The main functions of any enterprise (commercial organization) are the production of products (manufacture of products, performance of work, provision of services) and the achievement of positive (or desired) economic results from its implementation.
Along with the direct production and marketing of products, the enterprise acquires the necessary resources (material, labor, etc.) and uses them in the production process, carries out activities related to the development of science and technology, and carries out other activities. Depending on the level of costs for these types of activities, the final result of the enterprise as a whole is determined.
It can be concluded that intermediate links of the same chain lie between production and consumption. Each of these links can have its own intermediate final result. Orientation to the positive final results of the work of the enterprise requires strict continuity of all links in this chain and the subordination of intermediate final results to the general one.
Evaluation of the performance of the enterprise is carried out using a system of indicators, which combines separate groups of indicators for each area of activity. They determine the content of each activity.
Practice shows that one of the most difficult problems for enterprises is the question of how to bring and implement the decisions made to the structural units of all levels of management. Based on these positions, it is important to single out from the system of indicators suitable for evaluating the final results. Let's call these indicators key.
The question arises: how to build a system of key indicators?
The general and indisputable statement that the system should include such economic indicators that can be used to quantitatively measure and qualitatively reflect the most important aspects of the enterprise's activities is not enough to solve the problem, since it remains unclear how to single out the most important aspects of its activities. For example, the activity of any division of the enterprise includes about twenty functions. It is practically impossible (at least difficult) and economically unjustified to set volumes, deadlines and take into account the performance of all functions.
In practice, the selection of indicators is usually based on the intention of quantifying each function. In this case, it is possible to facilitate the decision on the fate of a particular indicator. However, this method of selecting performance indicators, while useful, is far from perfect. Its main drawback is the possibility of subjective assessment when choosing specific indicators, their number and assessing the significance of each of them in the overall performance. It is not surprising that the economic literature provides different opinions on the application of these parameters. It follows from this that the approach to developing a system of indicators for a particular enterprise should be creative, taking into account its individual organizational and technical features and the specifics of a particular area of activity.
From the whole variety of indicators, key indicators should be selected, with the help of which it would be possible to evaluate the final results of certain types of activities, and then - the final results of the enterprise as a whole.
It must be borne in mind that the system of indicators for evaluating the final results of an enterprise's activities by itself can significantly affect what goals the enterprise will actually face and how they will be achieved.
The planned activity of the enterprise should set the team to achieve the necessary final results. The plan covers the production and economic activities of the enterprise, assesses the expected costs and results, and is an indispensable condition for its successful functioning.
The restructuring of the system of planning indicators in this direction requires the establishment of goals and final results of the enterprise as a whole and its individual types, the transformation of the overall final result into a direct object of planned impact through key indicators for assessing intermediate final results.
To correctly set goals, you should build a logical chain of relationships between the main directions of costs and results, which is the most
would fully reflect the cause-and-effect relationships between costs, applied production resources and the main types of economic results. The relationship between these directions, separated into separate blocks, is shown in fig. 2.2.
The basis of all the results of the enterprise's activity is the organizational and technical level and levels for other activities (see block 1).
Rice. 2.2.
The organizational and technical level determines the technical equipment, specialization and cooperation of production, the duration of the production cycle and the rhythm of production, labor and management, etc. The technical side of production is not the subject of our study. Organizational issues are partially resolved. At the same time, economic indicators are studied in close connection with the level of use of technology, the use of production technology, its organization, etc. In this case, economic indicators acquire the character of technical and economic ones.
Levels for other types of activities (see block 1) include the foreign economic relations of the enterprise (the state of sales markets, purchases, sales), as well as the social conditions of life of production teams. The degree of use of production resources depends on these conditions and the organizational and technical level.
Efficiency in the use of production resources (see box 2) also manifests itself in the following three dimensions:
- the amount of resources used (in advanced capital) - see block 3;
- the amount of resources consumed (in the cost of production) - see block 4;
- the volume and quality of manufactured and sold products - see block 5.
When comparing the applied resources (see block 3) and the volume of production (sales) of products (see block 5), the efficiency of the applied capital is determined (see block 6). The more capital turnovers are made during the period under review (see block 6), the more stable the financial condition and the higher solvency (see block 8).
When comparing the consumed part of the capital - the cost of production (see block 4) and the volume of production (see block 5) - the profit of production is determined (see block 7). The more efficiently the consumed part of the capital is used (see blocks 2 and 4), the higher the profit will be (see block 7), which will also favorably affect the financial condition and solvency of the enterprise (see block 8). Profitability (see block 7) and capital turnover (see block 6) determine the financial condition of the enterprise (see block 8).
Each block, as a relatively separate system, is included in the general system of interconnections between the main directions of costs and results. On the basis of the presented set of relationships, it is possible to determine general goals for all types of activities and private goals for individual types of enterprise activities. The presented structure of interrelations (see Fig. 2.2) should first of all be oriented towards the possibility of comparing costs and results (see section 2.3). The requirement to give the system of relationships the ability to measure is directly related to the solution of the problem of choosing a common goal and a common indicator for assessing the final result of the entire activity of the enterprise, as well as the choice of private goals and indicators for evaluating intermediate final results.
Each system of indicators for evaluating the final results should be determined by one single (general) goal set to solve a specific final result of the entire activity of the enterprise. To solve this problem, it is necessary to achieve the transformation of the common end result into the common and only goal of the entire system of indicators. Such a goal will be the final result to which the enterprise should strive in its activities.
As practice shows, the role of the overall end result (general indicator) at the enterprise level can be profit; at the level of departments - the cost of production, and in some cases - the degree of use of available resources, profit.
From the foregoing, we can conclude that the main and at the same time the general goal of each enterprise (each commercial organization) is to maximize profit from its activities. For manufacturing enterprises, book profit is one of the most common estimated indicators. This is the main measure of the absolute value of the excess of results over costs.
The desire for maximum balance sheet profit cannot be an end in itself, it must contribute to the performance of the relevant functions of the enterprise, expressed in its lines of activity. "Planning, in so far as it serves to formulate established goals, helps to create a unity of common purpose within an organization."
The choice of a specific indicator for assessing the overall final result of the activities of a structural unit depends on many factors, the main ones being the form of management, the level of the economic link, the state and capabilities of the current accounting system.
The achievement of the final result is associated with the activities of the enterprise and its structural divisions, the success of which is determined by the extent to which it meets the overall goal.
The activities of all structural divisions of the enterprise, all areas of its production and economic activities (sales and production, development of science and technology, resource provision, financial, social activity etc.) must be subordinated to the stated general purpose. Therefore, for evaluation, it is necessary to use a system of indicators that reflects the key quantitative and qualitative characteristics in the circle of the enterprise's activities, subject to the final result (general goal). For each area of activity, their own private goals are set and their own private indicators for evaluating the final results aimed at achieving a common goal (general final result) are developed.
The private goals of a manufacturing enterprise must first of all be commercial, i.e. aimed at making a profit and associated with the achievement of a certain role in the sales markets, the growth of production, and the strengthening of the financial position. These goals should also be measurable using appropriate indicators.
Despite the variety of performance indicators of the enterprise, on the basis of the presented set of relationships between the main areas of costs and results (see Fig. 2.2), five sets of private indicators for assessing intermediate final results can be distinguished, subject to the following structure of private goals: market, social, production, economic and other (See Figure 2.3).
For each set of indicators, an indicator (criterion) for evaluating the final result is determined. Recall that in the economic literature, a criterion is a set of requirements, under which feasible solutions best satisfy the goals set.
A possible criterion for achieving a market goal may be market share or the main market segments and their share (by product groups and regions). The criterion for achieving a social goal can be wages or living standards (per capita consumption per employee, determined by dividing the total amount of the consumption fund by the number of employees). The criterion for achieving the production goal should be the target sales volume (sales proceeds). The criterion for the realization of the economic goal in the conditions of economic independence of enterprises can be the maximum profit remaining at their disposal from the production and marketing of all aggregate products. Other (other) goals also have their own achievement criteria. They can be very different and depend on the nature of the key problems of the enterprise.
For example, the criterion for achieving the goal of improving the organization of production may be the planned cost reduction.
To achieve private goals, a large set of tasks corresponding to subgoals should be solved. Some problems can be solved, others - not, and then they go into the category of problems. As a rule, in order to solve a problem, it is necessary to look for new approaches and methods.
From the general list of problems, the most important ones can be singled out, without the solution of which the goal cannot be achieved. These will be strategically important problems, and the changes corresponding to their solution will be the development strategy or the main directions of development.
Rice. 2.3.
The nature of strategically important issues may change. Other conditions in which the enterprise is forced to work can lead to such a change in strategy that it will turn from defensive to offensive. In this case, the new working conditions of the enterprise should correspond to the planned strategy.
According to the accepted directions for solving problems in order to achieve the set private goals, we determine the composition of the key performance indicators, which should give a quantitative description of the compliance of the planned solutions with the accepted criterion.
Let's determine the most significant (key) indicators for evaluating the final results of the enterprise as a whole and rank them in order of importance and achieving consistency in the selected areas of activity. At the same time, we use the indicators and methods of their measurement that exist in domestic accounting and statistics.
The composition of the final results of each block and their measurement can be represented by the following key indicators.
Among the initial (key) performance indicators of the enterprise are indicators for evaluating the results of activities in the market of goods and services (see Fig. 2.2, block 1; Fig. 2.3). We are talking about the foreign economic relations of the enterprise and, above all, about market research, which will make it possible to reasonably formulate the purpose of its activities. It is necessary to focus on this issue, which will allow you to conduct successful business activities, promote the company's services on the market, and achieve advantages over competitors.
As a criterion for achieving a market goal, one can take the share of the sales market controlled by the enterprise, determined by the share of the turnover or sales volume of the enterprise in the total value of products sold in this market. In this case, two or three indicators can be included in the key indicators for evaluating the final results, reflecting, for example, the dynamics of demand for all comparable products on the market, the dynamics of changes in the production capacities of competitors, forecasts of the possible number of buyers or information about the contract with consumers, accounting their requests.
All of these indicators are somehow related to increasing the size of profits (the common goal). So, for example, an increase in the dynamics of demand for all comparable products in the market potentially leads to an increase in the mass of profit received by the enterprise. This will require an increase in production.
The social development of teams is a scientifically based definition of goals, directions and specific indicators and the definition of means for achieving goals (see Fig. 2.2, block 1; Fig. 2.3).
From a methodological point of view, when setting goals, it is necessary to achieve optimization of all aspects of the life of teams, and above all, production, economic and social life. In the production and economic sphere, the task is reduced to the formation of a creative attitude to work, increasing labor activity, and the qualifications of workers. In the social and everyday life - to improve working and living conditions at the enterprise, improve housing conditions, increase the cultural and everyday needs of workers and their families. It is necessary to specify the goals and objectives of social development for each team, taking into account its specifics and the achieved level of social development.
The possibilities of meeting the social needs of the team are determined by the end results of the enterprise, in this case, profit (income). Enterprises independently decide what part of the earned funds they will direct to the expansion and modernization of production, payment and material incentives for labor, social development team.
Among the indicators for evaluating the results of production and marketing of products is a large list. To identify key production indicators, it is necessary to proceed from the established criterion for the implementation of the production goal, taking into account the specifics of production (see Fig. 2.2, block 5; Fig. 2.3). This approach involves a qualitative definition of the result of production and marketing of products (see Table 2.4).
| General list of indicators | Indicators for evaluating key results from the composition | |
|---|---|---|
| existing indicators | proposed indicators | |
Commodity nomenclature and range of products. The volume of commodity (gross) production in current and comparable wholesale prices. Product quality indicators (product quality coefficient, losses from marriage, delivery of products from the first presentation, etc.). Other indicators (the volume of work in progress and its changes in the planned period, the volume of gross and intra-production turnover, the volume of net and normative net products, etc.) |
Volume of sales (sales) in current wholesale prices. Commodity nomenclature or volume of commodity (gross) products in current wholesale prices. Product quality factor |
The volume of products (production) in current (comparable) prices instead of indicators of the volume of marketable (gross) output in current wholesale prices and the volume of marketable (gross) output in comparable prices |
The first of the initial indicators for evaluating the final results and the criterion for the implementation of the production goal may be the size of the turnover of the enterprise (commercial organization). It is calculated as the total sales volume (sales volume), i.e. the cost of goods and services sold to consumers, as well as the cost of sold fixed assets and other property. This key performance indicator determines the degree of participation of the enterprise in the process of expanded reproduction, and at the same time characterizes the production, economic and financial activities. It is associated with such a final indicator (result) of the enterprise's activities as profit. Given the great potential of the indicator, it can be concluded that for a consolidated assessment of the final results, it will be enough to single out the indicator in question from the composition of production results.
However, the volume of sales is strongly influenced by inflationary processes, since it is determined only by sales prices, it is calculated for all products (all works and services) as a whole (it is not established for individual nomenclature positions). Therefore, in practice, quite often, in addition to the sales volume indicator, production indicators are used (see Table 2.4).
Evaluation of production results should be carried out where possible (especially for structural divisions of the enterprise), using the indicator "commodity product range". Where this is not possible, through an indicator reflecting the volume of marketable (gross) output in comparable prices. These prices should be prevailing market prices. These are current wholesale prices. To take into account inflationary processes, measure the dynamics of output (production) and labor productivity, as well as assess structural relationships, the volume of marketable (gross) output for the compared reporting (previous) period should be recalculated into prices valid in the planning period. All this will make it possible to keep records on real expenses and incomes and exclude from the practice of using indicators of volumes of marketable (gross) output separately in comparable and current prices.
High quality is a key element of the market. In the single European market, those businesses that meet the needs of present and future customers will be successful. It is necessary to change the goals of production and become a leader producing the highest quality product. The higher the quality of the product, the higher, as a rule, the volume of production (sales), expressed in market prices. It is necessary to adhere to the alternative - to produce quality products and sell them at a more affordable price. In order to assess success in the global market, it is recommended to use indicators that are of decisive importance: specific productivity, reliability, cost of operation and durability.
As mentioned earlier, the criterion for the implementation of the economic goal may be the profit remaining at the disposal of the enterprise (see Fig. 2.3). The possibility of accepting balance profit as a criterion is not excluded. The use of net profit leads to a decrease in the absolute value of the total profit of the enterprise by the amount of taxes and other payments, an additional decrease in the value of the result when it is compared with the resources used. It should be noted that planning based on profit indicators, as a rule, provides the absolute amount of profit required for a given period, but not necessarily the maximum.
The problem of assessing the influence of factors on the final results of enterprises' activities is becoming more and more urgent. The dependence of profit, as you know, manifests itself through a change in production costs (sales) and production volumes (production, sales). The degree of influence in both directions, in turn, depends on changes in the level of resource use (see Figure 2.2).
From this we can conclude that economic goals should be measurable with the help of indicators for evaluating the final results of the enterprise, divided into two large groups that will be organically interconnected in their general cycle. These are indicators of production costs, as well as the economic efficiency of the use of resources and financial condition (see Fig. 2.2, blocks 2, 4, 8).
The results of the enterprise's work from the point of view of assessing them by production costs are determined by a number of indicators of the cost of production. These indicators are made up of the costs associated with the use of materials, fuel and energy, wages, fixed assets and other costs in the production and marketing process. Consequently, the result at the cost of production depends on the level of labor productivity of workers and employees, the rationality of the use of material resources and fixed assets (see Fig. 2.2, blocks 2, 4).
To determine the profit from the sale of products and other property, such a key indicator as the cost of goods sold should be used.
The key indicator that determines the average cost can be the cost per ruble of marketable (sold) products, which is defined as the quotient of the cost of all marketable (sold) products divided by the same volume of marketable (sold) products, calculated at current wholesale prices (free market prices). prices).
The assessment of the results of the enterprise's work to ensure its activities is based on complex final indicators that characterize both the state of resources (the movement of resources, the organizational and technical level, the use of resources - see Fig. 2.2, block 1), and the economic results of their use (the efficiency of the use of resources - block 2, capital turnover - block 6 and financial condition - block 8). The group of indicators for the economic goal block is designed to evaluate economic results.
It is known that economic results on the use of resources can be determined not only by intensive, but also by extensive factors. Qualitative indicators of resource use characterize intensity, and quantitative indicators - extensiveness.
The key indicators for evaluating the use of certain types of production resources can be indicators that compare increases in costs and results. These increments should not be absolute, but relative, calculated in relation to a specific resource in physical terms or to another object. Such an object can be the number of machines, machines, jobs, the size of the production area, the number of employees.
The overall economic result of the work of enterprises characterizes the concept of economic efficiency of production, which is determined by the ratio of the effect obtained to the costs. The criterion for increasing the economic result of work is max profit. Therefore, as a numerator, you can use production resources, expressed as the sum of the following indicators: the average annual cost of fixed production assets, as well as the annual wage fund for employees of the main activity.
Indicators of the use of certain types of resources are inextricably linked with economic growth (decrease). It is necessary to define them more specifically. For example:
- to assess the efficiency of the use of production resources - material productivity, labor productivity and capital productivity (see Fig. 2.2, block 2);
- to assess the effectiveness of the applied capital - capital turnover (see Fig. 2.2, block 6);
- to assess the financial condition - the profitability of working capital (see Fig. 2.2, block 8).
Market relations increase the importance of the supply and procurement sphere of activity. Depending on the level of costs of this activity, the overall end result of the enterprise is determined. When forming a logistics plan, indicators are calculated, including assessments of the efficiency of the use of material resources. Among them are the indicators displayed in Table. 2.5.
The key indicators for evaluating the efficiency of the use of material resources can be material consumption and material efficiency (see Table 2.5; Fig. 2.2, block 2).
Indicators of material consumption quite fully characterize the current material costs, but do not adequately reflect the efficiency of using objects of labor that take the form of working capital in production. This gap is filled by the indicator of material efficiency.
It is proposed to calculate the indicator of material efficiency as a percentage as a change in the cost of material resources relative to the volume of production of marketable products according to the formula:
| General list of indicators | |
|---|---|
| Material consumption - specific gravity(share) of material costs in the cost (cost) of products. Consumption of the most important types of material resources in physical terms per 1 million rubles. commercial products (works, services). Material costs for 1 rub. commercial products (works, services). The ratio of the growth rate of material costs to the growth rate of marketable products. Average reduction in material consumption rates (%). Specific consumption of material (metal) per unit of production for the entire service life of the machine (structure). Electricity consumption for 1 hour of equipment operation. The coefficient of use of materials. Cutting factor of sheet material |
Material return - change in the cost of material resources relative to the volume of marketable products. Material consumption - the share (share) of material costs in the cost (cost) of products |
Labor resources are resources associated with the use of living and materialized labor. Therefore, the task of more efficient use of labor resources is solved in two directions: saving living and materialized labor. The latter is achieved through the optimal use of labor costs embodied in the products of labor. The main direction in which the economy of the enterprise's labor resources is achieved is the growth of labor productivity. This is a key indicator for assessing the effectiveness of the use of labor resources (see Figure 2.2, block 2; Table 2.6).
| General list of indicators | Key indicators for evaluating the final results |
|---|---|
| Labor productivity (output per worker). Labor productivity (newly created value by the amount of wages of workers). Labor productivity growth rates. The share of production growth due to increased labor productivity. Saving the living labor of annual employees (in comparison with the conditions of the reporting year). The ratio of the growth rate of labor productivity to the growth of average wages. Reducing (increasing) the labor intensity of products |
Labor productivity (newly created value per employee's wages) |
To assess the efficiency of labor, it is advisable to calculate the productivity indicator as a quotient of the division of the newly created value (the sum of wages, profits or surplus value and the effect of production or management) by the wages of all workers. According to the plan, wages and profits (surplus value) can be accepted according to the established standard. The economic effect (surplus profit) is determined by the actual results of work as the difference between the actual profit (surplus value) and the planned (normative) value. The practice of the enterprise has shown the feasibility of using the considered methodology for calculating labor productivity. The proposed mechanism, in contrast to the traditional way of measuring labor productivity, additionally takes into account the expected ways to achieve labor efficiency.
The equipment and areas directly used in the manufacture of products are resources that limit the production capacity of the enterprise. Fixed production assets serve as the basis for measuring the production capacity of the enterprise, thus determining the possibility of output. However, an increase in the volume of fixed production assets does not always lead to an increase in production capacity. The same result can be achieved with a more efficient use of the existing fixed production assets. The key indicators for assessing the use of capacity resources can be capital productivity or capital intensity (see Figure 2.2, block 6; Table 2.7).
| General list of indicators | Key indicators for evaluating the final results |
|---|---|
| Capital productivity. The capital intensity of products. The cost of introduced fixed assets per 1 rub. capital investments. Equipment shift factor. Equipment extensive load factor. Equipment capacity utilization factor. Capital turnover |
Return on assets or capital intensity of production. Capital turnover. Real increase in the property of the enterprise |
As a key indicator for assessing capacity resources and financial resources, the indicator of the turnover of all capital can be adopted (see Table 2.7). Comparison of indicators of production volume and the value of advanced fixed and working capital characterizes the reproduction and turnover of capital, i.e. capital productivity of fixed production assets and turnover of working capital.
In addition to the available indicators for assessing the level of use of fixed assets and working capital, it is proposed to determine the indicator of the real increase in the property of an enterprise (see Table 2.7) using the formula:
Property prices, of course, should be comparable. The growth of the property mass of the enterprise indicates an increase in the volume of its funds and vice versa. However, the increase itself may be the result of overspending of funds, the growth of doubtful debts, which cannot be equated with such material values like cash in a checking account or at the cash desk. The level of realizable possibilities of cash is always equal to one, and for fixed assets it is much lower due to the inclusion of depreciation in their accounting price.
Thus, in order to assess the efficiency of the use of production resources, one can limit oneself to the above range of indicators. The choice of the number of indicators depends on the specific task that the researcher is solving.
The final block of the whole complex of interrelated key indicators for assessing costs and results is the financial condition and solvency of the enterprise (see Figure 2.2, block 8). To characterize various aspects of the financial condition, both absolute indicators and relative ones, which are financial ratios, are used. This is a large list of indicators that reflects the financial performance of the enterprise, the efficiency of financial and economic activities and the financial condition as a whole (see Table 2.8). Let's consider the main indicators reflecting the key financial results.
How successful the activity of the enterprise can be assessed by the value of one of the key indicators - profitability.
This is the most common indicator, which is calculated as a percentage or a ratio as the ratio of gross (balance sheet) profit to the average value of the balance of the company's assets (for example, to the average annual cost of fixed assets and working capital or to the average annual cost of working capital). A decrease in the indicator indicates a decrease in demand for the company's products and an overaccumulation of assets.
The use of only working capital in the formula expresses their profitability. This indicator is more sensitive to changes in efficiency, since the cost of fixed production assets often (from month to month) remains a conditionally constant value. It can be taken as key indicators for assessing the financial condition of the enterprise.
Coverage ratio (working capital per 1 ruble of term liabilities).
The turnover of receivables (revenue from the sale of products per 1 ruble of receivables).
Inventory turnover (revenue from product sales per 1 ruble of inventory and costs)The profitability of the main activity (profitability of sales) is determined by the profit from sales to the volume of economic turnover, i.e. to sales revenue. The return on sales ratio is calculated. This indicator reflects the profit per unit of product sold, and depends on factors such as price and sales volume. An increase in prices leads to a decrease in sales, and a decrease in prices causes an increase in sales. It is necessary to constantly decide whether it is necessary to reduce the price, increasing the volume of sales (economic turnover), or whether this price will achieve the required profitability. This indicator, as well as the profitability of working capital, is closely related to turnover. Because of this, this indicator can not be included in the key ones.
Another assessment of efficiency is envisaged - the profitability of products, which is defined as the ratio of the amount of profit received from the production or sale of products to its full cost. With an increase in the level of profitability and the stability of prices for products and materials during the billing period, the increase in cost efficiency will be due to the acceleration of turnover. With separate accounting for the production costs of each type of product, it becomes possible to compare individual levels of product profitability in order to further develop the most profitable activities. When costing is based on the distribution of costs in proportion to selling prices, the calculation of individual levels of product profitability is meaningless.
The financial position of the enterprise can be determined by the ratio of own and borrowed funds. The amount of own funds is characterized by the difference between the balance and the amount of accounts payable and loans received. A high share of own funds in comparison with borrowed funds is an indicator of the successful operation of the enterprise. At the same time, the lower this ratio, the lower the share of creditors' investments in relation to the enterprise's contribution. In this case, the reasons for this situation should be clarified, since the reluctance to use loans often leads to curbing sales growth, slowing down turnover and, ultimately, to a drop in income.
The stability of the financial position of the enterprise is often determined by calculating the liquidity ratio, which is the ratio of the working capital of the enterprise to the amount of short-term loans and payables. With the help of this coefficient, the ability to repay short-term debts is established. If the ratio is below 100%, the financial position of the enterprise is considered extremely unstable and indicates its insolvency. If the coefficient approaches zero, urgent measures must be taken to correct the existing situation. And only with a coefficient of more than 100% the financial position of the enterprise can be considered favorable. This coefficient can be included in the key indicators for assessing the solvency of the enterprise. Solvency and the availability of resources for development are among the most important not only financial but also general economic issues.
Other goals also have their own key performance indicators (see Figure 2.3). For example, the achievement of organizational improvement of production, ensuring labor productivity at the intended level. All components of the organization of production - the organization of the production process, labor and management are of independent importance. Therefore, if necessary, a system of indicators of key results should be applied, taking into account the noted specifics of the purpose of the organization of production. To assess the effectiveness of enterprises aimed at improving the technical level of production, a system of key indicators of final results is used, united in four main groups of levels: equipment, technology, labor force, mechanization and automation of production and labor.
The considered methodology for choosing the composition of key indicators contributes to the definition of a rational structure of goals, final results and key indicators, and also focuses on the most important problems, without solving which the goals will not be achieved.
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Record Type Computed
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Advice: If you want to display this data as text, you can set up a calculated field and insert the calculated field instead of the end result type. Base your calculated field, in the End result type field, and use the following formula:
Key([end result type] = 0, "NA", [end result type] = 1, "end result", [end result type] = 2, "Dependency")
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ANALYSIS OF THE IMPACT OF A PARTICULAR METHOD OF PAYMENTS WITH BUYERS AND CUSTOMERS ON THE FINAL FINANCIAL RESULT OF THE ORGANIZATION
Budzan Anastasia Vasilievna
Primorsky Krai, Vladivostok, trainee
annotation
The article discusses the features of accounting for settlements with buyers and suppliers of the organization, as well as recommendations for improving the system of financial settlements with buyers. The relevance is the analysis of the influence of receivables maturities on the final financial result of the company, taking into account official inflation indicators.
Budzan Anastasia Vasilevna
LLC "First Class"
Primorsky Krai, Vladivostok
Abstract
The article considers the features of accounting for payments with buyers and suppliers of the organization, as well as recommendations for improving the system of financial settlements with customers. The relevance is the analysis of the effect of the maturity of receivables on the final financial result of the firm, taking into account the official inflation indicators.
Bibliographic link to the article:
Budzan A.V. Analysis of the influence of a specific method of settlements with buyers and customers on the final financial result of the organization // Modern scientific research and innovation. 2017. No. 5 [Electronic resource]..03.2019).
For any commercial organization, the result of its activities is profit. An important role in obtaining such a result is played by timely settlements of accounts payable and receivable. The reputation of the company, its solvency, financial condition and competitive advantage in the market depend on this.
Correct and timely accounting of settlements with buyers and suppliers will help to avoid a number of difficulties, such as the occurrence of debts, the accrual of penalties and, most importantly, the loss of confidence of your own counterparties.
One of the most important stages of control of settlements with buyers is compliance with the terms of delivery of goods, works or services. This function should be performed by sales managers, if the structure of the organization provides for the existence of such a department or other persons endowed with appropriate authority. They must accompany the transaction from beginning to end, monitor all movements of goods and settlements on it, since the final result of cooperation depends on the quality of their work.
Another external factor that has a direct impact on the final financial result of the transaction is inflation. This process is uncontrollable, therefore no actions of the enterprise can predict or eradicate it.
In advanced economies, where inflation rates have been low for a long time, the impact of inflation is neglected, but if they start to rise, inflation will again become a significant factor, as it is for companies from a number of emerging economies.
The analysis of the influence of settlement methods with buyers and customers was carried out on the basis of accounting data of a particular organization. The object of our study was the limited liability company "First Class".
In the company under consideration, the main buyers are educational institutions such as schools and kindergartens. It is due to their purchasing activity that an organization can exist, since transactions with them account for about 80% of total sales.
In order to understand how efficiently the company works, it is necessary to analyze such indicators as the turnover of accounts payable and receivable. Figure 1 shows that the turnover ratio of accounts receivable exceeds the corresponding indicator for accounts payable. Consequently, the organization receives cash for goods, works and services sold faster than it needs to pay off its creditors, which means that the company is able to pay off the current debt to creditors at the expense of proceeds from debtors, which indicates that the enterprise in question is operating quite efficiently. But one cannot ignore the fact that the share of accounts payable in the company in question is very large, and therefore the company is not able to repay all obligations, even with full payment by buyers of all deliveries.
Figure 1. Indicators of turnover of receivables and payables of the company for 2016
Based on all of the above, it can be assumed that one of the reasons for the emergence of such a large amount of accounts payable may be such a form of settlement with buyers as payment after delivery of goods, as a result of which the actual income received is lower than expected due to an uncontrolled process called inflation.
The impact of inflation affects many aspects of the organization. The process of inflation consists in the constant excess of the growth rate of the money supply over the commodity supply, as a result of which there is a depreciation and an increase in prices. It has a particularly strong effect on the long-term financial operations of the enterprise.
Unfortunately, it is impossible to predict the rate of inflation, as it depends on many factors, such as the instability of the economic situation and economic information, so entrepreneurs try to refrain from large capital expenditures with a long-term maturity.
Thus, it is necessary to analyze the impact of changing the terms of payment for goods by debtors on the final expected financial result of the seller's organization. This analysis can be carried out by calculating the inflation rate according to consumer price indices for non-food products by Russian Federation in 2016
Table 1 shows the calculation of the final price of goods, taking into account inflation at different terms repayment of buyers' debts to the organization in question. Three contract amounts are presented in the calculations, which are most often found in transactions with counterparties, namely thirty, sixty and one hundred thousand rubles. Using the value of the consumer price index for each of the 6 months, we calculated the inflation rate, which allowed us to see how much the original price of the goods would change if the buyer was late in payment. Symbols used in the table: p - price, pr - profit.
Table 1 - Price change when paying for goods after their delivery, taking into account inflation in 2016
| Month | CPI | inflation rate | Final price adjusted for inflation | Cumulative change | ||||
| p=30000 | p=60000 | p=100000 | p=30000 | p=60000 | p=100000 | |||
| January | 100,67 | - | - | - | - | - | - | - |
| February | 100,78 | 101,46 | 30437 | 60873 | 101455 | 437 | 873 | 1455 |
| March | 100,81 | 102,28 | 30683 | 61366 | 102277 | 683 | 1366 | 2277 |
| April | 100,60 | 102,89 | 30867 | 61734 | 102891 | 867 | 1734 | 2891 |
| May | 100,42 | 103,32 | 30997 | 61994 | 103323 | 997 | 1994 | 3323 |
| June | 100,46 | 103,80 | 31139 | 62279 | 103798 | 1139 | 2279 | 3798 |
In Table 2, we can see how much this change in price affects the size of the organization's net profit, which is the most important indicator characterizing the efficiency and effectiveness of the firm's management apparatus and its prospects.
Table 2 - Change in the value of the net profit of the organization, subject to payment for the goods after its delivery, taking into account inflation in 2016
| Overdue period | The amount of net profit with timely settlement of buyers with the organization | Net profit adjusted for inflation | |||||||
| p = 30000 (pr = 12%) | p=60000 (pr=18%) | p = 100000 (pr = 25%) | p=30000 | p=60000 | Specific weight in the amount of planned profit,% | P=100000 | Specific weight in the amount of planned profit,% | ||
| 2 months | 3600 | 10800 | 25000 | 3163 | 87,87 | 9927 | 91,92 | 23545 | 94,18 |
| 3 months | 3600 | 10800 | 25000 | 2917 | 81,02 | 9434 | 87,35 | 22723 | 90,89 |
| 4 months | 3600 | 10800 | 25000 | 2733 | 75,91 | 9066 | 83,94 | 22109 | 88,44 |
| 5 months | 3600 | 10800 | 25000 | 2603 | 72,31 | 8806 | 81,54 | 21677 | 86,71 |
| 6 months | 3600 | 10800 | 25000 | 2461 | 68,35 | 8521 | 78,90 | 21202 | 84,81 |
If we analyze the impact of the inflation rate on the final financial result of the enterprise with different maturities of receivables, we can conclude that the net profit of the enterprise decreases by 31.65% with a delay in payment by buyers of previously delivered products in the amount of 30 thousand rubles for six months. If we talk about the dynamics of changes in this indicator depending on the amount of the contract, then we can see that with a transaction amount equal to 100 thousand, the losses will not be so high. So, with a payment delay of 3 months, net profit will change by 9%, while with a smaller amount, this figure will decrease by 13% and 19%, respectively. Thus, the inflationary process "eats" a significant part of the organization's profits, therefore it is not profitable to make transactions with this type of payment, given that the real inflation rate differs significantly from official data.
The cost of products (works, services) is a qualitative indicator that characterizes the production and economic activities of an enterprise, organization. In the cost price as a generalizing economic indicator, all aspects of the enterprise's activity are reflected: the degree of technological equipment of production and the development of technological processes; the level of organization of production and labor; degree of utilization of production capacities.
The cost price as the initial base for pricing also has a direct impact on profits, profitability and the formation of a nationwide monetary fund - the budget.
This figure reflects the relationship of cost through factors common to both indicators, a change in one of the factors: sales volume, selling prices or product structure leads to a corresponding change in profit and cost. The specific influence of factors on the cost of production will be considered in the cost analysis.
In market conditions, activities should be carried out on the principle of self-financing and self-development. This suggests that the main goal of the financial and economic activities of any commercial organization should be profit. In this regard, it is necessary to pay attention to the problem of profit quality. Such an emphasis is extremely important for an objective assessment of the enterprise's activities from the standpoint of all interested subjects of market relations.
In the scientific literature, this problem is not sufficiently disclosed, more precisely, it is reduced to a narrower issue - the reliability of reporting. A company that has confirmation of the reliability of reports may well experience not only certain difficulties in terms of profitability, but also be on the verge of bankruptcy. The reliability of accounting information in most cases is confirmed by the auditor's report. At the same time, the reform of accounting in practice more and more often requires the accountant not to be limited only to technical operations, fixing past events, but also to become an analyst (forecaster), since the adoption of certain management decisions depends on him, that is, the professional activity of an accountant is like a part of financial management. Therefore, we can say with sufficient confidence that the accounting policy is a real tool for enterprise management, financial and tax planning, in other words, the accounting policy ensures the variability of the final financial results. It would be logical to propose to put into practice such a thing as profit quality.
The quality of profit reflects how characteristic (stable) the achieved level of profit is for a given organization, as well as the degree of use of economic reserves to achieve it.
The purpose of assessing the quality of profit is not at all to determine its level in comparison with the results of the past activities of the enterprise and to identify the factors that ensured the achievement of this level. Rather, it is about being able to highlight those aspects of the financial and economic activities of the enterprise, which, as can be expected, will provide not so much an increase in profitability as an impact on stability in the future period. Thus, only that information plays a significant role, which allows you to decide how likely it is that a given enterprise will be able to achieve success in the subsequent period. Profit quality assessment should be considered as a tool to help analyze the overall performance of the enterprise. To assess the quality of profit along with various methods audit can be used methods, methods and techniques of economic and financial analysis.
It is known that costs and their structure directly affect the amount of profit from the sale of goods and require close attention in analytical work.
Enterprises with a high level of fixed costs have a higher commercial risk, since fixed costs are difficult to manage quickly in a rapidly changing economic situation (for example, with a sharp drop in income, it is impossible for an enterprise to quickly reduce fixed costs). An analytical approach to costs in terms of profit quality involves not only determining their structure, but also identifying those costs that attract attention with their ambiguity: by reducing the level of current profit, they positively affect the level of profit in the future. For example, enterprises necessarily have so-called discretionary expenses, the amount of which can be set quite arbitrarily depending on the policy of the enterprise (expenses for advertising, for repair work, for training specialists, etc.).
An unjustified reduction in these costs means a decrease in the quality of profits, since such expenses are necessary for business development. On the other hand, reducing these costs can play a positive role if the policy of discretionary spending previously pursued did not meet the requirements of the company's position in the market.
Options for managing current costs are presented in Figure 1.4.
Figure 1.4 - Methods for managing current costs
Consider the approaches listed above, which allow us to determine the ratio of "costs - profits".
Break-even analysis. It is important for the enterprise to know the moment when the volume of output covers all associated costs. In other words, this is the breakeven point. Break-even is a state in which an activity brings neither profit nor loss.
The break-even point is the amount of sales at which the company will be able to cover all its costs (fixed and variable) without making a profit.
It can also be expressed in terms of the number of units of production that must be sold to cover costs, after which each additional unit will be profitable in terms of value.
The sales volume at the break-even point in value terms is determined by formula 1.1:
(1.1)
In value terms, the break-even level is determined by formula 1.2:
(1.2)
In physical terms, the number of units of goods sold at the break-even point is determined by formula 1.3:
Coverage contribution method. The contribution to covering fixed costs and generating profit is the difference between the proceeds from the sale of products and the variable costs of producing these products and is determined by formula 1.4:
(1.4)
This data facilitates calculations related to possible changes in sales volume, cost price and profit.
When making decisions aimed at increasing profits, it is necessary to strive to maximize the contribution to coverage.
By changing the volume of production at a given ratio of fixed and variable costs, it is possible to achieve profit optimization. This dependence is called in the theory of "the effect of operating leverage". The operating lever shows how much the profit will change with a change in revenue by 1 percent (formula 1.5).
(1.5)
Operating leverage is related to the level of entrepreneurial risk: the higher it is, the higher the risk. For a product with a high level of operating leverage, being below the break-even point is associated with large losses: reaching the break-even level is rewarded with profits that increase rapidly with increased sales.
Based on the break-even point, the margin of financial safety is determined in the form of the following calculation according to formula 1.6:
The financial safety margin is an assessment of the additional, i.e. above the break-even level, sales volume.
Direct costing method. Cost-Volume-Profit analysis is one of the most powerful tools available to professionals. It helps them understand the relationship between product price, volume or level of production, direct unit costs, total fixed costs, mixed costs, and profit. It is a key factor in the process of making many managerial decisions. These decisions relate to the issues of determining the range of manufactured products, the volume of production, the type of marketing strategy, etc. With such a wide range of applications, cost-volume-profit analysis is undoubtedly the best remedy management in order to achieve the maximum possible profit of the organization under given conditions.
Cost-volume-profit analysis allows you to find the most favorable ratio between variable costs, fixed costs, price and volume of production. The main role in choosing an enterprise behavior strategy belongs to marginal profit.
Obviously, it is possible to achieve an increase in profit by increasing the marginal profit. It is possible to achieve this different ways: reduce the sales price and increase the volume of sales accordingly; increase fixed costs and increase volume; proportionally change variable, fixed costs and output.
The value of marginal profit per unit of production also has a significant impact on the choice of the model of enterprise behavior in the market.
Marginal profit is determined by formula 1.7:
(1.7)
In this case, marginal profit is equal to the sum of marginal profits per unit of production for all products, or it is calculated as the difference between sales in value terms and variable costs.
However, due to the fact that production and sales are usually limited not by the quantity of the product sold, but by the availability of some resource, the concept of marginal profit per unit of resource used is used.
An example of such a concept is marginal profitability, which is marginal profit per unit of invested funds.
It is possible to carry out an analysis of marginal profit while limiting the above factor in order to achieve the maximum or optimal amount of marginal profit. So, marginal income plays a very active role, signaling the overall level of profitability, both for the entire production and for individual products.
The higher the difference between the selling price of products and the sum of variable costs, the higher the marginal income and the level of profitability. The division of costs into fixed and variable is important for managing and analyzing the activities of an enterprise, in particular for making decisions on assortment policy, as well as closing or declaring bankruptcy in case of unprofitable activities.
In short, the use of marginal profits is the key to solving the problems associated with the costs and income of enterprises.
Cost-volume-profit analysis is often referred to as critical point analysis. The critical point is understood as the point of sales volume at which the costs are equal to the proceeds from the sale of all products, that is, the costs of production and sale are fully covered by the proceeds from the sale of products, products.
Based on the foregoing, we can conclude that the costs incurred by the enterprise in the course of its activities are heterogeneous in nature, composition, structure, purpose and amount of monetary expression. In accordance with this, each of the types of costs has its own sources of repayment and in its own way affects the results of the economic activity of the enterprise.
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