In modern market conditions, the financial activity of the company is a key point in creating financial stability in the daily functioning of the enterprise. Without the ability to use the necessary financial resources and their proper allocation, without rational management of the company's cash flows, it is impossible to create stability and stability of the financial system of the company. In this regard, the financial side of the organization’s management is singled out as a share of the overall business process of the enterprise. In this case, the word "activity" implies a certain activity.
The concept
The financial and economic activity of an enterprise is a set of measures for the production and sale of goods, services, products with a limited amount of finance and company resources.
In fact, economic activity involves the process of creating goods, services, products. Financial activities are part of the economic activities of the entire enterprise.
Activities
The process of implementing financial and economic activities involves the following options:
- creation of equity through the issuance of shares and other instruments;
- application of credit resources, loans, commodity loans;
- use of equipment and fixed assets during operation;
- creation of working capital: the use of raw materials for production, spare parts, the formation of various stocks;
- lending to customers in product areas;
- cash optimization at the cash desk and in the current account;
- the formation of the investment portfolio of the company;
- the formation of opportunities for generating income, the formation of an assortment of goods and products, the selection of places for sale and sale, the development of a communication policy, and other marketing tools of the company;
- optimization of production costs, company costs, bringing them in line with the level of sales;
- other measures aimed at increasing the stability of the financial system of the company and its effective work in the near future.
Activity planning
Sustainable work of the organization on the market does not exist without the use of modern methods of financial management and planning. Practical and international experience shows that the problems of improving financial planning at the micro level are very relevant. Planning makes organizations stable in unpredictable market conditions. The development and implementation of a plan of financial and economic activity occupies a decisive place in the package of measures to create financial stabilization.
Consider the basic concepts associated with financial planning at the enterprise. The financial and economic activity plan is a planned consolidated document that reflects the expenses and cash flows of the company for the periods: current (up to one year) and long-term (more than one year). The role of this plan is to formulate the forecast indicators of the company.
The plan includes the preparation of capital and current estimates, forecast financial indicators for 1 or more years.
More recently, in Russia such a plan was drawn up in the form of a balance of income and expenses.
Extensive experience of most successful organizations in developed countries shows that in the midst of fierce competition, financial and business planning creates the prerequisites for the survival of companies, their prosperity and economic growth, as well as for the implementation of a successful strategy.
If the organization’s strategy is fundamental and aimed at the future development of the company, then planning represents more optimal methods for the formation of the production and implementation systems of the company, since there is a connection between resources, the organization’s potential and the company's development goals at specified intervals. In the event of uncertainty in the economic development of the company and the conditions of fierce competition, financial risks that determine the market economy, planning becomes the only condition that forms the basis for the sustainability of the financial and economic activities of the organization. Planning allows the company to calculate the necessary resources in order to organize the production and sale of products subject to the impact of all external changes that occur in the economic environment. Thus, highly effective financial management of an organization is possible only with the forecast of possible and existing resources and finances, as well as their sources.
Analysis Basics
Analysis of financial and economic activities is carried out to identify the main factors that affect the financial benefits and viability of the company. It allows you to predict growth and development trends, as well as business strategy.
Such an analysis is carried out by assessing the composition and structure of the company’s assets, their movement and condition, studying the dynamics and structure of sources (borrowed and equity). The methodology also examines the characteristics and properties of the financial stability of the company.
Analysis of the financial and economic activities of the enterprise is a research procedure that can be used to identify the financial weaknesses of the company in order to predict its most likely development. The analysis also includes the development of a solution to reduce and eliminate risks during operation.
In modern conditions of development of the economy of our country, questions of analysis of the financial and economic activities of the enterprise are very relevant. In the end, the success of the firm depends on the state of economic health. Therefore, analysis should be given maximum attention.
The most common areas of financial analysis of the company are: solvency, financial independence (stability, stability), structural analysis of assets and liabilities, business activity (turnover, capital efficiency), efficiency (profitability, profitability), liquidity.
Such issues are less frequently investigated: assessing the potential for bankruptcy, managing cash flows, analyzing investment attractiveness, business prospects, etc.
Purpose of analysis
The main objective of the analysis of the financial and economic activities of the enterprise is to:
- assessment of the dynamics of movement and the state of composition, structure of assets;
- assessment of the dynamics of movement, composition of own and borrowed capital;
- analysis of financial stability indicators of the company, assessment of level changes and identification of trends in dynamics;
- analysis of the solvency of the company, the liquidity of its assets.
Analysis results
Analysis and results of financial and economic activities are as follows:
- determination of indicators of financial position;
- calculation of changes in financial ratios over time;
- calculation of the influence of factors that cause changes in financial condition;
- development of conclusions and forecasts of the main trends of the company.
The role of financial analysis in forecasting management decisions is determined by the fact that the subjects of analysis are the economic services of an economic entity, as well as external users of information interested in its activities.
It is possible to get a comprehensive assessment of the state of the company, taking into account the parameters of the enterprise. There are approaches to conducting an integrated assessment; financial control mechanisms have been developed. There are management methods that include the normalization of financial stability through the preparation of payment calendars.
Activity audit
An audit of the financial and economic activities of an institution is the most reliable and accurate method of creating an opinion that it is functioning and developing in a positive direction in accordance with applicable law. It is recommended to regularly organize events for audit activities, analyzing the whole range of factors influencing the company.
To achieve the goals of the company, management technologies were invented, but only their implementation in production still does not allow achieving the desired result. For maximum efficiency, it is necessary to regularly check the financial and economic activities of the organization.
The best option is to engage independent auditors. These are, as a rule, highly qualified experts, whose extensive experience allows us to carry out the test accurately, clearly, taking into account all important factors. As a result of these processes, they provide a report with conclusions and recommendations to optimize the company's performance. The audit of financial and economic activities covers various areas and aspects of the business, which provides business owners with a lot of information about what is happening in the company.
The specialist who audits the plan of financial and economic activity, accumulates analytical information about all financial and accounting processes of the company, assesses the completeness of the methods and forms of accounting activity used. The auditor checks the accuracy of the company's accounting and offers the manager a plan of measures that will increase the profitability of the company. The auditor gives recommendations for minimizing and optimizing them. According to the results of innovations in the near future, the company will achieve higher rates of profitability while optimizing production costs.
An audit of financial and economic activities is important because the organizational structure of modern companies is very complex, as are the ongoing business processes within its framework. Attracting an auditor is the best option to achieve the results of an independent assessment of the company in terms of financial condition.
In the future, this will help to clarify the data about whether the full account is stored, what disadvantages it has, and what errors are made systematically.
Audit of the financial and economic activities of the enterprise includes a comprehensive study of the company, designed to determine: financial position, firm liabilities, assets of the company. In accordance with the results of the checks, information is disclosed that in the near future will be used with high efficiency for management decisions.
Profit as the most important result
Profit is always an indicator of the result of the company’s functioning in the market, since it shows the share of funds that the company leaves at its disposal after all expenses incurred.
To determine the financial result of the company, it is necessary to compare the income with the cost of production and sales (cost of production):
- if the income exceeds the cost, then the financial result shows a profit;
- if the income is equal to the cost, then the company only restored the costs of production and sale of products, there are no losses, but there is no profit as a source of industrial, scientific and social development;
- if costs exceed revenues, the company receives a negative financial result, that is, losses, this puts the company in a very difficult financial situation, which leads to bankruptcy.
Profit Functions
Profit as an economic category is manifested in the following functions:
- Profit is a characteristic of the profitability of a company as a result of its activities. This indicator is studied in conjunction with other financial ratios of the company.
- The stimulating function of profit is reflected in the fact that, being the financial result of the company, it ensures its self-financing. Part of this amount can be directed to the development of the company itself, to the social development of personnel, to innovations and innovations.
- The company's profit creates sources of income for the state, since it is from its amount that the company pays income tax, which occupies a significant share in the country's budget revenues.
Possible ways to increase efficiency
There are two parameters: profitability and risk level. Each business entity is characterized by a level of sustainability and effectiveness. The first parameter indicates the ability to carry out continuous production activities and fulfill the obligations undertaken on time, and efficiency indicates the company's ability to sell goods and services and make a profit for the owners.
Recommendations to strengthen the sustainability of the financial and economic activities of the enterprise are associated with increased stability of the economic system of the enterprise. Therefore, actions to increase financial independence, reduce the share of borrowed funds in the structure of sources, and increase liquidity indicators become apparent to the company. An example of such measures may be raising additional funds from owners, abandonment of customers who create problem receivables.
Conclusion
If a company seeks to increase the profitability of its work, management should take measures to increase the profitability and business activity of the company. An example of such actions can be the introduction of new products and services in the assortment line, increase in sales, optimization of costs and financial investments.