ratio of accounts payable to accounts receivable 2006 = 702126/ 64296 = 1092.02%
Ratio of accounts payable to accounts receivable 2007 = 1244761/ 360663 = 345.13%
Ratio of accounts payable to accounts receivable 2008 = 1880467/ 663047 = 283.61%
Business activity indicators presented the following picture in 2005-2008:
The receivables collection period increased from 12 days in 2006 to 52 days in 2008.
The repayment period for accounts payable decreased from 102 days in 2006 to 89 days in 2008.
The asset turnover period ranged from 140 to 185 days.
The share of accounts receivable in the balance sheet currency was 13.43%; 6.31%; 19.60% and 49.23% in 2005, 2006, 2007 and 2008 respectively.
2.2. Characteristics of the present financial planning system at DTS LLC
The financial block in DTS LLC is represented by the Financial Department, which reports to the Financial Director of DTS LLC, as well as the Accounting Department, which reports to the Chief Accountant of the company.
The company carries out short- and long-term financial planning in the context of the Budget of Income and Expenses and the Forecast Balance. These plans are prepared on an annual and monthly basis. The deadline for submitting the monthly Budget of Income and Expenses and the Forecast Balance is until the 30th day of the month preceding the planned one.
Input information for drawing up the Budget of income and expenses are:
Operating expenses budget generated by the finance department, which includes expenses for labor, rent of premises, general and administrative expenses;
Business expenses budget submitted by the marketing department;
Tax payment budget submitted by the accounting department;
Forecast of other investment and financial investments generated by the financial department.
Input information for drawing up the Forecast Balance are:
Payroll budget submitted by the HR department;
Budget of income and expenses;
Payment calendar generated by the financial department;
Forecast of the balance of finished goods and products in WIP in the warehouse, presented by the logistics department;
Sales budget submitted by the sales department;
Tax payment budget submitted by the accounting department.
Control over the implementation of financial plan indicators in DTS LLC is assigned to services subordinate to the financial director - the financial department and the accounting department. Operational analysis of the implementation of plans is carried out monthly by all persons responsible for developing budgets. The financial department collects summarized information on the implementation of budgets for the month and draws it up in the form of a memo to the company's financial director.
Modern conditions for the functioning of an enterprise are such that competition is quite high, and one has to work in conditions of risk and instability, which in turn leads to a significant increase in volume financial work. At the same time, this entails a significant increase in the role and content of financial work in the enterprise. Underestimation of this factor can lead to loss of financial stability and even bankruptcy of the enterprise.
All activities of the financial service are subordinated to ensuring financial stability and creating stable preconditions for economic growth and profit generation.
In providing financial resources to the main economic activities of DTS LLC and using them effectively to achieve its goals;
In organizing relationships with the financial and credit system and other economic entities;
In the preservation and rational use of fixed and working capital;
To ensure timely payments of the enterprise’s obligations to the budget, banks, suppliers and employees.
In other words, the essence of financial work at DTS LLC is to ensure the circulation of fixed and working capital and maintain financial relations accompanying commercial activities.
The financial service of DTS LLC is engaged in:
Prompt preparation of financial documents necessary for the management of the enterprise to make effective management decisions;
Coordinating the activities of all departments to achieve the main goal of the enterprise;
Responsible for the quality preparation of financial plans;
Without a financial service, normal functioning of an enterprise in market economic conditions is practically impossible.
The most important areas of activity of the financial service of DTS LLC include: financial planning, operational and control-analytical work.
Financial planning occupies an important place in the organization of all financial activities of an enterprise. During financial planning, the financial condition is comprehensively assessed, the possibility of increasing financial resources is determined, and directions for their most effective use are identified.
Financial planning at DTS LLC is carried out on the basis of analysis of financial information obtained from accounting, statistical and management reporting.
In the area of planning, the financial service ensures the following tasks:
Development of draft financial and credit plans with all necessary calculations;
Determining the need for own working capital;
Identification of sources of financing of economic activities;
Development of a capital investment plan with the necessary calculations;
Participation in the development of a business plan;
Drawing up cash plans provided to bank institutions;
Participation in drawing up implementation plans in monetary terms and determining the planned amount of balance sheet profit for the year and quarters and profitability indicators.
In the field of operational work, the financial service of DTS LLC solves numerous problems, the main of which are:
Ensuring timely payments to the budget and extra-budgetary funds, interest payments on short-term and long-term bank loans, payment of wages to employees and other cash transactions, payment of supplier bills for shipped inventory, services and work;
Ensuring financing of costs for core activities;
Processing loans in accordance with agreements;
Maintaining daily operational records: product sales, profit from sales, other indicators of the financial plan;
Compilation of information on the receipt of funds and certificates on the progress of fulfilling the indicators of the financial plan and financial condition.
DTS LLC pays great attention to control and analytical work, since its effectiveness largely determines the financial result of the enterprise. The financial service constantly monitors the implementation of financial, cash and credit plans, profit and profitability plans, monitors the intended use of equity and borrowed capital, and the targeted use of bank loans. In carrying out control and analytical work, the financial service is greatly assisted by the accounting department, together with which the correctness of estimates is checked, the return on capital investments is calculated, all types of reporting are analyzed, and compliance with financial and planning discipline is monitored.
We can say that the financial department of DTS LLC is part of a single mechanism for managing business activities, and therefore it is closely connected with other services of the organization. Thus, as a result of close contacts with the accounting department, the financial department is provided with sales and production plans, lists of creditors and debtors, documents on the payment of wages to employees, etc. In turn, the financial department familiarizes the accounting department with financial plans and analytical reports on their implementation.
From the marketing department, the financial service receives product sales plans for income planning and drawing up operational financial plans, cost estimates for providing cash. To conduct a successful marketing campaign, the financial service approves a system of concessions in the contract price, analyzes sales and marketing costs, thus creating conditions for concluding major transactions.
With the development of market relations based on a variety of forms of ownership and the rights of a commercial organization to complete economic independence and access to foreign markets, the financial service is faced with a qualitatively new task - organization effective management financial resources using methods adequate to a market economy. This formulation of the problem can be successfully solved only within the framework of financial management, which is a key subsystem common system management of DTS LLC.
2.3. Formation of a financial plan for DTS LLC
Since the financial plan includes several components, such as a forecast balance sheet, a profit and loss plan, and a cash flow plan, the following procedure can be determined for determining the indicators necessary for drawing up plans in a trade organization such as DTS LLC:
Revenue from sales of goods (Forecast of sales volumes)
Cost of goods sold
Inventory of goods at the beginning of the period
Procurement of goods
Inventory of goods at the end of the period
Operating expenses
To determine these indicators, it is necessary to create a sales budget, a cost of goods sold budget based on auxiliary budgets, a purchasing budget, an operating expenses budget and a cash flow budget.
Revenue from sales of goods
The development of this document begins with determining the sales plan, i.e. from the formation of a budget for the sale of goods. At this planning stage, the market is studied in detail, demand dynamics are determined taking into account seasonal fluctuations and other factors, and competitors' strategies are examined. After the organization’s management becomes clear about the possible volume of sales of goods, taking into account the available inventories at the beginning of the planning period and the budget for goods inventories at the end of the period, a budget for the purchase of goods is developed. For the company DTS LLC, the sales volume for 2009 is determined in the following quantities:
94,000 summer tires and 75,000 winter tires. The average selling price of a summer tire is 2,500 rubles. The average selling price of a winter tire is 4,000 rubles. There are no sales planned for January, November and December 2009.
Revenue from the sale of summer tires: 94,000 * 2,500 = 235,000 rubles.
Revenue from the sale of winter tires: 75,000 * 4,000 = 300,000 rubles.
A more detailed calculation of the Sales Plan for 2009 is presented in Appendix 6.
Cost of goods sold
Cost of goods sold is defined as the sum of the beginning of the period inventory and purchases of goods for the period, reduced by the value of the ending inventory.
The sum of goods inventories at the beginning of the year and the end of the year is 0.
Let's calculate the cost of purchased goods based on the fact that the purchase price is 1600 rubles. for 1 unit.
cost of purchased goods = 1600 * 18000 = 28800 thousand rubles.
cost of purchased goods = 1600 * 26000 = 41600 thousand rubles.
cost of purchased goods = 1600 * 28000 = 44800 thousand rubles.
cost of purchased goods = 1600 * 22000 = 35200 thousand rubles.
cost of purchased goods = 1600*11250=18000 thousand rubles.
cost of purchased goods = 1600 * 17500 = 28000 thousand rubles.
cost of purchased goods = 1600 * 23750 = 38000 thousand rubles.
September:
cost of purchased goods =1600*15000=24000 thousand rubles.
cost of purchased goods =1600*7500=12000 thousand rubles.
The total cost of purchased goods for the year will be 270,400 thousand rubles. The calculation results are presented in Table 2.4. Budget of variable and fixed expenses for 2009 Appendix to the Thesis.
Variable costs
- customs duties and fees;
- warehouse storage services;
- transport services;
- tire tucking services.
Calculation of transportation services:
Transportation services are calculated based on the following rates:
Tr 1=150,000*18000/1000=2700 thousand rubles;
Tr 2=18000/1800*45000= 450 thousand rubles.
Tr 1=150,000*26000/1000=3900 thousand rubles.
Tr 2=26000/1800*45 000=650 thousand rubles.
Tr 1=150,000*28000/1000=4200 thousand rubles.
Tr 2=28000/1800*45 000=700 thousand rubles.
Tr 1=150,000*22000/1000=3300 thousand rubles.
Tr 2=22000/1800*45 000=550 thousand rubles.
Tr 1=150,000*11250/1000=1688 thousand rubles.
Tr 2=11250/1800*45,000=281 thousand rubles.
Tr 1=150,000*17500/1000=2625 thousand rubles.
Tr 2=17500/1800*45,000=438 thousand rubles.
Tr 1=150,000*23750/1000=3563 thousand rubles.
Tr 2=23750/1800*45,000=594 thousand rubles.
September:
Tr 1=150,000*15000/1000=2250 thousand rubles.
Tr 2=15000/1800*45 000=375 thousand rubles.
Tr 1=150,000*7500/1000=1125 thousand rubles.
Tr 2=7500/1800*45,000=188 thousand rubles.
Calculation of costs for studding winter tires:
Studring costs include the cost of studs and tire studding services. The cost of studs per tire is 70 rubles. without VAT. The cost of tucking one tire is 20 rubles. without VAT.
Thus:
June: Costs for studding=11250*(20+70)=1013 thousand rubles.
July: Costs for studding=17500*(20+70)=1575 thousand rubles.
August: Costs for studding=23750*(20+70)=2138 thousand rubles.
September: Costs for studding=15000*(20+70)=1350 thousand rubles.
October: Costs for studding=7500*(20+70)=675 thousand rubles.
Calculation of customs duties and fees:
In the table of Appendix 7, customs duties and fees are listed in the line Other variable costs and are calculated at a rate of 22% of the Amount of the Cost of purchased goods and their Transportation to the border.
February: (28800+2700) thousand rubles*0.22=6930 thousand rubles.
March: (41600+3900) thousand rubles*0.22=10010 thousand rubles.
April: (44800+4200) thousand rubles*0.22=10780 thousand rubles.
May: (35200+3300) thousand rubles*0.22=8470 thousand rubles.
June: (18000+1688) thousand rubles*0.22=4331 thousand rubles.
July: (28000+2625) thousand rubles*0.22=6738 thousand rubles.
August: (38000+3563) thousand rubles*0.22=9144 thousand rubles.
September: (24000+2250) thousand rubles*0.22=5775 thousand rubles.
October: (12000+1125) thousand rubles*0.22=2888 thousand rubles.
Calculation of warehousing costs:
Warehousing costs are calculated at a rate of 3.5 Euro excluding VAT per tire for a period of 8 months. The Euro exchange rate is conventionally accepted as 1 Euro = 40 rubles. Since all goods in any case arrive at a warehouse in the Moscow region before being shipped to customers, the volume of goods stored is 100%.
February: Warehousing = 18000*3.5*40= 2520 thousand rubles.
March: Warehousing = 26000*3.5*40= 3640 thousand rubles.
April: Warehousing = 28000*3.5*40= 3920 thousand rubles.
May: Warehousing = 22000 * 3.5 * 40 = 3080 thousand rubles.
June: Warehousing =11250*3.5*40= 1575 thousand rubles.
July: Warehousing =17500*3.5*40= 2450 thousand rubles.
August: Warehousing = 23750 * 3.5 * 40 = 3325 thousand rubles.
September: Warehousing =15000*3.5*40= 2100 thousand rubles.
October: Warehousing =7500*3.5*40= 1050 thousand rubles.
The results of variable cost calculations are presented in table Appendix 7 to the Thesis.
Fixed costs
Let's calculate the following fixed costs of DTS LLC:
Rent (as well as utilities);
Depreciation of own fixed assets;
General running costs;
- administrative and management expenses;
- business expenses (including advertising and marketing expenses);
- wage employees of DTS LLC;
Taxes.
Trips and business trips:
The budget for expenses is provided by the Human Resources Department. Monthly expenses in 2009 were 200 thousand rubles.
200 thousand rubles * 12 = 2400 thousand rubles.
Promotion costs:
The budget for expenses is provided by the Marketing Department.
May: 1500 thousand rubles.
June: 800 thousand rubles.
August: 900 thousand rubles.
September: 900 thousand rubles.
The budget for expenses is provided by the Marketing Department. The annual expenditure on advertising in 2009 will be 14,700 thousand rubles.
Monthly rental expenses in 2009 were 650 thousand rubles.
Depreciation of own fixed assets:
The depreciation rate for fixed production assets is 10%. There are no plans to receive OPF in 2009. According to accounting data, the annual depreciation amount is 300 thousand rubles. Accordingly, the monthly depreciation amount will be 25 thousand rubles.
300,000/12 = 25 thousand rubles.
Other fixed general operating expenses:
Monthly expenses for general economic needs in 2009 will amount to 650 thousand rubles. Planned figures are based on actual data from 2008.
650 thousand rubles * 12 = 7800 thousand rubles.
Forecast income statement formed in accordance with the above calculated variable and fixed costs and presented in the table in Appendix 1 to the Thesis.
Income tax is calculated based on a rate of 20% for 2009.
Cash Flow Budget (CFB)
BDDS is presented in the table in Appendix 2 to the Thesis
BDDS items are calculated for the same types of expenses as for the forecast income statement.
Calculation of proceeds from product sales:
Receipts from the sale of products are calculated in accordance with the planned revenue (see table in Appendix 6) including VAT. Condition - shipment of goods upon prepayment.
In January 2009, receipts from customers are planned to pay off accounts receivable for products purchased in 2008 in the amount of 10,004,700 rubles.
February: 45,000,000*1.18 = 53,100 thousand rubles.
March: 65,000,000*1.18 = 76,700 thousand rubles.
April: 70,000,000*1.18 = 82,600 thousand rubles.
May: 55,000,000*1.18 = 64,900 thousand rubles.
June: 45,000,000*1.18 = 53,100 thousand rubles.
July: 70000000*1.18 = 82600 thousand rubles.
August: 95000000*1.18 = 112100 thousand rubles.
September: 60000000*1.18 = 70800 thousand rubles.
October: 30,000,000*1.18 = 35,400 thousand rubles.
Cash receipts from product sales for 2009 will amount to 641,305 thousand rubles.
Calculation of disposals for the purchase of marketable products:
February: 1600*18000= 28800 thousand rubles.
March: 1600*26000=41600 thousand rubles.
April: 1600*28000=44800 thousand rubles.
May: 1600*22000=35200 thousand rubles.
June: 1600*11250=18000 thousand rubles.
July: 1600*17500=28000 thousand rubles.
August: 1600*23750=38000 thousand rubles.
September: 1600*15000=24000 thousand rubles.
October: 1600*7500=12000 thousand rubles.
Calculation of payment for transport services:
Payment for transport services of an Estonian company to a warehouse in Russia begins in December 2008 and then follows the shipment schedule (Sales Plan) 2 months ahead.
1. Transportation by an Estonian company to a warehouse in Russia RUB 150,000. excluding VAT per truck, 1 truck contains 1000 tires. In the calculations it is designated as Tr 1.
2. Transportation by a Russian company from the warehouse of DTS LLC to the buyer’s warehouse 45,000 rubles. excluding VAT per truck, 1800 tires per truck. In the calculations it is designated as Tr 2.
Tr 1=150,000*26000/1000*1.18=4602 thousand rubles.
Tr 1=150,000*28000/1000*1.18=4956 thousand rubles.
Tr 2=18000/1800*45*1.18=531 thousand rubles.
Tr 1=150,000*22000/1000*1.18=3894 thousand rubles.
Tr 2=26000/1800*45*1.18=767 thousand rubles.
Tr 1=150,000*11250/1000*1.18=1991 thousand rubles.
Tr 2=28000/1800*45*1.18=826 thousand rubles.
Tr 1=150,000*17500/1000*1.18=3098 thousand rubles.
Tr 2=22000/1800*45*1.18=649 thousand rubles.
Tr 1=150,000*23750/1000*1.18=4204 thousand rubles.
Tr 2=11250/1800*45*1.18=332 thousand rubles.
Tr 1=150,000*15000/1000*1.18=2655 thousand rubles.
Tr 2=17500/1800*45*1.18=516 thousand rubles.
Tr 1=150,000*7500/1000*1.18=1328 thousand rubles.
Tr 2=23750/1800*45*1.18=701 thousand rubles.
September:
Tr 2=15000/1800*45*1.18=443 thousand rubles.
Tr 2==7500/1800*45*1.18=221 thousand rubles.
Calculation of payment for winter tire tuning services:
Studring costs include the cost of studs and tire studding services. The cost of studs per tire is 70 rubles. without VAT. The cost of tucking one tire is 20 rubles. without VAT. Payments are made approximately a month before the sale of the studded goods; accordingly, payments begin in May.
Thus:
May: Costs for studding=11250*(20+70)*1.18=1195 thousand rubles.
June: Costs for studding=17500*(20+70)*1.18=1859 thousand rubles.
July: Costs for studding=23750*(20+70)*1.18=2522 thousand rubles.
August: Costs for studding=15000*(20+70)*1.18=1593 thousand rubles.
September: Costs for studding=7500*(20+70)*1.18=797 thousand rubles.
Calculation of payments to Customs:
Article Customs duties and fees are calculated at a rate of 22% of the sum of the cost of purchased goods and transportation costs to the border. Customs VAT payable is calculated based on the rate of 18% applicable to the sum of the cost of purchased goods, transportation costs to the border and customs duties. Payments to customs for goods planned to be sold in February are made starting in December 2008.
Accordingly, the payment schedule will be as follows:
Duty = (41600+3900)*0.22=10010 thousand rubles.
VAT =(41600+3900+10010)*0.18 = 9992 thousand rubles.
Duty = (44800+4200) *0.22=10780 thousand rubles.
VAT = (44800+4200+10780) *0.18 =10760 thousand rubles.
Duty = (35200+3300) *0.22=8470 thousand rubles.
VAT = (35200+3300+8470) *0.18 =8455 thousand rubles.
Duty = (18000+1688) *0.22=4331 thousand rubles.
VAT = (18000+1688+4331) *0.18 =4323 thousand rubles.
Duty = (28000+2625) *0.22=6738 thousand rubles.
VAT = (28000+2625+6738) *0.18 =6725 thousand rubles.
Duty = (38000+3563) *0.22=9144 thousand rubles.
VAT = (38000+3563+9144) *0.18 =9127 thousand rubles.
Duty = (24000+2250) *0.22=5775 thousand rubles.
VAT = (24000+2250+5775) *0.18 =5765 thousand rubles.
Duty = (12000+1125) *0.22=2888 thousand rubles.
VAT = (12000+1125+2888) *0.18 =2882 thousand rubles.
Calculation of payment for warehousing:
February: (2520+3640)*1.18=7269 thousand rubles.
March: (3920+3080) *1.18=8260 thousand rubles.
April: (1575+2450) *1.18=4750 thousand rubles.
May: (3325+2100+1050)*1.18=7641 thousand rubles.
Calculation of payments to company personnel:
Payments to personnel are made in accordance with the Forecast Profit and Loss Statement.
All other payments regarding fixed expenses are made in accordance with the Forecast Profit and Loss Statement including VAT. Accordingly, the amounts of payments in 2009 will be as follows:
Trips and business trips:
2400 thousand rubles * 1.18 = 2832 thousand rubles.
Promotions:
4100 thousand rubles * 1.18 = 4838 thousand rubles.
14700 thousand rubles * 1.18 = 17346 thousand rubles.
7800 thousand rubles * 1.18 = 9204 thousand rubles.
Other fixed costs:
3600 thousand rubles * 1.18 = 4248 thousand rubles.
Balance Forecast
The balance sheet forecast completes the financial planning process at DTS LLC. The company's balance sheet forecast is based on end-of-year balance sheet data for 2008.
Balance sheet asset calculation:
Line 120 of the Balance sheet asset: 4298 thousand rubles - 300 thousand rubles = 3998 thousand rubles. (it is assumed that no OS receipts are planned in 2009).
Line 130 of the Balance Sheet: no changes.
Line 220 of the Balance Sheet: no changes.
Line 240 of the Balance sheet asset: 66305 thousand rubles - 10005 thousand rubles. (BDDS data January) + 100,000 thousand rubles. (deposit on deposit BDDS September) =156300 thousand rubles=
Line 260 of the Balance Sheet asset: RUB 28,388 thousand. (according to BBDS data, balance at the end of 2009).
Line 270 of the Balance Sheet: no changes.
Total Total assets: 188,790 thousand rubles.
Calculation of balance sheet liability:
Line 410 of the Balance Sheet liability: no changes.
Line 470 of the balance sheet liability: 76,465 thousand rubles + 46,738 thousand rubles. (BDR data) = 123203 thousand rubles.
Line 590 of the balance sheet liability: no changes.
Line 620 of the balance sheet liability: 51,236 thousand rubles. + 8027 thousand rub. (debt customs authorities) - 7965 thousand rubles. (repayment of debt on tucking) - 1377 thousand rubles. (repayment of transportation debt) = 58,596 thousand rubles.
Total Liabilities: RUB 188,790 thousand.
CHAPTER 3. MAIN DIRECTIONS FOR INCREASING THE EFFICIENCY OF FINANCIAL PLANNING AND USE OF FINANCIAL RESOURCES OF DTS LLC
3.1. Identification and analysis of areas of financial planning that require improvement and additional control
At DTS LLC, financial planning is based on the preparation of a Forecast profit and loss report annually and monthly, as well as the preparation of an annual Forecast balance sheet. This allows the company to quickly plan the financial result, determine the economic efficiency of the company, its economic potential and financial condition for a certain period in advance. Thus, one of the most important areas of financial planning and control remains not covered within the framework of regular management - this is the Cash Flow Budget. Using this tool, you can estimate how much money the company will need and in what period. In addition, planning this document on a monthly basis allows you to increase payment discipline in the company, and also, with the help of certain organizational procedures and methods, to ensure almost 100% implementation of the cash flow budget, and therefore the forecast profit and loss statement. And since 100% implementation of the plan is ensured, it means that the company has achieved its goals and planned results for a given period of time.
The main goal of financial planning is to organize activities in such a way that they are effective, i.e. brought profit. A necessary condition for making a profit is a certain degree of development of the basis of the activity, ensuring that the proceeds from sales exceed the costs (expenses) of its production and sales.
Optimizing the profit of an enterprise in market conditions requires a constant flow of operational information, not only of an external nature (about the state of the market, demand for products, prices, etc.), but also internal (about the formation of costs and costs). This information is based on a system for recording expenses by place of their occurrence and type of activity, on identified deviations in resource consumption from standard norms and estimates, on data on calculating the cost of individual types of products, on recording sales results by type of product. It is important to note that, depending on the accounting policy pursued by an enterprise in the field of accounting, the degree of detail in cost accounting, and therefore analysis, varies for different enterprises. The methodology for analyzing profit and cost also depends on the completeness of inclusion of costs in cost, the availability of separate accounting of variable and fixed costs.
The basis for profit optimization is the calculation and analysis of the break-even level of activity. Analysis and calculation of break-even activity in DTS LLC is almost never done.
The calculation of break-even activity is based on dividing the enterprise's costs into constant and variable.
Variable costs in DTS LLC include costs, the value of which changes with changes in sales volumes: Cost of goods purchased for sale, Transportation (to the border), Studling costs and Other variable costs.
Fixed costs of DTS LLC include costs the value of which does not change with changes in production volume, for example, wages (including unified social tax), travel and business trips, promotional costs, advertising, office rent, depreciation, and other fixed general expenses. Expenses.
Break-even analysis is carried out to study the relationship between changes in production volume, costs and profits over a short-term period. Special attention is given to determining the break-even point (critical point, profitability threshold).
The point of sales volume at which the enterprise has costs equal to revenue is considered critical. In this case, the company has neither loss nor profit.
The equation method is based on calculating net profit using the formula:
TR - VC - FC = P, (21)
where TR is revenue from sales of products (works, services);
VC - variable costs for this volume of sales;
FC - fixed costs in total;
P - profit from sales of products.
Having written down each indicator in more detail, the formula can be presented as follows:
P * Q - FC * Q - VC = P, (22)
Where, P is the unit price;
Q - quantity;
FC - fixed costs per unit of production.
Let us denote the number of units in the formula, that is, the volume of sales (production) at the break-even point by X, equate the right side of the equation to zero, since at the break-even point market participants have no profit and we get:
X * (P - AVC) -FC = 0.(23)
In brackets, the marginal income per unit of production is formed, that is, the difference between revenue and variable costs. From here the volume of sales at the critical point is determined:
X =F.C./MD, (24)
where MD is marginal income per unit of production.
Marginal income includes profit and fixed costs. Enterprises must sell their products in such a way that marginal income equals the amount of fixed costs. This requires the creation of information, consulting and marketing services. They will help study the sales market and determine the most effective channels for selling tires. In this case, an equilibrium point is reached: marginal income equals fixed costs.
MD*Q = F.C.. (25)
Qtb =F.C./MD/Q (26)
Where: Qtb - sales volume at the break-even point
The share of marginal profit in the company’s revenue is characterized by the marginal profit coefficient (Km), which shows how many rubles of marginal profit DTS LLC receives from each ruble of revenue:
Km = MD/TR (27)
The higher the marginal profit ratio, the larger part of the revenue remains to pay off fixed costs and generate profit. Therefore, with consistently high revenue volumes, the company benefits from a high marginal profit ratio.
Thus, having planned revenue from product sales, you can determine the amount of expected marginal income.
To do this, it is important to determine the safety zone, or safety margin. This indicator shows how much sales volume can be reduced before DTS LLC begins to incur losses:
ZB =Qf -QTB,(28)
where ZB is the safety zone;
Qf - actual or planned implementation;
Qtb - sales at the threshold of profitability.
The greater the margin of safety, the more stable the position of the enterprise, the less the risk of loss as a result of fluctuations in sales volumes.
If an enterprise has a positive margin of safety, that is, on the break-even chart it is to the right of the critical point, its profit is determined:
P = Salary * MD/Q. (29)
Thus, any change in sales volume causes an even greater change in profit. This dependence is called the operating leverage effect (OR):
OR = MD/P(30)
Using the strength of the operating leverage, a mathematical relationship is revealed: if profit is 0, the strength of the operating leverage tends to infinity - even the weakest fluctuations around the critical point cause strong relative fluctuations in profit.
Operating leverage measures how much profit will change if revenue changes by one percent.
All of the above indicators can be used for financial planning and forecasting the activities of DTS LLC.
Let us calculate the break-even of the activities of DTS LLC.
We will make the calculation based on the data from the Budget of Income and Expenditures for 2009 (Appendix 1).
For the sum of variable costs, we will take the cost of purchasing products in the amount of 367,565 thousand rubles.
For fixed costs, we will assume conditionally commercial and general expenses in the amount of 103,265 thousand rubles.
The average price of summer tires is 2500, winter tires - 4000 rubles. Let us conditionally determine the average selling price of tires:
(4000+2500)/2=3250 rub.
Table 3.1
Calculation of break-even level and financial safety margin
Indicator name | |||
Quantity of products, units | |||
Price, thousand rubles per unit | |||
Fixed costs (FC), thousand rubles. | |||
Variable costs (VC), thousand rubles. | |||
Gross costs (TC), thousand rubles. | |||
Sales revenue (TR), rub. | |||
Marginal income, rub. | |||
Share of income margins in revenue | |||
Break-even point, thousand rubles. | |||
Break-even point, units | |||
Safety factor, units. | |||
Threshold of financial strength, thousand rubles. | |||
Margin of financial strength, thousand rubles. | |||
Profit, thousand rubles | |||
Profitability level, % | |||
Operating leverage |
Our calculations showed that the company should sell on average 164,615 units. products (tires) for 3.25 thousand rubles. At the same time, in order to avoid losses, the company needs to sell 101,526 units. products at a price of 3.25 thousand rubles. That is, the safety margin is 63089 units.
In financial terms, it turns out this way - in order to cover its fixed and variable costs, the company needs to sell products worth 329,960 thousand rubles, after DTS LLC reaches this level of revenue, it will already make a profit. Those. the company has a financial strength margin of 205,040 thousand rubles.
Calculation and control of break-even activity is necessary in difficult economic conditions, therefore the main recommendation for improving financial planning is the condition for drawing up a financial plan that has a good margin of financial strength.
So, we have determined that the calculated financial plan of DTS LLC has a fairly good margin of financial strength. Those. the enterprise, even with a possible decrease in sales volumes, will be able to survive in difficult economic crisis conditions.
3.2. Development of recommendations for improving financial planning at DTS LLC
The first step to increasing the efficiency of financial planning in the company DTS LLC is the monthly preparation of the Cash Flow Budget, which was calculated and presented in Chapter 2, paragraph 3 of this work. The second step is the development of an organizational procedure for making payments planned in the Cash Flow Budget and its implementation in the organizational structure of the company DTS LLC. The organizational procedure will be the Regulations for making payments at DTS LLC, which is being developed in order to unify and improve the procedure for making payments within the framework of the approved Cash Flow Budget, developing the budget process, control and reporting in the company.
The Regulations apply to all functional divisions of DTS LLC. Payments under the Regulations of all structural units of the company are made in accordance with the BDDS approved for the current month.
The basis for making a payment will be a properly executed Register of Payments and an invoice signed by the Initiator. Primary documents must be attached to the Payment Register (in exceptional case copies) which are the basis for payment.
The initiator of the payment must be the structural units of the Dunlop Tire CIS company, which participate in the formation of the BDDS and provide the corresponding expense plans.
Responsible person for correct execution, compliance with the contract, preparation of the Invoice for payment and primary documents , collection of all necessary signatures and approvals, as well as control over mutual settlements within the framework of each specific agreement (with each individual counterparty) is the Contractor from the Initiator, i.e. an employee of the unit initiating the Agreement, appointed by the Initiator, and responsible for preparing the Invoice for payment in the Structural Unit, as well as its approval in the company’s units
When making payments, they are divided into parts in accordance with the following principles:
For each payment to a separate bank account of the recipient, a separate payment must be allocated in the Payment Register of the Structural Unit.
Payments of different purposes are recorded in the Register in separate payments.
Payment approval procedure
The Contractor in the Structural Unit, having received instructions from the Initiator to process the payment, checks the availability of fully completed primary documents and, if necessary, prepares the missing ones.
After checking the availability and preparation of all necessary documents, the Contractor from the Initiator submits the Invoice for approval to the Initiator.
The Initiator's signature on the back of the invoice means that this payment has been approved by the Initiator.
Invoices for payment from a Structural Unit without a mark from the Initiator of the corresponding structural unit of the company are not accepted for execution by the Financial Manager.
The Contractor, on behalf of the payment initiator, is obliged to provide to the Accounting Department all original documents necessary for payment (agreement, specification, invoice for payment, invoice, etc.).
The financial manager, having received the invoice(s) and primary documents from the Structural Unit, checks the presence of the Initiator’s signature on the invoice(s) and generates a Register of Payments for the day for further transfer to the Accounting Department for approval, assignment of a number and payment.
The financial manager, before 11:00 the next day, checks each account:
To ensure that the purpose of the payment corresponds to the code of the budget item approved for the current month of the BDDS (the code is a number assigned in the Budget Classifier to each item of the BDDS)
For the balance of the limit on the budget item approved for the current month of the BDDS.
If the purpose of one or more payments on the account(s) does not correspond to the code of the budget item approved for the current month by the BDDS, the Financial Manager prohibits making this payment by notifying the Initiator and the Executor in the Structural Unit by e-mail.
If the limit for the budget item approved for the current month by the BDDS of one or more payments on the account is exceeded, the Financial Manager prohibits making this payment by notifying the Initiator and the Executor in the Structural Unit by email.
If the payment in the invoice was not scheduled for the current month, the Contractor from the Initiator must write a memo (with an Invoice attached) addressed to the General Director (or the person replacing him) explaining the reason for the absence of this payment in the BDDS and a request to allow this payment in excess budget. If the decision is positive, the Invoice, together with the attached endorsed memo and its copy, is transferred by the Contractor from the Initiator to the Financial Manager. The original of the endorsed memo remains with the chief accountant (or the person replacing him).
Payments prohibited by the Financial Manager can be paid only after all identified violations have been eliminated.
The financial manager checks the signature of the Initiator, and in the case of an unplanned payment, the signature of the General Director (or the person replacing him).
The absence of the General Director's signature in the event of an unscheduled payment serves as an absolute reason for refusal to accept the Invoice by the Financial Manager for payment.
The financial manager fills in the following fields of the Payment Register for all Invoices submitted for consideration from Structural Units:
Budget assignment code
Name of budget item
Payee (counterparty)
Payment currency
Purpose of payment (description of payment according to its affiliation with the type of activity)
Basis of payment (invoice number and date, contract number and date)
Amount of payment
Complies with the budget (yes/no)
After completing the Register of Payments, the Financial Manager submits it for approval to the Financial Director of the company (or the person replacing him).
The signature of the Financial Director on the Payment Register means that this payment has been approved by the Financial Director.
Registers of payments from the Financial Manager without a mark from the Financial Director of the company are not accepted for execution by the Accounting Department.
The financial manager, before 11.00 o'clock on the day of the planned payment, transfers the Register of Payments generated and agreed upon with the Financial Director to the Accounting Department for approval, assignment of a number and payment.
Payments that are not scheduled in the BDDS and have not undergone the approval procedure described above are prohibited for payment.
Payment registers are not prepared for the following operations:
Purchase and sale of foreign currency;
Receiving cash from a bank account;
Return of cash from the cash register to a bank account;
Mutual settlements with credit institutions;
When calculating current taxes from the payroll; VAT; income tax; property tax;
For payroll statements for wages, vacations, bonuses and other payroll payments;
Direct debiting of funds from the account.
Thus, the above-described system for coordinating payments in the company allows for daily monitoring of payments in accordance with the planned volumes of receipt and expenditure of funds, allows the Finance Department to regardless of Accounting maintain operational records of the actual write-off of funds by item, thereby providing the company's management with up-to-date information on budget execution. Also, the payment approval procedure helps to prevent the company from overspending or unplanned payments in a timely manner. Since all payments are made in accordance with the Regulations in accordance with the budget assignment code, another advantage from using this control system is the ability to also indirectly control the Budget of income and expenses and reach the planned financial result.
CONCLUSION
Financial planning is an integral part of planning the financial and economic activities of an enterprise, aimed at implementing the strategy and operational objectives of the enterprise.
Financial planning is closely related to the marketing, production and other plans of a business entity. No financial forecasts will acquire practical value until production and marketing areas of activity have been worked out. Financial plans will be unrealistic if marketing goals are not specific and therefore difficult to achieve.
However, along with the perceived need wide application modern financial planning in the current conditions there are factors limiting its use in enterprises:
High degree of uncertainty in the Russian market associated with ongoing global changes in all areas public life(their unpredictability makes planning difficult);
A small proportion of enterprises that have the financial capacity to carry out serious financial developments;
Lack of effective legal framework domestic business.
Financial planning includes several stages.
At the first stage, financial indicators for the previous period are analyzed. To do this, use the main financial documents of enterprises: balance sheet, profit and loss statements, cash flow statement. They are important for financial planning, as they contain data for the analysis and calculation of financial performance indicators of the enterprise, and also serve as the basis for drawing up a forecast of these documents. The balance sheet of the enterprise is part of the financial planning documents, and the reporting balance sheet serves as the starting point at the first stage of planning.
At the second stage, the main forecast documents are compiled: forecast of the balance sheet, profit and loss statement, cash flow (cash flow); they are classified as strategic financial plans and included in the structure of a scientifically based business plan of an enterprise.
At the third stage, the indicators of forecast financial documents are clarified and specified through the preparation of current financial plans.
At the fourth stage, operational financial planning is carried out.
At the fifth stage, the financial planning process ends with the practical implementation of plans and monitoring their implementation.
The object of research in this work was the enterprise DTS LLC, which is a subsidiary of the Japanese Sumitomo Rubber Industries, Ltd. in Russia. Sumitomo Rubber Industries, Ltd. manufactures and markets tires under brands such as Dunlop, Falken, Goodyear, Sumitomo and Ohtsu. In addition to Representative Offices in China and Indonesia, Sumitomo Group, together with The Goodyear Tire and Rubber Company, has manufacturing and sales operations in Europe and North America. The main activity of DTS LLC in Russia is the sale of high-quality tire products to large wholesale dealers.
The analysis of the financial condition showed that the company uses borrowed capital in its activities. Financial stability indicators are quite unstable for the period from 2005 to 2008:
The equity capital concentration ratio, the working capital ratio and the debt-equity ratio only in 2008 met the recommended norm and amounted to 61.85%; 60.71% and 61.67% respectively. The coefficient of maneuverability of own funds for the entire analyzed period is more than 50% and increased from 63.31% in 2005 to 94.84% in 2008.
The liquidity analysis showed good results. The company is able to pay off its obligations.
The company operates profitably and has fairly good profitability indicators, however, there has been a slight decrease in profitability indicators in the reporting period.
Along with a decrease in profitability, there is a slight decrease in business activity, which is confirmed by the calculated turnover indicators.
To carry out financial work, DTS LLC has created a financial service, which is represented by the financial department and accounting department.
The financial activities of DTS LLC are aimed at monitoring the provision of cash payments, receipt of cash income and expenses, the formation and distribution of cash savings and financial resources. The financial activities of DTS LLC are subordinated to ensuring financial stability, creating stable preconditions for the company’s economic growth and making a profit.
Since the financial plan includes several components, such as a forecast balance sheet, a profit and loss plan, and a cash flow plan, the procedure for determining the indicators necessary for drawing up plans at DTS LLC is as follows:
Revenue from sales of goods (Forecast of sales volumes)
Cost of goods sold
Inventory of goods at the beginning of the period
Procurement of goods
Inventory of goods at the end of the period
Operating expenses
Loan portfolio and plan for paying and receiving interest
The diploma project contains a detailed calculation of all indicators necessary for the formation of a financial plan.
The main goal of financial planning is to organize activities in such a way that they are effective, i.e. brought profit. The basis for profit optimization is the calculation and analysis of the break-even level of activity.
Analysis and calculation of the financial plan for break-even showed that the formed financial plan has a fairly good margin of financial strength. Those. the enterprise, even with a possible decrease in sales volumes, will be able to survive in difficult economic crisis conditions.
In order to increase the efficiency of financial planning, the company DTS LLC proposes the monthly preparation of a Cash Flow Budget, in the form presented in this thesis.
It is also proposed for implementation into the management system of a certain organizational procedure for making payments planned in the Cash Flow Budget.
The organizational procedure is the Regulations for making payments at DTS LLC, which was developed in order to unify and improve the procedure for making payments within the framework of the approved Cash Flow Budget, developing the budget process, control and reporting in the company.
The Regulations should apply to all functional divisions of DTS LLC. Payments under the Regulations of all structural units of the company will have to be made in accordance with the BDDS approved for the current month. This regulation will allow for increased control over the expenditure of funds and will contribute to their more efficient use.
In general, the use of modern methods of financial planning and control will allow the company to more carefully plan its activities and anticipate possible errors and failures, as well as find timely solutions. All this will help improve the efficiency of the enterprise as a whole.
LIST OF REFERENCES USED
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- Federal Law of December 26, 1995 N 208-FZ “On Joint Stock Companies” (as amended on June 13, 1996, May 24, 1999, August 7, 2001, March 21, October 31, 2002, February 27 2003, February 24, April 6, December 2, 29, 2004, December 27, 31, 2005, January 5, July 27, December 18, 2006, February 5, July 24, December 1, 2007)
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- Decree of the Government of the Russian Federation of January 1, 2002 No. 1 “On the Classification of fixed assets included in depreciation groups” (as amended on July 9, August 8, 2003, November 18, 2006)
- All-Russian classifier of fixed assets OK 013-94 (OKOF) (approved by Decree of the State Standard of the Russian Federation dated December 26, 1994 N 359) (as amended 1/98)
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- Order of the Ministry of Finance of the Russian Federation dated March 30, 2001 N 26n “On approval of the Accounting Regulations “Accounting for Fixed Assets” PBU 6/01” (as amended on May 18, 2002, December 12, 2005, September 18, November 27, 2006 G.)
- Order of the Ministry of Finance of the Russian Federation dated June 9, 2001 N 44n “On approval of the accounting regulations “Accounting for inventories” PBU 5/01” (as amended on November 27, 2006, March 26, 2007)
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- Order of the Ministry of Finance of the Russian Federation dated August 2, 2001 N 60n “On approval of the accounting regulations “Accounting for loans and credits and the costs of servicing them” (PBU 15/01)” (as amended on September 18, November 27, 2006)
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- Kovalev V.V. Introduction to financial management. - M.: Finance and Statistics, 2001. Financial plan of the organization
Type of work: Diploma
A financial plan is an integral part of intra-company planning, the process of developing a system of indicators to provide an enterprise with the necessary funds and improve the efficiency of its financial activities in the future period. Financial planning is one of the main functions of management, including determining the required amount of resources from various sources and the rational distribution of these resources over time and by structural divisions of the enterprise.
Financial planning is necessary to provide the necessary resources for the company's activities to:
- choosing options for effective investment of capital;
- identifying on-farm reserves for increasing profits through the economical use of funds.
It helps control the financial condition, solvency and creditworthiness of the enterprise.
There are many methods for calculating financial planning, but there are also general rules, principles that remain unchanged regardless of the exact method in which the financial plan is drawn up.
It is important. Financial planning must be targeted, operational, real, managerial, collective, regulated, continuous, comprehensive, continuous, balanced, transparent for the management of the process. The costs of financial planning should not cover the effect of it.
Financial planning- a responsible process, so you can’t approach it formally.
During planning, it is necessary to draw conclusions regarding the causes of failures in work, to take these factors into account along with positive experience when drawing up financial plans for the next period.
Financial planning must be comprehensive in order to provide financial resources to various areas:
- innovation (that is, the development and implementation of new technologies that affect the maintenance of product competitiveness, the creation of new products, industries, etc.);
- supply and sales activities;
- production (operational) activities;
- organizational activities.
When drawing up financial plans, the following are used: information sources:
- accounting and financial reporting data;
- information on the implementation of financial plans in previous periods;
- agreements (contracts) concluded with consumers of products and suppliers of material resources;
- forecast calculations of sales volumes or product sales plans based on orders, demand forecasts, sales price levels and other characteristics of market conditions;
- economic standards approved by legislative acts (tax rates, tariffs for contributions to state social funds, depreciation rates, bank accounting interest rate, minimum monthly wage, etc.).
During planning, it is necessary, if possible, to take into account or analyze all factors: analytical materials, market trends, general political and economic situation, opinions of analysts and experts, moral and ethical standards, etc.
Should be analyzed as economic(Central Bank refinancing rate, exchange rates, rates on loans in local banks, the amount of available free funds, repayment terms of accounts payable and many others), and non-economic factors (possibility of collecting receivables, level of competition, changes in legislation, etc.). Before making a decision, it is important to evaluate all available alternatives. Moreover, for the accuracy of the plan, it is more expedient to evaluate not the strict value of the indicator, but the range of values. It is important to take into account possible force majeure situations.
Note. Plans should be focused on achieving set goals (the basis of the plan is the real capabilities of the company, and not its current achievements).
For example, the company’s turnover currently amounts to 1,000,000 rubles, and if the existing shortcomings in the work are eliminated, the turnover can be relatively easily doubled. If in such a situation we base the plan on existing indicators, then we will not take into account the company’s potential (the financial plan will be ineffective).
The financial plan should (if you do not consider various options for the development of events) contain a specific strategy for action in the event of the most likely forecast situations. For example, a company uses conventional units in its calculations - US dollars. The company's management needs to imagine a strategy for action in the event of a sharp change in the dollar exchange rate and consolidate their ideas in financial terms so that their subordinates can imagine this strategy no less clearly.
When drawing up a plan, it is necessary to foresee the possibility of revising the planned indicators as they are achieved. One way to achieve flexibility in plans is to establish minimum, optimal and maximum results.
Note. It is impossible to draw up a financial plan so that, in accordance with it, the company does not have a cash reserve.
Such a situation can lead to the fact that any force majeure, unplanned payment or delay in receipts can lead not only to the collapse of such a financial plan, but also the company itself. Still, it is easier to profitably invest excess funds than to find the missing ones.
When attracting additional financial resources, it is necessary to adhere to principle of conformity, that is, it is irrational to take out a short-term loan to purchase expensive equipment, knowing that during this period the company will not have free funds and will have to borrow money again to repay the loan.
Suppose a company needs funds to replenish inventory, the average sales period of which is one month. In this case, it is unwise to take out a long-term loan and overpay for it.
Many people are mistaken in considering the company’s net or retained earnings to be some real assets that can be put into economic circulation. This is often far from the case. Therefore, when carrying out financial planning and determining the need for additional sources of financing, one cannot make a mistake when referring to such indicators as retained earnings and retained loss.
One of the planning stages is the financial analysis, during which the solvency of the company is analyzed. A common mistake is that financiers include indicators in the plan, which they themselves criticize during the analysis of actual indicators. A situation often arises when low-liquidity and insolvent financial plans are created. To avoid this, you need to remember the indicators for assessing liquidity and solvency, and also focus on them when drawing up a financial plan.
Types of financial planning and financial plans
The time periods for which financial plans are drawn up may vary. Typically, financial plans are drawn up for some rounded period (month, quarter, half-year, 9 months, 1–3 years or more). This tradition is due to the convenience of work: it is much better to draw up a plan and use it for a year than a year and 10 days.
Depending on the period for which the plan is drawn up, long-term, medium-term and short-term plans are distinguished (Table 1).
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Table 1. Types of plans and their features |
||
|
Type of financial plan |
Name of planning |
The period for which the financial plan was drawn up |
|
Short |
Operational | |
|
Medium term |
Tactical | |
|
Long term |
Strategic |
over 3 years |
This classification has its drawbacks. Medium-term financial plan we call it a plan drawn up 1–3 years in advance. But if you take a construction company, it turns out that the construction of one facility requires an average of 1–3 years. Therefore, a plan drawn up for three years (formally medium-term) will be for the company short-term. The time period for which the financial plan is drawn up is essential.
Financial plans can be main and auxiliary (functional, private). Supporting plans designed to ensure the drawing up of basic plans. For example, basic plan includes planned indicators of revenue, cost, tax payments and many others.
To bring all the indicators into one plan (the main one), it is necessary to first draw up a number of auxiliary plans for almost every indicator. You should plan the amount of revenue, cost and other indicators (only then can you bring everything together to obtain a basic plan).
Note. Plans can be formed both for individual divisions of the company and for the entire company as a whole. The company's consolidated aggregate financial plan, which includes the main plans of individual divisions, will constitute the master financial plan.
Depending on the time of drawing up, financial plans can be:
- introductory (organizational) - formed on the date of organization of the company;
- current (operational) - compiled periodically throughout the entire operation of the company;
- anti-crisis;
- unification (connection, merger plans);
- dividing;
- liquidation.
In a relationship anti-crisis, unifying (connecting),dividing, liquidation financial plans can easily be concluded that they are drawn up when the company is undergoing reorganization (rehabilitation) procedures, the organization is being merged, divided or is at the stage of liquidation.
The need to formulate an anti-crisis financial plan arises when the company is at the stage of obvious bankruptcy. Using an anti-crisis financial plan, you can determine what the company's real losses are, whether there are reserves to pay off accounts payable and what their estimated value is, as well as ways to get out of this situation.
Separating And unifying(connective, merger plans) financial plans can be called antipodean plans. Connecting(merger plans) and dividing financial plans are drawn up when one company merges with another or when a company is divided into several legal entities. That is, connecting (consolidation, merger plans) and separation plans are formed during the reorganization of a legal entity, which can be carried out in the form of a merger, accession, division, separation or transformation. Unifying(connection, merger plans) financial plans are drawn up when two or more companies merge (merge) into one or when one or more structural units are merged into a given company. Separating financial plans are drawn up at the time of division of a company into two or more companies or when one or more structural units of a given company are separated into another. Liquidation financial plans are drawn up at the time of liquidation of the company. The reasons for liquidation may be bankruptcy or closure due to reorganization.
EXAMPLE 1
Static LLC has drawn up a financial plan, which sets out certain target indicators. This financial plan does not provide for changes in indicators due to changes in any external or internal conditions. Such a financial plan will be static.
At Dynamics LLC, the financial plan contains various options for indicator values depending on what situation will actually be realized. That is, with an increase in product sales by 20%, some indicators and a development option are planned, with an increase of over 40%, other indicators and a development option, etc. In fact, the dynamic financial plan of a given enterprise will represent a set of static financial plans.
Dynamic plans more informative, but they are more difficult to compose than static ones. If in static financial plans one version of the situation is developed, then in dynamic ones - two or more. Accordingly, the complexity and labor intensity of compilation increases proportionally.
Based on the volume of information, plans can be single or summary (consolidated). Unit plans display the strategy for one company. Summary (consolidated) plans represent an action strategy for an entire group of companies. Such financial plans are most often drawn up when it comes to a group of companies controlled by one person or group of people. According to the purposes of compilation financial plans can be divided into trial and final.
Trial Plans are compiled for the purpose of implementing control and analytical procedures. Trial plans are not distributed to interested users, as they are documents of internal control and analysis. Final plans are the official documents of a company and serve as a resource for various interested users to study its financial plans.
By usersfinancial plans can be:
- tax authorities;
- statistical authorities;
- creditors;
- investors;
- shareholders (founders), etc.
Depending on user information plans will be divided into plans submitted to fiscal authorities, statistical authorities, creditors, investors, shareholders (founders), etc. By nature of activity plans can be divided into plans for core and non-core activities. Previously main activity named the types of activities specified in the charter of the enterprise. But at present, such an approach is unwise. The distinction between main and non-core activities is possible based on revenue indicators.
EXAMPLE 2
Revenue from type of activity No. 1 - 18,000,000 thousand rubles, from type of activity No. 2 - more than 1,000,000 thousand rubles.
Revenue from activity No. 1 will account for more than 94% of total revenue (18,000,000 / (18,000,000 + 1,000,000)). The main activity for the company in this case will be activity No. 1.
At the same time, the distinction between main and non-core activities can be made on the basis of other indicators (in particular, the amount of income from various types of activities).
Let’s assume that the profit from activity No. 1, despite such serious indicators of gross revenue, is only 300,000 thousand rubles. , and from type of activity No. 2 - 800,000 thousand rubles. In this case, the main activity for the company will be activity No. 2.
Classification of activities into core and non-core is a rather subjective process and depends on the direction of the company’s management.
When planning long-term investments and sources of their financing, future cash flows are considered from the perspective of the time value of money based on the use of discounting methods to obtain comparable results.
Using a cash flow forecast, you can estimate how much of the latter needs to be invested in the economic activities of the organization, the synchronicity of the receipt and expenditure of finance, and also check the future liquidity of the enterprise.
The forecast of the balance of assets and liabilities (in the form of a balance sheet) at the end of the planned period reflects all changes in assets and liabilities as a result of planned activities and shows the state of the property and finances of the business entity. The purpose of developing a balance sheet forecast- determination of the necessary increase in certain types of assets, ensuring their internal balance, as well as the formation of an optimal capital structure that would ensure sufficient financial stability of the organization in the future.
Unlike the income statement forecast, the balance sheet forecast reflects a fixed, static picture of the financial balance of the enterprise. Exists several methods for preparing a balance sheet forecast:
1) methods based proportional dependence sales volume indicators;
2) methods using mathematical apparatus;
3) specialized methods.
The first of them is the assumption that balance sheet items that depend on sales volume (inventories, costs, fixed assets, accounts receivable, etc.) change in proportion to its change. This method is also called percentage of sales method.
Among the methods using mathematical apparatus, the following are widely used:
- simple linear regression method;
- nonlinear regression method;
- multiple regression method, etc.
Specialized methods include methods based on the development of separate forecast models for each variable. For example, accounts receivable are assessed based on the principle of optimizing payment discipline; the forecast of the value of fixed assets is based on the investment budget, etc.
EXAMPLE 3
Let's consider financial planning of profits using the direct method. The procedure of this method is based on the assumption that the change in the need for funds for the manufacture of products is proportional to the dynamics of sales. Let's illustrate the essence direct method financial planning of profits (Table 2).
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Table 2. Income Statement |
||
|
Index |
During the reporting period |
Forecast for next year(with an increase in sales volume by 1.5 times) |
|
Revenue (net) from the sale of goods, products, works, services (less VAT, excise taxes and similar mandatory payments) |
500 × 1.5 = 750 |
|
|
Cost of goods, products, works, services sold |
400 × 1.5 = 600 |
|
|
Gross profit | ||
|
Business expenses | ||
|
Administrative expenses | ||
|
Profit (loss) from sales | ||
|
Interest receivable | ||
|
Percentage to be paid | ||
|
Other income | ||
|
other expenses | ||
|
Profit (loss) from financial and economic activities | ||
|
Profit (loss) before tax | ||
|
Income tax | ||
|
Profit (loss) of the reporting period (net) | ||
A 50% increase in sales volume affects many metrics. It is assumed that the cost of goods sold, as well as selling expenses, will change in direct proportion to the growth rate of sales, but interest on loans depends on the financial decisions made.
One of the planning documents developed by the organization as part of long-term planning is business plan. It is developed, as a rule, for 3–5 years (with a detailed study of the first year and an enlarged forecast for subsequent periods) and reflects all aspects of the organization’s production, commercial and financial activities.
The most important part of a business plan is financial plan, summarizing the materials of all sections preceding it and presenting them in value terms. This section is necessary and important for businesses, as well as investors and creditors. After all, they must know the sources and amount of financial resources necessary to implement the project, the direction of use of funds, and the final financial results of their activities. Investors and creditors, in turn, must have an idea of how cost-effectively their funds will be used, what is the payback period and return.
2.2 Calculation of an enterprise’s financial plan using the example of Kapriz LLC
Let's consider the formation of a financial plan for an enterprise using the example of the limited liability company "Caprice". 1). In table 1.1 presents a plan for product sales volumes based on marketing research. Its main task is to give an idea of the market share that is expected to be won by the new product. Table 1.1 Sales forecast
| Indicators | |||||
| Expected unit sales | 8000, 00 | 7000, 00 | 9000, 00 | 8000, 00 | 32000, 00 |
| Selling price per unit of product (in rubles) | 15, 00 | 15, 00 | 15, 00 | 15, 00 | |
| Total sales volume (thousand rubles) | 120 000, 00 | 105 000, 00 | 135 000, 00 | 120 000, 00 | 480 000, 00 |
Table 1.2. Schedule of expected cash receipts
| Indicators (in thousand rubles) | |||||
| Accounts receivable as of December 31 of the previous year * | 2500, 00 | 2500, 00 | |||
| Sales of the first quarter** | 84 000, 00 | 33 600, 00 | 117 600, 00 | ||
| Q2 sales | 73 500, 00 | 29 400, 00 | 102 900, 00 | ||
| Third quarter sales | 94 500, 00 | 37 800, 00 | 132 300, 00 | ||
| IV quarter sales | 84 000, 00 | 84 000, 00 | |||
| Total cash inflow | 86 500, 00 | 107 100, 00 | 123 900, 00 | 121 800, 00 | 439 300, 00 |
* Total accounts receivable balance expected to be collected in the first quarter
** 70% of quarterly sales are paid in the quarter of sale, 28% of quarterly sales are paid in the next quarter; the remaining 2% represents uncollectible debts
3). Based on the sales forecast and the established practice of maintaining inventories of finished products, a production plan was developed (Table 1.3).
Table 1.3 Production plan
| Indicators | ||||||
| Desired stock of finished goods at the end of the period* (in thousand pieces) | 700, 00 | 900, 00 | 800, 00 | 1000, 00** | 1000, 00 | |
| Total need for the product (in thousand pieces) | 8700, 00 | 7900, 00 | 9800, 00 | 9000, 00 | 35400, 00 | |
| Less: Inventory of finished goods at the beginning of the period*** (in thousand pieces) | 800, 00 | 700, 00 | 900, 00 | 800, 00 | 800, 00 | |
| Number of units to be delivered (in thousands) | 7900, 00 | 7200, 00 | 8900, 00 | 8200, 00 | 34600, 00 | |
* 10% from next quarter's sales
** approximate estimate
*** similar to finished goods inventory at the end of the previous quarter
4). A plan of income and expenses of the enterprise has been drawn up. The purpose of this document is to show how profits will be formed and change.
Among the analyzed indicators the following stand out:
a) income from sales of goods;
b) costs of production of goods;
c) total profit from sales;
d) general production expenses (by type);
e) net profit (line c) minus line d)).
Table 1.4 Plan of income and expenses
| Index (in thousand rubles) | |||||
| Sales revenue | 120000, 00 | 105000, 00 | 135000, 00 | 120000, 00 | 480000, 00 |
| Import costs | 12000, 00 | 10500, 00 | 13500, 00 | 12000, 00 | 48000, 00 |
| Gross profit from sales | 108000, 00 | 94500, 00 | 121500, 00 | 108000, 00 | 432000, 00 |
| General production costs, including | 5280, 00 | 4620, 00 | 5940, 00 | 5280, 00 | 21120, 00 |
| trading costs | 1200, 00 | 1050, 00 | 1350, 00 | 1200, 00 | 4800, 00 |
| advertising | 1200, 00 | 1050, 00 | 1350, 00 | 1200, 00 | 4800, 00 |
| remuneration of management personnel | 600, 00 | 525, 00 | 675, 00 | 600, 00 | 2400, 00 |
| depreciation | 1200, 00 | 1050, 00 | 1350, 00 | 1200, 00 | 4800, 00 |
| other | 1080, 00 | 945, 00 | 1215, 00 | 1080, 00 | 4320, 00 |
| Profit | 102 720, 00 | 89 880, 00 | 115 560, 00 | 102 720, 00 | 410 880, 00 |
5). A balance of cash receipts and payments has been developed (Table 1.5). Its main task is to check the synchronicity of the receipt and expenditure of funds, and therefore the future liquidity of the enterprise during the implementation of this project. The information thus obtained serves as the basis for determining the total cost of the entire project.
Table 1.5. Balance of cash receipts and payments
| Index (in thousand rubles) | |||||
| Sales income | 86500, 00 | 107100, 00 | 123900, 00 | 121800, 00 | 439300, 00 |
| Payments, including | 62000, 00 | 59000, 00 | 47000, 00 | 5000, 00 | 173000, 00 |
| equipment | 50000, 00 | 50000, 00 | 40000, 00 | 0 | 140000, 00 |
| office equipment | 10000, 00 | 7000, 00 | 5000, 00 | 3000, 00 | 25000, 00 |
| other | 2000, 00 | 2000, 00 | 2000, 00 | 2000, 00 | 8000, 00 |
| Cash growth | 24500, 00 | 48100, 00 | 76900, 00 | 116800, 00 | 266300, 00 |
| Balance at start | 50000, 00 | 74500, 00 | 122600, 00 | 199500, 00 | 446600, 00 |
| Remaining at the end | 74 500, 00 | 122 600, 00 | 199 500, 00 | 316 300, 00 | 712 900, 00 |
1. How much funds are required to implement this project.
2. Sources of financial resources and the form of their receipt.
Sources may include:
a) own funds;
b) bank loans;
c) attracting funds from partners;
d) raising funds from shareholders, etc.
3. The period of expected full return of the invested funds and the receipt of income by investors on them.
Plan for sources and use of funds
Funds from various sources, total…………………889800
Including:
Real estate loan………………………200000
Profit of previous years…………….…..250000
Profit of the planned year……….…432000
Depreciation…………………………….4800
Use of funds, total…………………………679000
Including:
For the purchase of equipment……………………..140000
For the increase in reserves…………………………….519000
To repay the loan……………………………20000
Net increase in working capital………………..210800.
Conclusion
This course work examines financial issues and calculates the financial plan of the enterprise, which will allow you to determine the enterprise’s costs, income, payments and receipts of funds, increase the efficiency of the enterprise’s production and, most importantly, calculate its profit.
The first chapter discusses the theoretical aspects of the analysis of finances and the financial plan of an enterprise, and the second chapter provides all the practical calculations of the financial plan of an enterprise based on Caprice LLC.
Based on the analysis of finances and the calculated financial plan of the enterprise, the following conclusions were made.
Finance occupies a special place in economic relations. Their specificity is manifested in the fact that they always appear in monetary form, have a distributive nature and reflect the formation and use of various types of income and savings of economic entities in the sphere of material production, the state and participants in the non-productive sphere.
The life of a company is impossible without planning; the “blind” desire to make a profit will lead to a quick collapse. When creating any enterprise (in our example, Kapriz LLC), it is necessary to determine the goals and objectives of its activities, which determines long-term planning. Long-term planning defines medium-term and short-term planning, which are designed for a shorter period and therefore imply greater detail and specificity.
The basis of planning is the sales plan, since production is focused primarily on what will be sold, that is, in demand in the market. Sales volume determines production volume, which in turn determines the planning of all types of resources, including labor resources, raw materials and materials inventories. This necessitates financial planning, planning costs and profits. Planning must be carried out according to a rigid scheme, using calculations of many quantitative indicators.
The financial plan provides the entrepreneurial plan of the business entity with financial resources and has a great influence on the economy of the enterprise. This happens due to a number of significant circumstances. Firstly, in financial plans the planned costs for carrying out activities are compared with real possibilities. As a result of the adjustment, material and financial balance is achieved. Secondly, the articles of the financial plan are related to all economic indicators of the enterprise and are linked to the main sections of the business plan: production of products and services, scientific and technological development, improvement of production and management, increasing production efficiency, capital construction, logistics, labor and personnel, profits and profitability, economic incentives. Thus, financial planning influences all aspects of the activity of an economic entity through the selection of financing objects, the direction of financial resources and promotes the rational use of labor, material and monetary resources.
This course work was intended to prove the need for financial planning for the activities of any company that expects success in modern market conditions. Kapriz LLC is on the path to increasing the efficiency of its activities. He has the opportunity to strengthen his financial position. But we must not forget that we are in particularly harsh conditions of the Russian economy, in which some market laws operate exactly the opposite, however, taking into account the fact that before perestroika our country for many years was a shining example of an authoritarian directive-planned economy , then the process of planning the production and commercial activities of an enterprise and the main market indicators is based on many years of experience. Of course, with the advent of the reform stage in our state, both planning methods and its tasks have changed.
Literature
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All profitability indicators decreased by an average of 93%, the payback period for equity decreased by 16.33 years and amounted to 77.60 years. 2.3 Analysis of the organization of financial planning of the company OJSC "TRK "TVT" Financial planning of the enterprise's activities is predetermined by the specifics of the services provided on the market of the TV and Radio Company OJSC "TRK "TVT": cable analogue and...
This growth rate of indicators will be 110.7% (according to the revenue growth rate in 2005). CONCLUSION The goal of the work - optimization of the financial planning system at Montazhstroy LLC - was achieved based on solving the following tasks: - the theoretical aspects of planning at the enterprise were studied; - an analysis of the planning system at the analyzed enterprise was carried out; - optimization of the financial system...
Any modern company that conducts economic activities in one or another area of business engages in planning. Planning in business plays, if not the leading, then at least an important role in matters of economic efficiency and is aimed at maximizing the efficiency that the business is able to show.
The financial plan of an enterprise is a subtype of a group of management, interrelated documents, which is compiled and maintained for long-term planning and operational management of the resources available to the company in cash. Simply put, thanks to the financial plan, a balance is ensured between planned and actual revenue receipts, and, on the other hand, planned and actual expenses for the company’s activities.
The balance of the financial and economic state of the company, which is achieved through high-quality financial planning, is perhaps the main benefit of using such a management tool as the enterprise’s financial plan.
Types of financial plans for a modern enterprise
The intense competition in today's marketplace forces businesses to work much harder to find resources and opportunities to become more competitive within their operations. Subject-based financial plans, as well as their variable use in operational business issues, make it possible to solve these management problems based specifically on the company’s internal plans and resources, avoiding, if possible, serious dependence of the business on a continuous flow of borrowings. Or, if not decide, then at least create a balance within the economic issues of the organization using financial planning tools.
It is worth noting that financial plans at enterprises differ not only in the size of the planning period (duration), but also in their composition. The composition of indicators or the composition of planning items will differ in two parameters: purpose and degree of detail. Relatively speaking, for one company the grouping of expenses “utilities” is sufficient, but for another, the planned and actual value of each grouping indicator is important: water, electricity, gas supply and others. Therefore, the main classification of financial plans is considered to be the classification by planning period, within which each specific company independently chooses the degree of detail of the financial plan.
As a rule, modern companies in Russia use three main types of financial plans:
- Fin. plans for short-term periods: the maximum planning horizon is a year. They are used for operational activities and can include maximum detail of planned and actual indicators managed by the company’s team.
- Fin. plans for medium-term periods: the planning horizon is more than a year, but not more than five years. Used for planning over a 1-2 year horizon, they include investment and modernization plans that contribute to the growth or strengthening of the business.
- Fin. long-term plans: the longest planning horizon, starting from five years, including the interpretation of the company's long-term financial and production goals.
Figure 1. Types of financial plans of modern companies.
Development of a financial plan for a modern enterprise
Development of a financial plan for an enterprise is an individual process for each individual enterprise, depending on the internal economic characteristics and talent of financial specialists. Moreover, any approach, even the most exotic, to the financial planning process requires financiers to include mandatory, that is, identical for everyone, financial data when drawing up financial plans:
- Planned and operational data on production and sales volumes;
- Planned and actual estimates of departments;
- Expense budget data;
- Revenue budget data;
- Data on creditor and debtor;
- Data from budgets of taxes and deductions;
- Regulatory data;
- BDDS data;
- Specific management accounting data for a particular enterprise.
Figure 2. Data composition for the financial plan.
In practice, the role of financial plans in modern business is enormous. It can be said that financial plans are gradually replacing traditional business plans because they contain only specific information and enable management teams to constantly monitor the most important values. Essentially, for middle and middle managers senior management the system of financial plans drawn up at the enterprise is the most dynamic tool. That is, any manager who has access to management information and the competence to manage such information can continuously improve the efficiency of the department entrusted to him through the use of various combinations of financial planning tools.
Form of a financial plan of an enterprise and management tasks solved using the system of financial plans
Today there is no approved form or recognized standard of a financial plan for an enterprise, and the variability of the forms of this management tool is due to the internal specifics of enterprises. In management practice, there are traditional tabular forms of the system of financial plans of enterprises, proprietary IT developments in the form of special programs and bundles of these programs that provide import and export of data, and specialized packaged software packages.
In order for an enterprise to determine the required level of detail in its own financial plan, it is worth listing a list of management problems that the financial plan will help solve:
- The financial plan solves the problem of preparing and implementing a system for continuous assessment of the company’s financial performance at the enterprise;
- The financial plan allows you to set up the process of continuous preparation of forecasts and plans for the company’s activities;
- Determine sources of income and volumes of financial resources planned for the enterprise;
- Formulate plans for the financing needs of the enterprise;
- Plan standards within the enterprise;
- Find reserves and internal capabilities to improve efficiency;
- Manage the planned modernization and development of the company.
Thus, the system of interconnected financial plans becomes that part of the enterprise management system that reflects and makes it possible to manage all financial, economic, production and business processes, both within the enterprise and in the company’s interaction with the external economic environment.
Enterprise financial plan - sample
To create a high-quality financial plan, it is recommended to use the following sequence of actions:
1.Formulate the goals of drawing up a financial plan;
2. Specify the composition of indicators and the degree of detail;
3. Study examples and samples of financial plans;
4. Develop an example of a financial plan form and agree within the organization;
5. Based on feedback from users of the enterprise financial plan sample, develop a final individual template for the company’s financial plan.
Financial plans are drawn up not only to plan the work of a single company as a whole, they can perform different tasks - be the basis of projects, calculations within individual divisions, or reflect financial data for a single manufactured part.
Figure 3. Example of a spreadsheet financial plan for a small project.
conclusions
The market economy dictates new requirements for business to its own organization. High competition forces businesses to focus on predicted results, which in turn is impossible without planning. Such external market conditions encourage companies to engage in financial planning to ensure their own efficiency.
Competent calculations and plans can provide an enterprise not only with current operational benefits, but also help in managing its prospects for the production of works and services, cash flow, investment activities and the commercial development of the enterprise. The current financial condition of the enterprise and the corresponding reserve for the future directly depend on financial planning. A well-drafted financial plan for an enterprise is a guarantee of protection from business risks and an optimal tool for managing internal and external factors affecting business success.
Successful business development largely depends on adequate planning. This is especially true for enterprises that are new market players. It is important for their founders, firstly, to competently occupy their niche, secondly, to form a sustainable business model, and thirdly, to ensure the investment attractiveness of the company, as well as high credit ratings. All these problems can be solved by competent planning. How is a financial plan drawn up? What are the specifics of this source?
Key Components of a Financial Plan
A financial plan is a set of documents. In general, it consists of:
Sales volume forecast;
Balance of revenue and expenses;
Graphics of estimated profitability;
Balance sheet.
Of course, in the methodology of individual enterprises, the principles for forming an appropriate source may differ significantly from this scheme. But it is widespread among Russian businesses. Let us consider the specifics of each of the noted components of the financial plan in more detail.
Sales forecast
This document essentially involves researching the market segment in which the company operates and then determining the size of its share that the company will most likely be able to occupy. As a rule, the financial plan in this part is drawn up several years in advance - for example, 3 years. In this case, the expected growth for the first year can be calculated on a monthly basis (since in this case, forecasts based on a study of current factors are likely to be very close to reality).
Estimated profitability chart
A financial plan has a lot to do with forecasts. If the corresponding sales volume document is intended to help set expectations for revenue dynamics, then the source in question is directly related to profit. That is, when calculating it, cost forecasts are also made.
Balance of revenue and expenses
This document is important from the point of view that company managers need to know which expenses and at what point in time will provide a return within the framework of current activities, and which ones will pay for themselves over time. Another function of the balance of revenue and expenses is to assess the amount of costs necessary to achieve the required turnover (for example, sufficient from the point of view of the company’s fulfillment of current obligations - credit, management, etc.). As a rule, the document in question is supplemented with a table that reflects the ratio of costs and income.
There is an official name for the corresponding component of the financial plan - “Profit and Loss Statement”. It is part of the financial statements that an enterprise must submit to government agencies, so its formation is mandatory for many businesses. At the same time, the corresponding document is the most important in terms of drawing up a financial plan. It contains valuable and informative information that reflects the effectiveness of the company's business model.
Of course, the development of a company’s financial plan may involve the formation of a balance of revenues and expenses in forms that differ significantly from the “Profit and Loss Statement”. It may be more detailed or, conversely, less complex. However, the official form of the “Profit and Loss Statement” is assessed by many entrepreneurs as quite logical and informative, and therefore is widely used in business.
Balance sheet
This document, like the previous one, belongs to the official category. The enterprise must form it not only as part of the financial plan, but also as a necessary element of reporting submitted to the Federal Tax Service. At the same time, the balance sheet is an important element of forecasting. Based on the numbers reflected in it, management can analyze how effectively the enterprise operated in the reporting period and, if necessary, adjust the business development strategy. The balance sheet is one of the most detailed documents characterizing the activities of an enterprise. Through it, financial accounting is carried out. The chart of accounts of the balance sheet is an obligatory component of the activities of specialists in the relevant departments of the company dealing with monetary issues.
The document in question, as a rule, is created by enterprises without any significant differences from the official form approved by the laws of the Russian Federation (although, as in the case of the profit and loss balance sheet, the company has the right to determine its own criteria for creating the appropriate source). The Russian legislator, therefore, has developed a fairly well-thought-out, logical and informative balance sheet structure, and companies willingly use it not only when fulfilling reporting obligations, but also in the process of creating internal corporate financial plans.
It may be noted that the use of forms approved by the state is mandatory for budgetary institutions. Thus, every year, the relevant organizations, as a rule, are given the task of submitting a plan of financial and economic activities to a higher authority. It can be considered as an analogue of the corresponding document for private enterprises. Moreover, many businesses formulate a financial and economic plan based on the structure of the noted source developed by the state. But if reporting procedures do not require it, a private enterprise has the right to create documents according to its own concept.
So, creating a financial plan for the development of a corporation involves, first of all, the formation of four key sources. In what sequence is their development optimal? Let's try to create step-by-step instructions reflecting the algorithm for creating a financial plan recommended by market experts.
Step-by-step instructions for drawing up a financial plan: main stages
Many specialists in the field of corporate governance consider it correct, however, to begin work not with the formation of any of the noted documents, but with another source - a financing strategy. It thus precedes the creation of any of the four components of the plan in question noted above.
The next stage, within which a financial plan can be drawn up, is the development of a forecast for sales volumes. The fact is that calculating revenue is a procedure based on information that is more accessible in most cases than an analysis of possible expenses. As a rule, a new enterprise enters an already existing market segment, the dynamics of demand in which are generally known to all players. From here you can calculate what sales volumes may be in relation to certain deadlines.
Once your sales forecast is complete, it's time to work on your estimated profitability chart. Thus, the management of the organization has to work to identify, in turn, the likely dynamics of the organization’s costs in relation to a particular period.
Having at your disposal forecasts for revenue and profit, as well as actual figures reflecting business activities, you can create a balance sheet that takes into account the corresponding indicators. This document is largely statistical; it records financial transactions that have already been completed. The balance sheet performs a similar function. Most often, it is formed simultaneously with the document in which profits and losses are recorded - largely because both of them together form, as we noted above, the accounting statements that the enterprise must submit to government agencies.
Stages of drawing up a financial plan
So, drawing up a financial plan can be carried out within the following main stages:
1. Determination of financing strategy.
2. Formation of revenue forecasts.
3. Determination of cost dynamics.
4. Recording the results of the company’s activities in the balance sheet of revenues and costs (“Profit and Loss Statement”), as well as in the balance sheet.
Of course, the noted structure of the formation of the source in question may be different. Thus, it is logical to assume that the financial plan of an organization that has just entered the market will initially not contain data on profits and losses, as well as a balance sheet. The corresponding components will be added to it later.
It may well be that the balance sheet reflecting revenues and costs will be supplemented not only with statistical, but also with forecast data. An organization's financial plan may include such a need if, again, the company is just entering the market and investors have a need to obtain as much detailed information as possible about its business model.
What information should be reflected in the noted sources - documents that form the financial plan of the organization? Let's consider the aspect regarding its content.
What should a financial plan include? As we noted above, it can consist of four key sources. They are also complemented by a financing strategy. Let's consider the contents of the plan in relation to the sources, the essence of which we discussed above.
It is recommended to begin drawing up a financial plan for an enterprise with a strategy for the acquisition and distribution of the necessary capital. What should be included in this document? Its recommended structure assumes that it contains the following main sections:
Determining sources of revenue;
Formation of a range of necessary expenses;
Determining channels for attracting additional capital (through loans, investments);
Formation of key principles of interaction with the state (selection and justification of the organizational and legal form, taxation regime).
The revenue forecast involves drawing up a document that will reflect:
Determining key channels for generating profit (for example, selling specific types of goods that are in highest demand);
Identification of factors influencing sales dynamics (season, currency fluctuations, regulatory policies);
Formation of a revenue forecast in relation to certain periods (month, quarter, year and other periods).
The graph showing the dynamics of expenses suggests a very similar structure:
Determination of key cost items (for example, labor, raw materials, transport services);
Identification of factors influencing costs;
Generating cost forecasts.
In turn, the balance of revenue and costs, as well as financial statements, have sufficient complex structure(if they are based on forms approved by the state). The purpose of these documents is to identify how effective the organization’s current business model is, to determine how profitable the company is in a particular billing period.
It is quite possible that the management of the enterprise will decide to use the official forms of the income statement and balance sheet. In this case, to fill them out, you will need access to records of capital flows in the company, to transactions. So, it will be necessary to examine the chart of accounts for the financial and economic activities of the company. The data for filling out the marked forms is mainly taken from there. The chart of accounts for financial activities must, of course, be drawn up correctly. This is guaranteed by its standardization - at the level of federal legal acts.
What to pay attention to when drawing up a financial plan?
So, we have studied what a financial plan of an enterprise is and in accordance with what algorithms it can be developed. Let us now consider the key nuances that are useful to pay attention to when compiling the components of this source.
The first thing to note is that a financial plan is one of many documents drawn up in order to optimize the organization's development model. It may complement other sources. Most often, it is an integral component, and at the same time a very important one, of a larger document - a business plan. Its main function in this case is to formulate among the founders of the organization, investors or creditors an idea of the prospects for the commercial activities of a particular enterprise. The financial plan, as we noted above, will include data on revenue, costs, as well as statistical data reflecting them. All this information is needed by business founders and their partners.
The main thing is to reflect in the document what the main factors will be that influence the receipt and distribution of capital, how to recognize them in a timely manner and adapt the enterprise’s business model to possible changes. The plan for the financial and economic activities of the company makes it possible to determine the so-called “break-even point” of the company - the moment from which revenue consistently exceeds expenses (in another interpretation, when the established part of the investment is returned).
Forecasting income and expenses is usually formed for several years - most often for 3 years. As we noted above, in the first year you can distribute the corresponding indicators monthly. In the structure of income and expenses, those that are characterized by high stability or, conversely, volatility can be additionally distinguished. For example, with regard to costs related to the first type, this could be rent in accordance with the contract. Volatile costs may be associated with importing goods from abroad. Their value may change due to changes in the ruble exchange rate on the foreign exchange market.
When drawing up a financial plan, you should pay closer attention, as some researchers believe, not to the production aspect, but to the sales aspect. A company can develop a completely unique, technologically advanced product, but the company’s business model will turn out to be ineffective due to an insufficiently capacious market for the corresponding product at the prices that are included in the business plan as guaranteeing the profitability of the enterprise. Solving the corresponding problem may involve not only conducting financial analysis, but also using, as an option, sociological methods - surveys, communication with potential consumers on the Internet in order to identify their purchasing sentiments and demand potential.
In principle, when drawing up an algorithm for obtaining and distributing capital, you should not neglect promotion costs that are not directly related to production costs. It may well turn out that in order to occupy the necessary niche in the market, an enterprise will need to invest heavily in advertising so that more target consumers know about the brand.
When drawing up financial plans, it is necessary to act in conditions of access to current sources of legislation. You need to keep abreast of the latest news in the legal field. The legislator can quite significantly change, relatively speaking, the tax rate. The task of the enterprise management is to find out about this in time and make the necessary adjustments to the financial plan.
Also, you should not plan to save on staff salaries. Initially, it is recommended that the company’s budget, if possible, include, firstly, a staff size larger than may be required based on profitability criteria, in order, if necessary, to increase the overall productivity of the enterprise in a short time, and secondly, a sufficiently high amount of labor compensation. The organization must be attractive to the best specialists in the market segment in which it operates.
Who should develop a financial plan?
Who develops the organization's financial plans? In practice, these can be both ordinary specialists with the necessary competencies and managers. It is quite possible that the development of the relevant plan will be outsourced. Which of the noted mechanisms for drawing up an algorithm for obtaining and distributing capital is the most effective?
Eat a large number of points of view on this matter. Some researchers believe that the long-term portion of the plan should be entrusted to those employees who have access to strategic information. For example, this could be information about the specifics of the company's loans. Most likely, such employees will be people from among the top managers of the enterprise. In turn, monthly periods of financial plans may be best worked out by specialists who have a detailed understanding of the specifics of specific production areas. They will not need to know information of a strategic nature. But their competence in detailing business processes will probably be even higher than that of the company’s management.
What is better - when the financial plan of an institution is developed by in-house specialists, or a scheme in which the solution to the corresponding task is outsourced? It depends on many factors. Many enterprises do not trust outsourcing schemes too much due to the involvement of secret technologies, drawings, and materials in production. Those companies that see their competitive advantage not in unique developments, but in an effective business model, in many cases willingly agree to such cooperation mechanisms. Thus, competent, experienced specialists, albeit freelance ones, are involved in drawing up business plans. So, if they are accountants, then they, in particular, will always be able to properly take into account the chart of accounts of financial and economic activities, with which an untrained specialist may have problems.