For many businesses, it is normal for everyday decisions to be made without regard to the value of the company. This approach is justified by the fact that this indicator depends on factors that cannot be taken into account, which means that the value of the company cannot be controlled, much less planned. In fact, a financial director only needs one report to manage the value of a company.

For company value management you need to understand how current activities affect it, what contribution each manager makes, influencing cash flows in one way or another. These tasks can be solved using a special report “Forecast of Cost Changes”, which is successfully used in the Dinal company (see Table 1).

IN report on changes in company value The value of economic value added (EVA) is given as of the current month, as well as its forecast for a year, five years and on an indefinite horizon. It also lists the factors influencing EVA and the personnel responsible for them.

Information structured in this way allows you to answer several important questions:

• How effective is the company's value management and who is responsible for it;
• is there room for value growth;
• what awaits the company in the medium and long term.

Now let’s learn more about how to create a similar report for your company.

Drawing up a report on changes in the value of the company

The first thing you need to do is to highlight the indicators that affect economic added value. For convenience, the relationship between them and the EVA value can be represented in the form of a tree (see diagram). So, the starting point is the formula for economic added value:

EVA = NOPAT – CoC,

Where NOPAT– net operating profit after taxes (net operating profit after tax), rub.;
CoC– cost of capital of the company, rub.

Hence, the cost factors of the first (upper) level are operating profit after taxes (the higher the profit, the greater the EVA, direct relationship and positive impact) and the cost of capital (inverse relationship, negative impact). Next, let’s break these indicators down into their components. In other words, let's define the second level cost factors that affect net operating profit before taxes (NOPAT) and cost of capital (CoC):

NOPAT = EBIT – T,

where EBIT– profit before taxes and accrued interest on loans and borrowings, rub.;
T– income tax, rub.;

CoC = NAWACC,

where N.A.– net assets of the company (total assets – non-interest-bearing current liabilities), rub.;
WACC– weighted average cost of capital, %.

Cost factors of the third, fourth and all subsequent levels are similarly identified. In particular, EBIT can be expressed through revenue, variable and fixed expenses, and the latter can be divided into separate items - rent, labor and depreciation, etc. The same goes for variable costs, where the cost and quantity of products sold are distinguished. Proceeding in this way, the original EVA formula can be decomposed down to the selling price of the product and the cost of a unit of raw materials.

The tree of cost factors shown in the diagram is presented in an enlarged form. Naturally, in practice, deeper detail will be needed to understand in more detail what will change EVA. By the way, if you analyze the resulting diagram, it is easy to notice that the indicators above (all those that relate to the calculation of NOPAT) are nothing more than items in the management report on income and expenses from core activities. The lower group of factors affecting the company's net assets are balance sheet items. That is, when constructing a tree of cost factors, you can use existing items and analytical features of accounting or take as a basis the items of the budget of income and expenses and the forecast balance. Then, for each of them, determine how it affects EVA.

Table 1. Forecast of changes in company value (extract)

* Deviation = (reporting period - previous period): last period 100%.

Responsibility for managing the company's value

Once the final indicators that influence EVA are determined (the last ones in the value chain, such as revenue in the diagram), it is necessary to understand who in the company is responsible for each of them. For example, the financial director's sphere of influence is the cost of attracted sources of financing, therefore, he is responsible for the weighted average cost of capital (WACC).

Some cost factors may be influenced by multiple officials. For example, if the CEO is in charge of acquiring new customers and the sales manager is in charge of servicing ongoing sales, both are considered responsible for revenue. The influence of employees on the value of the company is presented in the form of a matrix of distribution of responsibility (see Table 2).

Table 2. Responsibility distribution matrix

* The sign characterizes the influence of the cost indicator on the EVA value (“+” – growth (direct relationship), “–” – decrease (inverse relationship)). If, when calculating EVA, two negative indicators are involved in division or multiplication (such as WACC and net assets), then one of them is taken into account with the opposite sign (WACC).

Data for the report on changes in company value

The report will require accounting and management data - the actual values ​​of those final cost factors for the current year (with detail by day) and for the last few years (monthly). The data is presented in the form of a table (see Table 3). It is not necessary to achieve perfect accuracy in numbers; deviations are acceptable. The main thing is that the collected information has analytics corresponding to those defined by the responsibility distribution matrix. Namely, the final cost factor and the responsible official were indicated.

When a cost factor is assigned to one manager, the data table shows the entire amount for the period. It is more difficult to distribute the value of a factor among several employees. If these are income or expenses, you can clarify who initiated them and what amount was discussed. For example, the company’s revenue for July 2014 was 6,500 thousand rubles: according to accounting data, 2,400 thousand rubles came from a new client attracted by the general director, and the remaining 4,000 thousand rubles were the result of transactions supervised by the commercial director.

As for balance sheet indicators, you will have to figure out why they changed compared to the previous period. For example, what is the reason for this particular balance of inventory - the supply manager purchased materials for future use or the turnover of raw materials in production decreased.

If it is impossible to break down the amount by responsibility (most likely this will happen in relation to previous years), then it is attributed to the person who is ultimately responsible for the line of business. For example, inventories - for the purchasing manager, variable expenses - for the production director, etc. By the way, the more detailed EVA is decomposed, the easier it will be to distribute amounts between employees.

Table 3. Database for creating a report on changes in company value (extract)

Contents of the report on changes in company value

The structure of the report on changes in the value of the company repeats the structure of the tree of cost factors (see Table 1). The report is generated and analyzed in the following sequence. First, the current state of affairs. Then a forecast for economic value added by the end of the year and for the distant future (five years), implying that the company's growth rate will remain unchanged. Finally, a final assessment of the value of the business is made with the assumption that it will exist for a long, foreseeable period. So, everything in turn.

Reporting period. This section summarizes the results of the month and compares the results obtained with the previous (base) period (in Table 1 these are July and June, respectively). Moreover, the values ​​of indicators are compared not according to the usual “more or less” scheme, but according to their contribution to economic added value. Depending on how exactly a particular indicator affects EVA, the calculation of its impact will vary.

Thus, the contribution of income and expenses (net operating profit after taxes and its components - revenue, variable and fixed expenses, etc.) is determined as the difference between the results of the reporting and base months. Let’s say that in June the company earned 5,260 thousand rubles, and in July – 4,986 rubles, which is 274 thousand rubles less. Consequently, in July sales volume had a negative impact on EVA by exactly this amount. As for operating profit (NOPAT), despite the sales results, it increased by 34 thousand rubles, as did economic added value.

The impact of assets and liabilities is assessed somewhat differently:

Contribution to EVA of assets (or liabilities) = (Assets (or liabilities) at the end of the reporting period - Assets (or liabilities) at the end of the base period) WACC of the base period.

For example, at the end of June the company's net assets amounted to 21,347 thousand rubles, and in July they increased to 21,449 thousand rubles. The weighted average cost of capital in June was 1.92 percent. Accordingly, an increase in net assets by 102 thousand rubles led to a decrease in economic added value by 2 thousand rubles. ((21,449 thousand rubles – 21,347 thousand rubles) 1.92%).

The impact on EVA of the weighted average cost of capital can be assessed as follows:

Contribution to EVA of the cost of capital = (WACC in the reporting period - WACC in the base period) x Net assets at the end of the reporting period.

After completing the calculations, it is worth carrying out a control check - the sum of the contributions of the cost factors must coincide with the amount of increase (decrease) in EVA. In the example, everything converges (the report given in Table 1). EVA increased by 50 thousand rubles, which is equal to the sum of the contributions of all final cost factors.

To make the report more convenient to analyze, it can also show relative deviations of the current period from the base period ((current period - base) : base 100%). Such information will help you quickly figure out, for example, why in July (see Table 1), with lower revenue, profit was higher - the reason is that variable costs decreased at a faster pace than sales.

Forecast for the year. The logic for working with the second block of the report (“Forecast for the year”) is similar. The only difference is that all indicators are planned. The main question here is how to predict them. For example, in order to make a forecast broken down by month for a company (the data for which is presented in Table 1), it is first reasonable to highlight fixed expenses (rent, depreciation, etc.). These costs will be repeated month after month, and no measures are planned to reduce them. The forecast for non-current assets was compiled taking into account depreciation charges (calculation formula, see Table 4). As for the weighted average cost of capital, it is expected to decrease from 23 to 22.5 percent, as the financial service was able to restructure the company's loan portfolio in July.

To obtain a revenue forecast, it is enough to build a linear trend (Excel TREND function) based on historical data, for example, for the previous six months. All other report indicators can be calculated through revenue and turnover (see Table 4). And finally, the cash balance at the end of the year is easily determined by the indirect method (balance at the beginning of the period + NOPAT + depreciation - increase in assets + decrease in liabilities + interest on loans and borrowings).

Table 4. Methodology for forecasting cost factors

Forecast for the future. The technique for constructing a forecast for a five-year perspective is similar to that used for planning until the end of the year. The only difference is that the forecast is broken down by year.

In addition to the report, data on the company's value is provided. It is equal to the sum of net assets at the end of the current year and future values ​​of economic added value discounted by WACC in the forecast (in the example from 2016 to 2020) and in the post-forecast period. The formula is:

where C– company value, rub.;
NAt– net assets at the beginning of the forecast period, rub. (in the example this is 23,169 thousand rubles in 2015);
EVAi– EVA value in the i-th year of the forecast period (total T years, in the example – 5 years from 2016 to 2010), rub.;
EVAt– EVA value at the end of the forecast period (for 2020), rub.;
WACC– weighted average cost of capital, %;
g– estimated average annual growth rate of EVA in the post-forecast period, %.

For the sake of simplicity, assume that in the example the long-run growth rate of economic value added is zero. Hence, the sum of discounted values ​​of economic added value for the forecast and post-forecast periods is 10,505 thousand rubles. According to calculations from Table 1, net assets at the end of 2015 will amount to 23,169 thousand rubles. Accordingly, the cost of the company will be 33,674 thousand rubles.

Let us illustrate what conclusions can be drawn from the “Forecast of changes in the value of the company” (see Table 1). The first is that in all periods under consideration, economic added value is above zero, that is, the value of the business is growing. At the end of July, EVA increased by 50 thousand rubles, but over the next five months it will increase only by 25 thousand rubles. The reason is that its growth will be constrained by an increase in inventories and receivables. This is an alarming signal; the July results show that the company can work more efficiently.

In the long-term forecast, EVA will exceed 3 million rubles, but taking into account discounting, its growth compared to 2015 will be nominal. The total value of the business, estimated on the basis of future discounted EVA values, shows that the return on net assets will be 45 percent (RUB 10,505 thousand: RUB 23,169 thousand). This state of affairs will most likely not suit the owners. And now you can take measures to avoid this. Namely, to determine which cost factors need to be influenced, evaluate their acceptable values ​​and develop the necessary program of action. For example, provide in the budget for the reduction of accounts receivable and inventories to a given level and link with this the motivation of the responsible persons - commercial director, production director and supply manager.

Attached files

Available to subscribers only

• An example of automated calculation of a forecast of changes in the value of a company.xls

Currently, the concept of company value management is becoming increasingly relevant. In this article, we will define the content of the concept of value management, identify the tools used within this concept, and analyze methods for assessing and managing the value of a company based on the concept of EVA (Economic Value Added).

The essence of the concept of managing the value of a company is that management should be aimed at ensuring growth in the market value of the company and its shares. Those. all the company's aspirations, analytical methods and management techniques should be directed towards one common goal: to help the company maximize its value by basing the management decision-making process on key value factors. Due to their enormous practical significance, issues within the framework of the concept of value management have been widely reflected in scientific and practical research.

Employees of the consulting company McKinsey made a great contribution to the popularization of the cost approach to management. The book by company partners Tom Copeland, Tim Koller and Jack Murrin “Valuation: Measuring and Managing The Value of Companies” has become a bestseller in business literature in many countries around the world , incl. and in Russia. We can also talk about the formation of a number of schools, represented by various consulting companies, promoting their own cost management systems. The turnover of these consulting companies (Stern Stewart&Co, Marakon Associates, McKinsey&Co, PriceWaterhouseCoopers, L.E.K. Consulting, HOLT Value Associates, etc.) The company's turnover is measured in hundreds of millions of dollars, and the number of clients is many thousands around the world; huge amounts of money are spent on research into value management problems. All this contributes to an even greater increase in the popularization of the concept of value management as a key management paradigm of our time.

The system of indicators characterizing the company’s activities within the framework of the value management concept is constantly updated. With the introduction of modern information technologies and the emergence of new ideas, indicators become more objective and complex (see Fig. 1).

Fig.1. Tree of indicators used as part of company value management.

Currently, the concept of value is accepted by the economic community as the basic paradigm for business development. The concept of value advises abandoning ineffective accounting criteria for the successful functioning of a company and taking into account only one criterion, the simplest and most understandable for shareholders and investors - newly added value.

A significant contribution to the development of the concept of company value management was made by G. Bennett Stewart. The result of the research was the book “The quest for value: a guide for senior managers”, published by Harper Business in 1990. The book was essentially the result of the activities of the consulting company Stern Stewart & Co, founded by Stewart in the 80s, which has a registered trademark EVA (Economic Value Added). Let us dwell in more detail on the analysis of this concept.

EVA cost estimation and management method

The EVA (Economic Value Added) method of assessing and managing value is based on the concept of residual income proposed by Alfred Marshall, which, due to the actualization on the part of investors of issues related to maximizing income for shareholders, has become widespread. The developer of the concept is Stern Stewart, and Stern Stewart & Co. is actively implementing and implementing the concept.

The essence of the EVA indicator

According to the EVA concept, the value of a company is its book value increased by the current value of future EVA. Scientific research has proven that there is a correlation between EVA and market value. Stewart (1990, pp. 215 – 218) studied this relationship among 618 US companies and presented the results in the book “The quest for value”.

The conclusions that the author came to: the correlation between EVA and market value is especially pronounced among American companies (data were from the late 1980s). At the same time, there is no correlation between negative EVA and negative MVA. The author explains this point by the fact that the potential for liquidation, restoration, recapitalization, or other fundamental restructuring affects the market value of the company; this moment acquires the greatest significance in relation to companies with a significant amount of fixed assets.

Let us dwell in more detail on the analysis of the main points of this concept.

It is obvious that the greatest increase in the value of any company is primarily caused by its investment activity, which can be realized both from its own and from borrowed sources. The main idea that justifies the advisability of using EVA is that investors (who may be the owners of the company) of the company should receive a rate of return for the risk taken. In other words, a company's capital should earn at least the same rate of return as similar investment risks in the capital markets. If this moment does not occur, then there is no real profit, and shareholders do not see the benefits from the company's investment activities.

Thus, a positive EVA value characterizes the efficient use of capital, an EVA value equal to zero characterizes a certain kind of achievement, since investors, the owners of the company, actually received a rate of return that compensated for the risk, a negative EVA value characterizes the inefficient use of capital.

On a macroeconomic scale, capital productivity is the factor that has the greatest impact on the economy and, as a consequence, on GDP growth. Any economy is characterized by a certain “stock” of capital, which leads to the emergence of new GDP. The more productive the capital, the greater the GDP we have. Therefore, achieving the highest possible positive EVA is not only positive for shareholders in managing the value of the company, but also for the entire economy and is important for each individual in a broader perspective. In practice, this moment characterizes the possibility of the most effective redistribution of capital from one industry to another, which allows the industry to develop and receive additional income.

Let us recall the chronology of the development of the paradigm for determining the cost and efficiency of a company (See Table 1) and dwell on the main advantages of the EVA indicator over the EPS, ROA (ROI), and CF indicators:

• The EPS (Earnings per share) indicator does not provide information about the costs associated with generating this income. If the cost of raising capital (loans, loans, bonds) is 15%, then a 14% rate of return is actually not a benefit within the value added concept
• The indicators ROA (Return on assets) and ROI (Return on investments) are more indicative of the characteristics of economic activity, but also ignore the costs of raising capital. As an example, we can cite data from IBM Corporation. Two years ago, ROA was 11%, the company was actively attracting loans, but the aspect that the costs associated with raising capital were 13% remained “behind the scenes,” which led to a gradual decrease in the company’s current rate of return. Large companies can receive a loan at a lower interest rate compared to other borrowers, this moment looks very tempting as part of the decision to expand, however, attention is not always paid to the presence of negative added value
• The discounted cash flow (FCF) indicator is very close to the value added indicator, but nevertheless does not make it possible to obtain data on value added over a period of time without a direct comparison of the two values ​​of the company

EVA calculation options

There are two main options for calculating EVA:

1) EVA = Profit after taxes (NOPAT) – Weighted average cost of capital (COST OF CAPITAL) x Invested capital (CAPITAL employed)

2) EVA = (RATE OF RETURN – Weighted average cost of capital (COST OF CAPITAL)) x Invested capital (CAPITAL employed)

Let's give a practical example of calculation. An investment in the production and sale of hot dogs at street stalls is $1,000 with a 5% rate of return, while investments with a similar level of risk can return 15%. Thus, EVA = (5% – 15%) x $1,000 = – $100 In the above example, although the accounting profit would be $50 (5% x $1,000), there is an alternative the opportunity to earn $150 (15% x $1,000), while a negative EVA value indicates that making this $1,000 investment is not advisable.

Let's consider a more complex example in terms of making an investment decision based on the value added (EVA) indicator.

The company operates in the field of production of carbonated drinks. Invested capital as of the valuation date is $100 million. Structure of invested capital: 50% equity, 50% debt. Cost of debt capital 5%, cost of equity 15%. The company's operating profit is $11 million. ROI (return on investment) = $11 million / $100 million = 11%.

EVA =(ROI – WACC)*CAPITAL = (11%-10%)*100 = 1

The head of the company is faced with the need to make an investment in the amount of $25 million associated with the purchase of new equipment. It is proposed to make this investment in full by obtaining a loan. Financial calculation shows that the return on investment is 6%.

Thus, the total amount of invested capital, taking into account the new investment, will be $125 million (40% equity, 60% debt). The expected operating profit will be 11 + 6%*25 = 12.5, the rate of return on all invested capital will be 12.5/125 = 10%, WACC will decrease and be: 0.4*15+0.6*5% = 9%.

EVA= (ROI – WACC)*CAPITAL = (10%-9%)*125 = 1,25

It is obvious that the actions of the manager in terms of making investments lead to an increase in Added Value, which in turn will lead to an increase in the value of the company for shareholders.

Factors that determine EVA

Let's return to the formation of the EVA indicator and reflect the relationship between EVA and the main factors involved in the formula calculation. As part of company value management, these factors can be detailed based on smaller components.

Fig.2. The main factors shaping EVA.

By increasing the value of EVA by influencing the factors involved in the model, the manager increases the value of the company.

Thus, EVA can be increased:

1. by increasing sales income and reducing costs (saving and optimizing current costs (reducing unprofitable production, etc.))
2. by optimizing capital costs.

Returning to the previously discussed example, it should be noted once again that the actions of the head of the company in the field of production of carbonated drinks are correct and lead to an increase in the value of the company. Further increase is possible by optimizing the assortment policy, saving and optimizing current costs, etc.

It should be noted that the value added indicator is highly sensitive to changes in the cost of capital. We present data for three large companies when the cost of capital changes by 3% (from 9% to 15%).

Table 1. Data on the companies Coca-Cola, TRW, Ford.

Valuation of a company's business based on EVA

Using EVA, you can also calculate the value of a company.

Firm Value =
Previously invested capital (Capital Invested in Assets in Place)
+ Current added value
from capital investments (PV of EVA from Assets in Place)
+ Sum of current added values
from new projects (Sum of PV of EVA from new projects)

Let's give a practical example of calculating the value of a company's business using the EVA model: Revenue from sales of a company is $1,000.00 in the first year, $1,200.00 in the second, $1,500.00 in the third, 1,500.00, $00 from the fourth year until the end of the company's activities. The forecast period is 6 years. EBIT share 20% of revenue, income tax 24%, WACC 15%. Invested capital $1,500.00 in the first year, $1,600.00 in the second, $1,200.00 from the third year. Calculate EVA by year in the forecast and post-forecast periods, obtain the value of the company using the EVA model.

Table 2. Estimating the value of a company's business.

FOR REFERENCE: adjusted initial capital invested $1,470.

It must be borne in mind that the simplicity of calculating the EVA indicator is only an apparent phenomenon. The developer of this model (Stewart G. Bennett) provides a list of possible amendments and adjustments to the NOPAT value and invested capital involved in the calculation.

Profit from sales adjusted by % (EBIT or Operating profit after depreciation and amortization)
+ Interest payments on leasing (Implied interest expense on operating leases)
+ Increase compared to the purchase price of inventories accounted for using the LIFO method (Increase in LIFO reserve)
+ Goodwill amortization
+ Increase in bad debt reserve
+ Increase in long-term R&D costs (Increase in net capitalized research and development)
– The amount of hypothetical taxes (Hypotical taxes or Cash operating taxes)

Book value of common equity
+ Preferred stock
+ Minority interest
+ Deferred income tax reserve
+ LIFO reserve
+ Accumulated goodwill amortization
+ Short-term debt on which interest is charged (Interest-bearing short-term debt)
+ Long-term debt
+ Capitalized lease obligations
+ Present value of non capitalized leases

Using the EVA indicator in a company's value management system

As part of company value management, EVA is used: when drawing up a capital budget, when assessing the performance of departments or the company as a whole, when developing an optimal and fair bonus system for management. The advantages of applying this concept within the framework of company value management are associated with an adequate and non-labor-intensive determination, using this indicator, of the degree to which a division, company or individual project has achieved the goal of increasing market value.

Advantages of EVA over ROI

The feasibility of creating a bonus system based on EVA can be assessed using the following example.

A widely used metric for rewarding divisional managers is return on investment (ROI). A manager of a division whose ROI is 2% will try to implement any investment project that will at least slightly increase the return on investment (almost without taking into account the value of net present value, NPV, net present value). On the contrary, the manager of a division with a high ROI will show some conservatism due to fear of a decrease in this indicator. A situation where the less profitable divisions invest “aggressively” while the most successful ones invest too cautiously is obviously not desirable for shareholders.

Advantages of EVA over NPV

Traditional NPV analysis requires calculating the required amount of investment with an accurate determination of the volume and timing of cash flows by period. The calculation of the value added indicator, as well as the NPV indicator, can be carried out for each individual period of the company’s operation without additional consideration of past events and predictions of the future, but simply based on the amount of capital employed estimated on the basis of accounting data. At the same time, with the help of EVA it is much easier to carry out a comparative analysis of the planned indicators of an investment project with the actually achieved results; the EVA indicator allows you to visually record data that allows you to draw a conclusion about the degree of effectiveness of an individual investment or their totality in a specific period of time.

Despite a number of obvious advantages, a number of disadvantages of the EVA indicator should be noted:

1. the value of the EVA indicator (as well as any indicator based on the concept of residual income) is significantly influenced by the initial assessment of the invested capital (if it is underestimated, then the added value created is high; if it is overestimated, then, on the contrary, it is low). At the same time, the author of this model (Bennet Stuart) proposes a number of adjustments balance sheet the amount of invested capital, which can also bring additional subjectivity to the calculations and does not reflect the real market situation
2. the bulk of the added value within the EVA model comes from for the post-forecast period, which represents an “adjustment” for “non-accounting” of the real value of invested capital in the added values ​​of the forecast period

In order to remove a certain subjectivity in the calculations, BennettStewart recommends assessing not the absolute value of EVA, but the annual increase in this indicator (Change in EVA/Change in RI).

CONCLUSIONS:

Thus, Economic Value Added

• is a tool for measuring the “excess” value created by an investment
• is an indicator of the quality of management decisions: a constant positive value of this indicator indicates an increase in the value of the company, a negative value indicates a decrease,
• serves as a tool to determine the rate of return on capital (ROC), allocating a portion of the cash flow earned through investments,
• is based on the cost of capital as a weighted average of the various types of financial instruments used to finance investments,
• allows you to determine the value of the company, and also allows you to evaluate the effectiveness of individual divisions of the company (individual property complexes),
• At the same time, it contains a number of restrictions discussed earlier.

Introduction

In the conditions of a market economy in Russia, the independence of enterprises in making decisions on doing business, as well as responsibility for the results of their activities, there is a need for continuous strategic development of the enterprise and the introduction of a strategic enterprise management system that helps determine effective directions in the implementation of the financial and economic activities of the enterprise, orientation in financial opportunities and prospects arising in the current economic system of the country.

Mastery of generally accepted financial management tools and the methodology for their construction will allow specialist managers to adapt to any possible change in the enterprise's accounting and statistics system.

These provisions explain the relevance of the course work

The purpose of the course work is to learn to determine the indicators studied in the course “Theoretical Foundations of Financial Management” on the basis of reporting data from specific enterprises, analyze the data obtained and draw conclusions.

To achieve the goal, the following tasks were set:

Analyze the main analytical tools for increasing the reliability of financial decisions, assessing calculated and reported values, and the financial condition of a particular company;

Perform calculations and analyze the results.

The object of research is the analyzed enterprise.

The subject of the study is the financial processes of the enterprise.

The theoretical and methodological basis of the study consisted of regulatory documents, scientific works of domestic and foreign specialists, periodical materials, methodological developments in the field of financial analysis, accounting, audit and management accounting.

Basic analytical tools for financial solutions

In the management system of a commercial organization, analysis is intended to justify management decisions in the field of financial management. The content of financial management is usually considered in relation to the activities of open joint-stock companies, but the universality of the methodology of financial analysis allows it to be used in relation to the activities of a commercial organization of any organizational and legal form of the real sector of the economy, the financial sector, as well as non-profit organizations.

In Russian science and practice, there is a fairly widespread point of view that financial analysis covers all sections of analytical work included in the financial management system, i.e. related to financial management of a business entity in the context of the environment, including the capital market. At the same time, financial analysis is often understood as an analysis of the accounting (financial) statements of an organization, an analysis of its financial condition, which does not seem entirely correct, since it narrows the goals, content of financial analysis, its information base and the possibility of using the analysis results in management.

If we consider financial analysis as a tool of financial management, then it is first necessary to determine the content of the latter as an applied science, which was formed as a science about the methodology and practice of financial management of a large company. The traditional approach to determining the essence of financial management is that the following are considered as management objects:

Operating assets and capital investment;

Capital structure and attraction of necessary sources of financing.

As, for example, consider J.K. Van Horn and J.M. Wachowicz (Jr.), financial management, or financial management, consists of the activities of acquiring, financing and managing assets aimed at realizing a specific goal. Consequently, managerial decisions in the field of financial management can be attributed to the following main areas of asset transactions: investment, financing and management Van Horn, James K., Wachovich (Jr.), John M. Fundamentals of Financial Management. - 11th ed.: Trans. from English - M.: Publishing house "William", 2004. - p. 20 (992 pp.).

V.V. Kovalev Kovalev V.V. Financial management: theory and practice. - M.: TK Welby, publishing house "Prospekt", 2006. - p. 16 (1016 pp.) uses an object-procedural approach to defining financial management as an independent scientific and practical direction based on two key ideas:

1) financial management is a system of actions to optimize the financial model of the company, or in the narrower sense of its balance sheet, which allows you to highlight all the objects of attention of the financial manager;

2) the dynamic aspect of the financial manager’s activity is determined by the formulation of five key questions that determine the essence of his work:

Is the position of the enterprise in the markets of goods and factors of production favorable and what measures contribute to its non-deterioration;

Do cash flows ensure the rhythm of payment and settlement discipline;

Is the enterprise operating efficiently on average?

Where to invest financial resources with the greatest efficiency;

Where to get the required financial resources.

Considering the balance sheet as a financial model of a company in the context of managerial decisions of financial management, we will show in the diagram the relationship between the balance sheet and management decisions on investing and raising capital (Fig. 1).

Rice. 1

financial management analytical reporting tool

The need for assets, the size, structure and quality of which allows the company to achieve its strategic goals, is covered by its own and borrowed sources of financing. The structure of a business entity's permanent capital can be optimized taking into account the following restrictions. Focusing on the maximum share of equity capital, on the one hand, ensures independence from suppliers of borrowed capital, on the other hand, it reduces the ability to invest capital, does not contribute to the growth of return on invested capital and increases the weighted average cost of capital. The desire to excessively increase the share of borrowed capital and thereby reduce the weighted average cost of capital leads to the risk of loss of financial stability, increases financial costs for debt servicing, reduces profit after tax and the ability to pay dividends.

The optimal size and structure of operating assets, technical and economic parameters reflecting the state and level of use of fixed capital, as well as the turnover of working capital determine the amount of income received. At the same time, investing capital always potentially contains the risk of not receiving the expected income, reducing the market value of shares (company value), which may be due to incorrect strategic decisions and insufficient efficiency of current activities. Suboptimal management decisions regarding the choice of capital investment options, one way or another, lead to an excess of the weighted average cost of attracted capital compared to the level of return on invested capital.

Profit as capital gain is generated in the process of ongoing activities in the production of goods and is realized after its sale. At the same time, the functioning of assets as invested capital is a factor determining the amount of income. At the same time, the nature of resource consumption and the amount of borrowed sources of financing determine the level of current production costs and financial expenses. Therefore, the scope of management includes not only the costs of acquiring resources (assets), but also income as a result of investing capital, as well as expenses as costs of consuming resources. The excess of income over expenses and the level of return on invested capital ultimately determine the amount of profit from operating activities and the increase in retained earnings, and, consequently, equity capital. Profit is not only the result of the functioning of assets, but also a condition for the further development of the organization, an economic justification for paying income to owners on invested capital.

Investing and raising capital, income received and expenses incurred are accompanied by cash flows, the management of which is one of the most important tasks in financial management.

Indicators of profit, return on invested capital, cash flow are key in justifying management decisions and are considered as factors determining the achievement of the goal of financial management - increasing the wealth of shareholders, and the criterion for the effectiveness of implemented management decisions is cost, the qualitative and quantitative determination of which is a rather difficult task.

The subject of management in financial management is a senior financial manager (financial director), whose role in the management of a large company is very significant, and whose functions are diverse. They are determined by the tasks in the field of financial analysis and financial planning as tools for achieving the goals of financial management, taking into account the internal conditions of the organization’s functioning and environmental factors.

In Russia, the status of the financial director, the general list of his job responsibilities and qualification requirements are defined in the Qualification Directory of Positions of Managers, Specialists and Other Employees. In accordance with this document, the job responsibilities of the financial director (deputy director for finance) include determining the financial policy of the organization, developing and implementing measures to ensure its financial stability; management of financial management work based on the strategic goals and development prospects of the organization. In addition to performing other important functions, the financial director takes measures to ensure solvency, a rational structure of assets, ensures the provision of the necessary financial information to internal and external users, organizes work to analyze and evaluate the financial results of the organization and develop measures to improve the efficiency of financial management. The financial director must know methods for analyzing and assessing the effectiveness of the organization's financial activities, methods and procedures for planning financial indicators.

The nature of the requirements for the financial director of an organization is determined by its size and structure, industry, development strategy and other factors. But the general list of responsibilities of the financial director of a medium and large company certainly includes financial analysis, monitoring of financial indicators that allow assessing the achievement of its strategic goals and operational financial management indicators, justification of management decisions in the field of financial management, and general risk assessment.

From this point of view, it seems necessary to determine the subject and content of financial analysis, which is important not only from a scientific but also from a practical point of view - properly organized analytical work is of exceptional importance for the timely adoption of management decisions.

In our opinion, financial analysis should be understood as an analysis of the efficiency of operating activities, methods of raising capital and investing capital in order to maintain constant solvency, generate profits and increase the value of the organization. This definition allows us to link the factors increasing the value of a company with financial indicators, highlight the strategic and operational aspects of financial analysis, as well as its content in the context of operational, investment and financial activities.

In relation to a commercial organization, the tasks of analysis to justify management decisions and evaluate their implementation in the field of operating activities include:

Justification of the strategy for financing current assets;

Analysis of working capital turnover to ensure its normal circulation;

Assessment of liquidity and solvency of the organization;

Analysis of the formation of financial results from the sale of products, assessment of profit growth factors in the short term, assessment of the effectiveness of the current activities of the company as a whole and its individual segments.

Effective management of investment activities is associated with assessing the structure and return of assets and justifying adequate management decisions on the choice of production and financial investment options to ensure the required level of return on invested capital. In turn, management decisions in the field of financial activities should be based on the study of possible ways to attract capital in financial markets, and financial analysis procedures should be aimed at optimizing the structure of sources of financing investment programs and the weighted average cost of capital.

Operational aspects of financial analysis are manifested in monitoring the status of receivables and payables, justifying the most rational forms of settlements with counterparties, maintaining the cash balance necessary for daily settlements, analyzing the turnover of individual elements of working capital, monitoring indicators of the operating and financial cycles, analyzing financial budgets and evaluating their execution. These tasks are implemented in the process of ongoing financial work, which makes it possible to control the process of implementing management decisions and maintain the financial condition of the organization at a level that ensures the solvency of the organization.

The strategic aspects of financial analysis are associated mainly with the application of the methodology of financial analysis in the development and justification of the organization's development strategy, which is impossible without the implementation of investment programs, their financial support, the corresponding return on invested capital and the financial stability of the organization. Strategic issues of financial analysis also include the justification of dividend policy and distribution of after-tax profits. Currently, the strengthening of the role of strategic aspects of financial analysis is due to the introduction into management practice of the concept of managing the value of a company and the need to analyze strategic risks.

In addition, decision-making in the field of financial management is based on a study of the external conditions of the organization’s functioning, an assessment of the organization’s position in the capital market, as well as an external analysis of the financial condition and business activity of the organization’s current and potential counterparties in terms of the feasibility of establishing and continuing business contacts.

In this context, the analysis of financial (accounting) statements, in the author’s opinion, should be considered as one of the sections of classical financial analysis, mainly external, which has not lost its significance at the present time, but not the only tool for justifying business decisions.

Speaking about the optimality of management decisions in the field of financial management, we mean the effective management of operational, investment and financial activities from the point of view of a reasonable ratio of costs and benefits, risk and profitability in accordance with the strategic goals of the company.

At the same time, the strategy of an organization (as a subject of market relations) is understood as the concept of its functioning for a given perspective, formulated in the form of goals, priorities in development directions, a system of strategic management decisions and a program of adequate measures, developed taking into account the risks of the external and internal environment that can ensure achievement set goals, the formation of competitive advantages and increasing the value of the organization with an acceptable degree of risk.

Issues of strategy development, its revision and optimization in modern management are becoming inextricably linked with managing the value of companies. The ability of company management to find and effectively use opportunities to increase value also forms a fundamentally new area of ​​key competence - the ability to “create” value turns into a source of competitive advantage. Cost is considered as an economic criterion that reflects the impact of decisions made on all indicators by which the company's activities are assessed (market share, competitiveness, revenues, investment needs, operational efficiency, cash flows and risk level), allowing to rank options in a choice situation.

The modern concept of Value-Based Management (hereinafter referred to as VBM) is aimed at qualitatively improving strategic and operational decisions at all levels of the organization by concentrating efforts on key value factors to achieve the goal of maximizing the value of the company. The principle of value maximization does not determine the direction of business development and the sources of growth in the value of the company, but sets a single direction for analyzing and evaluating performance results, a coordinate system for managing both individual subsystems and the organization as a whole in the process of implementing the strategy (Fig. 2).

T. Copeland, T. Koller, J. Murrin believe: “The value of a company is the best measure of performance because its assessment requires complete information” Copeland T., Kohler T., Murrin J. The value of companies: valuation and management. - 2nd ed., ster.: Trans. from English - M.: JSC "Olymp-Business", 2002. - P. 44..

The orientation of the company's strategy to increase its value involves the selection and use in financial analysis of the most informative indicators characterizing aspects of operating, investment and financial activities; achieving company goals and ways to achieve goals as efficiency factors.

Rice. 2

At the same time, it is important to distinguish between strategic indicators and indicators of operational analysis and control of economic activities; lagging (reflecting past events) and leading (reflecting forecast estimates) indicators. The optimal amount of both allows you to reduce the amount of redundant information and largely determines the quality of analysis and management decisions. Endless modeling of derived indicators, their excessive detail, endowment of indicators with characteristics not inherent to them, expansion of the volume of management information leads to increased costs for collecting and processing information, its redundancy and ineffective use.

Despite the variety of value indicators, their strengths and limitations, all models essentially have the same basis: new value is created when companies receive a return on invested capital that exceeds the cost of raising capital. At the same time, a single indicator in a specific cost management model cannot perform informational and evaluation functions, nor can it serve as a tool for making management decisions and a means of motivating personnel at all hierarchical levels.

The problem of forming a system of indicators that best suits management tasks is not new and has long been discussed by specialists in the field of analysis and management. In relation to traditional financial indicators generated in the accounting system and reflected in the accounting (financial) statements, the problematic aspects of their use are associated with their certain limitations:

The value of financial indicators can be changed by accounting methods, methods of asset valuation, and the application of tax legislation for accounting purposes (the latter is typical for Russian accounting practice), which distorts the amount of expenses, profits and indicators derived from them;

Financial indicators reflect past events and current facts of economic life;

Financial indicators are distorted by inflation and are easily veiled and falsified;

Generalizing financial indicators reflected in the accounting (financial) statements and the coefficients derived from them are “too” generalizing and cannot be used at all levels of management of the organization;

Accounting (financial) statements as a source of information for calculating relative financial indicators do not fully reflect the value of assets and do not cover all income-generating factors associated with intellectual capital;

Profit as an accounting performance indicator cannot be a criterion for evaluating long-term management decisions.

Increasing competition between companies and the deepening struggle for limited resources are placing increasingly stringent demands on the quality of financial management and business performance as a whole. In such conditions, special importance is attached to finding a strategic goal and indicators that determine the degree of its achievement and fulfillment of the assigned tasks. Systems aimed at cost management are designed to solve such problems.

Systems aimed at cost management are systems whose main goal is, on the one hand, the formation of a set of assessments of the compliance of the actual state of the company with its strategy and tactics, and on the other, the creation of active feedback from management systems (primarily financial accounting) with data information system. The strengths and weaknesses of current performance indicators are presented in Table. 2.4.4.1

Table 2.4.4.1.1

Current performance meters

The main goal of such systems is to focus on key indicators such as the value of the company and its share capital, economic added value, and cash flow. The difference between these systems and traditional ones is that they perform a service function in relation to financial management systems.

Rice. 2.4.4.1.

In domestic practice, the traditional indicator of business performance is profit, which personifies current successes and which Russian managers pay more attention to. This approach focuses managers at different levels of management on short-term priorities.

Foreign partners usually consider the value of the enterprise as an indicator of business valuation. The difference between these approaches is shown in Fig. 2.4.4.1.1.

Thus, the determining factor that influenced the development of modern management accounting systems is a change in the philosophy of thinking of management personnel and the refusal to consider profit as the main goal of the enterprise and the transition to a multi-purpose individual development function.

Under these conditions, profit becomes not a goal, but a conditional accounting category, the calculation options for which give different values; the main measurable indicator, the strategic maximization of which is necessary, is the long-term value (value) of the company.

Consequently, accounting profit and the organization’s performance indicators formed on its basis do not fully reflect the performance of the business, as evidenced by the opinions of individual authors.

Having investigated this issue, I.A. Kanushina, in the article “Strategic Profit Management”, revealed the limited capabilities of indicators calculated using accounting profit values ​​for adopting strategic development goals of the company. The author notes that financial statements do not provide the information necessary to calculate the full value of a modern company. “A number of resources that generate income are not included in the assets recorded. Such resources include: investments in R&D, personnel training, investments in the creation and promotion of a brand, and in business reorganization. All these resources are elements of capital, but are not recognized as assets in accordance with accounting standards and do not participate in the calculation of accounting profit. From a strategic analysis and strategic management perspective, these resources are important to consider when determining the amount of capital to use."

According to D. Yangel, “the widespread use of value indicators is caused by differences in estimates of the balance sheet (accounting) and market value of assets and, as a consequence, capital. This discrepancy arises, first of all, due to the increasing role of intangible assets (business reputation, intellectual developments) and intangible assets (organizational image, availability of influence resources, development potential, etc.).”

If existing accounting methods make it possible to evaluate and account for objects of the first category (for example, at fair value adopted in IFRS), then the second category cannot be quantified and valued. It is the assessment of the company by market value that allows you to obtain objective results. The value management indicator system is becoming the basic management paradigm, displacing traditional accounting methods for assessing performance. “At the same time, all management tools are subject to the task of maximizing market value; the process of making management decisions is also based on key value factors.”

The concept of managing a company by value has become the object of research by both foreign and domestic authors. For example, T. Copeland, T. Kohler and J. Murrin in their work “Company Value: Valuation and Management” set out the following principles for managing a company by value (Value-based management - VBM):

• - the main goal of the company’s activities should be to maximize its value;
• - the value of a company is a general indicator on the basis of which one can evaluate the effectiveness of its activities, as well as the quality of management decisions made.

Company value - this is its assessment by the market. In general, it reflects the value that the owners could receive by selling the business. The principles of organizing company value management are as follows:

• - determine the management object - categories leading to value maximization;
• - determine the result of management and the factors ensuring it;
• - choose a system of meters for factors and results;
• - development of a new motivation system - do only what leads to maximizing the value of the company;
• - involve employees and managers of all levels in achieving the company's goals.

The organization of cost management is usually based on key cost factors - factors leading to value maximization (analogue - key performance indicators). Key Performance Indicators are specified in the form of systems of analytical interrelated indicators.

System of analytical indicators is a set of separate, logically interrelated indicators linked in a chain in which each subsequent indicator follows from the previous one and characterizes a certain aspect of the company’s performance.

The advantages of indicator systems over single meters are that they:

• - reduce the possibility of ambiguous interpretation inherent in single meters;
• - provides quantitative and qualitative information on the financial and economic situation;
• - have a pyramidal shape, ensuring aggregation of information when moving from bottom to top;
• - serve as an effective tool for monitoring and monitoring the achievement of set goals.

The following indicators can be used to assess profitability: EVA (economic value added), ROE (return on equity), ROA (return on assets), ROCE (return on equity capital), ROI (return on investment), operating income, gross profit, net profit .

The most well-known systems of analytical indicators are, in particular, the system of return on invested capital (ROI) and the system of measuring return on equity (ROE).

Table 2.4.4.1.2

Characteristics of the indicators that make up the ROI and ROE systems

Scorecard ROI characterizes the efficiency of using invested capital, and also allows you to assess the degree of improvement in the efficiency of its use.

Company financial analysis system ROE examines the ability of an enterprise to effectively generate profit, reinvest it, and increase turnover. This system is based on a strictly determined factor model, which illustrates the influence of factors of profitability, turnover, capital structure and resources on return on equity, and also allows you to track changes in indicators over time and calculate the topics of economic growth.

This model allows you to coordinate management goals through a set of requirements for individual indicators and organize the planning of indicators in the system on a top-down basis. The ROE indicator is of interest primarily to the company's owners, since it allows them to improve the quality of management and demonstrates the ability to manage their own and borrowed capital. These models use the following component indicators (Table 2.4.4.1.2).

The listed indicators have a number of disadvantages, because:

• - do not take into account the degree of risk of decisions made;
• - indicators of the lower level may conflict with indicators of the higher levels;
• - do not take into account intangible assets;
• - the difficulty of an objective monetary valuation of the company’s assets based on standard financial statements;
• - illustrate the contradiction between strategic objectives and current financial results.

The trends in the development of the value management indicator system are illustrated in Table. 2.4.4.1.3. That is why the development of the VBM concept has led to the development of value-oriented indicators, which make it possible to transform disparate business lines, processes and tasks into a single whole by creating an organizational chain of command focused on increasing the value of the company. Value management indicators analyze the following categories of company performance.

• 1. Strategic efficiency of the company- success of management in achieving the strategic goal of the business - maximizing the value of the company.
• 2. Operational efficiency- displays the results of the company’s activities in terms of sales growth, cost reduction or productivity growth.
• 3. Efficiency of investment activities- reflects the effectiveness of investment projects implemented by the company.
• 4. Financial efficiency- reflects the effectiveness of efforts to attract all possible sources of financing for the company, place free funds on the stock market and manage working capital.

All metrics in a value management system can be based on free cash flow estimates or financial reporting data. The evolution of the VBM concept allows us to identify the following trends characteristic of calculating cost indicators:

Table 2.4.4.1.3

Cost Management Indicators: Evolution

• - assume payment of not only borrowed but also equity capital;
• - take into account the state of market and information uncertainty and the associated time and economic risks;
• - focused on dynamics and forecasting, therefore they use discounting methods;
• - in calculations, measures are used that characterize the availability of “real” money, and not conditional accounting estimates of profit.

The implementation of a cost approach to optimizing the financial structure of companies' capital involves substantiating the choice of parameters for assessing performance results based on market value and building a system of factors for its creation according to this target criterion. Despite the recognition of the importance of the cost concept, a number of problems remain in financial practice related to an ambiguous understanding of the possibilities of its application in the process of financial management.

Even in developed Western countries, where the cost approach to financial management has been used since the second half of the twentieth century, the scale of this application, according to ongoing research, is characterized by significant differences across countries. So, in Austria, Germany, Ireland, Switzerland, 75% of the largest companies used it, in the UK - 65%, in France - 50%, Italy - 40%, in Norway and Sweden - about 30%. Moreover, some companies declaring the use of the cost approach reduced it to assessing the effectiveness of strategic decisions in acquisitions and implementation of investment projects, others - to using it as an additional tool for setting goals and assessing their activities. At the same time, it should be noted that in the process of developing the cost approach, there was a constant improvement in the tools for managing the company’s value and methods for determining it.

In Russian financial practice, the value approach to company management (VBM) is just beginning to be used. This necessitates the need to turn to analytical tools for assessing the market value of a company, developed in Western countries, to identify the possibilities of VBM in optimizing the financial structure of companies' capital.

The most common approach to assessing the market value of a company in developed countries is based on determining its market capitalization. As noted by G.B. Kleiner, the value and dynamics of the capitalized value of a company in a market economy correlates quite closely with changes in the market value of the existing business. At the same time, in recent decades, a tendency has formed in the world financial markets towards a rapid excess of market valuations of companies compared to their real assets, which has become one of the key factors in the modern global financial crisis.

To determine the reasonable market value of a company, it becomes necessary to carry out a special assessment. For these purposes, countries with developed market economies have developed a number of indicators and methodologies based on the identification of three fundamental approaches: cost-based (property), comparative (market) and income (Appendix 14). Each of these approaches has certain advantages and disadvantages, which have been studied quite fully in the economic literature.

For the purposes of this study, it seems necessary to compare the possibilities of their use in relation to the tasks of forming the financial structure of the capital of companies from the standpoint of taking into account the influence of factors that are decisive both for the formation of the capital structure and the market value of companies (Table 3.1.1).

Table 3.1.1 - Comparative characteristics of approaches to assessing the market value of a company

The approach takes this factor into account;

— the approach does not take this factor into account;

The approach partially takes this factor into account.

The cost (property) approach involves establishing value based on a hypothetical sale of the company's underlying assets. In this case, the total value of the individual components of the property complex is taken into account, and not the economic value of the company and the quality of its management. The cost approach partially takes into account the existing financial structure of the enterprise's capital, for example, when using the net asset method. However, it ignores the influence of factors such as changes in capital structure, as well as the potential return on assets and associated risks that underlie strategic financial decisions.

Using the cost approach to estimate the value of companies whose shares are outstanding may lead to misleading results, especially if the valuation results are based on the book value method. This is due to the fact that the decisive influence on the book value is exerted by the method of accounting for depreciation, the cost of purchased resources in the cost of goods sold, the value of the revaluation coefficients of fixed assets taking into account the level of inflation, the frequency of such revaluation, etc.

The main disadvantages of the cost approach are not eliminated when using the net asset method or adjusted book value, since in this case it is impossible to take into account the influence of the analyzed factors on the value of the company. The use of the indicators “residual value” and “replacement cost”, which are focused on past costs of creating (acquiring or using) a company, does not give correct results. The introduction of temporary indices of the value of objects of evaluation and current prices allows, to a certain extent, to reflect changes in the scale of prices and future profitability, but does not change the fact that the value of a company as an object of evaluation is identified with resource costs and does not reflect future income and risks. It can be concluded that the use of this approach to assess the market value of a corporation from the point of view of forming the financial structure of capital is not advisable.

The market (comparative) approach, in contrast to the cost approach, is focused on taking into account market prices not for assets, but for similar companies. The main methods within this approach are: the method of analogous companies, the method of comparable sales (transactions) and the method of multipliers (industry coefficients). The use of these methods largely depends on the availability and accessibility of information, the characteristics of the subject of assessment, the subject and conditions of the proposed transaction with the subject of assessment. To determine the market value of companies whose shares are in free circulation, the multiplier method is most often used. As a rule, financial indicators are used as the latter: P/S - price / sales volume; P/EBIT - price / profit before taxes and interest; P/E - price / net profit; EV/EBITDA – market value / earnings before taxes, interest and amortization; Р/СF - price/cash flow; Р/ВV - price/book value of equity capital and others. Information on market financial multipliers is published in the materials of analytical agencies.

Methods of the comparative approach are based on the actual purchase and sale prices of similar companies, therefore, when using them, unlike other approaches based on calculations, the value of enterprises is determined by the market. The comparative approach takes into account the current financial structure of the capital of companies and market risks, however, it is focused on the price environment, reflecting past financial results, and, therefore, does not take into account future changes in the capital structure and future earnings of the company. In addition, comparative approach methods have a number of other disadvantages that limit their use for assessing the market value of a company. These disadvantages include, in particular, the need for intermediate calculations, adjustments requiring justification, the subjective nature of these adjustments, limited access to financial information, the requirement for the reliability of financial statements, etc.

Thus, both considered evaluation approaches are based on the actual conditions and results of the company’s production and financial activities (costs or prices), and do not take into account the company’s development prospects, expected financial benefits, or the impact of the financial structure of capital on the company’s performance. In this regard, the objectives of this study are most consistent with the methods of the income approach, which allow us to take into account the key factors that determine the formation of the capital structure and market value of companies. Let us note that it is the income approach that is commonly used in world practice to assess the impact of management decisions on the value of a company.

The income approach is based on the use of fundamental financial concepts: the time value of money and the relationship between risk and return. All methods within its framework reflect the requirement for the investor to receive a certain benefit from owning a company, taking into account the risk of such ownership, which involves taking into account the prospects for using the asset in the future, the size of the income stream generated by the asset, the distribution of this flow over time and its volatility. Hence, the methods of the income approach are based on the reduction of future cash receipts separated in time by taking into account one or more factors that reflect the probability of their receipt.

The simplest methods within the income approach include the method of capitalization of income (profit), which is used subject to stability of income (profit) or sustainability of its growth rate. Using this method involves converting the income stream into a present value using a capitalization rate. The capitalization rate can be considered as a simplified discount rate, which is applied under the condition of uniform income flow.

The market value of a company is determined by the following formula:

where V is the market value of the company;

D – income indicator;

N – capitalization rate.

Net cash flow, net profit of the enterprise, and the amount of dividend payments can be used as income indicators. The latter indicator is usually used when evaluating a company whose shares are listed on the stock market. If the shares of the company being valued are not traded, then in order to identify the most typical level of dividends, a similar company whose shares are in free circulation is selected and the share of profits that can be used to pay dividends after tax is calculated. The calculated amount of possible dividend payments is capitalized, as in the net income capitalization method.

One of the modifications of the method under consideration is the method of capitalization of net income. When using it, net income (profit) is taken as an indicator of income, and the rate of expected income (profit) is taken as the capitalization rate. This method, like other methods based on the use of profit, is characterized by the disadvantages that arise from the use of this accounting indicator. At the same time, the net income capitalization method is easy to use and makes it possible to compare different types of property being valued.

In order to account for intangible assets to assess the value of companies, an enterprise often uses the method of capitalization of excess income, which is based on the assumption that the value of a company consists of the value of its tangible and intangible assets. The value of intangible assets is determined by their ability to generate excess income, which is understood as income in excess of the average market value of the rate of return on tangible assets. Thus, the value of a company is calculated as the sum of the value of tangible assets and the capitalized amount of excess income (profit).

The most common methods within the income approach include the discounted cash flow method, where expected cash flows are converted into current values ​​using discounting techniques. In its general interpretation, it involves calculating the current value of free cash flows generated by the company, that is, flows discounted at a certain discount rate:

where FCFt is the free cash flow indicator in the t-th year of the calculation period, at each stage it includes the net present value minus the flow of capital investments.

r — discount rate,

t is the interval of the calculation period.

In relation to assessing the value of a company, the algorithm for implementing this method involves dividing the calculation period into two components: planned (forecast) and post-forecast periods. The forecast period is determined based on the duration of the company's business cycle, the average duration of ongoing projects (in this case, the company is considered as a portfolio of projects), and the period of implementation of the company's strategy. A forecast of expected cash flows for the planning period is made, the value of the company in the post-forecast period is determined (residual value - TV), then the values ​​of cash flows and residual value are discounted.

The market value of a company is determined by summing the discounted value over a fixed forecast horizon and the discounted residual value:

The discounted cash flow method allows you to reflect the market value of a company taking into account its prospects. It underlies a number of corporate value management models (A. Damodaran, balanced scorecard, McKinsey's Pentagon).

At the same time, the use of the discounted cash flow method involves the need to make a number of assumptions and justify the choice of key parameters. Among the main problems of applying the discounted cash flow method in economic literature are:

— choice of discount rate. The economic significance of the discount rate is that it acts as the required rate of return for available alternative options for using capital with a comparable level of risk. The discount rate is determined on the basis of statistical, analytical, expert and heuristic methods, as well as their combination. At the same time, to calculate it, it becomes necessary to establish additional unknown parameters (return on “risk-free” investments, return on alternative investments, weighted average cost of invested capital, etc.);

— determination of the forecast and post-forecast calculation periods, the degree of stability of the company’s operation in the post-forecast period;

— forecast of the flow of future income in conditions of uncertainty and risk;

— taking into account the risks associated with the use of an asset or the operation of a company throughout the entire calculation period;

— the subjective nature of the assessment, determined by one or another interpretation of the economic situation and decisions made.

These problems determine the possibility of error in calculating the market value of a company. In addition, this method has some limitations in its scope: it can only be used to assess the value of companies that generate cash flows, that is, those engaged in stable business activities, and is not suitable for estimating the value of companies incurring financial losses.

In addition to the discounted cash flow method, methods of analysis and management of added value that implement the concept of economic profit have become widespread in financial practice. In accordance with this concept, a company increases its value only if its income exceeds the cost of attracted capital, that is, there is residual income. One of the first economists to substantiate the concept of economic profit and residual income was A. Marshall. As early as 1890, he wrote: “What remains of his [the owner or manager’s] profits after deducting interest on capital at the current rate may be called his business or managerial profits.” According to the views of A. Marshall, when determining the value created by a company in any period of time (that is, its economic profit), it is necessary to take into account not only the expenses recorded in the accounting accounts, but also the opportunity costs of attracting capital employed in the business.

The ideas of economic profit and residual income were finally formed in the 60s of the 20th century, and at the end of the 80s. were practically implemented in the form of a number of models that were used to assess the value of a company for management purposes.

One of these models was the development of the American consulting firm Stern, Stewart & Co., which proposed methods for calculating economic value added (EVA) and market added value (MVA).

D. Stewart defined economic added value as the difference between net operating profit after tax (NOPAT = EBI = EBIT - Taxes) and the amount of expenses for servicing the company's capital (capital charge - CC) for the same period of time:

EVAt = EBITt – Taxest – CCt, (3.3)

Transforming formula (3.3) we can obtain:

where IC is invested capital;

ROIC - return on invested capital,

WACC is the weighted average cost of capital.

From formula (3.4) it follows that the EVA indicator depends on the financial structure and cost of capital of the company. It shows what type of financing (equity or debt) and what amount of capital must be invested to obtain a certain profit. At the same time, on the one hand, the company must ensure a level of return on invested capital not lower than the level of costs to attract it, and, on the other hand, the rate of return on capital invested by shareholders must cover their risks associated with investing in the company.

The EVA indicator acts as a current financial indicator of the increase in value, allowing one to combine the company’s financial statements and the requirements of the cost management concept, which determines its role in financial management practice (when forecasting new projects, restructuring processes, mergers and acquisitions, determining remuneration for managers, etc. ). In order to adequately reflect the value of the company when using the EVA method, a number of adjustments to the company’s capital are used (accounting for “equity equivalents” in the terminology of the authors of the concept), the most significant of which are:

— accounting for all types of intangible assets (R&D, costs of creating a trademark, goodwill, etc.), the cost of which should be capitalized when calculating EVA and not expensed;

— accounting for various reserves created in the company;

— accounting for deferred taxes and any paid sources of financing;

— re-accounting of questionable investments from the principle of “successful efforts” to full costs.

Appropriate amendments are also provided for the company’s profit, aimed at converting accounting profit into economic profit, taking into account changes caused by capital adjustments, reflecting “typicality”, repeatability, and excluding speculative effects.

The disadvantages of the EVA model that limit the possibilities of its application in the economic literature include:

— connection of EVA with accounting indicators. The EVA calculation is based on financial reporting indicators, which reduces the reliability of assessing the impact of current financial decisions on the future value of the company;

— the need to make adjustments to financial statements;

— underestimation of differences in the size of the companies under study and the causes of possible problems in the company’s activities;

— the possibility of underestimating the company’s long-term development prospects. When implementing large investment projects characterized by long-term costs and risks, EVA worsens, so focusing on this indicator when choosing a strategy can lead to a reduction in capital investments and income generated by these investments in the future;

— discrepancy between the return on investment (ROIC) indicator used in calculating EVA and the actual rate of return. When evaluating investment projects, the ROIC indicator shows an underestimated value of the internal rate of return (IRR) at the beginning of the period and overestimated at the end of the period; when evaluating companies, an industry bias may occur - in growing industries with large investments, the ROIC indicator is overestimated relative to the actual profitability, and in mature ones - understated

The need to mitigate the shortcomings of the EVA model led to the development of new indicators, primarily the Market Added Value (MVA) indicator. MVA is a reduced estimate of projected economic value added (EVA):

Company value (V) is calculated as the sum of invested capital (IC) and added market value:

V = IC +MVA (3.6)

Thus, the MVA indicator allows us to expand the scope of use of the EVA method for a long-term forecast period.

Among other modern developments based on the concept of economic profit, the following can be highlighted:

— models of adjusted economic value added (Adjusted Economic Value Added - AEVA) and improved economic value added (Refined Economic Value Added - REVA), proposed by J. De Villiers. In the first case, instead of an adjusted valuation of capital, the current market valuation of capital is used when calculating ROIC, and in the second, the market value of the company at the beginning of the period;

— a model for the analysis of added value (assessment) of equity capital, presented in the works of A. Rappaport, K. Walsh, and specialists from the McKinsey consulting company. Value added here is considered as an increase to the balance sheet value of equity. The model involves identifying basic financial ratios that serve as the basis for constructing control levers within the framework of the cost concept;

- monetary value added (CVA) model developed by E. Ottoson and F. Weissenrieder. According to this model, financial management consists of maximizing the difference between cash flow from the company's current activities and cash flow from strategic investments;

— model of total shareholder return (TSH) of Boston Consulting Group. The TSH indicator is calculated as the ratio of the difference in the market capitalization of the company being valued for the reporting period, taking into account dividends paid to shareholders, and the underlying value of the company;

- Olsson model (Edwards-Bell - Olsson Valuation Model - EVO). The value of the company is expressed through the current value of net assets and excess profit reduced to the current time (the amount of excess of the company's profit over the industry average, obtained as a result of existing competitive advantages). Instead of forecasted cash flows, estimated parameters obtained from standard reporting are used, which are in an autoregressive relationship;

— model of cash flow return on investment (CFROI). This indicator synthesizes cash flow and the capital generating it, which makes it possible to take into account the inflation factor, different quality and terms of financial assets, accounting policy methods, etc.

A special place within the framework of the income approach methods is occupied by the options method, which is based on taking into account the probability factor of a particular development of an event and price volatility. The idea of ​​using option pricing techniques to estimate the value of an enterprise belongs to F. Black and M. Scholes. They developed a model, later modified by R. Merton, according to which the value of a company is determined through its comparison with the price of the underlying asset and the risk-free rate and is a function of a number of variables (current price of the underlying asset, option exercise price, option life, risk-free interest rate, corresponding option term, variance in the value of the underlying asset). Option models make it possible to reflect the possibility of obtaining certain benefits with qualified management; however, their use in practice is complicated by the tasks of finding model parameters and reliable estimation of volatility.

In general, an analysis of modern analytical tools for managing a company’s value allows us to draw the following conclusions regarding the possibilities of their use in optimizing the financial structure of a company’s capital. To a greater extent, these goals are met by methods of the income approach, which allow taking into account factors of changes in the capital structure, future income of the company and the risks associated with their generation.

Among the methods of the income approach, the economic profit model should be highlighted, the advantage of which over the discounted cash flow model is that economic profit gives an idea of ​​​​the company's performance in any given year, while free cash flow does not have this property. The discounted cash flow method can be used to estimate the market value of a company at a certain point in time, but does not allow ongoing monitoring of changes.

The economic profit model using EVA and MVA indicators allows us to determine the impact of changes in the financial structure of capital on changes in the market value of the company, and also provides a synthesis of accounting and financial approaches, combining standard accounting reporting of companies and the requirements of the cost management concept.

At the same time, the results of calculating the market value of a company based on the EVA indicator are identical to the results obtained using the discounted cash flow method. Formal proof of this position is given in the works of a number of researchers. Comparative characteristics of discounted cash flow and economic value added models are presented in Appendix 15.

The introduction of the EVA model as an analytical tool for managing the value of a company involves analyzing the possibilities of eliminating its inherent limitations. Let us establish these possibilities in the context of those shortcomings of EVA, which, based on an analysis of economic literature, were highlighted above.

1. The calculation of EVA is based on financial reporting indicators, which reduces the reliability of assessing the impact of current financial decisions on the future value of the company. This limitation is leveled by using EVA together with the MVA indicator, which allows you to expand the scope of the method for a long-term forecast period. We also note that the EVA indicator is a more advanced tool for making financial decisions than accounting profit, since EVA allows you to evaluate not only the final result, but also how it was obtained (volume and structure of capital, cost of capital). In this regard, it can be argued that this approach is more economic than accounting.

2. The need for special adjustments to financial statements. The need for and the number of necessary accounting adjustments that must be made when calculating EVA is debatable. In particular, S. Stewart and G. Bennett describe 154 adjustments, of which it is proposed to actually use 10-12. E. Ottoson and F. Weissenrieder reduce the number of necessary adjustments to 20. A. Erchbar indicates that 5-6 adjustments are sufficient to apply the EVA model. R. Ray and T. Russ consider it inappropriate to make adjustments.

Indeed, adjustments complicate the calculation of EVA and therefore make it difficult to use to inform financial decisions. Those reporting adjustments that increase the value of the indicator may cause mistrust among shareholders, creditors and financial analysts. In addition, some adjustments do not have a significant impact on the EVA value. Based on this, when justifying the methodology for calculating EVA, one should take into account the complexity and labor intensity of the adjustment, as well as the degree of impact that the adjustment has on the value of the indicator and determining the value of the company. Obviously, for different companies this degree will not be the same, which determines the advisability of making certain adjustments (Appendix 16).

It should be noted that adjustments complicate the calculation of EVA and therefore increase the risk of problems when using this concept to manage a business. In addition, reporting adjustments that increase the value of the indicator may cause mistrust among shareholders, creditors and financial analysts.

4. Underestimation of differences in the size of the companies under study and the causes of possible problems in the company’s activities. This limitation, in our opinion, can be removed if we use relative indicators based on EVA, for example, the ratio of EVA to invested capital.

5. The possibility of underestimating the company's long-term development prospects. EVA does deteriorate when introducing large investment projects with long-term costs and risks. These costs and associated risks are spread over the entire forecast period, which reduces the value of EVA in the current and subsequent years. However, such changes will also occur if the discounted cash flow method is used, since free cash flow will decrease as costs increase.

6. The return on investment (ROIC) indicator used in calculating EVA does not correspond to the actual rate of return. If an investment project is taken as the basis for the analysis, then it is obvious that in the initial years, when investments in the project are large compared to the income generated, the return on investment indicator is underestimated, and at the end of the period, on the contrary, it is overestimated. J. De Villiers, in particular, notes that the discrepancy between ROIC and IRR is directly proportional to the length of the investment period (life of assets). However, if we consider the company as a whole (as a set of investment projects), the problem of incorrect periodization is reduced. Another solution to this problem is the introduction of a modified depreciation schedule.

Thus, taking into account the possibilities of eliminating the listed limitations, we can conclude that EVA has a high potential as an analytical tool for managing the value of a company. This indicator combines the ability to determine the value of a company, assess the effectiveness of both the company as a whole and its individual divisions, and motivate management personnel to make effective investment decisions. Its use allows you to implement a cost approach to optimizing the financial structure of a company and build an appropriate model.

Cooper S., Crowther D., Davis D., Davis M. Return on Investment // Management Accounting. June 2000, Vol. 78, Issue 6. - P . 38-46.

Business strategies: an analytical guide / Ed. G.B. Kleiner. - M.: "CONSECO", 1998. - P. 102.

Berdnikova T.B. Valuation and taxation of enterprise property. - M.: INFRA-M, 2003; Grigorieva I.L., Filippov L.A. Disadvantages of appraisal activities and their elimination // Assessment issues. - 2003. - No. 4; . The value of companies: valuation and management. - M., 2007; Revutsky L.D. Ways and possible prospects for rationalizing methods for assessing the market value of enterprises and other business objects // Valuation Issues. - 2003. - No. 3; Roche D. Cost of the company. From the desired to the actual. - Minsk, “Grevtsov Publisher”, 2008, etc.

Azgaldov G.G., Karpova N.N.On one of the problems of applying the cost approach // Questions of assessment. - 2003. - No. 2.

Copeland T. Koller T., Murin J . Cost of companies: valuation and management. - M., 2007. - P. 112.

Mikhailets V.B. Once again about the discount rate in valuation activities and methods of the income approach // Valuation Issues. — 2005. — No. 1 ; Mikhailets V.B., Artemenkov I.L., Artemenkov A.I. Income approach and the discounting principle when valuing income-generating illiquid assets // Valuation Issues. - 2008. - No. 1; Forecasting and analyzing the accuracy of the discounted cash flow method. Retrospective review of previously completed assessment reports // Property relations in the Russian Federation. - 2006. - No. 7; Salun V. How to choose the right discount rate // Securities market. - 2003. - No. 4 ; Sinadsky V. Calculation of the discount rate // Financial Director. - 2003. - No. 4 ; Yakovleva I.N. How to calculate the discount rate and risks for a manufacturing enterprise // Economist’s Handbook. - 2008. - No. 9, etc.

Copeland T., Koller T., Murrin J. Cost of companies: valuation and management.- M., 2007. - P.123.

Dodd J.L., Chen Sh. EVA: A New Panacea? // Business and Economic Review, Vol. 42. Jul-Sep 1996. — R.26-28.

Wilson J. Economic Value Added (EVA). L., UBS Global Research. May, 1977.

Stewart G. The Quest for Value: a Guide for Senior Managers. — New York: Harper Collins Publishers, 1991.

Krivorotov V.V. Cost management: Valuation technologies in enterprise management. - M.: UNITY-DANA, 2005. - P.38; Teplova T.V. Modern modifications of the cost model of company management // Bulletin of Moscow State University. - 2004. - No. 1.

Teplova T.V. Modern modifications of the cost model of company management // Bulletin of Moscow State University. - 2004. - No. 1. — P.19-20.

De Villiers J. The distortions in Economic Value Added // Journal of Economics and Business, Volume 49, No. 3 May/June 1977. – P. 285-300.

Rappaport A. Creating shareholder value: The New Standard for Business Performance.- NewYork: Free Press, 2000.

Walsh K. Key indicators of management. How to analyze, compare and control data that determines the value of a company. – M.: Delo, 2000.

Ottoson E., Weissenrieder F. Cash Value Added – a New Method for Measuring Financial Performance // Gothenburg Studies in Financial Economics. - 1996. - No. 1.

Feltham G.A., Ohlson J.A. Uncertainty Resolution and the Theory of Depreciation Measurement // Journal of Accounting Research 34 (Autumn 1996), 209-34.

Black F. Scholes M. The Pricing of Options and Corporate Liabilities // Journal of Political Economy, Vol. 81/3. — 1973. — R . 637-654.

Zozulya V. EVA: a new look at old things // Company Management. - 2001. - No. 3; Stepanov D. ValueBased Management and value indicators.

Stewart S., Bennet G. The Quest for Value. The EVA Management Guide/Harper Business. – New York, 1999.- P.154.

Ottoson E., Weissenrieder F. Cash Value Added – a New Method for Measuring Financial Performance. - Gothenburg Studies in Financial Economics, 1996.

Ehrbar A. EVA: The Real Key to Creating Wealth. — New York: Jorn Wiley & Sons, 1998.

Ray R, Russ T. Economic Value Added: Theory, Evidence, A Missing Link // Journal of Applied Corporate Finance. – 2001. – No. 1.

De Villiers J. The distortions in Economic Value Added // Journal of Economics and Business, Volume 49, No. 3 May/June 1997. — R . 285-300.

Teplova T.V. Modern modifications of the cost model of company management // Bulletin of Moscow State University. - 2004. - No. 1. — P.21.