Accounting (financial) reporting is the information base for economic analysis. Subject and methods of analysis of financial statements Subject of analysis of financial statements
Topic 1.1. Types of financial analysis, techniques and methods for its implementation
Lecture outline:
Outline of theoretical material:
1 Financial analysis concept
2
3
5 Classification of types of financial analysis
7. Methodological basis financial analysis
8 Stages of express analysis of financial statements. Net balance.
- Practical work 1. (vertical analysis)
- Practical work 1. Conducting vertical and horizontal accounting analysis. balance(horizontal analysis)
- Practical work 2. Using financial analysis techniques in accounting. accounting
- Practical work 2. Continued
Theoretical material
Introduction. Purpose, basic concepts, tasks of analysis financial statements
Financial Statement Analysis - it is the process by which we evaluate the past and current financial position and performance of an organization. However, the main goal is to assess the financial and economic activities of our organization relative to future conditions of existence.
Analysis- is a tool for cognition of objects and phenomena of internal and external environment, based on dividing the whole into its component parts and exploring their interrelation and interdependence.
Economic analysis is a system of special knowledge associated with the study of economic processes and phenomena in their interrelation, developing under the influence of objective and subjective factors.
Analysis of financial statements acts as a tool for identifying problems in managing financial and economic activities, for choosing directions for investing capital and forecasting individual indicators.
1 Financial analysis concept
Financial analysis was separated from economic analysis and analysis of financial and economic activities. The financial analysis- a method of understanding the financial mechanism of an enterprise, the processes of formation and use of financial resources for its operational and investment activities - is part of the general study of business processes and has acquired very important and independent significance today. The financial analysis is a research process financial condition and the main results of the financial activity of the enterprise in order to identify reserves for further increasing its market value.
2 Subject, object and subject of financial analysis
Each science has its own subject of research, which it studies for the appropriate purpose using its own methods. No subject of research - no science. The definition of a subject is of fundamental importance for justifying the independence and isolation of a particular branch of knowledge.
Philosophy under subject of any science (including ACD) understands some part or aspect of objective reality, which is studied only by this field. The subject of a particular science should be considered something specific that allows it to be distinguished from many other sciences.
Subject of financial analysis are financial resources and their flows
Object of analysis- this is what the analysis is aimed at. Depending on the objectives, the objects of financial statement analysis (FSA) can be: the financial condition of the organization, financial results, business activity of the organization, etc.
Subject of analysis is a person engaged in analytical work and preparing analytical reports (notes) for management, that is, an analyst.
3 Goals and objectives of financial analysis
Main goal financial analysis is to obtain a small number of key (most informative) parameters that give an objective and accurate picture of the financial condition of the enterprise, its profits and losses, changes in the structure of assets and liabilities, and in settlements with debtors and creditors.
The following subgoals of FA can be identified:
Assessment of the current and future financial condition of the enterprise;
Assess the possible and appropriate pace of development of the enterprise from the standpoint of their financial support;
Identify available sources of funds and assess the possibility and feasibility of their mobilization;
Predict the position of the enterprise in the capital market.
Figure 1 - Objectives of financial analysis
home purpose of analysis– promptly identify and eliminate shortcomings in financial activities and find reserves for improving the financial condition of the enterprise and its solvency.
The financial analysis solves the following tasks:
1) assesses the structure of the organization’s property and the sources of its formation;
2) reveals the degree of balance between the movement of material and financial resources;
3) evaluates the structure and flows of equity and borrowed capital in the process of economic circulation, aimed at extracting maximum or optimal profit, increasing financial stability, ensuring solvency, etc.;
4) evaluates correct use cash to maintain an effective capital structure;
5) assesses the influence of factors on the financial results of operations and the efficiency of use of the organization’s assets;
6) exercises control over the movement of financial flows of the organization, compliance with norms and standards for the expenditure of financial and material resources, the feasibility of spending.
7) general assessment of the financial situation and factors of its change;
8) studying the correspondence between funds and sources, the rationality of their placement and the effectiveness of use;
9) compliance with financial, settlement and credit discipline;
10) determination of liquidity and financial stability of the enterprise, etc.
4 Functions and principles of financial analysis
The essence of financial analysis is manifested in its functions. Financial analysis performs analytical, synthetic (summarizing), forecasting (predicative), economic and control functions. Characteristics of financial analysis functions are presented in Table 1.
Table 1 – Characteristics of financial analysis functions
Function | Characteristic |
Analytical | objects of financial analysis are selected, indicators characterizing the objects of analysis are determined, calculation methods are selected, the method of analysis and evaluation methodology are selected |
Synthetic (generalizing) | allows you to generalize the conclusions obtained from analyzing different objects in different ways. |
Predictive (predicative) | forecasting the financial condition of the enterprise |
Economic | on the one hand, financial analysis is based on financial reporting data, and on the other hand, the results of financial analysis are used to improve the production process and other ways of generating income for the enterprise |
Control | Financial analysis allows you to timely monitor the imbalance in the financing of an enterprise, assess which types of production are profitable, and how effective the use of equity and borrowed capital is. |
Principles of financial analysis regulate the procedural side of its methodology and techniques. These include: consistency, complexity, regularity, continuity, etc.
5. Classification of types of financial analysis
Financial analysis, most often in the applied aspect, is understood as the process of studying the financial condition and main results of the financial activities of an enterprise in order to identify reserves for further increasing its market value. Financial analysis is divided into individual species depending on the following signs.
1. According to organizational forms distinguish internal and external financial analyzes of the enterprise.
- internalfinancial analysis is carried out by the financial managers of an enterprise or the owners of its property using the entire set of available informative indicators. The results of such analysis may constitute a trade secret of the enterprise.
- externalfinancial analysis is carried out by tax administrations, audit firms, banks, Insurance companies in order to study the correctness of the reflection of the financial results of the enterprise, its financial stability and creditworthiness.
2. By volume of research There are complete and thematic financial analyzes of the enterprise.
- fullfinancial analysis of an enterprise is carried out with the aim of studying all aspects of the financial activities of the enterprise in a comprehensive manner.
- thematicfinancial analysis is limited to the study of individual aspects of the financial activity of an enterprise. The subject of thematic financial analysis may be the efficiency of using the assets of the enterprise, the optimality of financing various assets from individual sources, the state of financial stability and solvency of the enterprise, the optimality of the investment portfolio, the optimality financial structure capital and a number of other aspects of the financial activity of the enterprise.
3. By object of analysis The following types are distinguished:
- analysis of the financial activities of the enterprise as a whole. In the process of such analysis, the object of study is financial activities the enterprise as a whole, without identifying its individual structural units and divisions;
- analysis of the financial activities of individual structural units and divisions. This analysis is based mainly on the results of management accounting of the enterprise;
- analysis of individual financial transactions. The subject of such an analysis can be individual transactions related to short-term or long-term financial investments, with the financing of individual real projects, and others;
- implementation of the financial plan;
- financial condition of the organization;
- identifying reserves for profit growth and profitability.
4. By period distinguish between preliminary, current and subsequent financial analyses.
- preliminary financial analysis with the study of the conditions of financial activity in general or the implementation of individual financial transactions of an enterprise (for example, assessing one’s own solvency if it is necessary to obtain a large bank loan).
- current (or operational) financial analysis is carried out in the process of implementing individual financial plans or carrying out individual financial transactions with the aim of promptly influencing the results of financial activities. As a rule, it is limited to a short period of time.
- subsequent (or retrospective) financial analysis is carried out by the enterprise for reporting period(month, quarter, year). It allows you to deeply and more fully analyze the financial condition and results of the financial activities of the enterprise in comparison with preliminary and current analysis, since it is based on completed statistical and accounting reporting materials.
5. By time of implementation:
- predictive analysis that is carried out before business transactions are carried out;
- operational analysis that allows you to make adjustments to the current economic activity;
- retrospective analysis carried out after the completion of business operations and allowing to monitor the implementation of the plan.
6. According to the coverage of analyzed objects:
- solid analysis – contains conclusions about the financial and economic activities of all divisions of the organization;
- selective analysis – contains conclusions based on the results of a survey of only individual divisions of the organization.
7. According to the methodology:
- comparative analysis - consists of comparing reported indicators on the results of economic activities with plan indicators and data from previous periods;
- factorial analysis – aimed at determining the influence of individual factors on changes in performance indicators;
- diagnostic analysis – is a way of identifying violations of the normal course of activity;
- operating analysis involves a method for assessing and justifying the effectiveness of management decisions, based on the cause-and-effect relationship of sales volume, costs and profits;
- deterministic analysis – used to study the functional relationships between factors and performance indicators of the organization.
8. Depending on the goals and methods of financial analysis There are two main systems for its implementation:
- express diagnostics financial condition of the organization. Express diagnostics give an instant look at the situation and are designed to find and highlight the most important and complex financial management problems. Such an analysis does not take much time, since it does not contain complex calculations. Its purpose is an early (preliminary) assessment of the financial condition of the organization in order to narrow the scope of the search for problems and their solutions. Express diagnostics are aimed at studying current aspects of the organization’s activities;
- in-depth (fundamental) analysis of the financial and economic activities of the organization. A fundamental analysis of the financial and economic activities of an organization is intended to deepen and detail the assessments obtained as a result of express diagnostics, as well as to determine the real economic potential of the organization.
6 Structure of financial analysis
The structure of financial analysis is presented in Figure 3.
Figure 3 – Approximate structure of financial analysis
7. METHODOLOGICAL BASIS OF FINANCIAL ANALYSIS
Methodeconomic analysis is a dialectical way of cognition, a way of researching its subject, that is, economic and financial processes and phenomena in their interrelation and interdependence.
The characteristic features of the economic analysis method are:
* use of a system of analytical indicators that comprehensively characterize the financial and economic activities of the organization;
* study of the reasons for changes in these indicators;
* identifying and measuring cause-and-effect relationships between them.
Methodologyanalysisis a system of rules and requirements that guarantee the effective application of the method.
Taken together, the method and methodology represent methodological basis economic analysis.
All analytical methods can be divided into two large groups: qualitative (logical) and quantitative (formalized).
Toward qualitative (non-formalized, logical) methods These include analytical techniques and methods based on logical thinking, the use of professional experience of an analyst, and professional intuition. These include:
» comparison method;
» method of constructing systems of analytical tables;
» method of constructing systems of analytical indicators;
» method expert assessments;
» script method;
» psychological and morphological methods, etc.
Quantitative (formalized) methods are techniques that use mathematics. As a result of their use, you can get a fairly accurate result or several results for further selection of the correct one using logical methods.
Quantitative methods can be divided into accounting, statistical, classical, economic and mathematical methods of analysis, etc.
When analyzing financial statements, you can use various methods(both logical and formalized). But to the most commonly used methods of financial analysis relate:
» method of absolute, relative and average values;
» comparison method;
» vertical analysis;
» horizontal analysis;
» analysis using financial ratios;
» method of expert assessments.
IN practice of financial analysis allocate six basic methods:
First method - horizontal (time) analysis– comparison of each reporting item with the previous time period. Horizontal analysis is carried out using the following methods:
Simple comparison of financial statement items and analysis of sudden changes;
Analysis of changes in reporting items in comparison with changes in other items; wherein Special attention should be given to cases where a change in one indicator, due to its economic nature, does not correspond to changes in another indicator.
Second method - vertical (structural) analysis– determination of the structure of the final financial indicators, identifying the impact of each reporting item on the final result. Vertical analysis is carried out in order to identify the share of individual reporting items in the overall final indicator and subsequent comparison of the result with the data of the previous period.
Third method - comparative (spatial) analysis- this is an analysis that includes an intra-company analysis of free reporting indicators for individual indicators of a company, subsidiaries, divisions, workshops, and an inter-company analysis of the indicators of the analyzed company with the indicators of competing companies, with industry average and average economic data.
Fourth method - factor analysis– analysis of the influence of individual factors (reasons) on the performance indicator using deterministic or stochastic research techniques. Moreover, factor analysis can be either direct (analysis itself), when the effective indicator is divided into its component parts, or reverse (synthesis), when its individual elements are combined into a common effective indicator
Fifth method - trend analysis– comparison of each reporting item with a number of previous periods and determination of the trend, i.e. the main trend in the dynamics of the indicator, cleared of random influences and individual characteristics of individual periods. With the help of a trend, possible values of indicators in the future are predicted, and accordingly, a long-term analysis forecast is carried out.
Sixth method - analysis of relative indicators (coefficients)– this is the calculation of the relationship between individual report positions or positions of different reporting forms, determining the relationships between indicators.
Classification of financial analysis methods
To solve specific problems of financial analysis, a number of special methods are used to obtain a quantitative assessment of individual aspects of the enterprise's activities. In Table 1, the classification of financial analysis methods is made on three bases: by the degree of formalization, the tools used and the models used.
Table 1 - Classification of financial analysis methods
font-size:14.0pt;color:black">8 Stages of express analysis of financial statements. Net balance.
Based on the assigned tasks and the available information base, there are preliminary analysis(express analysis), based on financial statements, and in-depth analysis, carried out using management accounting data.
Main purpose of express analysis– a general assessment of the property status of an economic entity, the volume and structure of funds attracted by it, its liquidity and solvency, identifying the main trends in their changes.
Express analysis is carried out based on public reporting data and is focused mainly on external users (buyers, creditors, investors, shareholders, suppliers).
Express analysis is carried out in several stages:
1. Checking the indicators of financial statements according to formal and qualitative criteria (compliance of results, mutual linkage of indicators of different forms of reporting).
2. The nature of the changes that took place in the analyzed period in the composition of the enterprise’s funds and their sources is established.
9 Information support for financial analysis
Information, sources of information
The following sources of information are used to conduct financial analysis.
standards and instructions (Civil Code, Tax Code, federal chacons, Presidential decrees, decrees and orders of the Government, regulatory documents of the Ministry of Finance, the Central Bank of Russia, the Ministry economic development and trade and others);
plans and forecasts (project budgets, exchange rates, information on market conditions, auditors' opinions, long-term and business plans of the enterprise, etc.);
reports (forms of accounting and statistical reporting);
reference and analytical information (official statistics, minutes of meetings, orders, contracts, unofficial data).
Accounting statements of the enterprise
The main source of information for analyzing the financial condition of an organization is financial statements. Accounting statements are a system of indicators that reflect the property and financial position of the organization as of the reporting date, as well as the financial results of its activities for the reporting period.
Accounting reporting forms can be downloaded from the Glavbukh magazine website: http://www. *****/ko/23
1. Subject, objects, purpose and objectives of financial reporting analysis. Financial statements– a unified system of data on the property and financial position of the organization and the results of its economic activities, compiled on the basis of accounting data in established forms.
Subjects of analysis users of information interested in the activities of the enterprise. There are two groups of users – external and internal. To external users include: - owners of the enterprise's funds, lenders (banks, etc.), suppliers, clients (buyers), tax authorities, enterprise personnel and management. - the profitability of investing their capital in the enterprise, etc. - subjects of analysis, which, although directly are not interested in the activities of the enterprise, but must, under the contract, protect the interests of the first group of reporting users. To internal users include enterprise managers at various levels. It should be noted that only the management (administration) of an enterprise can deepen the analysis of reporting using production accounting data as part of management analysis carried out for management purposes.
Objects of analysis of financial statements: specific economic entities, their production activities, investment activities, financial activities of organizations.
Subject of analysis is the financial statements of the subjects of analysis.
One of characteristic features financial analysis is that its information base is currently undergoing significant changes. First of all, this is due to the process of reforming accounting in accordance with IFRS.
Introduction of new regulatory documents led to the emergence of new types of accounting: financial accounting and management accounting.
In connection with the separation of 2 types of accounting, 2 types of analysis of external accounting statements appear: 1. External. 2. Internal.
During external analysis it is planned to evaluate various objects of analysis, establish the reason for their changes, and consider a specific direction for further improvement of these objects.
During internal analysis carried out: assessment of absolute indicators of profitability, profitability, assessment of financial condition based on indicators of solvency and liquidity, financial stability and profitability, general assessment of financial condition, consideration of opportunities and its elimination, assessment of the long-term development of the enterprise, determination of its rating.
Internal analysis tasks: 1. Assess the rationality of forming the enterprise’s financial resources; 2. Make a preliminary analysis of the property; 3. Assess the composition and structure of the enterprise’s capital; 4.Define optimal size production volumes, costs and profits; 5. Assess the financial flows of the enterprise; 6.Eliminate the relationship between movement Money and financial results; 7. Consider the possibility of financial risks;
According to the results external analysis or a conclusion is made about the advisability of cooperation with the enterprise, or assistance is provided to the enterprise in accordance with the concluded agreement.
The main purpose of analyzing accounting (financial) statements– identify the financial condition of an economic entity or its financial results. As a final result, the analysis of the financial statements should give the management of the enterprise a picture of its actual state, and persons not directly working at the enterprise, but interested in its financial condition - the information necessary for an impartial judgment.
Thus, content of financial statement analysis is determined by its objectives and depends on: the purpose of the study, the scope of the issue and objects under consideration, the breadth of their consideration, the nature of the decision made, the effectiveness of the use of computer technology in processing financial information.
Main directions of financial reporting analysis: - analysis financial condition of the organization; analysis of the financial results of the organization.
Principles of financial statement analysis:1.Objectivity.2.Reliability 3.Specificity.4.Efficiency.5.Practical significance.6.Publicity.
2. Methods for predicting possible bankruptcy (Altman model). Among qualitative methods, we pay attention to greatest attention consideration of three models of E. Altman. The first model considered - two-factor - is distinguished by its simplicity and the possibility of its application in conditions of a limited amount of information about the enterprise, which is precisely the case in our country. But this model does not provide high accuracy in predicting bankruptcy, since it takes into account the impact on the financial condition of the enterprise of the coverage ratio and the financial dependence ratio and does not take into account the influence of other important indicators (profitability, return on assets, business activity of the enterprise). In this regard, the forecast error using a two-factor model is estimated at the interval Z = 0.65. In addition, about the weighting values of the coefficients and the constant value appearing in this model, it is only known that they were found empirically. For this reason, they are probably true for the USA, and for the USA of the 60s and 70s. In this regard, they do not correspond to the modern specifics of the economic situation and business organization in Russia, including the different accounting system and tax legislation, etc.
The application of this model for Russian conditions was studied in the works of M. A. Fedotova, who believes that the weighting coefficients should be adjusted in relation to local conditions and that the forecast accuracy of the two-factor model will increase if a third indicator is added to it - return on assets.
However, the new weighting coefficients for domestic enterprises due to the lack of statistical data on bankrupt organizations in Russia, they were not identified.
Altman's next model, the five-factor model, is also not without its drawbacks in terms of applicability in Russia; however, on its basis, a computer model for predicting the probability of bankruptcy has been developed and used in practice in our country. Here, nothing is still known about the basis for calculating the weighting values of the coefficients. The lack of statistical materials in Russia on bankrupt organizations does not allow us to adjust the methodology for calculating weight coefficients and threshold values taking into account Russian economic conditions. In addition, the coefficient x4, which includes the total market value of the company’s shares, is still somewhat confusing; currently in Russian Federation there is no information on the market value of shares of most enterprises, and even in the conditions of underdevelopment of the Russian secondary market, valuable papers For most organizations, this indicator loses its meaning. Thus, it can be noted that differences in the specifics of the economic situation and in the organization of business between Russia and developed market economies also influence the very set of financial indicators used in the models of foreign authors. Experts from the Expert Institute of the Russian Union of Industrialists and Entrepreneurs suggest using the Z-score without its fourth component. Russian banking analysts replace the numerator of this indicator with the value of fixed assets and intangible assets.
Some Russian economists, for example, M.A. Fedotov, they recommend defining the x4 coefficient as the ratio of the total assets to the total amount of borrowed funds. In our opinion, this indicator will not be realistic in all the examples given, and the option proposed by economist Yu.V. is more correct. Adamov, who replaces market value shares in the amount of authorized and additional capital, since an increase in the value of an enterprise’s assets leads either to an increase in its authorized capital (increase in par value or additional issue of shares), or to an increase in additional capital (an increase in the market value of shares due to an increase in their reliability).
The essence, goals and objectives of financial analysis
Reporting
In market relations, the central element of the economic management system is the quality of development and adoption of management decisions to ensure the profitability and financial sustainability of the economic activities of organizations. This work can be done efficiently using accounting information and financial analysis as a method for assessing and forecasting the financial condition of organizations.
All organizations of any organizational and legal form of ownership are required to prepare accounting (financial) statements based on synthetic and analytical accounting data, which is the final stage of the accounting process. Accounting (financial) statements in the established forms contain a system of comparable and reliable information about sold products, works and services, the costs of their production, the property and financial position of the organization and the results of its economic activities.
Accounting statements are the main source of information for making management decisions in the field of planning, control and evaluation of the organization's activities. According to the reporting data, the manager reports to the workforce, founders (owners), relevant management structures (financial authorities, banks) and other interested organizations.
Accounting financial statements provide an information base for financial analysis, with the help of which an objective assessment of liquidity, solvency, financial stability of organizations, their possible bankruptcy, efficiency of use of financial resources, as well as improving relations between organizations, external financial, credit and commercial structures is achieved.
Determining the real financial position of organizations is a complex, labor-intensive process, the effectiveness of which is determined by the reliability of the methods used to evaluate the analysis of financial statements.
The purpose of financial reporting analysis is the timely identification and elimination of deficiencies in financial activities, and the identification of reserves for increasing the efficiency of financial activities.
To achieve the goal, the following tasks are set and solved:
1. Analysis of property status and capital structure.
2. Study of the financial condition of the organization, including liquidity and solvency, financial stability, and bankruptcy risk.
3. Analysis of the financial results of the organization’s activities, including assessment of the influence of factors on the financial results of activities.
4. Assessing the efficiency and intensity of capital use, including capital turnover, profitability (profitability) of capital.
5. Assessing the correct use of funds to maintain an effective capital structure.
6. Control over the movement of the organization’s financial flows, compliance with norms and standards for the expenditure of financial and material resources, and the feasibility of spending.
The object of analysis of financial statements is the financial and property potential of a commercial organization, its dynamics, changes in constituent elements and possible economic studies.
As modern business entities move towards market relations, the need to analyze their financial statements becomes increasingly urgent.
Both internal and external users of financial statements achieve one common goal - to analyze the financial condition of the organization and, on its basis, achieve the set goals for making decisions to optimize their interests.
The need to analyze financial statements for internal users is as follows. Managers get an idea of the place of their organization among competitors, the correctness of the chosen strategic course, the degree of efficiency in the use of resources, which, in turn, will help in making decisions on issues related to managing the organization. Employees are interested in data on the stability and profitability of the organization, which in turn will allow them to assess the employer’s ability to provide wages, pensions and employment opportunities. The organization's shareholders, based on financial statements analysis, form an opinion about the organization's ability to pay dividends.
External users are interested in the following. Credit organizations and trade creditors are interested in the timely solvency of the organization. Buyers are interested in information about the stable activities of the organization, both in the short and medium term. Government bodies are interested in the results of the organization’s activities as a whole, including in order to provide jobs, decent wages for workers, and the receipt of tax payments. The public is interested in information about the development trends of the organization, its property status, which has an impact on the regional economy and the economy of the country as a whole.
In the process of analyzing financial statements, the composition and content of financial statements are studied, the ability to read them is developed, the information content of the statements is assessed, a comprehensive analysis is carried out in order to rehabilitate the main items of the statements and develop an analytical balance sheet, the results of the analysis of statements are used in the process of justifying the organization’s development strategy and drawing up business plans and production management.
Types of financial statement analysis
Classification of types of economic analysis is of utmost importance for a deeper understanding of its content and tasks. When analyzing financial statements, the following main methods of studying financial statements are used:
Depending on management needs, the following types of analysis can be distinguished:
By industry:
Industry-specific, takes into account the specifics of a particular industry;
Intersectoral, it is a theoretical and methodological basis of analysis for all sectors of the economy.
Based on temporary:
Preliminary, carried out before business transactions are carried out;
The subsequent one is used to monitor the implementation of the plan and evaluate the results of the organization’s activities. In turn, subsequent analysis is classified into operational (conducted immediately after improving business operations over short periods of time (shift, day, decade)) and final (analysis for the reporting period of time (month, quarter, year) in order to study the comprehensive activities of the organization) .
By spatial basis:
On-farm, studying the activities of only the organization under study and its divisions;
Inter-economic, during which the results of activities of several organizations are compared in order to study best practices and search for reserves.
On-farm analysis, in turn, can be classified into:
Technical and economic, which takes into account the interactions of technical and economic processes;
Financial and economic, aimed at studying financial results: efficiency of capital use, increasing the amount of profit, increasing profitability, improving solvency;
Auditing (accounting) carried out for the purpose of assessing and forecasting the financial condition of organizations;
Socio-economic, taking into account the relationship of social and economic processes, their mutual influence;
Economic-statistical – used to study mass social phenomena at the management levels of an organization, industry, region;
Economic-ecological – explores the interaction of environmental and economic processes;
Marketing, used to develop tactics and strategies for marketing activities: studying the markets for raw materials and sales of finished products, supply and demand, forming a pricing policy.
Analysis is distinguished by user subjects:
External, which is characterized by a plurality of subjects of analysis and users of information about the activities of the organization, a variety of goals and interests of subjects of analysis, the presence of standard methods of analysis, accounting and reporting standards, orientation of the analysis only to public, external reporting of the organization, maximum openness of the results of the analysis for users of information about the activities organizations;
Internal, oriented to its management, it is characterized by the absence of regulation of analysis from the outside, a more detailed approach to the study of all aspects of the organization’s activities, and maximum secrecy of the analysis results in order to preserve trade secrets.
The division of economic analysis is due to the division of the accounting system across the organization into financial and management accounting that has developed in practice. This division of analysis is somewhat arbitrary, because internal analysis can be considered a continuation of external analysis, and vice versa. Both types of analysis provide each other with information, but at the same time, each of them has its own characteristics.
Based on the scope of the objects studied, the analysis is divided into:
Continuous, studying all objects;
Selective, studying individual objects.
Comprehensive, studying the comprehensive activities of the organization;
Thematic, during which individual aspects of greatest interest are studied.
A comprehensive analysis of a commercial organization with the goal of making a profit, in addition to everything, takes into account all the factors of making a profit and increasing the level of profitability, strengthening financial stability. It is especially necessary when forming a comprehensive business plan, creating a new company or an annual and long-term plan for an existing company, when summing up the implementation of business plans, and a comprehensive assessment of business activities.
According to the study methodology, the analysis can be:
Horizontal – comparison of the results of economic activity in dynamics, with the indicators of the plan, indicators of competing organizations and similar industries;
Vertical (structural) – determining the impact of each reporting position on the result as a whole;
Trend – determination of the main trend of the indicator dynamics, formation possible values future performance;
Factorial – identifying the influence of individual factors on the performance indicator;
Marginal is a method for assessing management efficiency, taking into account the relationship between sales volume, costs and profits;
Functional-cost method is a method of identifying reserves, managing the production and sale of products, works and services oriented to the market.
In practice, certain types of economic analysis are rare.
In the management process, a set of various types economic analysis. For example, a market economy is characterized by dynamic situations in the external and internal environment of an enterprise. In these conditions, operational analysis plays an important role. Its distinctive features are complexity, computer processing of operational information arrays, and the use of its results at the level of individual functional services of the enterprise in the form of targeted fragmented information.
Control questions
1. Describe the essence of financial statement analysis.
2. Describe the purpose and objectives of financial statement analysis.
3. Give a description of the subject of economic analysis.
4. Describe the users of the results of the analysis of financial statements.
5. What distinctive features characterize the method of economic analysis?
6. What principles underlie the classification of techniques and methods of analysis?
7. Describe the types of economic analysis.
8. What is the basis for the connection between the types of economic analysis?
Tests
1. The main tasks of analyzing financial statements include:
a) mastery of calculations of general and specific indicators of the efficiency of economic activity; studying the features of the formation of production efficiency indicators; knowledge of the main factors influencing production efficiency;
b) assessment of the organization’s property status, financial condition, financial results, efficiency and intensity of use of capital, correct use of funds;
c) the connection between the compared indicators and the “factor field of analysis”;
d) comparability of the range and quality of products; the need to ensure the coincidence of the planned and analyzed periods.
2. Based on spatial characteristics, economic analysis is divided into:
b) technical and economic;
c) financial and economic;
d) marketing.
3. Based on the scope of the objects under study, the analysis is divided into:
a) continuous and selective;
b) complex;
c) thematic;
d) external and internal.
4. According to the study methodology, the analysis can be:
a) intra-farm and inter-farm;
b) technical and economic;
c) horizontal, vertical, trend, factor, marginal, functional-cost;
d) external and internal.
5. During horizontal analysis:
a) the best practices and results of the activities of several organizations are studied;
b) the relationship between sales volume, costs and profits is studied;
c) the impact of each reporting item on the result as a whole is determined;
d) the results of economic activity are compared over time, with the indicators of the plan, indicators of competing organizations and similar industries.
Analysis (from the Greek analysis - decomposition) means analysis, division into component parts. Economic analysis is a systematized set of methods, methods, techniques used to obtain conclusions and recommendations of an economic nature in relation to a certain business entity. The analysis procedure consists of dividing the problem into components that are more accessible to study. Using special methods, methods, techniques, individual problems are solved, and their combination allows us to obtain a general solution to the problem. This is the dialectics of knowledge, which is based on the unity of analysis and synthesis as scientific methods for studying reality. Economic analysis is aimed at studying economic processes (phenomena) that arise during the creation and sale of products (goods, services). Since the creation and sale of products (goods, services) involve a number of successive stages (thematic areas, types of activities) described by the concept of the life cycle of systems, the thematic areas of economic analysis include such types of activities as design, investment, financial, production and others.
Thematic types of economic analysis are identified, such as economic analysis in project activities, investment activities, in financial and production activities, etc. Since the production and financial activities of an organization are inextricably linked, the term “economic activity” is used.
The subject of economic analysis is the activities of specific economic entities of any form of ownership, aimed at making a profit or ensuring a balance of expenses and income, studied comprehensively in order to objectively assess its effectiveness and identify reserves for its improvement, as well as ensuring the sustainability of the functioning of the analyzed economic entity.
The purpose of analyzing the activities of specific economic entities of any form of ownership is to prepare information for decision-making.
Information for making management decisions is prepared in three areas:
assessment of the phenomena under study;
diagnostics - establishing cause-and-effect relationships and assessing the “power of influence” of individual factors on the result;
forecasting the consequences of decisions made.
You can understand the results of assessment, diagnosis and forecasting by knowing the laws of development and functioning of systems. For example, three years ago, capital investments in fixed assets led to a significant increase in labor productivity with a relative decrease in capital intensity. Similar investments this year did not lead to the same or similar results. Obviously, the law of diminishing efficiency of evolutionary improvement of systems had an effect. Therefore, the methodology for assessing, diagnosing and forecasting the financial and economic activities of an organization should be learned on the basis of the laws of development and functioning of systems.
This goal presupposes, on the one hand, the study of the laws of development and functioning of systems for their subsequent use in economic analysis, and on the other, the development of analysis methods that are adequate to various states, stages, stages of systems development and specific analysis tasks.
The classification of types of economic analysis is based on the classification of management functions, since economic analysis is necessary element each economic management function (Fig. 3).
Rice. 3 Contents of economic analysis
A developed market economy gives rise to the need to differentiate analysis into internal - managerial and external - financial analysis.
Internal management analysis - component management accounting, i.e. information and analytical support for the administration and management of the organization with the necessary data for preparing management decisions.
External financial analysis is an integral part of financial accounting that provides information about the organization to external users who act as independent subjects of economic analysis based on data from public financial reporting.
Based on the content of the management process, there is a long-term (forecast) analysis; operational analysis - based on the results of activities for a particular period.
This classification of economic analysis corresponds to the content of the main functions reflecting time stages:
preliminary control stage (planning function);
stage of operational management (function of management organization);
the final stage of management (control function).
All of the above three types of analysis (on-farm production, external financial and internal management) are present in the management processes of economic objects. On-farm production and financial analysis has received the greatest development.
Types of economic analysis are also classified according to:
subjects, that is, who conduct the analysis, management and economic services, owners and economic management bodies, suppliers, buyers, credit, financial authorities;
periodicity (periodic annual, quarterly, monthly, ten-day, daily, shift analysis);
content and completeness of the issues being studied ( full analysis of all economic activities, local analysis of the activities of individual divisions, thematic analysis of individual economic issues);
methods of studying the object (comprehensive, comparative, continuous and selective analysis, etc.).
The main difference between complex analysis is a single goal and comprehensiveness (systematicity) of the analysis. Consistency is manifested in a certain logic, in a reasonable sequence of consideration of indicators of economic activity.
The basis for making decisions on production regulation is operational analysis, which is characterized by modeling business situations and the use of standard solutions.
To solve problems of strategic management, a final comprehensive economic analysis of the enterprise is used, a comprehensive analysis of the economic prospects for its development, which will be discussed in the work.
The subject of economic analysis is understood as the economic processes of enterprises, associations, socio-economic efficiency and the final financial results of their activities, which are formed under the influence of objective and subjective factors, reflected through the system of economic information. That is, economic analysis deals with the economic processes of enterprises, associations, other divisions and the final production and financial results of their activities.
As an information base for economic analysis, planning and forecast information, enterprise reporting data (accounting, statistical), some specified economic parameters (tax and interest rates, insurance payments, industry profitability levels and others).
The analysis allows us to establish and quantitatively express the relationship between the final results of the enterprise’s activities and production resources (material, financial, human,
informational, temporary) that it has in order to carry out the current activities and development of the enterprise.
Thus, the essence of economic analysis is a comprehensive study of the activities of an enterprise in accordance with its goals, presented through a system of economic information.
Financial ratios are used as tools for financial analysis. This relative indicators financial condition of the enterprise, which express the ratio of some absolute financial indicators to others.
Financial ratios are used: to compare indicators of financial condition; to identify the dynamics of development of indicators and trends in changes in the financial condition of the enterprise; to determine normal limits and criteria for various aspects of financial condition.
Based on the calculated individual indicators and ratios characterizing the financial condition of the company, it is possible to draw more detailed conclusions about the financial position of the enterprise and identify reserves for increasing the efficiency of business activities and prepare proposals for improving the operation of the enterprise.
More on the topic Subject and objects of financial reporting analysis:
- 1.2. Financial reporting is an information base for analyzing the financial and economic activities of an enterprise
Homework
Discipline: “Theory of Economic Analysis”
On the topic “The role of accounting reporting in economic analysis”
Introduction
1. Concept and essence of financial statements
2. Financial reporting as an information base for financial analysis
Conclusion
Application
Bibliography
Introduction
The most important conditions for the functioning of market institutions is information that allows them to make informed economic decisions. To meet the general needs of interested users, a unified system of data on the property and financial status and results of the organization’s economic activities is being formed - accounting statements.
The goals of accounting reporting, like analysis, are determined by the needs of users. Therefore, it must contain data on the results of financial and economic activities, as well as on the current financial position and changes that have occurred in it during the reporting period.
One of the main advantages of accounting reporting as a means of communication is its analytical capabilities. Analysis of the organization's annual report is one of the main sections of the current activities of the enterprise's financial services. Its importance is determined by the fact that in a market economy, the financial statements of business entities, which are, in fact, the only means of communication, the reliability of which is very high and, under certain conditions, confirmed by an independent audit, becomes the most important element of information support for the analysis of financial and economic activities. It is the accounting statements, together with statistical and current financial information published by the relevant agencies in the form of analytical reviews on the state of the capital market, that allows us to obtain the first and fairly objective idea of the state and trends in the economic potential of a possible counterparty or investment object.
1. The concept and essence of financial statements.
Accounting (financial) reporting b- this is a set of reporting forms compiled on the basis of financial accounting data in order to provide users with generalized information about the financial position and activities of the enterprise, as well as changes in its financial position for the reporting period in the prescribed form for these users to make certain business decisions.
Reporting includes tables that are compiled according to accounting, statistical and operational accounting data. It is the final stage of accounting work.
Organizations draw up reports using forms and instructions (directives) approved by the Ministry of Finance and the State Statistics Committee of the Russian Federation. A unified system of organizational reporting indicators allows you to draw up reporting summaries on individual industries, economic regions, republics and throughout national economy and in general.
In accordance with the Federal Law “On Accounting” dated November 21, 1996 No. 129-FZ (as amended on November 23, 2009) and the Accounting Regulations “Accounting Statements of an Organization” (PBU 4/99), the annual financial statements of organizations, with the exception of reporting by budgetary organizations, consists of:
1) balance sheet;
2) profit and loss statement;
3) appendices to them, provided for by regulations;
4) an audit report confirming the reliability of the organization’s financial statements, if they are subject to mandatory audit in accordance with federal laws;
5) explanatory note.
The explanatory note may contain an assessment of the organization’s business activity, the criteria of which are the breadth of product markets, including the availability of export supplies, the organization’s reputation, expressed, in particular, in popularity among clients using the organization’s services, etc.; the degree of implementation of the plan, ensuring the specified growth rate; level of efficiency in using the organization's resources, etc.
It is advisable to include in the explanatory note data on the dynamics of the most important economic and financial indicators of the organization over a number of years, descriptions of future investments, ongoing economic activities and other information of interest to possible users of the annual financial statements.
Small businesses that apply a simplified system of taxation, accounting and reporting are not required to conduct an audit of the reliability of financial statements may not submit as part of the annual financial statements reports on changes in capital and cash flows, an appendix to the balance sheet (forms No. 3, 4 and 5 ) and an explanatory note.
Non-profit organizations have the right not to present a Cash Flow Statement (Form No. 4) as part of the annual financial statements, and also, in the absence of relevant data, a Statement of Changes in Capital (Form No. 3) and Appendices to the Balance Sheet (Form No. 5).
Public organizations (associations) that do not carry out entrepreneurial activities and do not have turnover in the sale of goods (works, services) other than disposed of property, do not prepare interim financial statements.
These organizations do not submit reports on changes in capital and cash flows (forms No. 3 and 4), Appendix to the balance sheet (form No. 5) and an explanatory note as part of the annual financial statements.
2. Financial reporting as an information base for financial analysis
The subject of economic analysis is economic processes that together constitute the economic activities of an organization. The quantitative content and significance of economic processes is expressed economic indicators, and the quantitative side of the financial processes of business entities - financial indicators. Most financial indicators are presented in accounting (financial) statements, each line of which is a financial indicator. Let's consider the most significant indicators of accounting (financial) statements.
The balance sheet (form No. 1) is the most informative form for analyzing and assessing the financial condition of an enterprise.
The main indicators f. No. 1 “Balance Sheet” and references to it are: non-current assets; current assets; assets; balance currency; equity (capital and reserves); long-term and short-term liabilities; accounts receivable and accounts payable; values recorded in off-balance sheet accounts.
The ability to read a balance sheet allows you to:
Obtain a significant amount of information about the enterprise;
Determine the degree of security of the enterprise with its own working capital
means;
Determine due to which items the amount of working capital has changed;
Assess the overall financial condition even without analytical calculations
indicators.
The importance of the balance sheet is so great that financial analysis is often called balance sheet analysis.
The main areas of analysis for a real assessment of financial condition:
1. analysis of financial condition for the short term consists of
calculating indicators for assessing satisfaction with the balance sheet structure.
2. long-term financial analysis examines
structure of funds, degree of dependence of the organization on investors and
creditors.
To assess real analytical capabilities, it is necessary to know the limitations of the information presented in the balance sheet:
1. The balance sheet is historical in nature: it records the results of business transactions that had emerged at the time of its preparation.
2. The balance reflects the status quo in the organization’s funds, that is, it responds to
the question is what the organization is at the moment, but does not answer
to the question of what resulted in this situation.
3. One of the significant limitations of the balance sheet is the principle inherent in it
use of purchase prices. All fixed and current assets are valued at the current prices of their acquisition, which, in conditions of inflation, rising prices, and low renewal of fixed assets, significantly distorts the real assessment of the property as a whole.
In f. No. 2 “Profit and Loss Statement”, certificates and transcripts thereto contain such indicators as: revenue from the sale of goods, products, works, services; truncated and full cost of goods sold; gross profit, profit (loss) from sales; profit (loss) before tax; profit (loss) from ordinary activities; net profit (retained profit/loss) of the reporting period; operating income and expenses; non-operating income and expenses; extraordinary income and expenses; dividends per share; decoding of individual profits and losses.
In f. No. 3 “Report on changes in capital” discloses private indicators of the movement of the organization’s own capital (authorized capital, additional and reserve capital, retained earnings, uncovered losses of the reporting year and previous years); their values are calculated as of the beginning and end of the year; the receipt and use (expense) of all components of equity capital and valuation reserves are reflected.
In f. No. 3, to increase analytical capabilities and implement the principle of transparency of its data, information is included on such factors of increasing equity capital as: additional issue of shares; revaluation of assets; increase in property; merger or acquisition of companies; an increase in income, which, in accordance with the rules of accounting and reporting, is directly attributed to the increase in capital. It also contains information about the factors of reducing equity capital due to a decrease in the par value and number of shares, division and formation of new legal entities as a result of the reorganization of a previously existing legal entity, as well as due to some expenses of the organization now attributable to the reduction of its capital. K f. No. 3, a certificate is drawn up on the change in net assets at the end of the year compared to the beginning; about expenses for ordinary activities; on capital investments in non-current assets.
