The main goal of managing the company's capital structure. V. Financial activities of the enterprise. Optimization of the capital structure of OJSC Livnynasos

VI. Enterprise capital and its formation.

VII. Forms and methods of raising borrowed funds.

VIII. Management of the process of placement and use of capital.

IX. Financial planning as the first stage of enterprise management.

X. Management of enterprise financial resources.

XI. Investment management.

XII. Investments in securities.

XIII. Asset Management.

XIV. Profit maximization.

XV. Dividend policy of the enterprise.

XVI. Fundraising is a new direction of financial management in the field of culture.

XVII. Bankruptcy and anti-crisis financial management of an enterprise.

“Financial Management” is an academic discipline for students of the specialty “Culturalist-Manager”. It provides the necessary economic training for managers of sociocultural activities.

I. FUNDAMENTALS OF MANAGEMENT

The Lily word “manage” means not just to manage, but to contrive, not just to lead, but to manage. In other words, do not “work hard”, but catch, catch luck, tame or pacify others.

Thus, the ability to control a horse is to make it “perform certain movements which, being free, it performs under certain conditions completely freely.” The manager acts in the same way, who, firstly, stimulates and directs people so that they act within the framework of the business they receive in the same way as they would act on their own initiative. Secondly, it integrates the activities of all people within the organization.

ð Finally, management is management in a market environment, a market economy.

REMINDER

HOW THE MARKET IS CHARACTERIZED

ECONOMIC SYSTEM

This is a country's economic management system based on market mechanisms.
Market	the ability to sell or buy freely produced goods and services at will.
Market economy	1. Freedom of economic activity. The state does not interfere with economic relations. On the contrary, it creates favorable conditions for them,
entrepreneurs are free to engage in any business not prohibited by law: trade, produce goods and services, mediate. Businessmen themselves plan what to produce and when. Relations between them are based on contracts. 2. Equality of different types of property. With the dominance of private property. The market itself was generated precisely by private property.
3. Accounting for supply and demand. The laws of supply and demand apply.
4. Free price formation (pricing).
5. Competition as a mechanism of selection and regulation. The concept of “competition” means rivalry in any field. – between manufacturers, traders, etc. If there is no competition and monopolists dominate the market (firms, enterprises have the exclusive right to something), then they easily “drive the consumer into a corner”, dictating to him any prices and conditions.
Management development.
Stages of management	During primitive accumulation the success of an entrepreneur depended on the amount of capital he
invested in the business, the availability of qualified personnel and, most importantly, modern equipment and technology. Further the success of the business increasingly depended on the entrepreneur’s ability to maneuver in the market, sell products profitably, know marketing, bypass competitors, and find profitable suppliers and clients. Therefore, there was an increasing need for managers who knew how to do this professionally.
Manager status	An entrepreneur is a private owner, owner of capital.
When the company is small, he copes with tasks himself, including managerial ones. But when the scale of an enterprise expands, it requires a professional assistant. The manager is an employee, not a partner of the capitalist. The professional responsibilities of a manager include the subtle art of leading people, the ability to motivate and interest them.
Corporate management	Management originated in the private sector, not the public sector. It originated as business management.
But he really got back on his feet, that is. showed himself to the world as a social force, not in medium and small firms, but in large corporations. The well-being of both the state and the private sector increasingly depended on the quality of management.
Management boom	Interest in management reached its apogee in the mid-50s. XX century. The idea of ​​a managerial revolution covered not only the sphere
scientific, but also everyday consciousness. Conclusions were drawn that the capitalist class is being transformed into a management class: control over production, which once belonged to families, owners of corporations, is passing to management personnel; Professional management in large corporations, armed with modern technology, becomes an invincible force that neither shareholders nor the government can match. Test questions: 1. Define management. 2. What is meant by a market economy. 3. Stages of management development.

II. FINANCE

Basic concepts:

1. Finance

A national fund of funds - the budget - arose.

2. Systems of state revenues and expenditures with a certain structure and legislative support were formed. The main groups of budget expenditures have remained virtually unchanged over the centuries (for military purposes, administration, economics, social problems).

3. Taxes began to acquire a monetary character instead of payments in kind and taxes.

Enterprise finance

Definition	Enterprise finance is a system of economic
relations related to the circulation of funds, education, use of cash income, control over production, distribution.
Principles of financial organization	1.Independence in the field of financial activities 2.Self-financing
3. Interest in the results of financial and economic activities 4. Responsibility for the results 5. Control over the financial and economic activities of the enterprise
Functions of enterprise finance	Distribution Control
Distributive function	Its economic content is to ensure complete correspondence between the movement
monetary and material resources. This manifests itself promptly, at the planning stage. By compiling the amount of planned income and expenses, they determine to what extent the need for funds can be covered from their own sources, bank loans, etc.
Control function	It is based on the fact that the consumption rates of each element of production resources are planned and taken into account in
in monetary form, thereby controlling the consumption of materials in monetary form.
Sources of formation of financial resources	- depreciation deductions; - profit received from all types of economic and financial activities;
- funds received from the issue of securities; - long-term bank loan and other loans; - other sources. Having defined the essence of management and finance, we can begin to clarify the content of financial management.

Control questions:

1. Define finance.

2. What is enterprise finance?

III. ESSENCE OF FINANCIAL

MANAGEMENT

Basic concepts:

1. Finance

2. Management

3. Purpose of financial management

4. Objects and subjects of financial management

The concept of "financial management"	ð English words. Translated as “financial management”.
Management is a conscious process of people influencing the activities of a managed object in order to achieve the intended goal. Based on the concepts of “management” and “finance”, we will define the concept of “financial management”. Obviously, it might sound like this: Financial management This is the management of a system of economic relations regarding the formation, distribution and use of funds of funds. In another meaning, it is the management of enterprise funds. The concept of “financial management” in modern literature. Abroad, when considering issues of financial management, the main attention is paid to ways to achieve the company's goals, management of the securities portfolio, and the movement of financial resources and capital. Robert W. Kolb and Ricardo J. Rodriguez argue that the financial manager's job is to contribute to the overall goal of the firm, which is to maximize shareholder value. Louis Gapenski believes that financial management is a system for making investment decisions and financing decisions; At the same time, investment decisions are, as a rule, a set of the most suitable assets in the form of financial market instruments; financing decisions are characterized by the choice of sources of financing investment decisions. Among Russian scientists, T.V. is closest to the point of view of foreign financiers. Teplova, who argues that a financial manager makes investment decisions and manages capital to achieve targets that are consistent with the interests of all participants in the enterprise. E.S. Stoyanova defines financial management as the science of managing the finances of an enterprise, aimed at achieving its strategic and tactical goals.

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Introduction

Chapter 1.Equity capital of the enterprise

1.1 The concept of equity capital and its structure

1.2 Sources of equity financing

Chapter 2. Own capital management

2.1 Tasks and stages of equity capital management

2.2 Formation of the enterprise’s own internal financial resources

2.3 Dividend and emission policy of the enterprise in managing the enterprise’s own capital

Conclusion

Bibliography

Introduction

The development of market relations in society has led to the emergence of a number of new economic objects of accounting and analysis. One of them is the capital of the enterprise as the most important economic category and, in particular, equity capital.

The significance of the latter for the viability and financial stability of the enterprise is so great that it has received legislative recognition in the Civil Code of the Russian Federation in terms of requirements for the minimum amount of the Authorized Capital, the ratio of the Authorized Capital and net assets; the possibility of paying dividends depending on the ratio of net assets and the amount of authorized and reserve capital.

The financial policy of an enterprise is a key point in increasing the pace of its economic potential in a market economic system with its fierce competition.

Indicators characterizing the financial condition of the enterprise are important. The net worth estimate serves as the basis for calculating most of them.

Ownership accounting is an important part of the accounting system. Here the main characteristics of the enterprise’s own sources of financing the activities are formed.

An enterprise needs to analyze its own capital, as this helps to identify its main components and determine the consequences of their changes for financial stability.

The dynamics of changes in equity capital determines the volume of attracted and borrowed capital. In recent years, significant changes have occurred in the structure of monetary capital, as a result of an increase in the share of attracted and borrowed capital.

The main problem for each enterprise that needs to be determined is the adequacy of monetary capital to carry out financial activities, service cash flow, and create conditions for economic growth. This problem remains unresolved for almost all enterprises, as evidenced by the significant lack of working capital. Consequently, there is an objective need for a comprehensive study, analysis and improvement of the methodology and organization of accounting for the equity capital of business entities.

The purpose of the course work is: consider the concept and structure of equity capital, equity management: tasks, stages, mechanism, as well as the role of dividend and emission policies in equity management.

In connection with this goal, it is necessary to solve the following tasks:

Consider the company's equity capital.

Analyze equity management.

Chapter 1. Own capital of the enterprise

1.1 The concept of equity capital and its structure

Own capital is a combination of material assets and cash, financial investments and costs for the acquisition of rights and privileges necessary for the implementation of its economic activities.1

In Russian practice, the capital of an enterprise is often divided into active and passive capital. From a methodological point of view, this is incorrect. This approach causes an underestimation of the place and role of capital in business and leads to a superficial consideration of the sources of capital formation. Capital cannot be passive, since it is a value that brings surplus value, which is in motion, in constant circulation. Therefore, it is more reasonable to apply the concepts of sources of capital formation and functioning capital here.

The structure of sources of formation of assets (funds) is represented by the main components: equity capital and borrowed (attracted) funds.

The equity capital (EC) of an organization as a legal entity is generally determined by the value of the property owned by the organization. These are the so-called net assets of the organization. They are defined as the difference between the value of property (active capital) and borrowed capital. Of course, equity capital has a complex structure. Its composition depends on the organizational and legal form of the business entity.

Own capital consists of authorized, additional and reserve capital, retained earnings and target (special) funds (Fig. 1). Commercial organizations operating on the principles of a market economy, as a rule, own collective or corporate property.

The owners are legal entities and individuals, a group of shareholders or a corporation of shareholders. The authorized capital, formed as part of the share capital, most fully reflects all aspects of the organizational and legal basis for the formation of the authorized capital.

Rice. 1. Forms of functioning of the enterprise’s own capital

Share capital- is the equity capital of a joint-stock company (JSC). A joint stock company is an organization whose authorized capital is divided into a certain number of shares. The participants of the joint-stock company (shareholders) are not liable for the obligations of the company and bear the risk of losses associated with its activities, within the limits of the value of the shares they own.

The authorized capital in this case is a set of contributions (calculated in monetary terms) of shareholders to the property when creating an enterprise to ensure its activities in the amounts determined by the constituent documents. Due to its stability, the authorized capital, as a rule, covers the most illiquid assets, such as land rent, the cost of buildings, structures, and equipment.

A special place in the implementation of the creditor protection guarantee is occupied by reserve capital, the main task of which is to cover possible losses and reduce the risk of creditors in the event of a worsening economic situation. Reserve capital is formed in accordance with the procedure established by law and has a strictly designated purpose. In a market economy, it acts as an insurance fund created to compensate for losses and protect the interests of third parties in the event of insufficient profit from the enterprise before the authorized capital is reduced.

The Civil Code of the Russian Federation provides for the requirement that, starting from the second year of operation of an enterprise, its authorized capital should not be less than net assets. If this requirement is violated, then the enterprise is obliged to reduce (re-register) the authorized capital, bringing it in accordance with the value of net assets (but not less than the minimum value). The formation of reserve capital is mandatory for joint-stock companies; its minimum amount should not be less than 5% of the authorized capital.2

In contrast to reserve capital, which is formed in accordance with legal requirements, reserve funds, created voluntarily, are formed exclusively in the manner established by the constituent documents or accounting policies of the enterprise, regardless of the organizational and legal form of its ownership.

The next element of equity capital is additional capital, which shows the increase in the value of property as a result of revaluations of fixed assets and unfinished construction of the organization, carried out by decision of the government, cash and property received in the amount of excess of their value over the value of the shares transferred for them, and more. Additional capital can be used to increase the authorized capital, repay the balance sheet loss for the reporting year, and also be distributed among the founders of the enterprise and for other purposes. In this case, the procedure for using additional capital is determined by the owners, as a rule, in accordance with the constituent documents when considering the results of the reporting year.

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In business entities, another type of equity capital arises - retained earnings. Retained earnings - net profit (or part thereof) not distributed in the form of dividends among shareholders (founders) and not used for other purposes. Typically, these funds are used to accumulate the property of a business entity or replenish its working capital in the form of free cash, that is, ready for a new turnover at any time. Retained earnings can increase from year to year, representing an increase in equity capital based on internal accumulation. In growing, developing joint stock companies, retained earnings over the years take a leading place among the components of equity capital. Its amount is often several times the size of the authorized capital.

Target (special) funds are created at the expense of the net profit of a business entity and must serve for certain purposes in accordance with the charter or decision of shareholders and owners. These funds are a type of retained earnings. In other words, this is retained earnings that have a strictly designated purpose.

Two main components can be distinguished as part of equity capital: invested capital, that is, capital invested by the owners in the enterprise; and accumulated capital - capital created in the enterprise in excess of what was originally advanced by the owners. Invested capital includes the par value of common and preferred shares, as well as additional paid-in capital (in excess of the par value of shares). This group usually includes valuables received free of charge. The first component of the invested capital is represented in the balance sheet of Russian enterprises by the authorized capital, the second by the additional capital (in terms of the share premium received), the third by the additional capital or social fund (depending on the purpose of using the gratuitously received property).

Accumulated capital is reflected in the form of items arising as a result of the distribution of net profit (reserve capital, accumulation fund, retained earnings, other similar items). Despite the fact that the source of formation of individual components of accumulated capital is net profit, the goals and order of formation, directions and possibilities of using each of its articles are significantly different. These items are formed in accordance with legislation, constituent documents and accounting policies.

1.2 Sources of equity financing

All sources of equity capital formation can be divided into internal and external (Fig. 2).

3. Ensuring the financial sustainability of the development of the enterprise, its solvency in the long term, and, accordingly, reducing the risk of bankruptcy.

However, it has the following disadvantages:

1. Limitation of the volume of attraction, and, consequently, the possibilities for a significant expansion of the operating and investment activities of the enterprise during periods of favorable market conditions at certain stages of its life cycle.

Rice. 2. Sources of formation of equity capital

2. High cost in comparison with alternative borrowed sources of capital formation.

3. An unused opportunity to increase the return on equity ratio by attracting borrowed funds, since without such attraction it is impossible to ensure that the financial profitability ratio of the enterprise's activities exceeds the economic one.

Thus, an enterprise that uses only its own capital has the highest financial stability (its autonomy coefficient is equal to one), but limits the pace of its development (since it cannot ensure the formation of the necessary additional volume of assets during periods of favorable market conditions) and does not use financial opportunities to increase profit on invested capital.

Based on the economic essence of equity capital, economist Ukhina O.I. It is proposed to highlight the following criteria for the optimal structure of equity capital:

1. To ensure the protective function inherent in equity capital, the amount of the authorized capital must meet the requirements laid down in legislative acts. First of all, this concerns the minimum possible size at the time of formation, as well as the condition that during the functioning of business companies the size of their net assets must be maintained in an amount less than the authorized capital. But already at this stage, contradictions arise in Russian practice.3

The share of the authorized capital in equity capital is so small that it cannot serve as a criterion for the sustainability of the enterprise, because revaluation of fixed assets is reflected in additional capital, and in this situation it is more appropriate to compare net assets not only with the amount of authorized capital, but also with additional capital.

2. Operating enterprises must have a sufficient amount of equity capital, which will ensure the financial stability of the enterprise. It is assumed that it should be sufficient to form not only fixed capital, but also its own working capital. This will ensure the protective and regulating functions of capital, as well as the function of changing the direction of production, i.e. development opportunities.

3. To implement the function of capital, expressed by the ability to generate income, the criterion can be the efficiency of using equity capital.

Its most effective use is possible if you attract a loan, despite its fee. This is indicated by the effect of financial leverage. Accordingly, the ratio of equity and debt capital should have an optimal value for each specific enterprise based on its strategy and capabilities.

4. The price of equity capital indicates the high price of the enterprise, its financial stability, and also allows for the realization of the purchasing power of capital and its regulatory function.

5. Capital acts as an agent of production and serves future needs. Based on this, it is necessary to include retained earnings (or profits allocated to special funds for production development) in equity capital. All this should be expressed in the dividend policy. Determining the proportions in profit distribution is one of the key issues. For an enterprise, it is important both for its own development and for the payment of dividends to the founders, which helps to increase the price of the enterprise. Achieving optimal amounts in profit distribution is possible based on the internal growth rates of the enterprise.

6. Protective and regulatory functions can be fully implemented only by creating a minimum amount of reserve capital. This is especially important for agricultural enterprises that are exposed to both business and natural-economic risks. In this case, it is necessary to take into account Russian practice and the contradictions that arise when determining the minimum amount of reserve capital, the value of which is directly dependent on the size of the authorized capital, which is regulated in legislative acts. However, it is worth noting that at present, in most ACOs, the size of the authorized capital is very small, which means that in the event of unexpected losses, the minimum level of reserve capital does not play the buffer role that is assigned to it.

Thus, considering the problem of forming a rational capital structure, it is advisable to conclude that by approaching the solution of this issue taking into account optimality criteria, many enterprises can achieve the required level of financial stability, ensure a high degree of development, reduce risk factors, increase the price of the enterprise and withdraw production to a more efficient level. The ratio between own and borrowed sources of funds serves as one of the key analytical indicators characterizing the degree of risk of investing financial resources in a given enterprise. One of the most important characteristics of the financial condition of an enterprise is the stability of its activities in the light of a long-term perspective. It is related to the overall financial structure of the enterprise, the degree of its dependence on creditors and investors.

Chapter 2. Own capital management

2.1 Tasks and stages of equity capital management

The basis for managing an enterprise's own capital is managing the formation of its own financial resources. In order to ensure effective management of this process, the enterprise usually develops a special financial policy aimed at attracting its own financial resources from various sources in accordance with the needs of its development in the coming period.

1. Analysis of the formation of the enterprise’s own financial resources in the previous period. The purpose of this analysis is to identify the potential for the formation of own financial resources and its compliance with the pace of development of the enterprise.

At the first stage of analysis the total volume of formation of own financial resources, the correspondence of the rate of growth of own capital with the rate of growth of assets and the volume of sold products of the enterprise, the dynamics of the share of own resources in the total volume of formation of financial resources in the pre-planning period are studied.

At the second stage of analysis the sources of formation of own financial resources are considered. First of all, the ratio of external and internal sources of formation of own financial resources is studied, as well as the cost of attracting equity capital from various sources.

At the third stage of analysis the sufficiency of the company's own financial resources generated in the pre-planning period is assessed.

2. Determination of the total need for own financial resources. This need is determined by the following formula:

Continuation
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Psfr = (Pk * Usk) / 100 – SKn + Pr (1.1.)

where Psfr is the total need for the enterprise’s own financial resources in the planning period;

PC – total capital requirement at the end of the planning period;

Usk – the planned share of equity capital in its total amount;

SKn – the amount of equity capital at the beginning of the planning period;

Pr – the amount of profit allocated for consumption in the planning period.

The calculated total need covers the required amount of own financial resources generated from both internal and external sources.

3. Estimation of the cost of raising equity capital from various sources. This assessment is carried out in the context of the main elements of equity capital formed from internal and external sources. The results of such an assessment serve as the basis for the development of management decisions regarding the selection of alternative sources for the formation of its own financial resources, ensuring an increase in the enterprise’s own capital.

4. Ensuring the maximum volume of attraction of own financial resources from internal sources. Before turning to external sources for the formation of one’s own financial resources, all possibilities for their formation from internal sources must be realized. Since the equal planned internal sources for the formation of the enterprise’s own financial resources are the sum of net profit and depreciation charges, then first of all, in the process of planning these indicators, it is necessary to provide for the possibility of their growth at the expense of various reserves.

The method of accelerated depreciation of the active part of fixed assets increases the possibility of generating one’s own financial resources from this source. However, it should be borne in mind that an increase in the amount of depreciation deductions in the process of accelerated depreciation of certain types of fixed assets leads to a certain decrease in the amount of net profit. Therefore, when searching for reserves for the growth of one’s own financial resources from internal sources, one should proceed from the need to maximize their total amount.

5. Ensuring the required volume of attracting own financial resources from external sources. The volume of attraction of own financial resources from external sources is intended to ensure that part of them that could not be formed through internal sources of financing. If the amount of own financial resources attracted from internal sources fully meets the total need for them in the planning period, then there is no need to attract these resources from external sources.

Doctor of Economic Sciences, Professor Blank I.A. The need to attract one’s own financial resources from external sources is proposed to be calculated using the following formula:

SFRexternal = Psfr - SFRinternal, (1.2.)

where SFRexternal is the need to attract own financial resources from external sources;

Psfr – the total need for the enterprise’s own financial resources in the planning period;

SFRinternal – the amount of own financial resources planned to be attracted from internal sources.

Ensuring that the need for own financial resources is met from external sources is planned by attracting additional share capital, additional issue of shares or through other sources.

6. Optimization of the ratio of internal and external sources of formation of own financial resources. This optimization process is based on the following criteria:

Ensuring the minimum total cost of attracting your own financial resources. If the cost of attracting your own financial resources from external sources significantly exceeds the planned cost of raising borrowed funds, then such formation of your own resources should be abandoned;

Ensuring that the original founders retain control of the enterprise. The growth of additional share or share capital at the expense of third-party investors may lead to a loss of such controllability.

The effectiveness of the developed policy for the formation of own financial resources is assessed using the coefficient of self-financing of enterprise development in the coming period. Its level must correspond to the goal.

The self-financing coefficient for enterprise development is calculated using the following formula:

where Ksf is the self-financing coefficient for the upcoming development of the enterprise;

SFR – planned volume of formation of own financial resources;

A – planned increase in the enterprise’s assets;

PP – planned volume of consumption of net profit.

The successful implementation of the developed policy for the formation of one’s own financial resources is associated with the solution of the following main tasks:

Ensuring the maximization of the enterprise’s profit generation, taking into account the acceptable level of financial risk;

Formation of an effective profit distribution policy (dividend policy) of the enterprise;

Formation and effective implementation of a policy for additional issue of shares (emission policy) or attraction of additional share capital.

2.2 Formation of the enterprise’s own internal financial resources

The basis for the formation of the enterprise’s own internal financial resources, directed to production development, is balance sheet profit, which characterizes one of the most important results of the enterprise’s financial activities.

It represents the sum of the following types of profit of the enterprise:

Profits from sales of products (or operating profit);

Profits from the sale of property;

Profits from non-operating operations.

Among these types, the main role belongs to operating profit, which currently accounts for 90-95% of the total balance sheet profit. In many enterprises it is the only source of balance sheet profit. Therefore, managing the formation of an enterprise’s profit is usually considered as a process of generating operating profit (profit from sales of products).

The main goal of managing the formation of an enterprise's operating profit is to identify the main factors that determine its final size and to find reserves for further increasing its amount.

The mechanism for managing the formation of operating profit is built taking into account the close relationship of this indicator with the volume of product sales, income and costs of the enterprise. The system of this relationship, called “The relationship between costs, sales volume and profit,” allows us to highlight the role of individual factors in the formation of operating profit and ensure effective management of this process in the enterprise.

In the process of managing the formation of operating profit based on the CVP system, the enterprise solves the following tasks:

1. Determination of the volume of product sales that ensures break-even operating activities for a short period.

2. Determination of the volume of product sales that ensures break-even operating activities in the long term.

3. Determining the required volume of product sales to ensure the achievement of the planned (target) amount of gross operating profit. This problem can also have an inverse formulation: determining the planned amount of gross operating profit for a given planned volume of product sales.

4. Determining the amount of the “safety limit” (or “margin of safety”) of the enterprise, i.e. the size of a possible reduction in product sales.

5. Determining the required volume of product sales to ensure the achievement of the planned (target) amount of marginal operating profit of the enterprise. This problem can also have an inverse formulation: determining the planned amount of marginal operating profit for a given planned volume of product sales.

Dividing the entire set of operating costs of an enterprise into fixed and variable also allows the use of a mechanism for managing operating profit, known as “operating leverage”.

The operation of this mechanism is based on the fact that the presence of any amount of constant types in operating costs leads to the fact that when the volume of product sales changes, the amount of operating profit always changes at an even higher rate. In other words, fixed operating costs (costs), by the very fact of their existence, cause a disproportionately higher change in the amount of operating profit of the enterprise with any change in the volume of product sales, regardless of the size of the enterprise, the industry characteristics of its operating activities and other factors.

However, the degree of such sensitivity of operating profit to changes in the volume of product sales is ambiguous at enterprises that have different ratios of fixed and variable operating costs. The higher the share of fixed costs in the total operating costs of the enterprise, the more the amount of operating profit changes in relation to the rate of change in the volume of product sales.

The ratio of fixed and variable operating costs of an enterprise, which allows the inclusion of an operating leverage mechanism with varying intensity of impact on the operating profit of the enterprise, is characterized by the operating leverage ratio, which is calculated using the following formula:

where Kol is the operating leverage ratio;

Ipost – the amount of fixed operating costs;

Io is the total amount of transaction costs.

Continuation
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The higher the value of the operating leverage ratio at an enterprise, the more it is able to accelerate the growth rate of operating profit in relation to the growth rate of product sales. In other words, at the same rate of growth in product sales, an enterprise that has a higher operating leverage ratio, other things being equal, will always increase the amount of its operating profit to a greater extent in comparison with an enterprise with a lower value of this ratio.

The specific ratio of the increase in the amount of operating profit and the amount of sales volume, achieved at a certain operating leverage ratio, is characterized by the “operating leverage effect” indicator. The fundamental formula for calculating this indicator is:

where Eol is the effect of operational leverage achieved at a specific value of its coefficient in the enterprise;

GOP – growth rate of gross operating profit, in%;

OR – growth rate of product sales volume, in%.

By setting a particular growth rate in the volume of product sales, using the specified formula, you can determine how much the amount of operating profit will increase given the operating leverage ratio established at the enterprise.

Management of an enterprise's own capital also includes determining the optimal ratio between its own and borrowed financial resources.

In order to answer these questions, it is necessary to become familiar with the concept of financial leverage and consider the issue of its functioning.

Financial leverage (“financial leverage”) is a financial mechanism for managing the return on equity capital by optimizing the ratio of used own and borrowed financial resources.

The effect of financial leverage is an increase in the profitability of equity capital obtained through the use of a loan, despite the payment of the latter.

The effect of financial leverage arises from the discrepancy between economic profitability and the “price” of borrowed funds. Economic profitability of assets is the ratio of the value of the production effect (i.e., profit before interest on loans and income taxes) to the total value of the total capital of the enterprise (i.e., all assets or liabilities).

In other words, the enterprise must initially develop such economic profitability that there are enough funds at least to pay interest on the loan.

To calculate the effect of financial leverage, you can use the following formula:

EGF = (Rk - Rzk) x ZS / SK, (1.6.)

where Rk is the return on total capital (the ratio of the amount of net profit and the price paid for borrowed funds and the amount of capital);

Rzk - return on borrowed capital (the ratio of the price paid for borrowed funds to the amount of borrowed funds);

ZK - borrowed capital (average value for the period);

SK - equity capital (average value for the period).

Thus, the effect of financial leverage determines the limit of economic feasibility of borrowing funds.

A high positive value of the EGF indicator indicates that the company prefers to make do with its own funds, does not make sufficient use of investment opportunities and does not pursue the goal of maximizing profits. In this situation, shareholders, having received modest dividends, may begin to sell shares, reducing the company's market value.

If the profitability of investments in an enterprise is higher than the price of borrowed funds, financing from borrowed sources should be increased, while the rate of profit growth will depend on the rate of change in the capital structure of the enterprise (the ratio of the amounts of borrowed and equity capital). However, an increase in the amount of debt in the structure of liabilities is accompanied by a decrease in the liquidity and solvency of the borrower, an increase in risks, and an increase in the price of loans provided. As a result, the profit from use and the price of borrowed sources are leveled, which leads to a zero value of the effect of financial leverage.

Further growth in the share of borrowed capital greatly increases the risk of bankruptcy of a business entity and should be perceived by management as a signal to repay part of the debt or search for sources of profit growth.

According to (1.6.), the return on total capital changes depending on the dynamics of the individual components of the above formula. The influence is exerted by the following factors: profit from business operations, the price of attracted resources, the ratio of equity and borrowed capital.

Obviously, with an increase in the share of raised funds in the capital structure and a decrease in financial stability, the rate of profit growth decreases down to a negative value (i.e., to an absolute decrease in profit). Thus, in pursuit of the goal of maximizing profits, an enterprise must increase the share of borrowed capital in sources of financing with a positive EGF value, while simultaneously avoiding financial instability.

When analyzing the EGF, it is necessary to note the problem of ensuring the reliability of the information used in calculating the indicator. EFR is calculated on the basis of traditional accounting sources of information, which involves its adjustment taking into account the specifics of the analysis. For example, replacing the monetary form of payment with a commodity form undermines the basis for determining the profitability and profitability of an enterprise; the financial result is distorted by barter transactions. In this situation, it is necessary to adjust the source data using detailed information.

Thus, effective management of an enterprise’s financial resources involves an active and targeted influence on the capital structure in order to obtain maximum profit from invested funds. It is possible to assess the optimal amount of financing from borrowed sources using the EFR criterion. It allows you to make a decision in advance on influencing the dynamics of funding sources in the right direction to prevent an increase in investment risk.

In our opinion, when solving the problem of forming a rational structure of an enterprise’s funds, in addition to calculating quantitative indicators, it is necessary to take into account qualitative factors, including:

Stability of turnover dynamics. An enterprise with a stable turnover can afford a relatively higher share of borrowed funds and more significant fixed costs.

Level and dynamics of profitability. The enterprise generates sufficient profit to finance development and manages to a large extent with its own funds.

Asset structure. If an enterprise has significant general purpose assets that can serve as collateral for loans, then increasing the share of borrowed funds in the liability structure is quite justified.

The severity of taxation. The higher the income tax, the fewer tax benefits and the opportunities to use accelerated depreciation, the more preferable debt financing looks due to the attribution of at least part of the interest on the loan to the cost price. Moreover, the higher the taxes, the more the enterprise feels a lack of funds and the more often it is forced to turn to credit.

Attitude of creditors to the enterprise. The specific terms of the loan may deviate from the average depending on the financial and economic situation of the enterprise. For a small and/or start-up enterprise, access to credit resources is especially difficult due to the risky financial situation of the enterprise, insufficient loan collateral, and lack of credit history.

State of the capital market. When conditions on the capital market are unfavorable, sometimes you just have to submit to circumstances, postponing until better times the formation of a rational structure of sources of funds.

2.3 Dividend and emission policy of the enterprise in managing the enterprise’s own capital

Dividend policy of the enterprise

The main goal of developing a dividend policy is to establish the necessary proportionality between the current consumption of profits by the owners and its future growth, maximizing the market value of the enterprise and ensuring its strategic development.

Based on this goal, the concept of dividend policy can be formulated as follows: dividend policy is an integral part of the overall profit management policy, which consists in optimizing the proportions between its consumed and capitalized parts in order to maximize the market value of the enterprise.

The problems, the solution of which necessitates the development of a dividend policy, are the following: on the one hand, the payment of dividends should ensure the protection of the interests of the owner and create the preconditions for an increase in the stock price, and in this sense, their maximization is a positive trend; on the other hand, maximizing dividend payments reduces the share of profits reinvested in production development. When forming a dividend policy, it is necessary to take into account that the classic formula: “the stock price is directly proportional to the dividend and inversely proportional to the interest rate on alternative investments” is not applicable in practice in all cases. Investors can highly appreciate the value of a company's shares even without paying dividends if they are well informed about its development programs, the reasons for non-payment or reduction of dividend payments and directions for reinvesting profits. The decision to pay dividends and their amounts is largely determined by the stage of the enterprise's life cycle. For example, if the management of an enterprise intends to implement a serious reconstruction program and, to implement it, plans to carry out an additional issue of shares, then such an issue should be preceded by a sufficiently long period of consistently high dividend payments, which will lead to a significant increase in the share price and, accordingly, to an increase in the amount of borrowed funds, received as a result of the placement of additional shares.

The dividend policy of a joint stock company is formed according to the following main stages:

1. Assessment of the main factors determining the formation of dividend policy.

2. The choice of the type of dividend policy is carried out in accordance with the financial strategy of the joint-stock company, taking into account the assessment of individual factors.

3. The mechanism for distributing the profit of a joint-stock company in accordance with the chosen type of dividend policy.

4. Determination of the level of dividend payments per common share.

5. Assessing the effectiveness of the dividend policy of the joint-stock company.

Emission policy of the enterprise

The main goal of the emission policy is to attract the required amount of own financial resources on the stock market in the shortest possible time. Taking into account the formulated goal, the emission policy of the enterprise is part of the general policy of forming its own financial resources, which consists in ensuring the attraction of the required volume through the issue and placement of its own shares on the stock market.

Continuation
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Development of an effective emission policy of an enterprise covers the following stages

1. Research into the possibilities of effective placement of the proposed issue of shares. The decision on the proposed primary (if the enterprise is transformed into a joint-stock company) or additional (if the enterprise has already been created in the form of a joint-stock company and needs an additional influx of equity capital) issue of shares can be made only on the basis of a comprehensive preliminary analysis of the stock market conditions and an assessment of the investment attractiveness of its shares .

Analysis of stock market conditions (exchange and over-the-counter) includes characteristics of the state of supply and demand for shares, dynamics of the price level of their quotations, sales volumes of shares of new issues and a number of other indicators. The result of such an analysis is to determine the level of sensitivity of the stock market's response to the appearance of a new issue and to assess its potential for absorbing the issued volumes of shares.

The assessment of the investment attractiveness of one's shares is carried out from the perspective of taking into account the prospects for the development of the industry (in comparison with other industries), the competitiveness of the products produced, as well as the level of indicators of one's financial condition (in comparison with the industry average). The assessment process determines the possible degree of investment preference of the shares of one's own company in comparison with the circulating shares of other companies.

2. Determination of emission goals. Due to the high cost of raising equity capital from external sources, issues must be quite significant from the standpoint of the strategic development of the enterprise and the possibility of significantly increasing its market value in the coming period. The main goals that an enterprise follows when resorting to this source of equity capital formation are:

Real investment associated with industry and regional diversification of production activities (creation of a network of new branches, subsidiaries, new production facilities with a large volume of output, etc.);

The need to significantly improve the structure of the capital used (increasing the share of equity capital in order to increase the level of financial stability, ensuring a higher level of own creditworthiness and thereby reducing the cost of attracting borrowed capital, increasing the effect of financial leverage, etc.);

The planned takeover of other enterprises in order to obtain a synergistic effect (participation in the privatization of third-party state-owned enterprises can also be considered as an option for their takeover, if this ensures the acquisition of a controlling stake or a predominant share in the authorized capital);

Other strategic goals requiring the rapid accumulation of a significant amount of equity capital.

3. Determination of the volume of emission. When determining the volume of emissions, it is necessary to proceed from the previously calculated need to attract one’s own financial resources from external sources.

4. Determination of the par value, types and number of shares to be issued. The nominal value of the shares is determined taking into account the main categories of their upcoming buyers (the highest nominal values ​​of the shares are aimed at their acquisition by institutional investors, and the smallest - at the purchase by the public). In the process of determining the types of shares, the feasibility of issuing preferred shares is established; if such an issue is considered appropriate, then the ratio of common and preferred shares is established. The number of shares to be issued is determined based on the volume of the issue and the par value of one share (during one issue, only one variant of the par value of shares can be established).

5. Estimation of the value of the attracted share capital. In accordance with the principles of such an assessment, it is carried out based on the expected level of dividends and the costs of issuing shares and placing the issue. The estimated cost of capital raised is left with the actual weighted average cost of capital and the average interest rate on the capital market. Only after this is the final decision to issue shares made.

6. Determination of effective forms of underwriting. In order to quickly and effectively carry out a public placement of the issued volume of shares, it is necessary to determine the composition of the underwriters, agree with them on the prices of the initial quotation of shares and the amount of commission, ensure regulation of the volume of sale of shares in accordance with the needs of the flow of financial resources that ensure the maintenance of liquidity already placed shares at the initial stage of their circulation.

Taking into account the increased volume of equity capital, the enterprise has the opportunity, using a constant financial leverage ratio, to accordingly increase the volume of borrowed funds, and, consequently, increase the return on equity capital.

Thus, it is the indicators of equity capital that close the entire pyramid of performance indicators of the enterprise, all of whose activities should be aimed at increasing the amount of equity capital and increasing its profitability.

Undoubtedly, the above methods and approaches to managing equity capital are fundamental. However, when assessing the investment attractiveness of an enterprise, the primary task in managing equity capital is its valuation.

Conclusion

Equity capital is a combination of material assets and cash, financial investments and costs for the acquisition of rights and privileges necessary for the implementation of its economic activities.

Own capital is characterized by the following main positive features:

1. Ease of attraction, since decisions related to increasing equity capital (especially through internal sources of its formation) are made by the owners and managers of the enterprise without the need to obtain the consent of other economic entities.

2. Higher ability to generate profit in all areas of activity, because when using it, payment of loan interest in all its forms is not required.

Considering the problem of forming a rational capital structure, it is advisable to conclude that by approaching this issue taking into account optimality criteria, many enterprises can achieve the required level of financial stability, ensure a high degree of development, reduce risk factors, increase the price of the enterprise and bring production to a more efficient level. level. The ratio between own and borrowed sources of funds serves as one of the key analytical indicators characterizing the degree of risk of investing financial resources in a given enterprise. One of the most important characteristics of the financial condition of an enterprise is the stability of its activities in the light of a long-term perspective. It is related to the overall financial structure of the enterprise, the degree of its dependence on creditors and investors.

The main objectives of equity capital management are

Determining the appropriate amount of equity capital;

Increasing, if required, the amount of equity capital through retained earnings or additional issue of shares;

Determining the rational structure of newly issued shares;

Determination and implementation of dividend policy.

The development of a policy for the formation of an enterprise’s own financial resources is carried out according to the following main stages.

1. Analysis of the formation of the enterprise’s own financial resources in the previous period.

2. Determination of the total need for own financial resources.

3. Estimation of the cost of raising equity capital from various sources.

4. Ensuring the maximum volume of attraction of own financial resources from internal sources.

5. Ensuring the required volume of attracting own financial resources from external sources.

Bibliography

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The accumulation of the required amount of capital is a means of ensuring real conditions for the continuous functioning of each economic entity. The process of placement and use of capital is very complex, time-consuming, closely interconnected with the movement of all resources in kind and monetary forms. All management decisions and their implementation involve monitoring the turnover of all resources, their production consumption, and the investment of funds in investment projects. At the stage of creating an enterprise, rational allocation of capital through the formation of an optimal property structure becomes of paramount importance. It is on this that the liquidity and financial condition of the enterprise and its economic results subsequently largely depend. The most common two groups of property include fixed and current assets. Fixed assets, as a rule, are involved in many production processes, are gradually subject to physical and moral wear and tear, and their value in the form of depreciation is partially transferred to the cost of a new product. Fixed assets are largely in physical form (buildings, structures, equipment, etc.). They also include intangible assets and long-term financial investments. Depending on the specific role in the production process, all fixed assets are divided into production and non-production (administrative buildings, social facilities, etc.). Problems of increasing the efficiency of capital investments in fixed assets are solved through: building a rational investment policy of the enterprise, implementing highly effective investment projects; establishing optimal relationships between fixed assets and working capital that are most consistent with the specifics of a particular production and the role of each type of property in achieving the main goal of the functioning of an economic entity; improving the structure of fixed assets, i.e. proportions between the main production and non-production assets, their individual objects based on economic needs, as well as the potential productivity of tools; application of effective methods for calculating depreciation, promoting a more rational use of fixed assets, as well as the accumulation and expenditure of appropriate resources for their restoration and modernization. The second part of the enterprise's property consists of working capital, which, as is known, is consumed in one production cycle and its value is completely transferred to the cost of the new product. Current assets include inventories, settlement funds, short-term securities, cash and other current assets. They are in constant circulation; the faster its individual parts turn over, the less capital investment is required for their formation. However, the liquidity of individual elements of working capital is not the same, since their content, purpose, and characteristics of consumption and turnover are different. In this regard, management of this part of the property involves the use of differentiated forms and methods, analysis of specific indicators characterizing the characteristics of each group of working capital. The optimal structure of property and sources of their financing are determined by the specifics of production, the organization of activities of an economic entity, the variability of the situation in the commodity and stock markets, economic conditions of business, and rapid technical progress. The choice of a new strategy or tactics for the operation of the enterprise, and methods for managing its activities also have a significant impact on these processes. The main rule when justifying the most important proportions between property and the sources of its financing is to establish the volume of constant capital in an amount no less than the cost of fixed assets. The proportions between permanent capital and fixed assets in favor of the former are usually called the “golden” rule of financing, since in such cases the financial stability of the business entity is ensured. Optimizing the composition of working capital, more efficient use of their individual elements, and accelerating their turnover essentially make it possible to unlock significant financial reserves for increasing the profitability of an enterprise. Therefore, in the theory and practice of financial management, working capital remains an important object.

Federal Agency for Education

State educational institution
higher professional education

"South Ural State University"

Department of Economic Theory and World Economy

Test

in the course "Financial Management"

Subject: Managing the process of attracting and forming enterprise capital

1 option

Completed:

Group student

Checked:_____________________

Chelyabinsk

Management of the process of attracting and forming capital of an enterprise.

Capital is a stock of economic goods accumulated through savings in the form of cash and real capital goods, involved by its owners in the economy. The process as an investment resource and factor of production for the purpose of generating income, the functioning of which in the economic system is based on market principles and is associated with factors of time, risk and liquidity.

The capital of an enterprise is classified according to the following main characteristics.

Let us consider in more detail the individual types of capital attracted and used by the enterprise, in accordance with its classification according to its main characteristics.

Based on the title of ownership, the capital formed by an enterprise is divided into two main types - own and borrowed. In the system of sources of attracting capital, this division is decisive.

Equity capital characterizes the total value of the enterprise's funds owned by it and used by it to form a certain part of its assets. This part of the assets, formed from the equity capital invested in them, represents the net assets of the enterprise.

Borrowed capital characterizes funds or other property assets raised to finance the development of an enterprise on a repayable basis. All forms of borrowed capital used by an enterprise represent its financial obligations that must be repaid within the stipulated time frame.

According to the groups of sources of attracting capital in relation to the enterprise, the following types are distinguished - capital attracted from internal sources and capital attracted from external sources.

Capital raised from internal sources characterizes own and borrowed financial resources generated directly at the enterprise to ensure its development. The basis of own financial resources generated from internal sources is the capitalized part of the enterprise’s net profit (“retained earnings”). The basis of borrowed financial resources generated within the enterprise is current settlement obligations (“internal accrual accounts”).

Capital attracted from external sources characterizes that part of it that is formed outside the enterprise. It covers both equity and borrowed capital attracted from outside. The composition of the sources of this group of capital formation is quite numerous and will be discussed in detail in the relevant sections.

Based on the nationality of the owners of the capital that provides it for economic use, a distinction is made between national (domestic) and foreign capital invested in the enterprise.

The national capital attracted by the enterprise allows it to better coordinate its economic activities with the economic policy of the state. Additionally, this type of capital tends to be more accessible to small and medium-sized businesses. At the same time, at the present stage of the country’s economic development, the volume of free national capital is very limited, which does not allow business entities to provide the necessary rates of economic growth.

Foreign capital is attracted, as a rule, by medium and large enterprises engaged in foreign economic activity. Although the volume of capital supply on the global market is quite significant, the conditions for attracting it by domestic business entities are very limited due to the high level of economic and political risk for foreign investors.

According to the forms of ownership of the capital provided to the enterprise, its types are divided into private and public. This classification of capital is used primarily in the process of forming the authorized capital of an enterprise. It serves as the basis for the appropriate classification of enterprises by type of ownership.

According to the organizational and legal forms of raising capital by an enterprise, there are joint-stock, share and individual types. This division of capital corresponds to the general classification of enterprises by organizational and legal forms of activity.

Share capital is formed by enterprises created in the form of joint-stock companies (companies) of open or closed type. Such corporate enterprises have ample opportunities to generate capital from external sources by issuing shares. If the investment attractiveness of such enterprises is sufficiently high, their share capital can be formed with the participation of foreign investors.

Share capital is formed by partner enterprises created in the form of limited liability companies, limited partnerships, etc. Such enterprises, and accordingly the type of share capital, have become most widespread in modern conditions.

Individual capital characterizes the form of its attraction when creating individual enterprises - family ones, etc. In modern conditions, individual enterprises have not yet received widespread development in our country, while in foreign practice they are the most widespread (accounting for 70-75% of the total number all enterprises). The creation of new individual enterprises is hampered by the lack of start-up capital among entrepreneurs and the insufficiently high level of market conditions in most segments of the goods and services market.

According to natural and material forms of attracting capital, modern economic theory distinguishes the following types: capital in monetary form; capital in financial form; capital in material form; capital in intangible form. Investment of capital in these forms is permitted by law when creating new enterprises and increasing the volume of their authorized capital.

Capital in cash is the most common type attracted by an enterprise. The versatility of this type of capital is manifested in the fact that it can easily be transformed into any form of capital necessary for an enterprise to carry out economic activities.

Capital in financial form is attracted by the enterprise in the form of various financial instruments contributed to its authorized capital. Such financial instruments can be stocks, bonds, deposit accounts and bank certificates and other types. In domestic economic practice, attracting capital in financial form is used extremely rarely by enterprises in the real sector of the economy.

Capital in material form is attracted by the enterprise in the form of a variety of capital goods (machinery, equipment, buildings, premises), raw materials, materials, semi-finished products, and in some cases - in the form of consumer goods (mainly by trading enterprises).

Capital in intangible form is attracted by an enterprise in the form of various intangible assets that do not have a material form, but are directly involved in its economic activities and profit generation. This type of capital includes rights to use certain natural resources, patent rights to use inventions, “know-how,” rights to industrial designs and models, trademarks, computer programs and other intangible types of property assets.

Based on the time period of attraction, capital is divided into long-term (permanent) and short-term.

Long-term capital attracted by an enterprise consists of equity capital, as well as borrowed capital with a period of use of more than one year. The totality of own and long-term borrowed capital formed by an enterprise is characterized by the term “permanent capital”.

Short-term capital is attracted by the enterprise for a period of up to one year. It is formed to satisfy the temporary economic needs of the enterprise related to the cyclical nature of economic activity, temporary growth in market conditions, etc.

According to the degree of involvement in the economic process, capital is divided into two main types - used and unused in the economic process. This form of capital classification determines the status of its volume used and allows us to identify the possible potential for its additional use in a specific period.

Capital used in the economic process characterizes it as an economic resource involved in social production for the purpose of generating income.

Capital not used in the economic process (or “dead” capital) is a previously accumulated part of it, which, for certain reasons, has not yet been used in the economic process. Such capital not only does not bring income to its owner, but loses its real value during storage in the form of “opportunity costs”.

Based on the areas of use in the economy, capital in existing economic practice is divided into two main types - used in the real or financial sectors of the economy. This division of capital is somewhat conditional, since it is based on the corresponding classification of enterprises, and not on capital transactions carried out in various sectors of the economy.

Capital used in the real sector of the economy characterizes its totality involved in enterprises in this sector - in industry, transport, agriculture, trade, etc. (although a certain part of the capital of these enterprises may be associated with transactions in the financial market).

Capital used in the financial sector of the economy characterizes its totality involved in various financial institutions (institutions) - commercial banks, investment funds and companies, insurance companies, etc. (although a certain part of the capital of these financial institutions may be directly involved in the processes of actual investment or productive use).

According to the areas of use in economic activity, capital used as an investment resource is distinguished; capital used as a productive resource; capital used as a credit resource.

Capital used as an investment resource constitutes a certain part of the capital of enterprises, both real and financial sectors of the economy, directly involved in the investment process. At enterprises of the first group, this part of the capital is used primarily for making real investments (usually in the form of capital investments), and at enterprises of the second group - for making financial investments (usually in the form of investments in securities).

Capital used as a production resource constitutes the predominant part of the capital of enterprises in the real sector of the economy. This part of their capital is involved in the direct production of products (goods, services).

Capital used as a credit resource constitutes the predominant part of the capital of such institutions in the financial sector of the economy as commercial banks and non-bank credit institutions. To a certain extent, capital as a credit resource can be used in forms permitted by law and by other financial institutions (factoring companies, leasing companies, etc.). The use of part of the capital to provide commodity (commercial) credit by enterprises in the real sector of the economy does not belong to the type under consideration (this type of operation is carried out by them at the expense of capital used as a production resource).

Capital Management is a system of principles and methods for the development and implementation of management decisions related to its optimal formation from various sources, as well as ensuring its effective use in various types of economic activities of the enterprise.

Enterprise capital management is aimed at solving the following main tasks:

Formation of a sufficient amount of capital to ensure the necessary pace of economic development of the enterprise.

Optimization of the distribution of generated capital by type of activity and areas of use.

Providing conditions for achieving maximum return on capital at the envisaged level of financial risk.

Ensuring the minimization of financial risk associated with the use of capital at the envisaged level of its profitability.

Ensuring the constant financial balance of the enterprise in the process of its development.

Ensuring a sufficient level of financial control over the enterprise on the part of its founders.

Ensuring sufficient financial flexibility of the enterprise.

Optimization of capital turnover.

Ensuring timely reinvestment of capital.

2. Capital cost management

Capital in any form has a certain value, the level of which must be taken into account in the process of its involvement in the economic process.

Firm's cost of capital – these are the company’s costs for the use of capital, which are expressed as a percentage (%) of the amount of capital used. The cost of total capital consists of the cost of using equity and the cost of borrowed funds.

The cost of total capital consists of the cost of equity capital and the cost of borrowed capital.

Rice. 1 Simplified scheme for the formation of total capital

Total capital is the cost of equity capital and the cost of borrowed capital.

Equity is the cost of equity capital multiplied by the share of equity capital on the balance sheet.

Borrowed capital is the cost of borrowed capital multiplied by the share of borrowed capital on the balance sheet.

Cost of capital- this is the interest rate that determines the price of capital (total, own and borrowed).

Cost of equity (%)- this is the barrier rate of return of the capital owner (shareholder, investor) that he wishes to receive.

Cost of debt capital (%) is the cost of borrowed funds. For example, the bank’s established annual percentage on a loan.

Share capital- funds invested in the authorized capital, additional capital, various funds created by the company at the expense of shareholders

Profit- funds received as a result of the company’s activities (retained earnings from previous years, profit of the reporting year)

Credits and loans- long-term and short-term loans from banks and other financial organizations and enterprises.

Accounts payable- debt to suppliers, to personnel for the payment of wages, debt to the budget and extra-budgetary funds, other accounts payable.