Methods for estimating time cash flows. The choice of methods for assessing the cash flows of an enterprise

Among the main problems of the Russian economy, many economists single out the shortage of funds at enterprises for their current, financial and investment activities. Upon closer examination of this problem, it turns out that one of the reasons for this deficit is, as a rule, the low efficiency of attracting and using financial resources, the limited nature of the financial instruments, technologies and mechanisms used in this case.

The rational formation of cash flows contributes to the rhythm of the operating cycle of the enterprise and ensures the growth of production volumes and product sales. At the same time, any violation of payment discipline adversely affects the formation of inventories of raw materials and materials, the level of labor productivity, the sale of finished products, the position of the enterprise in the market, etc. Even for enterprises that successfully operate in the market and generate a sufficient amount of profit, insolvency can occur as a result of the imbalance of various types of cash flows over time.

Estimating the cash flow of the enterprise for the reporting period, as well as planning cash flows for the future, is the most important addition to the analysis of the financial condition of the enterprise and performs the following tasks:

Determining the volume and sources of funds received by the enterprise;

Identification of the main directions of use of funds;

Assessment of the sufficiency of the enterprise's own funds for investment activities;

Determination of the reasons for the discrepancy between the amount of profit received and the actual availability of funds.

Cash flow management is an important factor in accelerating the capital turnover of an enterprise. This is due to a reduction in the duration of the operating cycle, a more economical use of own funds and a decrease in the need for borrowed sources of funds. Consequently, the efficiency of the enterprise depends entirely on the organization of the cash flow management system. This system is created to ensure the implementation of short-term and strategic plans of the enterprise, maintaining solvency and financial stability, more rational use of its assets and sources of financing, as well as minimizing the cost of financing business activities.

The purpose of this work is to define the concept of cash flow, its classification and identification of the principles of cash flow management, disclosure of the concept of cash flow analysis and methods for evaluating their evaluation.

The final chapter is devoted to the issue of cash flow optimization, as one of the most important and complex stages of enterprise cash flow management.

Chapter I. Theoretical foundations of cash flow management

The cash flow of an enterprise is a set of time-distributed receipts and payments of cash generated by its economic activities.

In domestic and foreign sources, this category is interpreted differently. So, according to the American scientist L.A. Bernstein, “the term “cash flows” (in its literal sense) is meaningless by itself, without an appropriate interpretation.” A company can experience cash inflows (there are cash inflows) and it can experience cash outflows (there are cash outflows). Moreover, these cash inflows and outflows can relate to various types of activities - industrial, financial or investment. It is possible to distinguish between cash inflows and outflows for each of these activities, as well as for all activities of the enterprise in the aggregate. These differences are best attributed to net cash inflows or net cash outflows. Thus, a net cash inflow would correspond to an increase in cash balances over a given period, while a net outflow would be associated with a decrease in cash balances during the reporting period. Most of the authors, when referring to cash flows, mean cash generated as a result of economic activity.

Another American scholar, J. K. Van Horn, believes that "the cash flow of a firm is a continuous process." The firm's assets represent the net use of cash, while the liabilities represent net sources. The amount of cash fluctuates over time depending on sales volume, collection of receivables, capital expenditures and financing.

In the West, scientists interpret this category as "Cash-Flow" (cash flow). In their opinion, Cash-Flow is equal to the sum of the annual surplus, depreciation and contributions to the pension fund.

Often planned dividend payments are subtracted from Cash-Flow to move from possible internal funding to actual. Depreciation and pension fund contributions reduce domestic funding opportunities, although they occur without a corresponding cash outflow. In fact, these funds are at the disposal of the enterprise and can be used for financing. Therefore, Cash-Flow can be many times greater than the annual surplus. Cash-Flow reflects the actual volumes of internal financing. With the help of Cash-Flow, an enterprise can determine its current and future capital requirements.

In the activity of any enterprise, the availability of funds and their movement are extremely important. No enterprise can carry out its activities without cash flows: on the one hand, for the production of products or the provision of services, it is necessary to purchase raw materials, materials, hire workers, etc., and this causes the outflow of funds, on the other hand, for the products sold or services rendered, the enterprise receives cash. In addition, the company needs funds to pay taxes to the budget, pay general and administrative expenses, pay dividends to its shareholders, replenish or upgrade the equipment fleet, and so on. Cash flow management includes calculation of the financial cycle (in days), cash flow analysis, its forecasting, determination of the optimal level of cash, cash budgeting, etc. The importance of this type of assets as cash, according to D. Keynes, is determined by three main reasons:

· routine- cash is used to perform current operations; since there is always a time lag between incoming and outgoing cash flows, the company is forced to constantly keep free cash on the current account;

· precaution- the activity of the enterprise is not strictly predetermined, therefore, funds are needed for unforeseen payments;

· speculation- funds are needed for speculative reasons, since there is always a possibility that an unexpected opportunity for profitable investment will present itself.

The concept of "cash flow of the enterprise" is aggregated, including in its composition numerous types of these flows that serve economic activities. In order to ensure effective targeted management of cash flows, they require a certain classification.

Consider the most common classification of cash flows.

1. According to the scale of servicing the economic process, the following types of cash flows are distinguished:

- cash flow for the enterprise as a whole. This is the most aggregated type of cash flow, which accumulates all types of cash flows that serve the business process of the enterprise as a whole;

- cash flow for individual structural units(responsibility centers) of the enterprise. Such differentiation of the cash flow of the enterprise defines it as an independent object of management in the system of organizational and economic construction of the enterprise;

- cash flow for individual business transactions. In the system of the economic process of the enterprise, this type of cash flow should be considered as the primary object of independent management.

2. By types of economic activity, in accordance with the international accounting standard, the following types of cash flows are distinguished:

- Cash flows from operating activities.

The main directions of inflow and outflow of cash from core activities

- cash flows from investment activities.

The purpose of the article is to develop a methodology for calculating cash flows in the forecast and extended period and the value of the company, as well as determining their changes under the influence of key factors.

Alexander Samylin
Estimating the company's cash flows
"Economic Strategies", No. 08-2008, pp. 120-125

Introduction

Since the beginning of the transition to a market economy, the management of the company's finances has undergone changes. At the first stage, the main goal of management was profit maximization, and at the second stage, expansion and conquest of new sales markets. As competition grew, unoccupied business niches disappeared, the emphasis in financial management began to shift to increasing the profitability of operations. At present, the growth of the company's economic profit, the increase in the value of the business and the cash flows directed to shareholders and investors are increasingly becoming the target function of management.

Competitors, buyers, suppliers and investors, when selling a company, in case of raising funds and in the process of business planning of financial and economic activities, are increasingly asking the question: how much does your business and your company cost? This question is not idle, and the answer to it determines the level of risk for counterparties when establishing cooperation with this company and when making management decisions. A company that is valued higher and generates more cash flows, ceteris paribus, is less risky in terms of investment and return on invested capital.

An appraisal of the company's value is necessary when buying and selling, when reorganizing a company in accordance with Article 57 of the Civil Code of the Russian Federation, when insuring, for registering a pledge when obtaining a loan, in the process of preparing a prospectus for the issue of securities and organizing the circulation of securities on the stock exchange, when searching for an investor and in other cases. All this determines the relevance of the problem of assessing the value of the company and the cash flows generated by it.

The company's value should be understood primarily as a complex indicator in value terms that determines the state of all areas of activity, including ordinary activities, financial and investment activities, minus liabilities. To the mentioned areas of activity, characterized by financial indicators, one should add activities aimed at increasing the level of professionalism of employees, maintaining and improving the image of the company. Such activity is characterized by non-financial indicators, which for the most part are not yet formalized mathematically, but also contribute to the increase in the value of the company. Therefore, the company's value can be defined as the totality of its assets, invested capital, its return in the forecast and extended period, minus liabilities.

When calculating the value of the company, financial statements are used, which reflect information about assets and liabilities.

At the same time, cash flows generated by the company arising from the increase in working capital and capital investments, for example, in fixed assets and intangible assets, are not reflected in the financial statements. Therefore, it is necessary to develop a methodology for calculating cash flows in the forecast and extended period and the value of the company, to determine their change under the influence of the main factors. The solution of these problems was the purpose of the article.

Types and methods of company valuation

According to Decree of the Government of the Russian Federation No. 519 of 07/06/2001 "On Approval of Valuation Standards", there are: the market value of the object of assessment and the types of value of the object that are used in specific business situations, for example: the cost of the object of assessment with a limited market, the cost of replacement and reproduction , disposal and salvage value, investment value and value for tax purposes.

The calculation of the value of the company is carried out on the basis of one of three approaches: cost, comparative or profitable. The cost approach is based on determining the cost by establishing the costs that are necessary to restore or replace the object of assessment, taking into account its wear and tear. This approach is applied to the valuation of newly created companies and is based on the net assets method and the salvage value method. With a comparative approach, the value of an object is determined on the basis of a comparison of the cost of objects that have similar and homogeneous evaluation and comparison criteria. The comparative approach uses three valuation methods: the capital market method, the industry coefficient method, and the transaction method. In the first two cases, the value of an operating company is assessed, and in the latter, the value of a company that changes its activity. The income approach is based on determining the company's cash flows and calculating net cash flow as the difference between discounted cash inflow and cash outflow. This approach is used in the case of the implementation of investment projects and investments in intellectual property. The period of time during which it is planned to receive income is divided into two periods: forecast, characterizing cash flows during the implementation of the project, and extended - upon completion of the project. At the first stage, future cash flows are forecast, at the second stage, future cash flows are converted into present value, and at the third stage they are reflected in the forecast cash flow statement. In an unstable economy, it is difficult to predict cash flows, which narrows the scope of this approach. The income approach uses two methods: the profit capitalization method and the discounted cash flow method. The capitalization method is used for companies that have established cash flows - both their receipt from investors and shareholders, and the return on invested capital. The discounted cash flow method is used for companies that profit from competitive advantages.

Methods for estimating the value of a company and the cash flows it generates have changed over time. Initially, the calculations were carried out using moment and interval multipliers, profitability and profit indicators. Currently, a number of specialized complex indicators are used.
There are the following cost estimation methods:

• using discounted cash flow indicators, such as FCF (Free Cash Flow), ECF (Equity Cash Flow). The CCF indicator is used when the amount of cash sent to shareholders and investors is set, and the ECF indicator is used when the amount of cash flows for shareholders after the repayment of debt obligations is set;
  
• using indicators such as NPV (Net Present Value), APV (Adjusted Present Value), when a company can be represented as a set of parts, each of which can be evaluated as an investment project. In the presence of one-time or time-distributed investments, the NPV indicator is used. Its difference from the APV measure is the use of "tax protection" in the case of the APV measure;
  
• based on the principle of residual income using indicators such as EVA (Economic Value Added), MVA (Market Value Added). The use of the EVA indicator allows you to determine whether the shareholders receive the same return on their invested equity capital as in the case of its investment in alternative projects. Market Value Added (MVA) evaluates the value of an enterprise based on market capitalization and market value of debt, but does not take into account the intermediate return to shareholders and the opportunity cost of invested capital;
  
• based on combining income and expenses - EBO (Edwards-Bell-Ohlson valuation model), when cost and income approaches are combined, taking into account the value of net assets.

The value of the company is determined as the sum of the cost of equity and excess profit, calculated as a discounted cash flow.

Calculation and change in the value of the company under the influence of the main factors

A methodology for calculating cash flows with a change in a number of key factors has been developed. In table. Table 1 shows an example of calculating cash flows with the following values ​​of factors in the forecast period: revenue growth rate - 25%, cost growth rate - 15%, sales and management expenses growth rate - 7%, weighted average price of capital - 20%, invested capital growth rate - 8%, growth rate of depreciation charges - 6%. The growth rate of these factors in the extended period is 5%.
Based on the proposed methodology, the change in the value of the company's cash flows under the influence of the main factors is analyzed. The range of factor values ​​is set based on the business conditions of companies engaged in different types of activities.

The change in cash flows and the company's value with a change in the profit growth rate is shown in fig. 1. The calculation was made under the condition that the values ​​of the factors remain unchanged: the revenue growth rate of the extended period qn is 5%, the value of the investment rate NI in the forecast and extended periods is 14.4%, the amount of capital invested at the beginning of the forecast period IC = 53.2 thousand rubles ., the amount of depreciation deductions of JSC attributable to the main production assets - 15 thousand rubles.

The values ​​of the weighted average cost of capital WACC and the return on invested capital ROIC varied.

The presented graph shows that the value of cash flows due to the increase in working capital and investments differs by years of the forecast and extended periods and decreases with an increase in the value of WACC from 6 to 30%. This is due to an increase in the cost of capital raised, as a result of which the company has less free funds at its disposal and cash flows decrease. A noticeable difference in cash flows begins at WACC = 10%. With an increase in the growth rate of profit NOPLAT q from 5 to 35%, which is determined by the multidirectional influence of such factors as sales proceeds, cost of sales, selling and administrative expenses, the amount of cash flows increases. With a 6-fold increase in WACC, cash flows increase relatively slightly, namely from 911 thousand to 1567 thousand rubles, or 1.7 times with WACC = 30%. A significant change in cash flow occurs at WACC = 6%, when this value changes from 22,780 thousand to 47,896 thousand rubles, or 2.1 times. With an expected annual growth rate in the range of 15-20% and a price of capital raised in the range of 15-20%, the company can focus on cash flows in the range of 2,000 to 3,500 thousand rubles in financial planning.

The dependence of the change in the amount of cash flows from the change in the investment rate NI is shown in Fig. 2. The calculation was made at a constant value of the profit growth rate in the forecast and extended period. Accordingly, q \u003d 15%, qn \u003d 5%, the amount of AO \u003d 15 thousand rubles. The value of cash flows decreases with an increase in the payment for attracted capital. With an increase in the value of NI, the amount of cash flow decreases from 33,033 thousand to 22,624 thousand rubles. at WACC = 6% and from 1218 thousand to 834 thousand rubles. with WACC = 30%. There is a decrease in cash flow by 31.5%.

The growth of the value of NI is determined by the increase in working capital and capital investments. As a result, free cash flow decreases, which determines the decrease in the final cash flow. This is accompanied by a 3.5-fold decrease in ROIC: from 1.51 to 0.43. A significant change in cash flows is observed in the WACC range from 6 to 15%. The conditions under which management is possible is the NI range from 30 to 35%.

In this case, in financial planning, the company can use cash flows in the amount of 2,000 thousand to 3,000 thousand rubles in calculations. in the selected WACC range from 15 to 20%.

On fig. 3 shows the dependence of changes in cash flows on the amount of depreciation. The calculation is based on the assumption that the profit growth rate in the forecast and extended periods is the same and amounts to 15%: q = qn = 15%, the amount of invested capital is 53.2 thousand rubles. The graph shows that with a change in the weighted average cost of capital from 6% to 30%, or 5 times, the cash flow decreases by 27.1 times, which is explained by the diversion of significant funds to pay for the capital attracted by the company. With an increase in the amount of depreciation from 10 thousand to 50 thousand rubles. cash flow increases: at WACC = 6% - from 29,136 thousand to 34,367 thousand rubles, and at WACC = 30% - from 1,074 thousand to 1,267 thousand rubles. With an increase in the amount of JSC by 5 times, the cash flow increases by 1.18 times. The increase in cash flow is determined by the growth of gross cash flow and free cash flow with a decrease in the investment rate from 16.2% to 12.5%. In accordance with IFRS IAS 16 Property, Plant and Equipment, the depreciation method can change over the life of the asset, which means that it is possible to regulate cash flows using the AO factor.

On fig. 4 shows the dependence of changes in cash flows on the value of return on invested capital ROIC. The calculations were performed on the basis of the assumption of a constant value of AO = 15 thousand rubles. and investment rates NI = 14.4% in the forecast and extended period. The amount of cash flow falls with the growth of the WACC value from 6 to 30%, which is due to an increase in the diversion of funds to pay for the attracted capital. With an increase in ROIC, cash flow increases, which is due to an increase in the capital attracted by the company. With WACC = 6%, the amount of cash flow increases from 20,156 thousand to 22,806 thousand rubles, and with WACC = 15% - from 2,054 thousand to 2,280 thousand rubles. With WACC values ​​from 20 to 30%, the cash flow changes insignificantly and is in the range from 840 thousand to 1520 thousand rubles. For the company, an increase in ROIC is preferable. If the value of ROIC> 30% in the process of financial planning, you can take into account cash flows in the range from 2000 thousand to 3000 thousand rubles.
The dependence of the change in cash flow on the value of IC is shown in fig. 5. The calculations are based on the assumption that the profit growth rate in the forecast period is 15%, and in the extended period - 5%, the amount of AO = 15 thousand rubles, at the beginning of the analyzed period the amount of invested capital IC = 50 thousand rubles. The decrease in cash flow with an increase in WACC from 6 to 30% is explained by the same reasons as in the other charts above. It is most noticeable between 6% and 15% WACC and is almost unchanged between 15% and 30% WACC. Decrease in cash flow when changing the value of IC from 50 thousand to 250 thousand rubles. due to a decrease in the amount of free cash flow with an increase in the investment rate from 13.2 to 88.3%. The obtained results show that the q factor with a change rate of about 110% and the IC factor with a change rate of about 86% have the greatest impact on the change in the company's value.

Conclusion

You can increase the value of the company in the following ways:

• through the restructuring of the company, when the focus is, for example, on changing the management structure, on the formation of financial responsibility centers in the company, expanding their rights and increasing responsibility, on developing a system of labor motivation and employee interest in the final result. The cost of this method is much less than that of other methods. The main problem is explaining to employees the need for changes and teaching them new ways of working;
  
• by increasing the transparency and openness of the company for investors, suppliers, buyers and other interested users. This can be achieved, for example, by switching to International Financial Reporting Standards, disseminating information about the state of affairs and prospects for the company's development through rating agencies.The disadvantages of this method are longer implementation periods and higher costs than when using the first method, since the main focus is on attracting foreign capital, and therefore on creating an attractive image of the company abroad;
  
• through the development of industrial potential through, for example, the expansion of production, the commissioning of new and reconstruction of existing facilities. A company that has invested in an investment project will reduce profitability and profitability in the current period, but on the other hand, when cash flows at the beginning of the return on the investment project (in the forecast period) and after its completion (in the extended period), having increased potential, it will significantly increase its attractiveness and value. This is the most promising method and the most costly, since it is associated with increased risks;
  
• by choosing the optimal values ​​of influencing factors on the basis of the research. Their results can be used in the preparation of a cash flow statement using the budgeting method and forecast financial statements.
  

PES 8278/09.11.2008

Literature:
1. Gryaznova A.G., Fedotov M.A., Eskindarov M.A., Tazihina T.V., Ivanov E.N., Shcherbakova O.N. Enterprise (business) valuation. M.: INTERREKLAMA, 2003, p. 544.
2. Copeland T., Koller T., Murrin J. Cost of companies: evaluation and management / Per. from English. M.: CJSC "Olimp-Business", 1999, p. 576.
3. Popov D. Evolution of indicators of the enterprise development strategy // Management of the company. 2003. No. 1, p. 69-75.
4. Atkinson A., Epstein M. Measure for measure: Realizing the power of the balanced scorecard // CMA Management. September 2000, p. 22-28.
5. Kaplan R.S., Norton D.P. Lin-king the balanced scorecard to strategy // California Management Review. 1996 Vol. 4, Fall, p. 53-79.

There are several meanings of the concept of cash flow. At the static level, this is a quantitative expression of the money at the disposal of the subject (enterprise or person) at this particular point in time - "free reserve". For an investor, cash flow is the expected return on investment in the future (taking into account the discount). From the point of view of the company's management, at a dynamic level, cash flow is a plan for the future movement of the company's cash funds over time or a summary of data on their movement in previous periods. In each case, cash flow means the actual movement of funds.

The purpose of cash flow analysis is, first of all, an analysis of the financial stability and profitability of the enterprise. Its starting point is the calculation of cash flows, primarily from operating (current) activities.

Cash flow characterizes the degree of self-financing of the enterprise, its financial strength, financial potential, profitability.

The financial well-being of the enterprise largely depends on the inflow of funds to cover its obligations. The absence of the minimum required cash reserve may indicate financial difficulties. An excess of cash can be a sign that the business is incurring losses.

Moreover, the reason for these losses can be associated both with inflation and the depreciation of money, and with the missed opportunity for their profitable placement and additional income. In any case, it is the analysis of cash flows that will allow you to establish the real financial condition of the enterprise.

Cash flow analysis is one of the key points in the analysis of the financial condition of the enterprise, since it is possible to find out whether the enterprise was able to organize cash flow management so that at any time the company had a sufficient amount of cash at its disposal.

It is convenient to analyze cash flows using a cash flow statement. According to the international standard IAS7, this report is formed not according to the sources and directions of use of funds, but according to the areas of the enterprise's activity - operating (current), investment and financial. It is the main source of information for cash flow analysis.

The cash flow statement is prepared in order to visually see the impact of the current, investing and financial activities of the organization on the state of its cash for a certain period and allows you to explain the changes in cash for this period.

The cash flow statement is very important information for the management of the organization, as well as for its investors and creditors.

The management of the organization can use the information of the report when calculating the liquidity of the organization, when determining dividends, to assess the impact on the general condition of the organization of decisions to finance any programs. In other words, the management of the organization needs a cash flow statement in order to determine whether it will have enough cash to pay off short-term accounts payable, to address the issue of increasing incentives for employees. In addition, the report will help management plan the organization's investment and financial policies.

Investors and creditors use cash flow statement data to investigate whether the management of the organization is able to manage it in such a way as to generate enough cash in the accounts to pay off debt, to pay dividends.

The components of the cash flow statement are the receipt and disposal of cash in the context of the current, investment and financial activities of the organization.

Current activity includes the impact on cash of business transactions that affect the profit of the organization. This category includes such operations as the sale of goods (works, services), the purchase of goods (works, services) necessary in the production activities of the organization, the payment of interest on a loan, payment of wages, tax transfers.

Under investment activity understand the acquisition and sale of fixed assets, securities, the issuance of loans, etc.

Financial activities includes receipt from owners and return to owners of funds for the company's activities, operations on repurchased shares, etc.

Drawing up a cash flow statement involves:

• Determination of funds as a result of the current activities of the organization;
• Determination of funds as a result of the investment activity of the organization;
• Definition of cash as a result of the financial activities of the organization.

To do this, use the data of the balance sheet and income statement.

The profit and loss statement shows how profitable the activity was for the organization in the analyzed period, but it cannot show the inflow and outflow of funds in the current, investment and financial activities of the company.

The profit and loss statement is prepared on an accrual basis, when income/expenses are recognized in the period of their occurrence, and not in the period of inflow/outflow of funds.

In order to reveal the cash flow, it is necessary to transform the income statement. In this case, adjustments are used, in accordance with which income is recognized only in the amount of actually received cash, and expenses in the amount of actual payments.

There are two methods of income statement transformation: direct and indirect.

With the direct Cash Flow method, each income statement item is transformed, in the process of which the actual cash inflow and actual expenditure are determined. The indirect method does not require the transformation of each line item in the income statement. According to this method, the starting point of the calculation is the amount of annual profit (loss) for the analyzed reporting period, which is adjusted by adding all expenses not related to the movement of cash (for example, depreciation), and subtracting all income not related to cash flows.

Before drawing up a cash flow statement, first of all, it is necessary to find out which balance sheet item for at least two periods was the source of cash flow and which caused its consumption. This is done using a table showing the sources of formation and consumption of enterprise funds. First, the change in each balance sheet item is calculated, after which this change is attributed to the sources or consumption of funds in accordance with the following rules:

1. The source of available cash is any increase in an item classified as Liabilities or Equity. An example is a bank loan.
2. Any decrease in active accounts is also a source of cash flow generation. Examples: sale of non-current assets or inventory reduction.

Consumption:

1. Consumption of funds represents any decrease in an account classified as a "Liabilities" or "Equity". An example of the consumption of available funds is the repayment of a loan.
2. Any increase in active balance sheet items. The acquisition of non-current assets, the formation of stocks are examples of cash flow consumption.

The formation and consumption of cash flow occur in any type of activity of the company. The table below shows which operations related to a particular field of activity (production, investment, financial) caused an inflow (+) and which caused an outflow (-) of the firm's cash.

Sources of education and cash flow

The following table will help you convert income statement items into cash flows and draw up a cash flow statement.

Using both methods leads to the same results.

It can be represented as a cash flow characterizing the income and expenses generated by this activity. Making decisions related to capital investments is an important stage in the activity of any enterprise. A thorough analysis of future cash flows associated with the implementation of developed operations, plans and projects.

Estimated cash flows carried out by discount methods, taking into account the concept of the time value of money.

The task of the financial manager is to select such projects and ways of their implementation that will provide a cash flow that has the maximum present value compared to the amount of required capital investments.

Investment project analysis

There are several methods for assessing the attractiveness of investment projects and, accordingly, several main indicators of the effectiveness of cash flows generated by projects. Each method basically has the same principle: as a result of the project, the enterprise should receive a profit(the equity capital of the enterprise should increase), while various financial indicators characterize the project from different angles and may meet the interests of various groups of people related to this enterprise (owners, creditors, investors, managers).

First step analysis of the effectiveness of any investment project - calculation of the required capital investments and forecast of the future cash flow generated by this project.

The basis for calculating all indicators of the effectiveness of investment projects is the calculation net cash flow, which is defined as the difference between current income (inflow) and expenses (outflow) associated with the implementation of the investment project and measured by the number of monetary units per unit of time (monetary unit / unit of time).

In most cases, capital investments occur at the beginning of the project at the zero stage or during the first few periods, followed by cash inflows.

From a financial point of view, current income and expense flows, as well as net cash flow, fully characterize an investment project.

Cash flow forecasting

When forecasting cash flow, it is advisable to forecast the data of the first year by months, the second year by quarters, and for all subsequent years by total annual values. This scheme is recommended and in practice should correspond to the conditions of a particular production.

A cash flow for which all negative elements precede positive ones is called standard(classic, normal, etc.). For non-standard flow, alternating positive and negative elements are possible. In practice, such situations most often occur when the completion of the project requires significant costs (for example, the dismantling of equipment). Additional investments may also be required in the process of project implementation related to environmental protection measures.

• cash flows exactly correspond to the theory of the value of money in time - the basic concept of financial management;
• cash flows - a precisely defined event;
• using real cash flows avoids the problems associated with memorial accounting.

When calculating cash flows, take into account all those cash flows that change due to this decision:

• costs associated with production (building, equipment and equipment);
• changes in receipts, income and payments;
• taxes;
• changes in the amount of working capital;
• the opportunity cost of using scarce resources that are available to the firm (although this need not be directly related to cash costs).

should not be taken into account those cash flows that do not change in connection with the adoption of this investment decision:

• past cash flows (costs incurred);
• cash flows in the form of costs that would be incurred regardless of whether the investment project is implemented or not.

There are two types of costs that make up the total required capital investment.

1. direct costs, necessary to launch the project (construction of buildings, purchase and installation of equipment, investments in working capital, etc.).
2. Alternative costs. Most often, this is the value of used premises or land that could generate profit in another operation (alternative income) if they were not occupied for sale.
   project.

When forecasting future cash flow, it must be borne in mind that the recovery of costs associated with the necessary increase in the working capital of the enterprise (cash, inventory or receivables) occurs at the end of the project and increases the positive cash flow related to the last period.

The final result of each period, which forms the future cash flow, is the amount of net profit, increased by the amount of accrued depreciation and accrued interest on borrowed funds (interest has already been taken into account when calculating the cost of capital and should not be counted twice).

In general, the cash flow generated by an investment project is a sequence of elements INV t , CF k

• INV t - negative values ​​corresponding to cash outflows (for a given period, the total costs of the project exceed the total income);
• CF k are positive values ​​corresponding to cash inflows (revenues exceed expenses).

Since planning for the future cash flow is always carried out under conditions of uncertainty (it is necessary to predict future prices for raw materials and materials, interest rates, wages, sales volume, etc.), it is desirable to consider at least three possible implementation options to take into account the risk factor - pessimistic, optimistic and most realistic. The smaller the difference in the resulting financial indicators for each option, the more stable the project is to changes in external conditions, the lower the risk associated with the project.

Key indicators related to cash flow estimation

An important step in assessing cash flows is analysis of the financial capabilities of the enterprise, the result of which should be the value of the cost of capital of the enterprise with different volumes required.

WACC value is the basis for making financial and investment decisions, since in order to increase the capital of an enterprise, the following conditions must be met: the cost of capital is less than the return on investment.

The value of the weighted average cost of capital WACC in most cases is chosen as the discount rate when estimating future cash flows. If necessary, it can be adjusted for indicators of the possible risk associated with the implementation of a particular project and the expected level of inflation.

If the calculation of the WACC indicator is associated with difficulties that cast doubt on the reliability of the result obtained (for example, when evaluating equity), you can choose the value of the average market return, adjusted for the risk of the analyzed project, as the discount rate.

In some cases, the value of the discount rate is taken equal to that of the Central Bank.

Payback period of the investment project

The calculation of the payback period of investments is often the first step in the process of deciding on the attractiveness of a particular investment project for an enterprise. This method can also be used to quickly screen out projects that are unacceptable in terms of liquidity.

Most of all, creditors of the enterprise are interested in calculating this indicator, for which the fastest payback is one of the guarantees for the return of the funds provided.

In the general case, the desired value is the value !!DPP??, for which !!DPP = min N??, for which ∑ INV t / (1 + d) t more or equal ∑ CF k / (1 + d) k, where is the discount rate.

The decision criterion when using the payback period calculation method can be formulated in two ways:

• the project is accepted if the payback as a whole takes place;
• the project is accepted if the found DPP value lies within the specified limits. This option is always used when analyzing projects with a high degree of risk.

When choosing projects from several possible options projects with a shorter payback period will be preferred.

Obviously, the value of the payback period is higher, the higher the discount rate.

A significant disadvantage of this indicator as a criterion for the attractiveness of the project is ignoring positive cash flow values beyond the calculated period . As a result, a project that in general would bring more to the enterprise over the entire period of implementation may turn out to be less attractive according to the criterion !!DPP?? compared to another project that brings a much lower final profit, but more quickly recovers the initial costs. (By the way, this circumstance does not worry the creditors of the enterprise at all.)

This method also does not distinguish between projects with the same !!DPP?? value, but with a different distribution of income within the calculated period. Thus, the principle of the time value of money is partially ignored when choosing the most preferred project.

Net present (discounted) income

NPV indicator reflects a direct increase in the capital of the company, therefore, for the shareholders of the enterprise, it is the most significant. The calculation of net present value is carried out according to the following formula:

NPV = ∑ CF k / (1 + d) k - ∑ INV t / (1 + d) t.

The project acceptance criterion is a positive valueNPV. In the case when it is necessary to make a choice from several possible projects, preference should be given to the project with a larger value of net present value.

At the same time, it should be taken into account that the ratio of NPV indicators of various projects is not invariant with respect to a change in the discount rate. A project that was more preferable by the NPV criterion at one rate value may turn out to be less preferable at another value. It also follows from this that PP and NPV indicators can give conflicting estimates when choosing the most preferred investment project.

To make an informed decision and take into account possible changes in the rate (usually corresponding to the cost of invested capital), it is useful to analyze the graph of NPV versus d. For standard cash flows, the NPV curve is monotonically decreasing, tending with increasing d to a negative value equal to the present value of invested funds (∑ INV t / (1 + d) t). The slope of the tangent at a given point on the curve reflects the sensitivity of the NPV indicator to a change in d. The larger the slope, the more risky this project is: a slight change in the market situation that affects the discount rate can lead to major changes in the predicted results.

For projects that have large incomes in the initial periods of implementation, the possible changes in net present value will be less (obviously, such projects are less risky, since the return on investment is faster).

When comparing two alternative projects, it is advisable to determine the value barrier the rate at which the net present value of the two projects are equal. The difference between the discount rate used and the barrier rate will represent a margin of safety in terms of the advantage of a project with a larger NPV. If this difference is small, then an error in the choice of rate d can lead to the fact that a project will be accepted for implementation, which in reality is less profitable for the enterprise.

Internal rate of return

The internal rate of return corresponds to the discount rate at which the present value of the future cash flow coincides with the amount of invested funds, i.e. satisfies the equality

∑ CF k / (1 + IRR) k = ∑ INV t / (1 + IRR) t.

Finding this indicator without the help of special tools (financial calculators, computer programs) in the general case involves solving an equation of degree n, therefore it is quite difficult.

A graphical method can be used to find the IRR corresponding to normal cash flow, given that the NPV value turns to 0 if the discount rate matches the IRR value (this can be easily seen by comparing the formulas for calculating NPV and IRR). This fact is based on the so-called graphical method for determining the IRR, which corresponds to the following approximate calculation formula:

IRR = d 1 + NPV 1 (d 2 - d 1) / (NPV 1 - NPV 2),

where d 1 and d 2 are rates corresponding to some positive (NPV 1) and negative (NPV 2) values ​​of net present value. The smaller the interval d 1 - d 2, the more accurate the result. With practical calculations, a difference of 5 percentage points can be considered sufficient to obtain a fairly accurate value of the IRR value.

The criterion for accepting an investment project is the excess of the IRR indicator of the selected discount rate. When comparing several projects, projects with large IRR values ​​will be more preferable.

In the case of a normal (standard) cash flow, the condition IRR > d is fulfilled simultaneously with the condition NPV > 0. Decision-making according to the NPV and IRR criteria gives the same results if the question of the possibility of implementing a single project is considered. If several different projects are compared, these criteria may give conflicting results. It is believed that in this case the indicator of net present value will be a priority, since, reflecting an increase in the equity capital of the enterprise, it is more in the interests of shareholders.

Modified internal rate of return

For non-standard cash flows, the solution of the equation corresponding to the definition of the internal rate of return, in the vast majority of cases (non-standard flows with a single IRR value are possible) gives several positive roots, i.e., several possible values ​​of the IRR indicator. In this case, the IRR > d criterion does not work: the IRR value may exceed the discount rate used, and the project under consideration turns out to be unprofitable.

To solve this problem in the case of non-standard cash flows, an analogue of IRR is calculated - a modified internal rate of return MIRR (it can also be calculated for projects that generate standard cash flows).

MIRR is the interest rate at which, during the project implementation period n, the total amount of all discounted investments at the initial moment is accumulated, a value equal to the sum of all cash inflows accrued at the same rate d at the end of the project implementation is obtained:

(1 + MIRR) n ∑ INV / (1 + d) t = ∑ CF k (1 + d) n - k .

Decision criterion MIRR > d. The result is always consistent with the NPV criterion and can be used to evaluate both standard and non-standard cash flows.

Rate of return and index of profitability

Profitability is an important indicator of the effectiveness of investments, since it reflects the ratio of costs and income, showing the amount of income received for each unit (ruble, dollar, etc.) of invested funds.

P = NPV / INV 100%.

Profitability index (profitability ratio) PI - the ratio of the present value of the project to the costs, shows how many times the invested capital will increase during the implementation of the project:

PI = [∑ CF k / (1 + d) k ] / INV = P / 100% + 1.

The criterion for making a positive decision when using profitability indicators is the ratio P > 0 or, equivalently, PI > 1. Of several projects, those with higher profitability indicators are preferable.

The profitability criterion can give results that contradict the criterion of net present value if projects with different amounts of invested capital are considered. When making a decision, it is necessary to take into account the financial and investment capabilities of the enterprise, as well as the consideration that the NPV indicator is more in the interests of shareholders in terms of increasing their capital.

At the same time, it is necessary to take into account the influence of the projects under consideration on each other, if some of them can be accepted for implementation simultaneously and on projects already being implemented by the enterprise. For example, the opening of a new production facility may lead to a reduction in sales of previously manufactured products. Two projects implemented at the same time can give a result that is both greater (synergy effect) and less than in the case of a separate implementation.

Summing up the analysis of the main indicators of cash flow efficiency, we can highlight the following important points.

Advantages of the PP method (a simple method for calculating the payback period):

• simplicity of calculations;
• accounting for the liquidity of the project.

By cutting off the most dubious and risky projects in which the main cash flows come at the end of the period, the PP method is used as a simple method for assessing investment risk.

It is convenient for small firms with low cash turnover, as well as for express analysis of projects in conditions of lack of resources.

Disadvantages of the RR method:

• the choice of the barrier value of the payback period can be subjective;
• the profitability of the project beyond the payback period is not taken into account. The method cannot be applied when comparing options with the same payback periods, but different lifetimes;
• the time value of money is not taken into account;
• not suitable for evaluating projects related to fundamentally new products;
• the accuracy of calculations using this method largely depends on the frequency of dividing the life of the project into planning intervals.

Advantages of the DPP method:

• takes into account the time aspect of the value of money, gives a longer payback period than RR, and takes into account more cash flows from capital investments;
• has a clear criterion for the acceptability of projects. When using the DPR, the project is accepted if it pays for itself within its lifetime;
• the liquidity of the project is taken into account.

The method is best used to quickly screen low-liquid and high-risk projects under conditions
high level of inflation.

Disadvantages of the DPP method:

• does not take into account all cash flows received after the completion of the project period. But, since DPP is always greater than PP, DPP excludes a smaller amount of these cash receipts.

Advantages of the NPV method:

• focused on increasing the welfare of investors, therefore, is fully consistent with the main goal of financial management;
• takes into account the time value of money.

Disadvantages of the NPV method:

• it is difficult to objectively estimate the required rate of return. Its choice is crucial in NPV analysis, as it determines the relative value of cash flows over different time periods. The rate used in estimating NPV should reflect the required risk-adjusted rate of return;
• it is difficult to assess such uncertain parameters as the moral and physical depreciation of fixed capital; changes in the activities of the organization. This may lead to an incorrect assessment of the useful life of fixed assets;
• The NPV value does not adequately reflect the result when comparing projects:
  • with different initial costs for the same value
    pure real;
  • with a higher net present value and a long payback period and projects with a lower net present value and a short payback period;
• may give conflicting results with other indicators of cash flows.

The method is most often used when approving or rejecting a single investment project. It is also used in the analysis of projects with uneven cash flows to assess the value of the internal rate of return of the project.

Advantages of the IRR method:

• objectivity, informativeness, independence from the absolute size of investments;
• gives an estimate of the relative profitability of the project;
• can be easily adapted to compare projects with different levels of risk: projects with a high level of risk should have a large internal rate of return;
• does not depend on the discount rate chosen.

Disadvantages of the IRR method:

• complexity of calculations;
• possible subjectivity of the choice of normative return;
• greater dependence on the accuracy of estimates of future cash flows;
• implies the mandatory reinvestment of all income received, at a rate equal to IRR, for a period until the end of the project;
• not applicable for estimating non-standard cash flows.

The most commonly used method, due to the clarity of the results obtained and the possibility of comparing them with the yield of various market financial instruments, is often used in combination with the payback period method

Advantages of the MIRR method:

• gives a more objective assessment of the return on investment;
• less likely to conflict with the NPV criterion;

Disadvantages of the MIRR method:

• depends on the discount rate.

MethodMIRRused in the same cases as the methodIRRin the presence of uneven (non-standard) cash flows that cause a problem of multiplicityIRR.

Advantages of the methodPAndPI:

• the only one of all indicators reflects the ratio of income and costs;
• gives an objective assessment of the profitability of the project;
• applicable to the evaluation of any cash flows.

Disadvantages of the methodPAndPI:

• may give conflicting results with other indicators.

The method is used when the payback method and the methodNPV (IRR) give inconsistent results, and also if the value of the initial investment is important for investors.

Analysis of criteria for the effectiveness of investment projects. Comparison of NPV and IRR.

1. If the NPV and IRR criteria are applied to such a single project in which only cash receipts occur after the initial cash outlay, then the results obtained by both methods are
   agree with each other and lead to identical decisions.
2. For projects with other cash flow schedules, the value of the internal rate of return IRR can be as follows:

• no IRR:
  • a project in which there is no cash flow always has a positive NPV value; in this regard, there is no IRR in the project (where NPV = 0). In this case, IRR should be discarded and NPV should be used. Since NPV > 0, this project should be accepted;
  • a project with no cash flow always has a negative NPV, and such a project has no IRR. In this case, IRR should be discarded and NPV should be used; because NPV< 0, то данный проект следует отвергнуть;
• opposite IRR. A project that first has cash inflows and then cash outflows has an IRR that is never consistent with NPV (a low IRR and a positive NPV will occur at the same time);
• multiple IRRs. A project that alternates between incoming and then outgoing cash will have as many internal rates of return as there are reversals in the direction of cash flows.

3. Project ranking is necessary if:

• projects are alternative to be able to choose one of them;
• the amount of capital is limited, and the company is not able to raise enough capital to implement all good projects;
• there is no agreement between NPV and IRR. In the case of using two methods simultaneously: NPV and IRR, different rankings often occur.

Causes of discrepancy between the results of the IRR and NPV methods for several projects

Project lead time - Long term projects may have a low IRR, but over time their net present value may be higher than short term projects with a high rate of return.

Choice between IRR and NPV:

• if we use the NPV method as a criterion for choosing an investment project, then it leads to the maximization of the amount of cash, which is equivalent to the maximization of the cost. If this is the goal of the firm, then the net present value method should be used;
• if the IRR method is used as a selection criterion, it leads to the maximization of the firm's growth percentage. When a firm's goal is to increase its value, the most important characteristic of investment projects is the degree of return, the ability to earn cash to reinvest them.

Estimation of cash flows of different duration

In cases where there is doubt about the correctness of the comparison using the considered indicators of projects with different implementation periods, one of the following methods can be resorted to.

Chain repeat method

When using this method, find the least common multiple of the implementation time and estimated projects. They build new cash flows resulting from several project implementations, assuming that costs and incomes will remain at the same level. The use of this method in practice can be associated with complex calculations if several projects are considered, and in order to match all the deadlines, each will need to be repeated several times.

Equivalent annuity method

This method implies simpler calculations carried out in the following stages for each of the considered projects:

Projects with a higher value are preferred.

At the same time, the re-implementation of the project is not always possible, especially if it is long enough or relates to areas where there is a rapid technological renewal of manufactured products.

In addition to the considered quantitative indicators of the effectiveness of capital investments, when making investment decisions, it is necessary to take into account the qualitative characteristics of the attractiveness of the project, corresponding to the following criteria:

• compliance of the project under consideration with the general investment strategy of the enterprise, its long-term and current plans;
• possible impact on other projects implemented by the enterprise;
• the prospects of the project in comparison with the consequences of refusing to implement alternative projects;
• compliance of the project with the accepted regulatory and planned indicators regarding the level of risk, financial stability, economic growth of the organization, etc.;
• ensuring the necessary diversification of the financial and economic activities of the organization;
• compliance of the project implementation requirements with the available production and human resources;
• social consequences of the project implementation, possible impact on the reputation, image of the organization;
• compliance of the project under consideration with environmental standards and requirements.

The main disadvantage of the considered methods is the assumption that the conditions for the implementation of projects, and hence the required costs and revenues will remain at the same level, which is almost impossible in the current market situation.

Estimating the cash flow of the enterprise for the reporting period, as well as planning cash flows for the future, is the most important addition to the analysis of the financial condition of the enterprise and performs the following tasks:

• - determination of the volume and sources of funds received by the enterprise;
• - identification of the main directions of use of funds;
• -assessment of the adequacy of the enterprise's own funds for investment activities;
• - determination of the reasons for the discrepancy between the amount of profit received and the actual availability of funds.

In order to reveal the real cash flow at the enterprise, to assess the synchronism of receipts and payments, and also to link the amount of the financial result obtained with the state of funds, it is necessary to identify and analyze all directions of receipts, as well as their disposal. It is customary to consider the directions of cash flow in the context of the main types of activity - current, investment, financial.

In international accounting and analytical practice, the methodology for analyzing cash management has been developed in sufficient detail and boils down to analyzing the flow in three main areas:

• - operating (current) activities - the movement of funds related to the receipt of revenue, advances, payments on supplier accounts, payment of wages, settlements with the budget, other expenses from profits and other items that characterize the main activity of the enterprise;
• - investment activity - the movement of funds associated with the acquisition and sale of fixed assets and intangible assets, profitable financial assets, shares in joint-stock companies, receiving dividends;
• - financial activity - the movement of funds associated with obtaining and repaying loans, paying interest on obligations and paying dividends to shareholders of the company.

There are two approaches to identifying these areas and bringing them to the cash flow statement:

• - the direct method is based on the calculation of the inflow (revenue from the sale of products, works and services, receipt of advances, etc.) and outflow (payment of supplier invoices, payment of taxes, etc.) of funds;
• - the indirect method is based on the identification and accounting of transactions related to the movement of funds, and the subsequent adjustment of net profit.

The indirect method is aimed at obtaining data characterizing the net cash flow of the enterprise in the reporting period.

Sources of information for the development of reporting on cash flows of the enterprise by this method are the balance sheet and income statement. The calculation of the net cash flow of the enterprise by the indirect method is carried out by type of economic activity and the enterprise as a whole.

The use of the indirect method of calculating cash flow makes it possible to determine the potential for an enterprise to form the main internal source of financing for its development - net cash flow from operating and investment activities, as well as to identify the dynamics of all factors influencing its formation.

In addition, it should be noted the relatively low labor intensity of generating cash flow statements, since the vast majority of indicators required for calculation by the indirect method are contained in other forms of the enterprise's current financial statements.

For operating activities, the basic element for calculating the net cash flow of an enterprise by the indirect method is its net profit received in the reporting period.

The following indicators are used to assess cash flows: the net present value of the enterprise, the payback period for investments and production costs, the internal rate of return of production, investment and financial activities, etc.

Analysis of cash inflows and outflows is extremely important for assessing the performance of the enterprise. However, when we talk about the problems of assessing the acceptability of investments, we are more concerned not with the current cash inflows and outflows of the enterprise, but with its cash receipts, i.e. the "dry residue", which forms an increment in the capital of the enterprise.

Net cash flow (NFC), which is the difference between positive (MPC) and negative (NCP) cash flows in the analyzed period of time:

The calculation of the net cash flow for the enterprise as a whole, its individual structural divisions (responsibility centers), various types of economic activities or individual business transactions is carried out according to the following formula:

NDP \u003d PDP-ODP, (1)

NPV - the amount of net cash flow in the period under review;

RAP - the amount of positive cash flow (cash receipts) in the period under review;

ODP - the amount of negative cash flow (expenditure of funds) in the period under review.

As can be seen from this formula, depending on the ratio of the volumes of positive and negative flows, the amount of net cash flow can be characterized by both positive and negative values ​​that determine the final result of the corresponding economic activity of the enterprise and ultimately affect the formation and dynamics of the balance of its monetary assets. .

Rice. 5.

When analyzing cash flows, first of all, a horizontal analysis of cash flows is carried out: the dynamics of the volume of formation of a positive, negative and net cash flow of an enterprise in the context of individual sources is studied, the rates of their growth and growth are calculated, trends in their volume are established.

The growth rate of net cash flow (T NPV) is compared with the growth rate of the company's assets (T Act) and with the growth rate of production (sales) of products (T RP). For the normal functioning of the enterprise, increasing its financial stability and solvency, it is required that the growth rate of sales be higher than the growth rate of assets, and the growth rate of net cash flow outpaces the growth rate of sales volume:

100 < Т Акт < Т РП < Т ЧДП (2)

In parallel, a vertical (structural) analysis of positive, negative and net cash flows is also carried out:

• a) by types of economic activity (operating, investment, financial), which will allow to establish the share of each type of activity in the formation of positive, negative and net cash flows;
• b) for individual internal divisions (responsibility centers), which will show the contribution of each division to the formation of cash flows;
• c) by individual sources of income and directions of spending money, which makes it possible to establish the share of each of them in the formation of the total cash flow. At the same time, the role and place of net profit in the formation of NPV are determined, the degree of sufficiency of depreciation deductions for the reproduction of fixed assets and intangible assets is revealed.

The results of horizontal and vertical analysis serve as the basis for conducting a fundamental (factorial) analysis of the formation of net cash flow.

To study the factors of formation of positive, negative and net cash flows, it is recommended to use direct and indirect methods.

The direct method is aimed at obtaining data characterizing both the gross and net cash flow of the enterprise in the reporting period. When applying this method, the accounting data and the cash flow statement are used directly, characterizing all types of their receipts and expenditures. Differences in the results of calculating cash flows by direct and indirect methods relate only to operating activities.

For operating activities, the NPV by the direct method is determined as follows:

NPV o.d. \u003d V RP + P av + PP o.d. - About Inventory and Materials - ZP - NP - PV o.d. (3)

where B RP - revenue5a from the sale of products and services;

P av - advances received from buyers and customers;

PP o.d. - the amount of other income from operating activities;

About commodities and materials - the amount of funds paid for the acquired inventory items;

ZP - the amount of wages paid to the personnel of the enterprise;

NP - the amount of tax payments to the budget and extra-budgetary funds;

PV o.d - the amount of other payments in the course of operating activities.

One advantage of the direct method is that it shows total receipts and payments and focuses on those items that generate the most cash inflows and outflows. However, this method does not disclose the relationship between the value of the financial result and the value of the change in cash, in particular, does not show why a situation arises when a profitable enterprise is insolvent.

The indirect method is more preferable from an analytical point of view, as it allows you to explain the reasons for the discrepancies between financial results and free cash balances. The calculation of net cash flow by the indirect method is carried out by appropriately adjusting net income for the amount of changes in inventories, receivables, payables, short-term financial investments and other asset items related to current activities. The sources of information for the calculation and analysis of cash flows by the indirect method are the balance sheet and income statement.

For operating (main) activities, it is calculated as follows:

NPV o.d. = PE o.d. + A + ?DZ + ?Z TMC + ?KZ + ?DBP +?R + Pav +?Vav (4)

where PE o.d. - the amount of net profit of the enterprise from operating activities;

A - the amount of depreciation of fixed assets and intangible assets;

• ?DZ - change in the amount of receivables;
• ?Z Inventory and Materials - change in the amount of stocks and VAT on acquired values ​​that are part of current assets;
• ?КЗ - change in the amount of accounts payable;
• ?DBP - change in the amount of deferred income;
• ?Р - change in the amount of the reserve for future expenses and payments;

P av - change in the amount of advances received;

In av - change in the amount of advances issued.

To assess the efficiency of the company's cash flow, the cash flow efficiency ratio is calculated and analyzed as the ratio of net profit and depreciation to negative cash flow:

E DP = ChP + Am

or as the ratio of net profit and depreciation to the average annual amount of the company's assets:

E DP = ChP + Am

Of the financial ratios considered the adequacy ratio of the net cash flow of the enterprise; cash flow liquidity ratio; the cash flow efficiency ratio, as well as the net cash flow reinvestment ratio. The calculation is carried out according to the following formulas.

Net cash flow sufficiency ratio, KD NPV:

KD NPV = NPV

OD + ?Z TM + D y (6)

OD - the amount of principal payments on long- and short-term loans and borrowings of the enterprise;

З ТМ - the sum of the increase in stocks of inventory items as part of the current assets of the enterprise;

Du - the amount of dividends (interest) paid by the owners of the enterprise (shareholders) on invested capital (shares, shares, etc.).

The company's cash flow liquidity ratio, CL DP:

CL DP = RAP

where RAP is the sum of the gross positive cash flow of the enterprise in the planning period;

ODP - the amount of gross negative cash flow of the enterprise in the planning period.

The coefficient of reinvestment of the net cash flow of the enterprise, KR NPV:

KR DP = CHDP - Du

RI + ?FI d (8)

where NPV is the amount of net cash flow of the enterprise in the planning period;

Du - the amount of dividends (interest) paid by the owners of the enterprise (shareholders) on invested capital (shares, shares, etc.);

• ?RI - the amount of growth of real investments of the enterprise (in all their forms) in the planning period;
• ?FI D - the amount of growth of long-term financial investments of the enterprise in the planning period.

In addition to the formation of the monthly production program, the result of this planning stage is the adjusted dynamic registers. It is desirable for each enterprise to have dynamic registers of cash flows, as well as receivables and payables. Dynamic registers of cash flows include: receipts of funds to the account of the enterprise for shipped goods and services rendered; dynamics of income from fund activities (management of a fund portfolio, income from a new issue of shares); spending the proceeds from sales in the main areas (purchase of raw materials and materials, wages, fixed costs and other current needs of the enterprise); payment of interest on loans; payment of dividends; investment costs; the amount of free funds of the enterprise (or the amount of their deficit).

At the final stage, it is proposed to calculate the model of the net present value of cash flows, adjusted for the industry average inflation rate. In this regard, the net discounted cash flow, determined by the following generalized formula, becomes the indicator that determines the efficiency of the enterprise:

NPV=? -----------

t = 1 (1 + r (d)) t (9)

where t is the period of time; CF - the value of the cash flow in the considered 1st period of time; - discount rate; n is the number of periods, NPV is the net discounted cash flow.

The practical use of the NPV model is recommended to be carried out in a certain sequence. At the first stage, the values ​​of constant indicators (Io, I, n, Kt) are evaluated and substituted into the formula. At the second stage, through the regulation of the values ​​of variable indicators (sales volume, unit price, depreciation, level of fixed and variable costs), a multivariate assessment of NPV is carried out. At the third stage, the option with the highest NPV value is selected from the total amount of research. In conclusion, the main principles of the investment strategy are formed, taking into account the ratio of variable indicators used in the calculation of the best NPV option.

According to modern financial theory, net present value (NPV) acts as a universal indicator that facilitates the adoption of sound and optimal management decisions in the financial and investment activities of an enterprise. According to this provision, under the strategy of long-term investment, it is proposed to consider the process of determining the directions for the investment development of an enterprise, which ensures, over the expected period of time, a positive net present value of the cash flows generated by it. The successful implementation of this strategy should contribute to the acquisition of appropriate competitive advantages (in terms of technology, organization, marketing, costs, etc.), as well as be consistent with the requirement of a steady increase in the overall value of the company.

As noted earlier, not only in the course of various types of investments, but also in assessing the degree of efficiency of economic activity, the most important place is occupied by the level of competitiveness of the enterprise, and in particular its potential for transition to new areas of activity and the construction of "barriers" to entry into the industry of new competitive firms. It is through the achievement of appropriate market advantages that an enterprise can, to a certain extent, protect itself from the adverse effects of competitors.

Income approach to enterprise business valuation: discounted cash flow method (DCF)

The valuation of an enterprise's business using the DCF method is based on the assumption that a potential buyer will not pay for the enterprise an amount greater than the present value of the future income from the business of this enterprise. The owner will most likely not sell his business for less than the present value of projected future earnings. As a result of the interaction, the parties will come to an agreement on a price equal to the present value of the future income of the enterprise.

The valuation of an enterprise using the DCF method consists of the following stages:

• · Choice of cash flow model.
• · Determining the duration of the forecast period.
• · Retrospective analysis and forecast of gross proceeds.
• · Forecast and analysis of expenses.
• · Forecast and analysis of investments.
• · Calculation of cash flow for each forecast year.
• · Determining the discount rate.
• · Calculation of value in the post-forecast period.
• · Calculation of the current values ​​of future cash flows and costs in the post-forecast period.
• · Introducing final amendments.

The choice of cash flow model depends on whether it is necessary to distinguish between equity and debt capital or not. The difference is that the interest on servicing debt capital can be allocated as an expense (in the cash flow model for equity) or included in the income stream (in the model for the total invested capital), the value of net income changes accordingly.

The duration of the forecast period in countries with developed market economies is usually 5-10 years, and in countries with economies in transition, in conditions of instability, it is permissible to reduce the forecast period to 3-5 years. As a rule, the forecast period is taken until the growth rate of the enterprise stabilizes (it is assumed that there is a stable growth rate in the post-forecast period).

A retrospective analysis and forecast of gross revenue requires consideration and consideration of a number of factors, the main ones being production volumes and prices for products, demand for products, retrospective growth rates, inflation rates, capital investment prospects, the situation in the industry, the company's market share and overall situation in the economy. The gross revenue forecast should be logically consistent with the company's historical business performance.

Forecast and analysis of expenses. At this stage, the appraiser must study the structure of the company's expenses, in particular the ratio of fixed and variable costs, evaluate inflation expectations, exclude one-time items of expenditure that will not occur in the future, determine depreciation charges, calculate the cost of paying interest on borrowed funds, compare the projected costs with corresponding indicators of competitors or industry averages.

The forecast and analysis of investments includes three main components: own working capital (“working capital”), capital investments, financing needs and is carried out, respectively, based on the forecast of individual components of own working capital, based on the estimated remaining life of assets, based on the need for financing existing debt levels and debt repayment schedules.

Calculation of cash flow for each forecast year can be done by two methods - indirect and direct. The indirect method analyzes the cash flow by line of business. The direct method is based on the analysis of cash flows by item of income and expense, i.e. on accounting accounts.

The definition of the discount rate (the interest rate for converting future earnings into present value) depends on what type of cash flow is used as the basis. For cash flow to equity, a discount rate equal to the owner's required rate of return on equity is applied; for cash flow for all invested capital, a discount rate is applied equal to the sum of the weighted rates of return on equity and borrowed funds, where the weights are the shares of borrowed and equity in the capital structure.

For cash flow to equity, the most common methods for determining the discount rate are the cumulative construction method and the capital asset pricing model. For cash flow for all invested capital, the weighted average cost of capital model is usually used.

When determining the discount rate using the cumulative method, the calculation base is the rate of return on risk-free securities, to which is added the additional income associated with the risk of investing in this type of securities. Then adjustments are made (in the direction of increase or decrease) for the effect of quantitative and qualitative risk factors associated with the specifics of this company.

In accordance with the Capital Assets Pricing Model (CAPM), the discount rate is determined by the formula:

R = Rf + in(Rm - Rf) + S1 + S2 + C, where (10)

R is the rate of return on equity required by the investor;

Rf is the risk-free rate of return;

Rm - total market return as a whole (average market portfolio of securities);

c - coefficient beta (a measure of systematic risk associated with macroeconomic and political processes taking place in the country);

S1 - premium for small enterprises;

S2 is the premium for the risk characteristic of an individual company;

C - country risk.

According to the weighted average cost of capital model, the discount rate (WACC - Weighted Average Cost of Capital) is determined as follows:

WACC = kd (1-tc)wd + kpwp + ksws where (11)

kd - the cost of borrowed capital;

tc - income tax rate;

wd - the share of borrowed capital in the capital structure of the enterprise;

kp - the cost of raising equity capital (preferred shares);

wp - the share of preferred shares in the capital structure of the enterprise;

ks - the cost of raising equity capital (ordinary shares);

ws - the share of ordinary shares in the capital structure of the enterprise.

The calculation of the value in the post-forecast period is made depending on the prospects for business development in the post-forecast period, using the following methods:

• The method of calculating the liquidation value (if the company is expected to go bankrupt in the post-forecast period, followed by the sale of assets)
• Method of calculation based on the value of net assets (for a stable business with significant tangible assets)
• The estimated sale method (converting the projected cash flow from the sale to present value)
• · Gordon's method (income of the first post-forecast year is capitalized into value indicators using a capitalization ratio calculated as the difference between the discount rate and long-term growth rates).

Calculation of the current values ​​of future cash flows and value in the post-forecast period is made by summing up the current values ​​of income that the object brings in the forecast period and the current value of the object in the post-forecast period.

Making final adjustments - usually, these are adjustments for non-functional assets (assets that do not participate in generating income) and for the actual amount of working capital. If a non-controlling stake is valued, allowance must be made for the lack of control.

The discounted future cash flow method is used when an entity's future cash flows are expected to be materially different from its current levels, where the future cash flows can be reasonably estimated, the projected future cash flows are positive for most of the forecast years, and it is expected that cash flows in the last year of the forecast period will be a significant positive value. In other words, this method is more applicable to income-producing enterprises with a certain history of business activity, with unstable income and expense flows.

The DCF method is less applicable to the valuation of the business of enterprises that suffer systematic losses (although the negative value of the business value may be an argument for making one or another decision). Some caution should also be exercised in the application of this method when evaluating the business of new ventures, as the absence of a retrospective of profits makes it difficult to objectively predict future cash flows.

The DCF method is a very complex and time-consuming process, however, it is recognized all over the world as the most theoretically sound method for assessing the business of operating enterprises. In countries with developed market economies, when evaluating large and medium-sized enterprises, this method is used in 80 - 90% of cases. The main advantage of the method is that it is the only known valuation method that is based on the prospects for the development of the market in general and the enterprise in particular, and this is most in the interests of investors.

The standard approach to valuing a going concern or business (which is different from valuing financial assets with a fixed life) assumes an infinite life of its operation, or after some time the sale of this enterprise at a price determined on the basis of this assumption.

The methodology of strategic planning does not provide for the construction of long-term plans for financial and economic activities for an infinite period. In this regard, in order to take into account the company's further functioning, which is beyond the planning horizon, when assessing the value of the company, a certain assumption is introduced that, starting from a certain point in time, which is the horizon for drawing up a long-term plan for financial and economic activity , the free cash flow of the enterprise at constant prices will either be constant or will increase at the same rate. The presented model belongs to the class of two-step FCFF or FCFE models. It is the model of this class that is used in most valuations based on the cash flow method in practice, and it is the model of this class that is taken as the basis for assessing both individual products and the value of the enterprise as a whole in this study.

Based on the analysis carried out, the following methodology for estimating cash flow is proposed:

Block 1. Absolute indicators of cash flow:

• - RAP
• - ODP
• - CHDP
• - indirect method
• - direct method

Block 2. Indicators characterizing the efficiency of cash flow

Block 3. Discount cash flows