Financial and economic activity of the enterprise - what is it?

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

In today's market conditions, the financial activity of the company is a key moment 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 the rational management of the company's cash flows, it is impossible to create stability and sustainability of the company's financial system. In this regard, the financial side of the management of the organization is singled out as a share of the overall business process of the enterprise. At the same time, the word "activity" implies a certain activity.

Concept

The financial and economic activity of an enterprise is a set of activities for the production and sale of goods, services, products with a limited amount of finance and resources of the company.

In fact, economic activity involves the process of creating goods, services,products. Financial activity is part of the economic activity of the entire enterprise.

Activities

The process of financial and economic activity involves the following options:

• creating equity through the issuance of shares and other instruments;
• application of credit resources, loans, commodity loans;
• use of equipment and fixed assets in the course of operation;
• creating working capital: using raw materials for production, spare parts, forming various stocks;
• crediting customers in commodity areas;
• optimization of cash on hand and on the current account;
• formation of the company's investment portfolio;
• creating income opportunities, creating a range of goods and products, choosing places to sell and sell, developing a communication policy, other marketing tools of the company;
• optimization of production costs, company expenses, bringing them in line with the level of sales;
• other measures aimed at increasing the stability of the company's financial system and its efficient operation in the short term.

Activity planning

Sustainable work of the organization in 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 inmicro level is very relevant. Planning makes organizations stable in unpredictable market conditions. The development and implementation of a plan for financial and economic activity occupies a decisive place in the complex of measures to create financial stabilization.

Let's consider the basic concepts related to financial planning in an enterprise. The financial and economic activity plan is a planned summary document that reflects the company's expenses and cash flows for periods: current (up to one year) and long-term (more than one year). The role of this plan is to form the forecast indicators of the company.

The plan includes the preparation of capital and current estimates, forecast financial indicators for 1 or more years.

Most recently in Russia, such a plan was drawn up in the form of a balance of income and expenses.

The 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 is more optimal methods for the formation of the production and sales systems of the company, since there is a connection between resources, the potential of the organization and the company's development goals in given periods of time. In the event of uncertainty in the economic development of the company and in conditions of fierce competition, financial risks that determinemarket 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 taking into account the forecasting 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 benefit and viability of the company. It allows you to predict growth and development trends, as well as business strategy.

This 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 (debt and equity capital). The methodology also examines the characteristics and properties of the company's financial stability.

Analysis of the financial and economic activities of an enterprise is a research procedure that can be used to identify the financial weaknesses of a company in order to predict its most likely development. The analysis also includes the development of a solution to reduce and eliminate risks in the course of operation.

In the current conditions of the development of the economy of our countrythe issues of analysis of the financial and economic activities of the enterprise are very relevant. In the end, the success of the company depends on the state of economic he alth. Therefore, the maximum attention should be paid to the analysis.

The most common areas of financial analysis of the company's activities are as follows: the study of solvency, financial independence (stability, stability), structural analysis of assets and liabilities, business activity (turnover, efficiency of capital use), efficiency (profitability, profitability), liquidity.

The following issues are less frequently studied: bankruptcy potential assessment, cash flow management, analysis of investment attractiveness, business prospects, etc.

Purpose of analysis

The main purpose of the analysis of the financial and economic activities of the enterprise is as follows:

• assessment of the dynamics of movement and the state of the composition, the structure of assets;
• assessment of the dynamics of movement, the composition of equity and debt capital;
• analysis of indicators of the company's financial stability, assessment of changes in the level and identification of trends in dynamics;
• analysis of the company's solvency, liquidity of its assets.

Analysis results

The 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;
• calculationthe influence of factors that cause changes in financial condition;
• development of conclusions and forecasts of the main trends of the firm.

The role of financial analysis in predicting 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 obtain a comprehensive assessment of the state of the company, taking into account the parameters of the enterprise. There are approaches to conducting an integral assessment, financial control mechanisms have been developed. There are management methods that include the normalization of financial stability through the preparation of payment calendars.

Audit activities

Auditing 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 full range of factors influencing the firm.

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 audit 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 the test to be carried out accurately, clearly, taking into account all important factors. As a result of these processes, they provide a report with conclusions and recommendations for optimizing the company's performance. The financial audit covers various areas and aspects of the business, providing business owners with a lot of information about what is going on in the company.

A specialist who audits the plan of financial and economic activities, accumulates analytical information about all financial and accounting processes of the company, evaluates the completeness of the methods and forms of accounting activities used. The auditor checks the accuracy of the company's accounting and proposes to the manager a plan of measures that will increase the profitability of the company. The auditor gives recommendations for their minimization and optimization. Based on the results of innovations, in the short term, the company will achieve higher rates of return while optimizing production costs.

Audit of financial and economic activities is important due to the fact that the organizational structure of modern companies is very complex, as well as the business processes carried out within it. Engaging 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 clarify whether a full account is kept, what its shortcomings are, and what errors are being made systematically.

Audit of the financial and economic activities of an enterprise includes a comprehensive study of the company, designed todefinitions: financial position, firm liabilities, assets of the firm. In accordance with the results of the audits, information is disclosed that will be used with high efficiency for management decisions in the near future.

Profit as the most important result

Profit is always an indicator of a company's performance in the market, as it shows the proportion of funds that the company has at its disposal after all expenses incurred.

To determine the financial result of a company, it is necessary to compare revenues with the cost of production and sales (product cost):

• if the income exceeds the cost, then the financial result shows a profit;
• if income is equal to value, then the company only restored the cost 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 income, the company gets a negative financial result, i.e. 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 firm's profitability as a result of its activities. This indicator is studied in conjunction with other financial ratios of the company.
• The incentive function of profit is reflected in the fact that, being a financial resultcompany, 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 innovation and innovation.
• 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 improve efficiency

There are two parameters: profitability and risk level. Each business entity is characterized by a level of sustainability and efficiency. The first parameter indicates the ability to carry out continuous production activities and fulfill its obligations on time, and efficiency indicates the company's ability to sell goods and services and make a profit for owners.

Recommendations on strengthening the stability of the financial and economic activities of the enterprise are associated with the growth of the stability of the economic system of the enterprise itself. Therefore, for the company, actions to increase financial independence, reduce the share of borrowed funds in the structure of sources, and increase liquidity indicators become obvious. An example of such measures could be raising additional funds from owners, turning away customers who create problem receivables.

Conclusion

If a company seeks to multiply the profitability of its work, management mustto carry out measures in the direction of increasing the profitability and business activity of the company. An example of such actions can be the introduction of new products and services in the product range, an increase in sales volumes, optimization of costs and financial investments.