The transition to a market economy determines the increase of the role of finance in the operation of enterprises in the economic system. In the organization of the finance companies are recognized: industry-specific features, the nature of production and the level of technology, the specifics of the process, the composition and structure of production costs, the impact of climatic factors on production.
Each of the elements of financial resources can be considered in terms of the reproduction process. The importance of financial resources due to the reproduction of urgency of the issue of the reproduction enterprise funds through reproduction financial resources. Reproductive process is repeated many times the sequence of stages of formation and use of financial resources for the purpose of permanent increment, adding value to existing assets. Features functioning of financial resources suggest the conventional division of the reproduction process into two stages: the formation and use of financial resources. Task of financial control — to achieve incremental value on each of them.
Financial relations of the company represent cash relations associated with the formation and distribution of financial resources. Financial resources of the enterprise have three main functions: building, maintaining optimal structure and increase in production capacity of the enterprise, ensuring the current financial and economic activities, ensuring the company’s participation in the implementation of social policy.
Formation of financial resources provided by a variety of sources. The financial resources of the enterprise may be own, and borrowed. There may also be additional sources that have emerged with a positive balance of cash flows of the company. They are divided into external and internal.
Self-financing allows to ensure the development of the enterprise, without resorting to bank loans. At the same time, the use of self-financing enterprise does not mean that the necessary conditions for the company does not use credit resources or borrowed funds. The organization’s performance is impossible without constant borrowing, the use of which allows not only to significantly expand the scope of economic activities and achieve more efficient use of equity, but also to accelerate the implementation of major investment projects to ensure continuous improvement and updating of existing fixed assets, and ultimately improve market value of the organization.
Organization of economic activity requires appropriate financial support, i.e. initial capital, which is formed from contributions of the founders and takes the form of share capital. At the moment of creating, a company’s authorized capital is directed to the acquisition of fixed assets and working capital formation in amounts necessary to maintain normal production and business activities, i.e. invested in production, during which value is created, expressed the price of products sold. After the implementation of it takes money form — proceeds from the sale of goods (works, services). Today, amid the global financial crisis, the leadership of any enterprise is a goal of «survival» and, if possible, and to improve their own status.
To meet these goals, the company’s management should clearly regulate all financial resources of the enterprise. Today on the path of reform got all sectors of the economy for the purpose of the national system of accounting and financial reporting in compliance with the new national standards. Capital of the company as the most important economic category and, in particular, equity is the main source of financing of the enterprise necessary for its operation.
In Western countries, a great influence on the efficiency of financial management have expectations of holders of shares of the company. This factor requires the company to establish a minimum long-term rate of return, which would provide income to shareholders, and takes into account a number of factors: the potential opportunities for dividends and capital appreciation; element of risk in the business (in sectors with low risk income of the members of the company in general is also low and vice versa); amount of income that shareholders could get elsewhere on investments with comparable risk. [1]
Since the vast majority of shareholders do not have a clear understanding of current or potential problems faced by the company in which they have invested their hopes in respect of income is usually unrealistic and inflated. The extent to which they may be considered waiting depends on how much impact on their business. If holders are dissatisfied, they can simply sell the shares.
The more industry competitors, the more pressure on the holders of its shares for investments to upgrade and modernize equipment and facilities, research, training, computerization. None of these areas probably will not be a quick return on investment within a year or even a little more. Moreover, demand uncertainty, manifested in changes in fashion, consumer behavior, technology, business cycle irregularities, competition will be reflected in the errors that usually accompany the process of determining profit. In the management of financial resources necessary to decide how to determine the cost of capital, taken as the basis for calculations and its increment (retirement).
Any firm that has separated from the other leading industrial, or other commercial activity, must possess a certain capital, represents a set of tangible assets and cash investments, the cost of acquisition of the rights and privileges necessary for the implementation of its economic activity.
Thus, in terms of budgeting, financial resources are the main source of funds of the company, necessary for its functioning.
According to the definition, the financial resources of the enterprise — is money used to finance the activities of the enterprise. They differ from the tangible, intangible and human resources. Despite the heterogeneity of the composition, the level of liquidity of financial resources and higher maximum than the physical resources. Only financial resources can be converted into any other type of resources. [2]
Formation of a broad system of distribution relations, education, income and savings, the creation and use of financial funds provided by the financial mechanism. Financial mechanism — an integral part of the economic mechanism, which is a set of forms and methods by which the financial activities of the company is carried out. In fact, the financial mechanism includes species, forms and methods of financial relations and ways to quantify them. Because financial relationships are very diverse and depend on many factors, general economic, legal, administrative and other nature. The structure of the financial mechanism is very complex and is usually specific to a particular enterprise. However, in all cases, the financial mechanism includes three organically interconnected blocks:
— Funding — is to ensure business enterprise cash resources necessary to cover the costs of various kinds. Can be financed by debt and equity;
— Lending — lending (credit funds) company or enterprise in terms of maturity, repayment, differentiation and purpose;
— Investment — investment, in which — either enterprise or business takes port. If funding satisfies the current needs of the enterprise, the investment provides an implementation of business, social, environmental and other projects. [3]
The need to finance is to the needs of producers and the state resources for their activities.
Financial resources are formed mainly due to the profit (from the main and other activities), as well as proceeds from the sale of property retired, stable liabilities, different target income mutual funds and other contributions from members of the workforce. By stable liabilities are authorized, reserve and other capital, long-term loans, which are always in the back of the enterprise payables (salary due to the difference in the timing of accruals and payments for contributions to the extra budgetary funds in the budget for settlements with buyers and suppliers).
Considerable financial resources, especially in the newly created and renovated facilities, can be mobilized in the financial market through the sale of stocks, bonds and other types of securities issued by the enterprise, dividends and interest on securities of other issuers, income from financial transactions ; loans.
Businesses can receive funding from corporations and associations, to which they belong, from parent organizations while maintaining industry; from the government in the form of state subsidies, insurance undertakings.
Use of financial resources of the enterprise with the following directions:
— Current costs of production and sales of products (works, services);
— Investing in capital expenditures related to the expansion of production and its technical upgrading, using intangible assets;
— Investing funds in securities;
— Payments to financial and banking systems, contributions to non-budgetary funds;
— The formation of various cash funds and reserves (development, as well as promotional and social);
— Charity, sponsorship, etc. [4]
Financial resources are now in the process of production and investment activities. They are in constant motion and are in cash only in the form of cash balances in the current account in the bank and in hand enterprise.
Company, taking care of their financial stability and a stable place in a market economy allocates its financial resources on activities and time. Deepening of these processes leads to a complication of the financial work, use in the practice of specific financial instruments.
Speaking of financial resources means not only money-capital enterprise, but also natural, labor and means of production. Consideration of Finance as resources does not contradict the well-known formula of economic resources «land, labor, capital,» which formally finances do not appear. Indeed, under the capital in this formula refers to the basic means of production, referred to as physical capital. This is real, and not money capital. However, with respect to physical capital as an economic resource is arguable that it is closely linked to money capital allocated for the purchase of capital goods. In addition, the means of production — is undoubtedly economic resources. Hence, the funds spent on their acquisition or manufacture, justly regarded as resources. Hence the concept of «financial resources».
More broadly, financial resources include cash and money spent on the purchase of goods and services. It is important to understand that financial resources are not necessarily immediately possible to obtain the desired product through its direct acquisition purchase.
First, financial resources — is cash, not money. So do not exclude the need to first convert these funds into money, and then buy them the necessary things. Say, firm or corporation issued shares. This is financial resources. Only selling shares on the stock market, the company will get the money it needs for the business organization, procurement, and payment of expenses.
Second, if the company must, for example, a building, it may not be able to buy and build. Available financial resources will initially be spent on building materials and paying workers. Only after the completion of the financial resources to turn the building itself.
Any submission of financial resources and economic actor’s industry sectors of economy of the country, regions, businesses, entrepreneurs, public and private groups, as well as earmarking of funds for the implementation of programs or economic and social activities called funding. Isolation of the local authorities of the city funds to finance the construction of a cinema building there. Provision of bank funds the company in order to increase production — production funding. Object of expenditure in the state budget on the military forces have funding. Funding can be full and partial, carried out from one or more sources, on a paid or unpaid basis.
Financial allocations are not for current expenses and for construction of new facilities, modernization of production, purchase of equipment, called investment, or investment. These financial resources for future economic activity. In addition, invest funds can in manufacturing, business, development of technical and technological innovations, science, culture, education, or in a broader sense — in person. Providing financial resources of innovation, i.e. innovation, called venture capital. Typically, such funding is associated with increased risk, but if successful investments in scientific and technological advances offer great returns, bring weighty profits. [5]
In general, funding is often tied to the sources of its financial resources. Thus, the funding from the budget of the state, regions and municipalities called budgetary financing. Moreover, if an enterprise, organization, entrepreneur-providing financing economic activity from its own sources, then we say that there is a self-financing. In some cases, funding for one organization, the firm may be another organization or company, which is called the sponsor. Sponsor does not always provide the funds at no charge, a charitable basis; it can give them in the form of a loan to be recovered, and even with interest. [6]
Thus, the adequacy of financial resources for the implementation of the company is an important factor in ensuring the stability of the company and determine its current and future development. For the domestic economy at the present stage is characterized by a lack of financial resources, and the trend of investments in recent years indicate a rise in the volume of investments in domestic industries.
Financial management is a challenge at any level of economic structures so finance companies as a system of monetary relations arising from its business activities, requiring optimal financial solutions. The initial formation of Finance comes at a time of establishment, formed when the statutory fund. His sources, depending on the organizational and legal forms of management are: share capital (equity), equity contributions of cooperative members, industry financial resources (while maintaining branch structures), and long-term loan budget. Statutory fund shows the size of the cash (fixed and current) funds that invested in the process of formation and development of the enterprise. The main source of finance in existing enterprises is the revenue from the sale of goods and services, various ports of which are in the process of distribution of proceeds take the form of savings. Financial resources are formed mainly due to income from its core and complementary activities. Areas of manifestations of financial relations:
— relationship between enterprises in selling products (services, products, supplies of raw materials and components;
— the relationship between businesses and banks arising from the receipt and repayment of the loan and the purchase and sale of foreign currency, according to the calculations for banking services, as well as leasing and factoring operations;
— relationships with insurance companies and enterprises in the property insurance, commercial and financial risks;
— relationship with the goods, raw materials, stock exchange transactions with production assets;
— relationships with investment funds and companies distributing investment, privatization;
-relationships with affiliates and subsidiaries;
— staff relations for the redistribution of profits between participants pay dividends and shareholders, if they are not members of the workforce;
— relationship with the Internal Revenue Service for tax purposes, with audit firms with extra budgetary enterprises;
A common element of these monetary relations is that they are:
— expressed in monetary terms;
— represent a set of payments and receipts.
The system of financial relations important basic functions of finance, which are manifested in the following forms:
-reproductive
-distribution and Control Reproductive function of finance is to maintain cash resources circulation of fixed and working capital in the business enterprise on the basis of formation and use of cash income and savings.
The essence of the distribution function is to ensure the optimal proportions of distribution of profit (income) between the company, the government and various foundations.
List of literature:
- Sheremet A.D., R.S. Saifulin ‘Finance companies’. — Moscow: Infra — M., 2005 – p.120
- Dyusembaev K.S. Analysis of the financial position of the enterprise — Almaty «Karja-Karzhat» 2008 – p.55.
- Komekbaeva L.S .Finance: Textbook. — Karaganda «Bolashak-Baspa», 2009. – p.66
- Dyusembaev K.S. Analysis of the financial position of the enterprise — Almaty «Karja-Karzhat» 2003 — 70.
- Encyclopedic Dictionary / Ed. I.A. Andriievskii. — St. Petersburg: Publishers F.A. Brockhaus, J.F. Ephron, 2010
- Leontieva V.M. Shpittsner R. «Finance and accounting in a market economy», St. Petersburg, «Knowledge», 2007-p.4[schema type=»book» name=»ESSENCE AND EMPIRICAL ASPECTS OF COMPANY FINANCIAL RESOURCES FORMATION» description=»In a market economy, Kazakhstan is gaining strength. Together with its booming and competition as the main mechanism of regulation of the economic process. Competitiveness of enterprises, Joint Stock Company, any other business entity can provide just the right control the movement of capital and financial resources at their disposal.» author=»Karshalova A. D., Aitkazina M. A.» publisher=»БАСАРАНОВИЧ ЕКАТЕРИНА» pubdate=»2016-12-23″ edition=»euroasian-science.ru_25-26.03.2016_3(24)» ebook=»yes» ]