Financial Results of Enterprise Activity 1 General characteristics

Financial Results of Enterprise Activity 1. General characteristics of financial results. 2. Estimation of financial results. 1

1. General characteristics of financial results. 2

RESULT 3

Result as an accomplished objective Objective 4

“Objective tree” of enterprise Results of Enterprise Activity 5

Classification of Results (1) According to objective level : According to manufacturing stage: • strategic • final • operational • intermediate 6

Classification of Results (2) According to group of interest : According to enterprise activity : • • • Operational result Investment result Financial results Result from the main activity Result from the extra (extreme) activity • Result from other activity (innovative, foreign trade) Results for customers Results for personnel Results for investors / creditors Results for owners / shareholders • Results for society 7

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Classification of Results(3) According to value chain : According to economic character : • FinancialІ • Main results are the core objective of enterprise • Supporting results are essential for accomplishment of main results • nonfinancial • Integral 9

Enterprise Activity vs. Financial Results Operational Activity of the Enterprise Financial Results Investing Activity Financial Activity 10

Finances, Financial Results and Indicators with customers • Receipt for goods sold • Gross Profit • Net Profit • Debts etc. With personnel Finances are • Salaries and wages • Salary accruals • Dividends • Other reimbursements the system that includes the circulation of money With banks Other circulations • Credits received • % paid • Share prices • dividends With share • Value of enterprise -holders / • Profit from fixed volume owners investment 11 • Own capital etc.

2. Estimation of financial results. 12

Financial Analysis • refers to an assessment of the viability, stability and profitability of a business, sub-business or project. • Business decissions: Continue or discontinue its main operation or part of its business; make or purchase certain materials in the manufacture of its product; make decisions regarding investing or lending capital etc • Information database: accounting (financial statements: balance, cash flow statement; financial results statement, own capital statement) 13

Approaches to Financial Analysis statistic dynamic • Bases on property analysis with the balance data • Determines cash flows on enterprise with the data of financial report • Indicators: • solvency • liquidity • • 14 Profit Cash flow profitability Leverage effect

Financial Stability of Enterprise Solvency of Enterprise • its ability to pay its obligation to creditors and other third parties in the long-term; Liquidity • its ability to maintain positive cash flow, while satisfying immediate obligations. Profitability Managerial efficiency Business Activity 15

Indicators System for Estimation of Financial Statement of Enterprise 1 group. Indicators for Estimation of Fixed Asset 2 group. Indicators for Estimation of Liquidity 3 group. Indicators for Estimation of Financial Stability 4 group. Estimation of Profitability Methodical recommendation for detection of insolvency and attributes of bankruptcy concealment, fictitious bankruptcy or bankrupting, 2006 16

Indicators for Estimation of Liquidity current liquidity Growth positive tendency Financial flexibility Sustainable growth rate concept (0 g 1) Coverage ratio Growth positive tendency (current assets/current liabilities) Quick (liquidity) ratio Boundary values - 0, 6 -0, 8 Absolute liquidity ratio Cash ratio, the strictest indicator , Boundary values - 0, 2 -0, 35 Current assets share in actives percentage Own current assents share in current assets percentage Own current assets share in inventory coverage Lower boundary value – 50% Inventory share in current assets percentage 17

Indicators of financial stability • • • • • • Equity to total assets ratio Leverage ratio Structure of long-term investments Coefficient of long-term credits Borrowed to own capital ratio Financial leverage Debt ratio Labour productivity Output to capital ratio Receipts Turnover Time of one receipt turnover, days Inventory Turnover Time of one inventory turnover, days Time of one creditors turnover, days Time of operational cycle, days Time of financial cycle, days Debt coverage ratio Own capital turnover Capital turnover The economical growth sustainability solvency Beaver financial ratio 18

Profit (types) Features 1. According to business activity (Financial results statement) Types Operational Profit Financial Profit Investment Profit Operating Profit Extreme Profit 2. According to costs deduction Gross profit Net profit Marginal profit 3. Depending on distributing process distributed undistributed 4. Depending on inflation influence nominal real 19

Financial (economic) profitability • A class of financial metrics that are used to assess a business's ability to generate earnings as compared to its expenses and other relevant costs incurred during a specific period of time. • • Types: Product profitability Return on sales Return on assets Profitability of transaction Return on shareholders’ funds etc 20

“Leverage” • The amount of debt used to finance a firm's assets. A firm with significantly more debt than equity is considered to be highly leveraged. 21