Theoretical and methodological principles of functional strategy usefulness of financial analysis techniques

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Theoretical and methodological principles of functional strategy usefulness of financial analysis techniques

Lazaryshyna I.D. National University of Life and Environmental Sciences of Ukraine)

Introduction

Information economy causes a change in approaches to the quality and volume of economic information - including - analytical. Given the limited resources, it is important for managers at all levels to operate with the most important relevant and representative information, reducing the level of information "noise". Therefore, decision-making systems at the macro and micro levels of the economy, along with the overall business (corporate) strategy need to develop and implement an effective information strategy based on relevant principles and criteria. This approach can be implemented through a functional strategy of usefulness of financial analysis through its methods. Priority in this case for managers is the identification of relevant functions of analysis: evaluation (diagnostic), search, protective, regulatory. For the needs of strategic management it is necessary to use the evaluation and search functions of business analysis, as it uses methods of horizontal, vertical and coefficient retrospective analysis to identify trends in external and internal environment, as well as methods of strategic analysis (BSC, BCG, GE / McKinsey , Shell / DPM, benchmarking). For the needs of operational management it is important to use analytical tools that perform a diagnostic function - for operational analysis of business processes, their resource provision and effectiveness. The aim of the article is to study the theoretical and methodological foundations of the formation and improvement of functional strategy usefulness of financial analysis techniques for their adaptation to the needs of the management system. Research methods used to achieve the goal: general (analysis, synthesis, dialectics, induction, deduction) and special (systems approach, generalization).

Main material

financial analysis functional strategy

The success of economic entities in the formation of market relations largely depends on their effective management. An important place in this process belongs to the economic analysis of performance indicators of financial condition, financial results and cash flows. It allows to provide individual, collective (corporate) and public usefulness of analytical information for different groups of users: - individual - for owners, management staff, shareholders of the business entity, other stakeholders;

- collective (corporate) - for the meeting of shareholders, the supervisory board of joint stock companies, boards of directors, management of holdings, associations and other economic entities that are based on collective ownership;

- public - for regulatory authorities, higher organizations, ministries, departments, media, local governments and other macro-level stakeholders.

Ensuring each of these types of usefulness is possible through the use of scientific and practical approaches. Scientific approaches to the methodology and methods of analysis of performance indicators are embodied in the form of methods of financial analysis offered by Ukrainian and foreign economists and analysts.

According to the history of financial analysis, from its inception to the present stage, its methodology has implemented almost only one function of economic analysis - evaluation and diagnostic, as it allows to establish the presence, composition, structure and dynamics of assets, liabilities and financial results. factor analysis, diagnose the causes of positive and negative deviations.

The escalation of crisis phenomena in a market economy, competition, inefficient management has led and continues to lead to bankruptcy, unstable financial position of enterprises, their insolvency. Therefore, methods of diagnosing the threat of bankruptcy were introduced into financial and economic practice, which led to the growing importance of the protective function of economic analysis.

The need to develop effective measures to reduce the negative effects of objective and subjective factors of the external and internal environment on the financial systems of micro and macro levels has led to the development of the search function of economic analysis. In addition, the need to provide competitive advantages for economic entities, the existence of two subsystems - current and strategic management, the need to comply with economic security requirements also determine the diversification of the search function of economic analysis of performance indicators.

The development of market relations, the presence of internal and external environment led to the emergence and development of the communicative function of economic analysis of performance indicators. The publication of analytical information of a financial nature in the media, the interest of the public, non-residents, has the effect of providing information and communication links of the business entity with the external environment, materializing the demand for public knowledge about it.

The peculiarity of the communicative function of economic analysis is that its results, as a rule, are not the subject of management decisions, but supplement the relevant databases, are part of the arrays of statistical information and statistical samples.

On the other hand, analytical information at the macro level of the economy, which is reflected in the media, is also a consequence of the communicative function of economic analysis, providing information to the public about government strategies, plans and their implementation.

The advantage of financial analysis is that its results allow not only to determine the state of affairs at the enterprise, but also to regulate it in accordance with established requirements, individual standards and system needs. There are two approaches to providing this function of economic analysis - scientific and practical.

Scientific approaches to the methodology and techniques of financial analysis, which determine the possibility of regulating both individual aspects of financial and economic activities of the enterprise and its financial system as a whole, are provided by studies of Ukrainian and foreign economists - analysts.

Our research shows that almost all authors offer a unified scheme of analysis of financial performance. First, the analysis of the absolute values of cost indicators, their structure and dynamics according to the financial statements, and then the coefficient analysis.

Mandatory areas of parametric financial analysis are usually:

a) analysis of solvency and liquidity;

b) analysis of financial stability (stability);

c) analysis of profitability indicators;

d) analysis of business activity.

Regarding to other areas of coefficient analysis, it is also advisable to conduct:

1) analysis of funding sources;

2) analysis of production potential;

3) cash flow analysis;

4) analysis of property status;

5) analysis of the structure and use of capital;

6) analysis of economic activity;

7) debt analysis;

8) creditworthiness analysis;

9) analysis of bankruptcy diagnosis;

10) analysis of investment activity;

11) rating analysis;

12) analysis of capital efficiency;

13) analysis of production and financial leverage;

14) comprehensive financial analysis.

In our opinion, the predominance in the practice of effective financial management of the flow concept, that is the management of financial flows to achieve competitive advantage, requires further improvement of methodology and methods of financial analysis to provide opportunities for regulation of financial and economic processes.

A significant disadvantage of the above areas of financial analysis is that their information base is consolidated accounting data - that is financial statements. Therefore, the timely impact of management staff on the negative deviations in financial flows under such conditions of the organization of the analysis is impossible.

Therefore, to respond in real time to the behavior of financial flows, it is necessary to use data from synthetic and analytical accounting and apply our proposed method of analysis of performance indicators according to the accounts.

In addition to scientific, there are also practical approaches to the methodology of analysis of financial performance. They are regulated by instructional materials of domestic state institutions.

They provide for the analysis of identified indicators. They are grouped into five groups:

- property analysis;

- liquidity analysis;

- analysis of solvency and financial stability;

- analysis of business activity;

- profitability analysis.

The task of all analytical methods is to provide users with information on the financial condition and development trends of the analyzed enterprise, the solvency of potential buyers, their integrity and real intentions.

First, it is necessary to supplement the above methods of analysis by calculating and estimating indicators of cash flows (their level, dynamics, synchronicity both in the enterprise as a whole and in terms of their types).

Given that Ukraine uses the "Statement of Cash Flows" - the method of analysis of cash and cash equivalents should be expanded to include analysis of cash flows in terms of operating, investing and financing activities. This will increase the efficiency of analysis in enterprises and, ultimately, will increase the quality of financial management in Ukraine.

Cash flows of enterprises "feed" the monetary system of Ukraine and are its central element. The formation of its macroeconomic indicators depends on their fullness, intensity, duration in the economy of any country.

Cash flows and their analysis are also not yet a priority at the level of individual industries. However, with the advent of the Cash Flow Statement, statistics, ministries and agencies have the opportunity to summarize cash flow information. However, such an analysis will also be periodic, due to the timing of this form (once a year). Therefore, for the above users, this is a source of assessment of cash flow trends in the industry as a whole or in comparison with other industries.

Cash flow, given the non-variable method of its definition, in modern economic conditions really becomes the only indicator that meets the requirements of comparability according to the canons of economic analysis and can ensure comparability of analytical conclusions at the intersectoral level, which is a significant advantage over other financial indicators. In addition, a sufficient level of reliability and reliability of this indicator is provided by its duplication, namely the ability to determine and compare the net cash flow for the reporting period, both according to the balance sheet and according to the Statement of Cash Flows.

In addition to absolute indicators, the greatest analytical value for joint stock companies should have:

a) the ratio of total liquidity of cash flow, which is defined as the ratio of gross positive cash flow to gross negative cash flow of the enterprise;

b) cash flow efficiency ratio, which is calculated by the ratio of net cash flow to gross positive cash flow of the enterprise.

By analogy, you can also define the absolute liquidity of cash flow as the ratio of positive cash flow from operating activities to the turnover of liabilities of the enterprise.

The use of these indicators in management is justified. We believe that they are more objective in assessing the cash flows of enterprises in the dynamics. The movement of resources and cash is not discrete, but continuous, and to base management decisions on indicators that characterize the balances in the accounts for the last day of the reporting period is required only in retrospective analysis to assess overall financial trends in the enterprise.

Such an analysis will provide more transparent economic information.

Secondly, it is advisable to provide in the analytical tools a procedure for comparing the actual and planned values of the studied indicators and coefficients, and not just focus on the dynamics of the actual level of evaluation parameters. This proposal applies to companies that:

a) provide financial plans to higher organizations and agencies;

b) use in-house financial planning ..

Third, it is necessary to strengthen the focus on the disclosure in certain groups of indicators of analytical information in terms of certain types of ordinary activities: operational, investment and financial, as well as emergencies, if any.

Also, the positive consequences for making optimal management decisions at the micro and macro levels will be the disclosure through institutional tools of analytical information on the level of materiality of identified deviations in terms of realizing acceptable, critical and catastrophic industrial, commercial, investment and financial risks.

The implementation of the proposed approaches will improve the regulation of financial and economic processes both by the company's management and externally, as well as strengthen the qualitative characteristics of the usefulness of analytical information for its users.

The activity of enterprises of various forms of ownership in Ukraine in the conditions of transformation of the economy to a market one provides for the strengthening of its regulation both by owners and managers, and by state institutions. Regulation can be carried out in the management process:

a) by objectives, when stakeholders determine the priority areas of enterprise development and monitor those indicators that diagnose the degree of compliance of the actual state of affairs with the objectives;

b) enterprise strategies in accordance with the identified mission and credo;

c) from the achieved level of evaluation indicators.

In turn, the achieved level of indicators may be dependent on the planned values (if the company uses a financial planning system), and not depend on them, if the analysis of individual departments and the company as a whole is assessed by the dynamics of actual values.

Existing methods of analysis of indicators that characterize certain aspects of business entities, as a rule, are poorly adapted for use in current financial management, as calculated on the basis of financial statements - Balance Sheet (Statement of Financial Position), Statement of Financial Performance income). Although in an automated information environment it is possible to monitor property status; liquidity; solvency; financial stability; business activity; profitability for any period of time.

Each of the above areas of analysis is provided either by normative values of indicators, or normative characteristics of positive dynamics. The tasks of the economist-analyst, on the one hand, is to determine the institutionally regulated level or dynamics of estimates of financial and economic activities of the enterprise, and on the other hand - to develop measures of production, personnel, investment, innovation and / or financial management. values (dynamics) of indicators.

The peculiarity of the developed and applied methods of financial analysis is that they are based on the comparison of actual values of indicators and are focused on the assessment and diagnosis of self-supporting activities.

Unfortunately, the existing methods of financial planning do not provide a sufficient correlation between the dynamics and levels of financial indicators and ratios, focused on analytical work primarily with the resulting indicators.

Conclusions

Neo-institutionalism as the dominant economic theory of this century, determines the revision and improvement of existing theoretical and methodological approaches to analytical tools in accordance with the information needs of state and non-state institutions on the basis of utility. The implementation of qualitative characteristics of the usefulness of analytical information is ensured by regulating the functions required by the user. In accordance with which function of the analysis is a priority in accordance with the tasks, the selection of correct methods and types of analysis. Collectively, this allows you to implement the tasks of operational and strategic management.

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