Управленческий учет на предприятии

1. such division helps to solve a problem of increase in weight of profit at the expense of relative reduction of these or those expenses;

2. allows to look for the most optimum combination of variables and the constant expenses providing an increase of profit;

3. allows to judge an economic return and financial stability on a case of deterioration of an economic situation.

As criterion of a choice of the most profitable production the following indicators can serve:

1. gross margin on a unit of production;

2. share of a gross margin in the price of a unit of production;

3. gross margin on unit of a limited factor.

Considering behavior of variables and constant expenses, it is necessary to analyze structure and structure of expenses for a unit of production in a certain period of time and at a certain number of sales. Here is how the behavior of variables and constant expenses is characterized at change of output (sale).

Structure of expenses not so much quantitative relation, how many the qualitative. Nevertheless influence of dynamics of variables and constant costs of formation of financial results at output change very significantly. The operational lever is closely connected with structure of expenses.

The effect of the operational lever is that any change of sales proceeds always generates stronger change of profit.

For calculation of effect or force of influence of the lever a number of indicators is used. Thus division of expenses into variables and constants by means of intermediate result is required. It is accepted to call this size a gross margin, a cover amount, a contribution.

Into these indicators enter:

1. gross margin = profit on realization + constant expenses;

2. contribution (cover amount) = sales proceeds - variable expenses; 3 . effect of the lever = (sales proceeds - variable expenses) / profit on realization.

If to treat effect of influence of the operational lever as change of a gross margin, its calculation will allow to answer a question as far as the profit on increase in volume (production, sale) production changes.

The revenue changes, lever force changes. For example, if force of the lever is equal 8,5, and growth of revenue is planned for 3%, the profit will grow on: 8,5 x 3% = 25,5%. If the revenue falls for 10%, the profit decreases on: 8,5 x 10% = 85%.

However with each growth of sales proceeds force of the lever changes, and the profit grows.

Let's pass to the following indicator which follows from the operational analysis - to a profitability threshold (or profitability points).

The threshold of profitability pays off as the relation of constant expenses to coefficient of a gross margin:

Kvalova of a margin = gross margin / sales proceeds, (13.8)

From here:

profitability threshold = margin consumption / Kvalova's constants, (13.9)

The following indicator - a stock of financial durability:

Stock of financial durability = sales proceeds - a profitability threshold

The size of financial durability shows that the enterprise has a stock of financial stability, so, and profit. But the difference between revenue and a profitability threshold is lower, the it is more risk to receive losses. So:

1. force of influence of the operational lever depends on the relative size of constant expenses;

2. force of influence of the operational lever is directly connected with growth of volume of realization;

3. force of influence of the operational lever of subjects is higher, than the enterprise is closer to a profitability threshold;

4. force of influence of the operational lever depends on capital intensity level;

5. force of influence of the operational lever of subjects is stronger, than it is less profit more constant expenses.

Example for calculation

Basic data:

1. Proceeds from sales of production - 10000 000.

2. Variable expenses - 8300 000.

3. Constant expenses - 1500 000.

4. Profit - 200 000.

Calculation: 1 . Let's calculate force of influence of the operational lever.

Cover amount = 1500 000. + 200 000. = 1700 000.

Force of influence of the operational lever = 1700/200 = 8,5 times.

2. Let's assume that the next year growth of volume of realization by 12% is predicted. We can calculate, on how many percent the profit will increase:

12% Ч 8,5 =102%.

10000 Ч 112% / 100 = 11200 000

8300 Ч 112% / 100 = 9296 000

11200 - 9296 = 1904 000

1904 - 1500 = 404 000

Force of influence of the lever = (1500 + 404) / 404 = 4,7 times.

From here the profit increases for 102%:

404 - 200 = 204; 204 Ч 100 / 200 = 102%

Let's define a profitability threshold for this example. For these purposes it is necessary to calculate coefficient of a gross margin. It is considered as the relation of a gross margin to sales proceeds: 1904 / 11200 = 0,17.

Knowing coefficient of a gross margin - 0,17, we consider a profitability threshold.

Profitability threshold = 1500/0,17 = 8823,5.

The analysis of structure of cost allows to choose behavior strategy in the market. There is a rule at a choice of favorable options of assortment policy - the rule «50 / 50».

Management of expenses in connection with use of effect of the operational lever allows quickly and to approach to use of finance of the enterprise in a complex. For this purpose it is possible to use the rule «50 / 50».

All types of production are subdivided into two groups depending on a share of variable expenses. If it more than 50%, to the given types of production is more favorable to work over decrease in expenses. If the share of variable expenses less than 50%, to the enterprise is better to increase realization volumes - it will give more gross margin.

Having mastered a cost management system, the enterprise gets the following advantages:

1. opportunity to increase competitiveness of made production (services) at the expense of decrease in expenses and increase in profitability;

2. to develop flexible price policy, on its basis to increase a turn and to force out competitors;

3. to save material and financial resources of the enterprise, to receive additional current assets;

4. to estimate efficiency of activity of divisions of the enterprise, motivation of the personnel.

Questions for self-checking

1. Point of profitability and target profit.

2. Safety margin.

3. Operational lever.

Situational tasks

Task 1.

1.Organization planing sale some pens. Is it possible to by 0,8 tenge., and to y по 1 tenge. Total rent = 20 tenge. Comment pens nessecory to by and will break of point?

Task 2.

Calculate the net profit got from sale of goods. The quantity of the sold units of production makes 200, the price of realization of 5000 tenges. Cumulative constant expenses are equal 450 tenges. Variable unit cost is equal 300 tenges.

Task 3.

Calculate quantity of the realized units of production for receiving desirable profit.

Constant expenses make 3000 000 tenges.

Desirable profit of 5000 0000 tenges

The revenue on a unit of production makes 80 000 tenges

Task 4.

Find a safety edge for 2 years

The volume of expected realization for 2009 made 8000 units of production

The volume of profitable realization for 2009 made 4000 units

The volume of expected realization for 2010 made 6000 units of production

The volume of profitable realization for 2010 made 3000 units

Task 5.

Find coefficient of a limit of safety if it is known that planned realization of a consignment of goods is equal 1000 tenges, realization in a point of profitability of 500 tenges, planned realization of 5 pieces.

Task 6.

Find a safety zone if it is known that the planned price of realization is equal 2000 tenges, realization in a point of profitability of 1800 tenges.

Task 7.

Constant expenses make 710 tenges in a week. Variable expenses for the same period of they are 2980 tenges, an exit of production of-1820 pieces. Selling price of 2,5 tenges. The maximum output makes 2200 pieces a week. Find output in a critical point.

Tests

In what registration register period expenses gather?

A) in the sheet No. 5 to/about 10;

B) in the sheet No. 1 to/about 10;

C) in the sheet No. 2 to/about 10;

D) in the sheet No. 3 to/about 10;

E) / about No. 12

2. What types of marriage happen?

A) B,C, D answers;

B) internal and external;

C) partial and full;

D) remediable and incorrigible;

E) B, C answers.

3. Losses from remediable marriage represent:

A) the sum of actual cost of defective production and costs of marriage elimination minus the cost of the received waste and other deduction;

B) sum of expenses for marriage elimination;

C) sum of actual cost of defective production and costs of marriage elimination;

D) the sum of expenses for marriage elimination minus the cost of the received waste;

E) the correct answer isn't present.

4. Determine the content of accounting record of Dt 7210» Administrative expenses» by Kt 3350 «Short-term debt on compensation»:

A) the salary to workers administrative the administrative personnel is added;

B) the salary is added by the worker of the main production;

C) the salary to workers on marriage correction is added;

D) the salary to the foreman is added;

E) the salary to workers for idle time not on their fault is added.

5. What accounting record reflects economic operation: «Excess losses of marriage of the main production are included in period expenses»?

A) Дт 7210» Administrative expenses» Kt 8048 «Marriage in production»;

B) Дт 8010 «The main production» Kt 8048 «Marriage in production»;

C) Дт 8010 «Marriage in production» Kt 7210 «Administrative expenses»;

D) Дт 8048 «Marriage in production» Kt «8010 «The main production»;

E) D-8048 «Other overhead costs» Kt 8048 «Marriage in production».

6 . What is the counter services and in what cost are estimated.

A) services of auxiliary productions are each other estimated at planned prime cost of the current period or on actual cost of last periods;

B) services of auxiliary productions to the main production are estimated on actual cost;

C) services of the main production to auxiliary productions are estimated at standard cost;

D) services of auxiliary productions are each other estimated within the estimate;

E) services of auxiliary productions to the main production are estimated at registration cost.

7. That the following accounting record means: Дт 8045 «Depreciation of fixed assets and depreciation of intangible assets» Kt 2420 «Wear of buildings and constructions».

A) wear on production buildings is added;

B) wear on buildings of administrative personnel is added;

C) depreciation on acquired by the software on production management is added;

D) wear of a warehouse on storage of finished goods is added;

E) answers And, Century.

8. In what registration registers costs of production (works and services) are reflected?

A) in the magazine warrant No. 10 and sheets No. 1,2,3,4 to it, in cards of the accounting of production;

B) in the magazine warrant No. 11 and sheets to it;

C) in cards according to the accounting of production;

D) in razrabotochny tables and the magazine - the warrant 12;

E) in cards of standard accounting.

9. How to define actual cost of the let-out finished goods?

A) work in progress for the beginning of month plus expense in a month, plus marriage in production, a minus returnable waste, a minus a work in progress for the end of month;

B) expenses in a month plus a work in progress for the beginning of month a minus marriage in production;

C) work in progress for the beginning of month minus expense in a month plus marriage in production;

D) expenses in a month a minus marriage in production plus returnable waste;

E) work in progress for the beginning of month plus expense in a month plus marriage in production plus returnable waste minus a work in progress for the end of month.

10. Dismiss actual cost of the shipped finished goods on the basis of the following data:

Indicators Finished goods (tenge)

Indicators	Finished goods (tenge)
	At planned prime cost	On actual cost
The rest for the beginning of month	200 000	180 000
Receipts	560 000	500 000
total	760 000	680 000
It is released	640 000	?

A) 572631 tenges;

B) 590631 tenges;

C) 600831 tenges;

D) 566831 tenges;

E) 588631 tenges.

11. Define prime cost of a unit of production if the work in progress for the beginning of the reporting period made 300000 tenges, costs of the reporting period of production - 900000 tenges, a work in progress for the end of the reporting period - 100000 tenges, it is let out production - 1100 units.

A) 1000 tenges;

B) 1200 tenges;

C) 1100 tenges;

D) 1300 tenges;

E) 1250 tenges.

12. Call the general for managing subjects base of distribution of maintenance costs and equipment operation

A) salary of the main workers;

B) factor cost on production production;

C) standard rate (budget);

D) output;

E) any of answers doesn't approach.

Recommended literature

1. Aldaniyazov, K.N.Upravlenchesky accounting and analysis: studies. grant / Korkembay Nazarovich Aldaniyazov. - Almaty: Yurid. litas. 2008 . - 364 pages.

2. Druri K. Introduction in the management and production accounting. - M: Audit, 1994. - 10 pages.

3. Armless P.S.Uchet of expenses and calculation in the industry (Questions I of a series, methodology, the organization).- M: Finance and statistics, 2003. - 50 pages.

4. Myullendorf R., Karrenbauzr M. Production account. - M. :ZAO «FLN-PRESS», 1996. - 200 pages.

5. Nazarov V. L. etc. Management accounting - And. : Economy, 2005. - 50с.

Chapter 14 Decision-making on pricing

14.1 Price function

The price and pricing are the central elements of market economy. The prices serve all turnover of acquisition and realization of goods. In the most general view the price represents the sum of money which the buyer pays to the seller for acquired goods. In the conditions of market economy the price is the goods characteristic in the market. In it such main concepts of market economy, as requirement, inquiries, demand, the offer etc. concentrate. The price is the final indicator characterizing goods, it equally considers interests of all participants of process of barter - producers and consumers. Pricing represents process of pricing for goods and services. Two opposite models of pricing are traditionally allocated: market pricing and the centralized (state) pricing. In the conditions of team pricing establishment of the price is a prerogative of the sphere of production. The prices are established proceeding from costs of production of goods or service. Often it becomes even prior to production process, on a planned basis with direct participation of government bodies. As a result the market doesn't play an essential role in pricing. It simply fixes demand at the level of in advance given size of the prices, without influencing their further change. Pricing process in the conditions of market pricing happens in the sphere of realization of production. Exactly here demand for production or service, the offer, usefulness of offered goods, expediency of its acquisition, quality and competitiveness face. Made in the production sphere goods or the price of it pass direct check of the market where the final price of goods or service is formed. Fundamental difference of market pricing is that the prices are established here according to supply and demand by the owner or the producer of goods. Government bodies can regulate the prices only on a limited circle of goods. Establishment of «rules of the game», the general and approaches to pricing becomes a prerogative of the state. The inventory, realized at state prices, is defined by the legislation. State regulation of the prices is allowed on production of the enterprises monopolists, on goods and the services defining a standard of price in economy and social security of separate groups of the population. The prices play an important role not only in economy as a whole, but also in business activity of the separate enterprises since the end results of their activity, including profit and profitability depend on their level.

The prices act as a major factor in the solution of such questions, as definition of sales markets of production, expediency of production of goods or service, calculation of costs of production, determination of the volumes of investment.

Price functions.

Function of the price represents mission of the price in management of national economy as a whole and each enterprise separately. Allocate five main functions of the price:

1. Registration function. It is connected with the essence of the price being a money equivalent of goods or service. In the price expenses of work, raw materials, materials, etc. on goods production are considered. Besides, the price determines the size of the profit got by the enterprise after sale of goods. In the conditions of market economy the ratio of the price and costs of production can significantly differ since final recognition of value of goods happens in the market. Consumers are interested in reduction of price of goods and improvement of its quality, producers - in increase in sales volumes and profit. Besides, in the conditions of the competition successfully to resist to competitors, producers are compelled to supervise the expenses constantly. The last is especially important in the Russian conditions since in Russia long time the expensive mechanism of economy dominated.

2. Stimulating function. The role of this function consists in impact on production and consumption of goods and services. The prices have to stimulate production through a profit level put in them. By means of the prices it is possible to encourage investments, scientific and technical progress, to change production and consumption structure, to improve quality of production. For Russia paramount value has stimulation of development of the sphere of production, release of qualitative and competitive production, both for domestic market, and for export.

3. Distributive function. This function is connected with price fluctuations under the influence of market factors. By means of this function distribution and redistribution of the national income between economy branches, regions, various forms of ownership groups of the population is carried out. In a case when fast change of priorities and proportions of development of economy is required introduction of state regulation of the prices, and in extreme cases and direct establishment of the prices by government bodies is allowed. The system of the taxation including the VAT, possibility of establishment of excises and other types of tax, and also introduction or cancellation of various tax privileges.

4. Function of balancing of supply and demand. By means of the prices in economy communication between supply and demand and therefore between production and consumption is carried out. In case of a price deviation from its real market value, there are disproportions in production and the consumption, being expressed in emergence of deficiency or the excess offer. Return to an equilibrium state can be to reach at the expense of the change in price or outputs.

5. Price function as instrument of rational placement of production. The role and value of this function will increase in process of development and strengthening of the market relations in economy. The developing price level on branches and spheres of economy promotes a capital modulation from one sphere in another. Thus the decision on change of a kind of activity is made by the enterprise independently, proceeding from expected results of business.

14.2 Process of pricing and the factors influencing a tsennobrazovaniye

Process of pricing consists of a number of consecutive stages:

1. Identification of factors of the environment influencing price level.

2. Statement is more whole than pricing.

3. Choice of a method of pricing.

4. Formation of price strategy of the enterprise.

5. Development of tactics of pricing.

6.Establishment of the initial price of goods.

7.Market adjustment of the price.

8. Insurance of the price upon adverse external effects.

This approach represents pricing process at the enterprise in the most general view. It isn't invariable. It is necessary to consider that any of the listed stages can make the strongest and unexpected influence on established before the price and to correct them. So, it is difficult to overestimate the importance and influence on establishment of the prices of factors of environment into which such factors as market condition, the competition, demand enter. These factors have direct impact on change of strategy of pricing which is a component of a survival of the enterprise in long-term prospect. The chosen method of pricing can be exposed also to essential adjustment as the most different factors can have impact on it: the traditions of pricing accepted in this branch, behavior of competitors, change of policy of the state concerning policy of the accounting of expenses and the taxation, etc. The essential moment is the market adjustment of the price which is carried out while goods already is in process of sale. The producer isn't capable to change the carried-out expenses, the volumes of production being in a warehouse. The price becomes for it the only means of the adaptation to changing demand. At this stage special importance get different establishment of discounts to the price for involvement of additional consumers. In relation to the enterprise there is a number of factors which considerably influence pricing process, forming certain borders within which the enterprise can work. First of all, they influence degree of freedom of action of the enterprise in the field of pricing on the production. Let's provide the short characteristic of each of these factors.

1 . Consumers. Buyers significantly influence activity of the enterprises in the field of pricing. In order that it is correct to react and consider their behavior, the enterprise needs to possess a certain knowledge of the general regularities and features of their behavior in the market. Here it is possible to refer, first of all, psychological aspects of behavior of buyers: requirements, needs, inquiries, motivation at a goods or service choice, ways of consumption, the relation to goods and services, the relation to new, sensitivity of the consumer to the prices and quality of goods and services. Besides psychological, there are also economic aspects of behavior of buyers. Here such concepts as consumer ability, the budgetary restrictions and their communication with consumer preferences belong. Because the budget of the buyer is limited, and the prices are subject to continuous changes, the buyer constantly is before a choice: how to use the budget in the most rational way, what goods to buy and what isn't present. According to the theory of limit usefulness and a consumer choice, the buyer will prefer those goods which most corresponds to its personal idea of usefulness of the forthcoming purchase in combination with its financial opportunities.

2. Market environment. The market environment is very difficult and many-sided concept. It is formed under the influence of a large number of factors of an economic, political and cultural order. Usually allocate four main market models: pure competition, monopolistically competition, oligopoly, pure monopoly. From the point of view of pricing by the main distinctive feature of these markets extent of influence of the enterprise on establishment of market price is. The maximum impact is had in a monopoly condition, minimum - in the conditions of the market of the perfect competition. The price in the market can be supervised by separate firm, group of firms, the state and the market.

3. Participants of channels of merchandising. Merchandising is the process providing delivery of goods to the end user. It is known that there are three main types of channels of merchandising: straight lines - goods and services are delivered to the end user without participation of intermediaries; * the indirect - goods and services are delivered to the end user by means of one or several intermediaries; the mixed - unite features of the first two views of canals. From the point of view of pricing interest represents influence of participants of channels of merchandising on price increase. Than the bigger number of intermediaries is between the producer of goods and its end user, that more retail price will be higher the selling, initial price of manufacturer of this production. Finally it leads to restraint of demand for goods and services which, in turn, stimulates reduction of prices and by that promotes optimization of channels of merchandising. At the same time in case of animated effect the situation can be opposite - in the course of a rise in prices the phenomenon of unlimited demand since the inflationary spiral of the price will come to movement - a salary will be observed.

State. It is possible to allocate three extents of influence of the state for pricing:

Fixing of the prices. The state uses the following the main way of fixing of the prices: * use of the prices of price-lists. Price-lists of goods prices and service is an official collection of the prices and the tariffs, approved and published by the ministries, departments, government bodies of pricing. The number of the prices established by means of price-lists, can be very different: close to 100% in the conditions of rigid total control of the state of price level and insignificant, close to zero - in cases of mainly market way of pricing. Usually to regulation by means of price-lists of the price of the enterprises of monopolists: electric power, gas, oil, utilities, transport. The prices of this production cause animated effect in economy therefore their fixing at a certain level promotes stabilization of all economic situation and defines degree of stability of the prices in all other spheres. The most difficult here is definition of level on which the price in the price-list has to be recorded. Fixing of the prices at level above market price leads to a condition of surplus of the offer in the market, fixing of the prices at level below market price - to deficiency. fixation of monopoly prices. The state fixes the prices of the enterprises occupying a dominant position in the market which allows it to affect in a decisive way on the competition, access market and price level that finally limits freedom of action of other participants of the market. Whether to resolve an issue of that this enterprise is dominating or not, the antitrust law helps. By the Russian legislation the enterprise holds dominating (exclusive) position if its share in the market makes from 35% to 65%; freezing of the prices. This approach is used in case of disproportions in the prices or crisis situations in economy and carried out only for situation stabilization. Expedient it is considered application of freezing of the prices only in the short-term period.

Price control at the expense of establishment of limits of the prices (establishment of the top or bottom limit of the prices), introduction of the fixed coefficients in relation to list prices, establishment of limit extra charges, a regulation of the key parameters influencing pricing (an order of formation of expenses, the maximum size of profit, the size and structure of taxes), establishment of the maximum amount of single rise in prices, definition and price control to production and service of the state enterprises.

Regulation of system of free pricing at the expense of a legislative regulation of tsenoobrazovatelny activity of participants of the market, restriction of unfair competition. This way of influence of the state on process of pricing consists in introduction of a number of a ban: * ban on a dumping - a ban on goods sale below cost its productions for the purpose of elimination of competitors. This practice is especially actual if in the market there is a leader, seeking to force out competitors from the market or not to allow their penetration on this market. Besides, such ban is widely applied in practice of international trade with the purpose to prevent penetration on the market of aggressive importers of production having low costs of production.

Pricing on securities market is carried out by certain rules, with use of concrete methods, on the basis of the standard principles and taking into account separate factors.

It is possible to carry to them:

* establishment of borders and time intervals of the analysis;

* identification of the main criteria;

* research of the main events of the analyzed period;

* definition of level of saturation of the market;

* accounting of a ratio of supply and demand;

* analysis and assessment of a condition of the competitive environment;

* detection and studying of the reasons of growth or falling of price level, supply and demand volumes.

The main methods by means of which pricing on securities market is carried out, are: expert, analytical, statistical, standard and parametrical (mark), balance and methods of economic-mathematical modeling.

The expert method is based on use of experience of specialists experts, intuition. The persons attracted as experts, are the highly qualified specialists possessing wide professional and practical experience (recognized experts). They draw the reasoned conclusions about level of real cost of this or that security or the price of a certain share operation. Difficulty of a method consists in need of careful selection of experts and detailed selection of analyzed conditions.

The analytical method represents the detailed analysis of market condition, knowledge of internal communications and dependences of the phenomena for the purpose of definition of progressive tendencies of development and improvement opportunities. In the analysis for determination of the price such working methods, as comparison, the diagnostic factorial analysis, monitoring, the system analysis are used. System approach includes the analysis of components of cost of a security and the multidirectional factors which are at the same time influencing level of each element. Labor input of this method consists in the accounting of a large number of various sources of information.

The statistical method is based on the statistical analysis with use of average sizes, indexes, dispersions (an absolute deviation from average sizes), variations (a relative deviation from average sizes), application of the correlation and regression analysis. Most actively in this method share indexes which allow to define tendencies of changes of market condition on certain types of securities are used. Complexity of the statistical analysis consists in need correctly to define a type of statistical dependence and in a choice of receptions of the analysis.

The index method consists in definition of the general tendency of change of market condition of certain types of securities. Difficulty consists in a choice of a share index for inconvertible securities.

Standard and parametrical (mark) method. In the analysis of a security or share operation all investment characteristics inherent in this type of a security or operation are defined. To each investment characteristic of a security or parameter of share operation appropriate a certain range of standard values. Standard unit is estimated by a certain number of points. All got points are summarized, and total amount of points is multiplied by accepted in advance cost assessment of one point. As a result a certain cost level of the price turns out. Shortcomings of a method are not equivalence of separate parameters, big range of standard values, subjectivity of a mark assessment.

The balance method assumes use of balance cost of a security which is defined by a way of division of a total cost of the property recorded in the official reporting of the enterprise, on total of actions. Property cost periodically changes during revaluation of fixed assets, as complicates use of this method. By balance determine the par value of actions (authorized capital) and bonds (short-term and long-term loans), the market cost (the issue income) and the repayment price (net assets). Lack of this method is the impossibility to consider various factors of pricing. Economic-mathematical methods and models represent specific receptions of the analysis in the form of imitating models or dynamic modeling on the basis of graphic or logical models with use of computer technologies. They are based on creation of the certain schemes (models) fixing certain dependences and considering concrete factors, rendering both positive, and negative influence. On securities market can be used conceptual, mathematical, trend, the component analysis, structural, statistical, factorial, graphic, logical and imitating models. These models represent schematical reflection of influence of various factors on price level.

Conceptual models consider certain approaches, concepts (a frame of reference on pricing process on securities market). For example, according to the cost concept the price is modelled as monetary value of the valid market cost of securities. The concept of balance recognizes that the price in stock market reflects balance of supply and demand of a certain security at the time of commission of share operation. Mathematical models proceed from strictly certain mathematical dependences characterizing process of estimation of cost The special place among methods of pricing is taken by a rating. Many institutional and private investors, banks, brokers, insurance companies consider a rating of securities in the course of adoption of the investment decision, when forming the portfolios of securities. Rating researches conduct both professional participants of securities market, and certain analysts.

All rating companies use almost identical symbols. Each symbol designates approximately the same, as an investment rating:

* the highest level - AAA;

* high level - AA;

* level is higher than an average, a hope investment - And;

* the average level, some uncertainty - VVV+, VVV-;

* mediocre level, high uncertainty - VV;

* the speculative - In;

* speculative, high risk of breach of obligations - CCC;

* speculative, breach of obligations - CC is very probable, With;

* are overdue, no obvious cost have - DDD, DD.

Ranging, assignment in a rating of a certain place not always objectively. More expedient them to consider results as probable, but not the absolute.

Increase of a rating causes growth of the price of a security, fall conducts to its falling. If the rating of actions is raised at once by several firms, actions can grow by ten and more percent in some minutes. Reasons for which ratings of actions change, happen the most different: expectation of reduction of sales of production of the company, growth of overhead costs in connection with a rise in prices for transport, raw materials and t. II.

There is a multiplicative method of estimation of cost of securities. It is based on use of various coefficients (animators). The total size of cost of a security is defined by a way of calculation of the arithmetic-mean cost weighed values or their specific weight determined by various methods.

The choice of a method of determination of the price of a security depends: from a type of a security, the status, branch and territorial accessory of the issuer, investment characteristics:

* nature of negotiability (quoted and not quoted);

* liquidities (highly liquid, srednelikvidny, low-liquid, illiquid);

* release forms (issue and not issue);

* profitabilities, reliability and safety of securities;

* number of securities, time, form and terms of payment and registration of transactions, and also assessment purpose.

Questions for self-checking

1. Price function

2. Process of pricing and the factors influencing pricing

Situational tasks

Task 1.

To calculate the goods price, using the «full expenses + extra charge» method, considering that the extra charge makes 25%.

№	Expense	Costs of a product А	Costs of a product B	Costs of a product V	Costs of a product G
1	2	3	4	5	6
1	Main materials	6	50	20	300
2	Main work	4	10	100	250
3	PNR variables	3	2	20	100
4	Постоянные ПНР	7	8	10	100
5	Variable administrative and marketing expenses	2	10	25	100
6	Constant administrative and marketing expenses	3	10	25	50

Task 2.

To calculate extra charge percent, using the «production expenses + extra charge» method, considering that the extra charge makes 25%.

Expense	Desirable size of profit	Business, general administrative expenses	Total expenses
1	2	3	4
А	600	700	500
Б	400	800	600
В	300	200	500
Г	200	100	200

Task 3.

By the last estimates of the DB company the maturity date of accounts payable for suppliers for the end of the current year makes 45 days. Purchases the current year are estimated at $474,500. Now the DB company prepares the budget the next year and predicts growth of purchases by 10%.

The sum of accounts payable for suppliers, in $, subject to payment for the end of the next year, by estimates, will be same, as the sum for the end of this year.

Task 4.

Calculate in days the budgetary maturity date of accounts payable for suppliers on the end of the next year.

Tests

The company plans development and advance in the market of new production. The cost of development is estimated at $150,000. The probability of that development will be successful, makes 70%, and probability of that development will be unsuccessful, makes 30%.

In case of successful development, production will be offered on the market. There are 50% probability of that marketing will be successful and production will make profit of $250,000. There are 30% probability of that advance in the market will be moderately successful, and production will make profit of $150,000. There are 20% probability of that advance in the market will be unsuccessful and production will yield a loss of $80,000. In the given indicators of profit and a loss development cost of $150,000 is considered.

Expected value of the decision on development of a product and its advance in the market makes:

A) $154,000

B) $4,000

C) $107,800

D) $62,800

E) 0

Recommended literature

1. Aldaniyazov, K.N.Upravlenchesky accounting and analysis: studies. grant / Korkembay Nazarovich Aldaniyazov. - Almaty: Yurid. litas. 2008 . - 364 pages.

2. Druri K. Introduction in the management and production accounting. - M: Audit, 1994. - 10 pages.

3. Armless P.S.Uchet of expenses and calculation in the industry (Questions I of a series, methodology, the organization).- M: Finance and statistics, 2003. - 50 pages.

4. Myullendorf R., Karrenbauzr M. Production account. - M. :ZAO «FLN-PRESS», 1996. - 200 pages.

Chapter 15. Adoption of long-term investment decisions

15.1 Purposes and stages of estimating of capital investments

Adoption of investment decisions in the companies is one of the main objectives solved by finance directors. The sufficient attention in educational literature on financial management or corporate finance is paid to a question of an assessment of investment projects. In the theoretical plan the matter is solved. Practically all authors suggest to make decisions by means of the following investment criteria: the payback period (simple and discounted, Payback Period, PP and DPP), accounting norm of return (Average Rate of Return, ARR or ROI), the net specified (current) value (value) of the project (Net Present Value, NPV), internal norm of return (Internal Rate of Return, IRR), a return index (Profitability Index, PI). These indicators appeared not at the same time. At the beginning of the last century the simplest indicators - the period of payback and accounting norm of return used bigger popularity. Further there were such criteria, as NPV and IRR. On it evolution didn't stop: at the moment there are new indicators (such as EVA, CFROI) which are offered to be used for a number of the tasks arising during investment design.

If with the theory of an assessment of investment projects everything is clear, with practical aspects of the matter not everything is unambiguous. In particular, researches of a question of what indicators prefer to use the finance directors, started being carried out only rather recently. The purpose of this article is systematization of foreign experiment on carrying out empirical researches in the field of the investment analysis.

Indicators of efficiency of the investment projects, used by foreign finance directors.

For the present day there is a large number of researches of the foreign authors concerning practical aspects of a choice by finance directors of these or those indicators of efficiency of investment projects. To the first researchers who have raised this question, it is possible to carry the Soldering [Pike, 1996] and some other. However in researches the analysis of commitment of finance directors of the companies to these or those indicators of efficiency was consolidated only to the choice description (sometimes in dynamics, in separately taken country). Thus the reasons of why finance directors make this or that choice, weren't considered.

More in-depth studies began to appear after Graham and Harvey's work «The theory and practice of corporate finance: practical research» [Graham, Harvey, 2001]. Besides, the most significant, in our opinion, are the following works: Graham, Harvey «As finance directors make decisions on formation of the investment budget and capital structure? « [Graham, Harvey, 2002]; Ryan, Ryan «Practice of formation of the investment budget in the companies entering into a rating of Fortune 1000: What changed? « [Ryan, Ryan, 2002]; Трунг, Partington and Pitas «Practice of an Assessment of Expenses for the Capital and Formation of the Investment Budget in Australia» [Truong, Partington and Peat. 2005]; Silvola «Intensity of research and development and the economic analysis of investment decisions in research firms» [Silvola, 2006]; Lam, Veng and Lam «Practice of an assessment of the investment budget in 2004 civil engineering firms of Hong Kong» [Lam, Wang and Lam, 2007]; Hermes, Smid and Yao «Practice of formation of the investment budget: comparison of the Netherlands and China» [Hermes, Smid and Yao, 2007], etc.

In the works called above researchers tried to reveal, what indicators of efficiency of investment projects are preferred by finance directors of the different countries and what factors have impact on this choice.

The analysis of empirical researches allows to draw the following conclusions on foreign practice of use by finance directors of indicators of efficiency of investment projects.

In the USA research was conducted in 1999 by poll method on the basis of the standardized questionnaire which was dispatched to finance directors of 4440 companies. However answers were received only from 392 companies. Thus, only 9% of respondents [Graham, Harvey, 2001] answered.

According to the carried-out analysis, the criterion of IRR (76%), a method of an assessment of NPV (75%) appeared the most popular methods of an assessment of investment appeal of the project, applied in the American companies. To a lesser extent finance directors rely on criterion of the simple period of payback: according to research, it is used by 57% of respondents.

In Great Britain research was conducted in 1997 by questioning. From 296 companies to which questionnaires were dispatched, answers sent 96 participants (32%).

The difference in popularity of criteria of IRR and NPV for an assessment of investment appeal of the project, applied in the British companies, also made 1% (81 and 80% respectively). The method of an assessment of the period of payback is applied in 70% of the companies [Arnold, Hatzopoulos, 2000].

In the Netherlands research was conducted in 2003-2004. Questionnaires were dispatched to 250 Netherlands companies, 42 from them sent answers by e-mail [Hermes, Smid and Yao, 2007]. By results of poll the criterion of NPV in the Netherlands is the most popular method of an assessment of efficiency of investment projects, criteria of IRR and RVR are used by the Netherlands companies approximately equally (them 89% and 84% respectively use). ARR practically isn't used by the Netherlands companies - it is applied by only 1% of respondents.

In Canada research was conducted in 1994. From 588 companies to which questionnaires were dispatched, 11% (65 companies) answered. Difference of the research conducted in Canada, from researches is in Great Britain and the USA that it was offered to companies to range indicators which they use, on popularity. Thus, the criterion of NPV appeared the most popular criterion used in the Canadian companies, it is followed by IRR and PBP [Payne, Heath and Gale, 1999].

In Australia research was conducted in 2004 by means of questioning. The questionnaire consisted of 20 questions the part from which was in an open form. Questionnaires were dispatched to 356 companies, 87 from them sent the answers by e-mail. Therefore, 24% of respondents [Truong, Partington and Peat, 2005] answered.

Research showed that the most popular criterion of determination of efficiency of the project is the criterion of NPV. The method of definition of the period of payback is widely used also: the percent of use of NPV made 94, the simple period of payback - 90.

If to compare this research with earlier carried out, it is possible to tell that the criterion of NPV kept the positions as the most popular method of an assessment of investment appeal of the project. Eventually the criterion of IRR lost advantage before a method of an assessment of the period of payback though earlier it took the second place on popularity [Truong, Partington and Peat, 2005].

Within research of 2003-2004 in China questionnaires, thus answers were dispatched to 300 companies sent 45 companies. Research showed that in China the most popular methods of an assessment are the criterion of IRR and a method of definition of the period of payback of the project. Criterion of NPV use less than a half of the Chinese companies. The criterion of ARR the Chinese companies practically isn't used [by Hermes, Smid and Yao, 2007].

The generalized data on carrying out questioning, and also results of researches are provided in tables 1 and 2.

Table 15.1. - The generalized data on questioning of the companies

Information on research	USA	Great Britain	Netherlands	Canada	Australia	China
author	Graham, Harvey	Arnold, Hatzopoulos	Hermes, Smid, Yao	Payne, Heath, Gale	Truong, Partington, Peat	Hermes, Smid, Yao
Year of carrying out research	1999	1997	2003-2004	1994	2004	2003-2004
Number of the companies in selection	4440	296	250	588	356	300
Number of the answered respondents	392	96	42	65	87	45
Share of the answered respondents, %	9	32	17	11	24	15

Table 15.2. Preferences of finance directors in use of indicators of efficiency of the investment project, %

Name	USA	Great Britain	Netherlands	Canada *	Australia
NPV	75 %	80 %	89 %	1	94 %
IRR	76 %	81 %	74 %	2	81 %
PBP	57 %	70 %	79 %	3	90 %
ARR	There are no data	There are no data	2 %	There are no data	There are no data

· indicator Rank.

The carried-out analysis allows to draw certain conclusions. The indicator of NPV which, according to the theory, is preferable at an assessment of efficiency of investments in the project, as a whole is applied most often. The second for popularity is the criterion of IRR. In such countries as the USA and Great Britain, frequency of use of a method of the net specified value and a method of internal standard of profitability it is almost identical. The assessment of efficiency of investment investments in the project with use of criterion of the simple period of payback isn't the most popular way in one of the considered countries, however rather big percent of use of this method is observed in Australia and China.

After carrying out the generalizing analysis of experience of use by finance directors of the different countries of these or those indicators of efficiency of investment projects naturally there is a question of the reasons of their choice.

Some researchers considered dependence of use by finance directors of various indicators of efficiency of investment projects from branch in which the company [Truong, Partington and Peat, 2005] functions. However researches allowed to draw a conclusion that the choice of the finance director doesn't depend on branch accessory of firm.

Influence of the size of firm on a choice finance directors of indicators of efficiency of investment projects also is considered in many foreign researches [Payne, Heath and Gale, 1999; Graham, Harvey, 2001; Graham, Harvey, 2002; Ryan, Ryan, 2002; Brounen et al. 2004; Hermes, Smid and Yao, 2007]. Numerous results confirm a hypothesis that directors of the large companies prefer to use more advanced criteria of efficiency of investment projects, such as NPV and IRR. It is possible this results from the fact that in the large companies often it is necessary to make solutions of rather large-scale projects, and, respectively, specific expenses of application of the difficult NPV and IRR methods decrease. On the contrary, finance directors of the companies having a low sales level, prefer to use criterion of the period of payback of the project as an indicator of an assessment of efficiency of investment projects. Thus a small amount of the small companies uses the discounted period of payback - a method at which the temporary cost of money is considered and, thus, shortcomings of the simple (not discounted) period of payback are liquidated.

Than still it is possible to explain constancy of use with finance directors of the small companies of an indicator of the period of payback? Undoubtedly, one of the reasons of popularity of use of this criterion is relative simplicity of this method, and also lack of information of the top management on more difficult technologies (generally it is characteristic for directors of small firms). But it is necessary to recognize that the technique of the period of payback can supply the management of useful information, especially it concerns firms with the small and strictly limited investment budget. If the investment project doesn't provide at once positive cash flows, the company can go out of business before expected inflows of means will come. Even in case the firm survives, at it it can not appear resources for favorable investments within the next two years. Besides, as some economists, the answers received under the influence of «crude» practical methods consider, such as the payback period, often coincide with the results received on the basis of more difficult techniques, especially at an assessment of investments with high degree of uncertainty. And at the small companies «not predicted» projects much more, than at large corporations.

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