Cash flows from current investment activities. Net cash flow

Efficiency investment project is estimated during the settlement period, covering the time interval from the beginning of the investment project to its termination. The billing period is divided into calculation steps, i.e. time intervals within which data is aggregated to calculate efficiency (month, quarter, year).

A project, like any financial transaction, i.e. a transaction related to the receipt of income and (or) the implementation of expenses, generates cash flows (flows real money).

Cash flow (CF) of an investment project is receipts Money and their equivalents, as well as payments for the implementation of the project, determined for the entire billing period.

At each step, the value of the cash flow is characterized by:

- an inflow (in cash flow, CF +) equal to the amount of cash receipts (or results in value terms) at this step;
- outflow (out cash flow, CF -) equal to payments at this step;
- balance (active balance, effect), equal to the difference between inflow and outflow, and also called net cash flow (NCF).

The total (final) cash flow form cash flows from certain types of activities:

- cash flow from investment activities;
- cash flow from operating activities;
- cash flow from financial activities.

The component cash flows are made up of the following inflows and outflows:

1) For cash flow from investment activities:
- - outflows include capital investment, commissioning costs, liquidation costs at the end of the project, costs of increasing working capital and funds invested in additional funds;
- - inflows include the sale of assets (possibly conditional) during and after the end of the project, receipts from a decrease in working capital.
2) For cash flow from operating activities:
- - inflows include proceeds from sales, as well as other and non-operating income, including receipts from funds invested in additional funds;
- - to outflows - production costs, taxes.

Financial activities include transactions with funds external to the investment project, i.e. not coming from the project. They consist of the firm's own (share) capital and borrowed funds.

3) For cash flow from financial activities:
- - inflows include investments of own (share) capital and borrowed funds: subsidies and grants, borrowed funds, including through the issuance of its own debt securities by the enterprise;
- - to outflows - the costs of returning and servicing loans and debt securities issued by the enterprise (in full, regardless of whether they were included in inflows or in additional funds), as well as, if necessary, for the payment of dividends on the company's shares.

Cash flows from financial activities are taken into account, as a rule, only at the stage of assessing the effectiveness of participation in the project. The relevant information is developed and provided in the project materials in conjunction with the development of the project financing scheme.

Cash flows can be expressed in current, forecasted or deflated prices, depending on the prices in which their inflows and outflows are expressed at each step.

The current prices are the prices included in the project without taking into account inflation.

Forecast prices are prices that are expected (taking into account inflation) at future steps of the calculation.

Deflated prices are forecast prices reduced to the price level of a fixed point in time by dividing by the general basic inflation index.

Cash flows can be expressed in different currencies. It is recommended to calculate cash flows in the currencies in which receipts and payments are made, then convert them to a single, final currency and then deflate using the base inflation index corresponding to that currency.

Along with the cash flow, when evaluating an investment project, the accumulated cash flow is also used - the flow, the characteristics of which are determined cumulatively for this and all previous steps).

When calculating performance indicators, discounted cash flow values are usually used. Discounting cash flows is the reduction of their multi-temporal (referring to different steps of calculation) values to their value at a certain point in time, which is called the point of reduction. Discounting applies to cash flows denominated in current or deflated prices and in a single currency.

Cash flow from investing activities.

The cash flow from investing activities as an outflow includes, first of all, the costs of creating and putting into operation new fixed assets and liquidation, replacement or reimbursement of retired existing fixed assets, distributed over the steps of the calculation period. This also includes non-capitalizable costs (for example, payment of tax on a land plot used in the course of construction; expenses for the construction of external infrastructure facilities, etc.). In addition, changes in working capital are included in the cash flow from investing activities (an increase is considered an outflow of funds, a decrease is an inflow). The outflow also includes own funds invested in the deposit, as well as the costs of purchasing securities of other economic entities intended to finance this investment project.

Income from disposal of retired assets is included as cash inflow from investing activities.

Investment cost information should include information classified by cost type.

Estimation of costs for the acquisition of certain types of fixed assets can also be made on the basis of the results of the assessment of the corresponding property. The distribution of investment costs over the construction period should be linked to the construction schedule.

Cash flow from operating activities.

The main result of operating activities is the receipt of a return on investment. Accordingly, all types of income and expenses associated with the production of products and taxes paid on these incomes are taken into account in cash flows. In particular, it takes into account inflows of funds due to the provision of own property for rent, investment of own funds on a deposit, income from securities of other economic entities.

As inflows of funds in the formation of cash flow from operating activities, the following are taken into account:

Volumes of production and sales of products and other income. It is recommended to indicate production volumes in physical and value terms. The source of information is pre-design and design materials, as well as studies of Russian and foreign markets.

The initial information for determining the proceeds from the sale of products is set in steps of calculation for each type of product, separately for sales in the domestic and foreign markets.

In addition to proceeds from sales in the inflows and outflows of real money, it is necessary to take into account income and expenses from non-sales transactions that are not directly related to the production of products, which include:

- income from renting out property or leasing (if this operation is not the main activity);
- receipts of funds upon closing deposit accounts (the opening of which is provided for by the project) and on purchased securities of other economic entities;
- return of loans provided to other participants.

The following are taken into account as outflows of funds in the formation of cash flow from operating activities:

Production and marketing costs. The source of information is pre-design and design materials. For each type of the main resources consumed during the implementation of the project, prices must be justified (market prices, agreed between the project participants or others). If necessary, the impact of the project on the total demand for this type of resource (and, therefore, on its price) in the relevant market should be taken into account. It is recommended to indicate all indicators with the allocation of VAT, as well as other taxes and fees included in the price.

If an enterprise carries out several types of activities for which different tax rates are established (in particular, income tax), income and expenses for each of these types of activities are determined separately.

Current expenses, which at the time of implementation can neither be attributed to the cost price, nor included in capital investments (expenses for the repair of fixed assets, for the development of production, contributed in advance rent etc.), in the calculations of cash flows should be reflected at the step at which they are produced. However, in accounting, they are reflected in the balance sheet item "deferred expenses" and are allocated to the cost of production in the subsequent period. The order of such distribution is determined accounting policy enterprises and must be specified in the initial information

Cash flow from financial activities.

Cash flows from financial activities are largely formed during the development of a financing scheme and in the process of calculating the effectiveness of a project. Therefore, the initial information is limited to information about the sources of financing: about the amount of equity capital, subsidies and subsidies, as well as about the conditions for attracting borrowed funds (volume, term, conditions for obtaining, returning and servicing). The distribution of steps can be indicative in this case.

The form for calculating the total cash flow in the general case is presented in table. 4.1. It is recommended to set the size of cash receipts and payments related to financial activities separately for payments in Russian and foreign currencies.

Table 4.1

Calculation of the total cash flow

	Indicators	Calculation step


Calculation of the flow from operating activities
	Revenue from product sales
	Production costs
	Taxes at cost
	Depreciation
	Gross profit
	Non-operating income
	Non-operating expenses
	Profit before interest
	Loan interest included in the cost price
	Profit before tax
	Income tax
	Use of profit (decipher)
	Undestributed profits
	Depreciation
	Operational flow
Calculation of the flow from investment activities
	Realization of fixed assets and intangible assets
	investment
	Increase in current assets
	Project liquidation cost
	Project liquidation costs
	Investment flow
Calculation of the flow from financial activities
	Loans received
	Special-purpose financing
	Issue of debt securities
	Issue of own shares
	Repayment of loans
	Interest payments
	Dividend payments
	Placing funds on deposits
	Withdrawing funds from deposits
	Receiving interest on deposits and deposits
	Flow from financial activities
	Total flow balance
	Cumulative balance

In the course of the enterprise or in the implementation of projects, incoming and outgoing cash flows are generated. Their focus and predominance of some over others indicates how successful the project is and what to expect from it in the future. Let's consider how the cash flow from the investment activities of the firm is formed and how important it is in its activities.

Investment cash flow among other cash flows

When conducting a preliminary assessment and analysis of an investment project essential condition is the calculation of the expected cash flows (cash flow, or cash flow). Each calculated step for a given period of time is characterized by the following cash flow indicators:

receipts of funds (inflow);
costs in the form of payments;
the difference between receipts and costs (balance, balance).

The cash flow of an investment project is considered as a summary indicator of the flows created different kinds activities:

Operating room (internal, main). It affects the production area (purchase necessary materials, parts, raw materials, energy supply, remuneration of workers, transfer of taxes, sale of the manufactured product).
Financial. Here the basis is the work with external finance. This is the issue, sale and purchase of securities, settlement of dividends, attraction of grants, loans, subsidies, etc.
Investment. In this direction, there is work with assets (their acquisition, modernization, expansion and sale).

Without having complete information about the expected movement of cash flows, it is impossible to correctly calculate the discounted value of an investment project, and without such an analysis it is inappropriate to invest in the proposed undertaking.

How the investment financial flow is formed

Investment cash flow often has a negative indicator, since it contains mainly the costs of implementing the initiative, as well as its expansion and modernization in the course of implementation. It is usually covered by income received from the main activity of the enterprise (sale of goods or services).

Outflows consist of the following items:

capital investments (research, development and construction work);
purchase and installation of the necessary equipment;
acquisition of intangible assets (copyrights, licenses, permits, rights to use something, for example, a land plot);
commissioning works;
costs of performing work on the liquidation of the facility (environmental protection measures, reclamation, etc.);
expenses aimed at increasing the volume of working capital.

Also, a number of non-capitalized expenses are considered to be outflows (costs for external infrastructure facilities, taxes on the land plot used for the project). When it comes to capital construction, then investment investments should always be linked to the construction schedule. Investment costs are classified by type of expense.

The tributaries characteristic of this direction consist of:

Income received from the sale of enterprise assets (surplus equipment or raw materials, unused buildings or premises), their sale is most often made after the closure of the project, although this often happens during its implementation. In particular, if part of the equipment is no longer used in the production process, then it can be sold, the same can be said about the surplus of production and auxiliary areas.
Funds raised in the course of the sale of intangible assets (copyrights, intellectual property). Such transactions are infrequent, but result in significant inflows of funds.
Proceeds from a decrease in working capital.

This can also include non-operating income of the company. For example, a firm deposited temporarily unused money into a bank account. In this case, the interest on the deposit relates specifically to the investment money sphere, while the return of the principal amount of the deposit belongs to the financial sphere.

As you can see above, the dynamics of changes in working capital affects the inflow and outflow of money. At its core, the amount of working capital of the net is the difference between cash assets and liabilities at the current point in time. When carrying out calculations, the following criteria are mainly used:

current standardized liabilities, which include accounts payable;
current normalized assets, which include accounts receivable, inventories and work in progress.

Consequently, when forming stocks of materials and raw materials for production needs, finances are spent for this (outflow occurs), thus, fixed capital increases. If stocks in such quantities are no longer needed, then some of them are sold (there is an inflow), and the working capital decreases.

How investment cash flow is calculated

To calculate cash flows from investment activities, experts recommend using a special table, which includes costs and receipts for each step with the appropriate sign.

№	Indicator name	Step 0	Step 1	Step 2	Step 3	Step...
1	Total inflows of funds, including:
1.1	Income from the sale of fixed assets (after deducting taxes)
1.2	Income from the sale of intangible assets and / or fixed assets after the completion of the investment project (liquidation value)
1.3	Return of current assets at the end of the project (liquidation value)
2	Total cash outflows, including:
2.1	Investment costs (total capital investments), incl.
	fixed investments
	expenses on intangible assets
	expenses on non-current assets (commissioning and other work, non-capitalizable costs, replacement of fixed assets, increase in working capital)
2.2	Liquidation costs
2.3	Investments in other funds (purchase of shares and bonds, deposits)
3	Investment balance

When compiling an information table, you need to take into account the following nuances:

The entire period of the initiative is divided into segments (steps), according to which economic and financial indicators are assessed. Most often, a calendar year is taken as such a segment, although in short or medium-term endeavors, the step can be a quarter or a month.
The items shown in the table can be detailed depending on specific conditions.
Costs and receipts are indicated in the currency in which they were incurred, at current prices.
The last steps are characterized by the fact that they should take into account the costs of the liquidation of the enterprise (environmental measures, dismantling of equipment).
It is advisable to establish the level of income from the sale of the remaining fixed assets during the liquidation of the project using a forecast estimate, which may not coincide with the residual value of the specified property.

In fact, without an investment component, the implementation of the project is not possible. To subsequently receive income, you first need to finance the purchase or lease. land plot or suitable premises, purchase of equipment, transport, machinery, raw materials, materials required permits and licenses. Therefore, the curve on the graph at the initial stage goes down sharply, and only after the start of production and the enterprise reaches its design capacity, receipts begin to gradually overlap the costs.

If the project is long-term, then investments can be made in parts. After a large start-up investment, there may be a need for modernization or technical re-equipment to expand the range of products, replace out-of-order equipment, as well as vehicles. The specifics of the enterprise's work are of great importance here. If you have free funds, they can be invested in securities or in the authorized capital of other business entities (purchase of a share or the entire company), as well as issue a loan to another company, this can also be attributed to an outflow of investment activities.

An investor can invest money in the company's securities and not take part in its activities by agreeing to receive the agreed amount of dividends annually, in which case his income is called passive. If the investor is on the board of directors, participates in making important decisions that affect the size of the profit, then his investment income becomes active.

Net cash flow is one of the main indicators of business performance, designed to answer the question of management "Where is the money?" Read what this indicator is, from which components it is formed and how to calculate it. And also see an example of calculating net cash flow.

What is this article about:

What is net cash flow

Net cash flow (NPF) is the result of summing all cash inflows and cash outflows (minus) for the project in the context of time intervals, usually months or years. The indicator is used to calculate economic efficiency investment project, as well as for drawing up a statement of the company's cash flow for the past period.

The inflow and outflow of capital - this is the receipt and return of loans and borrowings, the payment of dividends to shareholders - are not used in calculating the NPH for an investment project, because the picture is different investment attractiveness the project will be distorted.

Net cash flow formula

Before we talk about how to find net cash flow, let's consider what it consists of. NPP includes:

Operating cash flow (OCF).
Cash flow from financing activities (FCF).
Investment cash flow (ICF).

Therefore, the net cash flow is determined by the formula:

where i is a time interval, usually a month or a year

The division of cash flow into operational, financial and investment flows carries an important semantic load. Having received the overall result in the form of cash flow, you find it difficult to answer which of the areas of the company's activity had a positive (or negative) effect on the change in cash.

Are operating activities unprofitable? Or does this high debt load have a negative effect in the form of large amounts of interest payments? Or, during the reporting period, the company invested in a new project, purchased new equipment? By dividing the cash flow into components, you will clearly see all the trends in your business and draw the right conclusions.

Let's visualize the cash flows belonging to each component.

Drawing... Net cash flow components

Depending on the specific situation, the same cash flows can relate to different types of activities. For example, interest on a loan can be both financial activity, if the loan is taken to finance the current business, and investment, if the loan is spent only on a new line of business. Lease payments can also be both operational cash flow and financial and investment.

Users of information on net cash flow

The company provides information on the net cash flow in the cash flow statement (cash flow statement in foreign practice). It belongs to regulated reports, because its importance is difficult to overestimate. The statement of cash flows collects all information about changes in the company's cash during the reporting period.

For the company's management, net cash flow is company liquidity management tool ... That is, focusing on the data of the cash flow statement, managers can assess whether the company will be able to pay off accounts payable, whether there will be enough funds to invest in new projects, or, on the contrary, it is necessary to look for ways of external financing of activities.

The cash flow statement serves as a basis for lenders and investors to make investment decisions, shows how successfully a company can manage cash, whether it will pay dividends, and so on.

Methods for calculating net cash flow

In order to calculate the net cash flow and fill out the statement of cash flows, you can use the direct or indirect method. The choice of the calculation method that suits you depends on the current accounting in your company, on the completeness of the initial data on income and expenses and on your goals, of course.

Direct method

The method is based on the direct use of data from the company's cash accounts. To use it, it is necessary to carry out preparatory measures, that is, to set up the accounting analytics system for the "bank" and "cash" accounts.

Fill out the activity guide. Enter operating activities, financial activities, investment activities.
Fill out the directory of cash flow articles, having entered all the articles you need to account for.
Assign an activity, cash flow item, or cash expense item to each cash flow.

As a result, at the end of the reporting period, you will receive a net cash flow drawn up in the form of a statement of cash flows using the direct method.

It will look like it is shown in table 1.

Table 1... ODDS example (fragment)

The advantages of this method are:

the ability to show the sources of the receipt of funds and the expense of funds, to conduct analytics on counterparties, contracts, nomenclature, etc .;
direct linking to the cash flow budget and easy plan-fact analysis;
ease of building a payment calendar based on data.

The direct method also has disadvantages, they are as follows:

labor intensity. If the company uses the direct method of accounting for VAT, then local performers need to fill in at least two additional analytics for each movement. With large volumes, this is a catastrophic amount of labor hours;
based on the ODDS formed by the direct method, it is impossible to determine the relationship between the financial result and changes in the volume of funds.

Indirect method

The indirect method is considered to be simpler for calculating net cash flow, although international reporting standards recommend using the direct method. In order to calculate NPH using the indirect method, you just need to have detailed data on the accrual of income and expenses of the company for the reporting period.

You need to act according to the algorithm:

Take the statement of financial position and statement of total income companies for the reporting period.
Form the structure of the ODDS, for example, in Excel, as shown in table 2.

table 2

Fill out the report sequentially by subtracting (adding) non-monetary transactions from operating activities from the sum of the net financial result.

Such operations include:

depreciation of fixed assets and intangible assets;
income / loss from disposal of fixed assets and intangible assets;
income / loss from revaluation of fixed assets and intangible assets;
income tax costs;
income / loss from currency revaluation;
creation / write-off of reserves;
writing off bad debts.

As a result, you will receive a net cash flow from operating activities.

Next, enter in the table positive and negative cash flows from financial activities, such as:

obtaining loans;
loan repayment;
finance lease liabilities;
share capital contributions.

The result will be a net cash flow from financing activities.

Finally, enter all monetary transactions of an investment nature, such as:

purchase of fixed assets, intangible assets, financial non-current assets;
sale of non-current assets;
receiving dividends;
loans granted and interest on them.

Thus, you will form a private equity fund from investment activities.

The last step will be to sum up cash flows and obtain an indicator calculated by the indirect method.

The pluses of using the indirect method include:

Quick and easy filling of ODDS.
The ability to visually see the sources of the formation of cash flow and identify the reserves for its optimization.

Disadvantages of the indirect method:

It is impossible to form a cash flow budget on its basis.
It will be difficult for a non-financier to understand and analyze it.

When using both direct and indirect methods, it is imperative to check the change in funds over the period. Check what the net cash flow is equal to, whether the equality holds

NPP = DS end p - DS start p

If so, you have completed the ODDS correctly.

Example of calculating net cash flow

Net cash flow is used not only for the statement of cash flows for the past period. He is a key parameter of investment planning. All investment indices and parameters are calculated based on this indicator. Let's take an example of how to form a private equity investment project and avoid common mistakes.

A company operating in the wholesale market for digital mobile equipment is considering an investment project to open a network of retail outlets in Moscow and St. Petersburg. The project has a useful and normative validity period of 3 years (further the company's strategy may be changed).

At the first stage, it is planned to purchase equipment (racks, counter lighting, shop equipment, etc.) for $ 20,000, installation and commissioning of this equipment will amount to $ 3,000, and another $ 900 is required to be invested in a year. The company's total revenue at the end of the first year of the project is expected to be $ 120,000, of which the project itself should bring in $ 40,000. By the end of the first year, it is planned to pay dividends to shareholders in the amount of $ 6,000. Operating cash flows expected at the end of the year, expressed in prices of the initial year investment can be estimated from Table 3 below (not taken into account liquidation value equipment).

Table 3... Project expected operating cash flows

The company realizes its initial investments at 40% with borrowed capital at 14%, the loan should be repaid in 3 years (the method of repayment of borrowed capital is annuity). Previously, the company incurred market research costs of $ 5,000.

We will form a net cash flow for the project. To do this, we will first figure out which payments we will include in the calculation and which will not.

The costs of purchasing equipment, its installation and commissioning are included in the NPP. These are investment cash flows. At the same time, the initial costs should be reduced by the share of financing from external sources in the amount of 40%.

The initial cost will be: (20,000 + 3,000) * 0.6 = $ 13,800

Project revenue, variable costs, and fixed costs are also included in the NPV. These are operating cash flows. Depreciation should be separated from fixed costs and excluded from NPP. Depreciation is a non-monetary transaction.

However, depreciation must be taken into account when calculating the projected income tax, which should be included in operating cash flows.

The receipt and repayment of a loan should not be taken into account in the net cash flow, since this is an inflow and outflow of capital, and interest on the use of a loan follows. They will refer to financial cash flow.

The costs of marketing research, like all other previously incurred costs (sunk costs), should not be taken into account in the NPP for the project. Criterion - although these flows are related to the expected flows of the project, they cannot be monetized.

Dividends payable and other general business cash flows (such as loans, bond issues, acquisitions of financial assets) are not counted in NPRs, as this is contrary to the “relevance” rule.

In the last year of the project, the terminal value of fixed assets should be included, because you will have the opportunity to sell fixed assets on the free market if the need for their use disappears.

The terminal value of fixed assets is calculated using the formula:

First - ∑Am = 20,000 + 900 - (7,400 + 8,500 + 3,000) = $ 2,000

The final NPH for the investment project is formed in Table 4.

Table 4... Final NPP for the project

	Amount, USD
Investment flows	Fixed assets + installation
Operational flows
	Variable costs
	Fixed costs less depreciation

Financial flows	Loan interest
		(13 800)

In conclusion, we note that the management of net cash flow is the second most important task for the financier after the management of profitability. Understand the mechanisms for the formation of private equity in your company and get an effective tool for influencing money supply in circulation, and at the same time you will find the answer to such an important question of the head "Where is the money?"

Operations of the enterprise, including the acquisition and sale of intangible assets, shares of shares of shares in the conditional capital of joint ventures, other securities (which are not short-term investments), as well as the issuance long-term loans other businesses and individuals and their subsequent return, are the main components of its investment activities. .

Investment activity is associated with the sale and acquisition of long-term use property

Cash flows arising from investing activities reflect the level of production costs of resources intended to generate income and future cash flows.

Cash flow from investment activities summarized in the section "Investment activity"

Cash flows from investing activities include:

For example, the enterprise receives income from the operation of the acquired fixed assets not immediately after their purchase, but during the entire period of their purchase, but during the entire period of their operation. Likewise, long-term securities can generate future income in the form of dividends and affect the amount of future cash flows through the amount of dividends received.

Let's analyze the flow of funds for investment activities at the enterprise "Zhemchuzhina" for three years (2004-2006)

Table 2

Analysis of cash flows from investment activities

Indicators			Off (+/-) 2004-2005	Off (+/-) 2005-2006
Receipt of DS, total

Interest received
Dividends received
Including from abroad
Other supply
DS expenses, total	18
Cash payments for the acquisition of long-term assets
Net proceeds (disposals) of DS from investment activities	*- 18*	*138*		*-138*

From table No. 2 and diagram No. 2 it can be seen that LLC "Zhemchuzhina" in 2005 compared to 2004 increased its income from sales due to the disposal of long-term assets (81 thousand lei) and other receipts.

The expenses of funds at the enterprise (- 6 thousand lei) associated with the acquisition of long-term assets also slightly decreased.

And in 2006, no operations were carried out on investment activities.

Income from investment Disposal from investment

Diagram # 2. Analysis of cash flows from investing activities

As follows from Table 2, LLC Zhemchuzhina does not use the received funds for the purchase of fixed assets, which would normally be reflected in the form of a negative flow from investment activities. The lack of proper attention to this aspect can provoke the emergence of difficulties in the process of carrying out operational activities due to lack of technical capacity.

Financial activity of the enterprise is a set of operations related to raising capital to finance its activities. The result of financial activities is a change in the size and composition of the company's equity and debt capital.

Financing activities are activities the results of which are changes in the amount and composition of equity and borrowed funds of an enterprise.

It is considered that an enterprise carries out financial activities if it receives resources from investors and owners returns them, receives and returns loans and loans and pays dividends.

Cash inflows and outflows associated with financial transactions are highlighted in a separate section of the report, since this information allows predicting the future amount of cash to which investors will be entitled.

Cash flows from financing activities are summarized in section "Financial activities".

Information about cash flows from financing activities is very important as it allows users to financial statements find out why the company has increased or decreased equity capital, what changes and why have occurred in the amount and composition of long-term and short-term liabilities. In addition, this information is useful in predicting the future cash flow requirements of investors and lenders. Financing activities are intended to increase the cash at the disposal of the enterprise to finance operating and investment activities.

For each area of activity, it is necessary to take stock. It is bad when cash outflows prevail in operating activities, this suggests that the received cash is insufficient to ensure the current payments of the enterprise.

Cash flows from financing activities include:

In this case, the lack of funds for current expenses will be covered by borrowed resources. If, in addition, there is an outflow of funds from investment activities, then the financial independence of the enterprise decreases.

We will analyze the cash flow for financial activities at the enterprise LLC "Pearl" for three years (2004-2006)

The data provided in Table 3 allows us to see that cash receipts from financial activities were associated only with obtaining loans and credits. This is due to the fact that due to the shortage of funds for the operating activities of LLC "Zhemchuzhina" to attract additional funds to cover their expenses

Table 3

Analysis of cash flows from financing activities

Indicators				Off (+/-) 2004-2005	Off (+/-) 2005-2006
DS receipts, total	*12 588*	*12 260*		*- 328*	*- 4 923*
Cash items in the form of loans and borrowings
Cash items from the issue of treasury shares
Consumption of DS, total		*9 589*	*10 810*	*+ 3 239*	*+ 1 221*
Cash payments on loans and borrowings
Dividend payments
Including non-cut.
Cash payments upon redemption of own shares
Other payments of the DS
Net receipts (payments) of DS	*6 237*	*21 671*		*+15 433*	*-6 144*

Although it must be said that from year to year, credits and loans are decreasing, in 2005 compared to 2004 by 327,770 lei, and in 2006 compared to 2005 by 4,922,790 lei. But as can be seen from the data in the table, this led to the appearance of a negative net inflow (outflow) of cash from financial activities.

Income from finance Disposal from finance

activities (thousand liters) activities (thousand liters)

Diagram # 3... Analysis of cash on financial activities.

From the above diagrams you can see, as well as the data balance sheet the company confirmed that the loans received are short-term in nature and cause their quick return. Consequently, due to a lack of funds, Zhemchuzhina LLC is unable to issue or redeem its own shares.

All three types of activity we have considered form a single sum of the enterprise's monetary resources, the normal functioning of which is impossible without a constant flow of cash flows from one sphere to another. The very existence of three areas of the organization's activities is aimed at ensuring its performance. Even a profitable production - economic activity can not always bring in a sufficient amount of money for the purchase of fixed assets (real estate or equipment). In such situations, new loans are required, the cost of which should be offset by future investment income. In the context of the crisis of non-payments, enterprises are forced to seek additional short-term financing of working capital. But expenses for such purposes cannot be offset by future income, since the money was not used for investments.

Let's make a structural analysis of the cash flow at the Zhemchuzhina LLC enterprise.

Structural analysis presents users with financial statements detailed information on the origin of cash receipts and their further use. The analysis examines the relationship between the various channels of cash inflow and outflow. Structural analysis allows you to assess the contribution of each constituent element of cash flow in the formation of the overall flow.

In economic theory and business practice, two technical methods are used to carry out the structural analysis of cash flows. The essence of the first method consists in a separate study of the structure of cash receipts and payments with the calculation of the share of each component in the total amount of receipts and payments, respectively. When using this method, in the process of preparing analytical materials, pie charts are often constructed, with the help of which the structure of cash flows is presented in a more accessible form.

Based on the data of the cash flow statement for the last two years, we will draw up an analytical table, build diagrams and interpret the results obtained.

Using the data from column 6 of table No. 4, we present the structure of cash flows at the enterprise LLC "Zhemchuzhina" in the reporting year using diagram No. 4. In 2004, the main elements that form the cash flow at the enterprise LLC "Zhemchuzhina" are sales receipts (44.84%). Income in the form of credits and loans is 38.39%, and other income is 16.77%. this speaks of the efficient functioning of the enterprise.

Table 4

Separate analysis of the structure of cash receipts and payments

	Money


Cash receipts
	Sales proceeds
	Other receipts from the operative.
	Income in the form of loans and borrowings
	Cash receipts from disposal of non-current assets
Total cash receipts			*19 378*
	Cash payments
	Payments to suppliers
	Payments to staff
	Payment%
	Income tax payments
	Other operating payments
	Payments on loans and borrowings
	Cash payments for the acquisition of long-term assets
Total cash payments	*32 677*	*100*	*18 304*

Diagram # 4. Cash receipts and payments at Zhemchuzhina LLC in 2006.

From the data of table 4 and the information presented in diagram 4 it follows that a significant part of payments falls on the share of suppliers (61.25%), 19.45% is on the share of payments on loans and borrowings, 14.2% is other operating expenses, and the rest to the share of payments to staff (2.11%), interest payments (2.55%)

In 2005, receipts from sales decreased to 36.57%, while receipts in the form of loans and borrowings increased to 56.11%.

In 2006, as in 2004, receipts from sales are higher (than receipts in the form of loans and borrowings (37.86%)

In 2005, most of the payments go to the repayment of loans and borrowings (44.06%), and in 2006 this item accumulates the principal amount - 52.18% of the total amount of payments. The share of suppliers accounted for 39.97% in 2005, and in 2006 - 37.93%.

Among the structural changes, the appearance in the reporting year of income tax payments stands out, the share of which amounted to 0.03% of the total amount of cash payments.

The political factor, as mentioned above, significantly influenced the operational activities. Consequently, this is what provoked the Zhemchuzhina LLC enterprise to purchase a larger loan, which attracts an annual increase in loan payments.

Having analyzed the last three years of operation of Zhemchuzhina LLC, one can come to the conclusion that the situation with regard to the receipt and disposal of funds is quite stable. This is due to the fact that the company has specialists who try to use money efficiently, control both the flow and outflow, trying to keep the company during the crisis and prevent its bankruptcy.

Among the structural changes, the appearance in the reporting year of income tax payments stands out, the share of which amounted to 0.03% of the total amount of cash payments. In the long term, the direct method of calculating the amount of cash flows makes it possible to assess the level of liquidity of an enterprise.

Let's analyze the cash flow using the method of coefficients. This method is often used in foreign analytical practice to assess the situation with regard to cash flow. The peculiarity of the method consists in the calculation of financial ratios that reflect the different ratios between the funds received and used. These coefficients are very numerous and varied, but for the most part, they characterize the ability of an enterprise to satisfy certain needs due to the availability of funds.

In particular, using this method in the analysis of cash flow, the ratios presented in table 5 can be calculated.

The results of the analysis (carried out in Table 5) indicate that the level of cash flow sufficiency has sharply increased at the Zhemchuzhina LLC.

Table 5

Analysis of cash flow ratios at Zhemchuzhina LLC

Diagram 5

If in 2004 the company generated as a result of operating activities a net operating flow, which was one time less than required by the company, then in 2006. The situation has developed that the enterprise satisfies its needs almost 100%. This is due to the fact that LLC Zhemchuzhina used the loan.

Diagram 6

As can be seen from diagram 6, the calculation of the degree of coverage of liabilities of the cash flow shows that during 2004. and 2005 the situation is characterized by the absolute inability of the enterprise to recover debts without financing from outside. In 2006. the enterprise LLC "Zhemchuzhina", with the help of cash received from operating activities, covered 11% of the total amount of liabilities, exists at the end of the year. This suggests that the company has become more creditworthy.

The adequacy ratio is at a very low level absolute liquidity assets at the Zhemchuzhina LLC enterprise.

Diagram 7

If in 2005. it increased by 3.74 days (from 1.66 in 2004 to 6.21 in 2005), then in 2006. decreased significantly at the end of 2006. Zhemchuzhina LLC has absolutely liquid assets in an amount that would allow the implementation of average operating payments within 0.70 days.

Diagram # 8

From the calculations made in table No. 5 and diagram No. 8 it follows that the degree of reinvestment of funds in the enterprise LLC "Zhemchuzhina" in 2005. (18.01%) exceeded the recommended level (8-10%).

And in 2004. and 2006 the reinvestment of funds did not take place at all due to the formation of an operating net flow from operating activities.

In the long term, the direct method of calculating the amount of cash flows makes it possible to assess the level of liquidity of an enterprise.

In operational financial management, the direct method can be used to control the process of generating proceeds from the sale of products (works, services) and to draw conclusions regarding the sufficiency of funds for payments on financial obligations.

The disadvantage of this method is that it does not take into account the relationship between the obtained financial result (profit) and the change in the absolute size of the company's funds.

Economic science understands investment cash flow as actual current receipts that are directly related to the implementation of the project under consideration. This money should be distinguished from other payments received by the investor from other areas of his activity.

Thus, we can consider the investment flow as financial receipts from the implementation of the investment project per unit of time.

Let's look at it all at specific example... The investor acquired a stake in an oil company. All securities generate annual income. That is, in the situation under consideration, the amount of cash flow that the investor will receive will be equal to the amount of dividends.

First of all, you need to understand that cash flows arise not only within the framework investment processes but also in finance and operations.

The cash flow that is directed to the investor is also called inflow. On the contrary, the money that moves in the opposite direction is called outflow.

At the initial and early stages life cycle investment project cash flows in 100% of cases will be an outflow. No need to be surprised at this. This looks quite natural if we remember that the pre-investment and investment phase (stage) of the implementation of an investment project always accounts for the bulk of the investor's expenses.

When an investment project enters the operational phase, the cash outflow is gradually replaced by an inflow. Moreover, with the passage of time, this difference becomes more and more impressive. This is where the investor begins to earn and receive substantial returns on invested capital.

The financial flow is the movement of money as a result of the implementation financial transactions... This can be the receipt and repayment of bank loans, the payment of dividends to shareholders, contributions to the authorized capital of the company, payment of interest, and so on.

Within the framework of each investment project, it is customary to separate the investment and operating flows. In addition, non-debt, discounted and net cash flows are considered separately. Moreover, the investor, at his discretion, can consider separately other cash inflows and outflows.

The ratio of receipts and disposals of money is usually denoted EBIDTA (Earnings Before Interest, Taxes, Depreciation and Amortization). In fact, this indicator denotes the investor's income before the deduction of mandatory operating expenses or expenses. In turn, these include:

depreciation;
taxes and fees;
payment of interest on bank loans.

This indicator within the framework of an investment project is the key to determining the EBITDA margin, which shows the return on investment. It is customary to calculate it as an index, which is expressed as a percentage. EBITDA margin is calculated as the ratio of EBITDA to real revenue.

Cash inflows (receipts) in investment projects are always formed within the framework of the operating activities of the investment object.

Net cash flow is calculated as EBITDA minus interest on loans, investments and repayment of the loan body.

Debt-free flow is considered as EBITDA minus investments in the current year of the investment project life cycle.

Discounted cash flow reflects the net present value of the investment project - NPV. It is this indicator that is traditionally perceived as the main measure of the effectiveness of the project under consideration.

Flow control

Correct cash flow management is the basis for successful investment activities. However, it can take different forms. Cash flow management can be operational and strategic. The difference between these forms is the same as between tactics and strategy, respectively. Their formation is based on investment planning. Time is a key factor in creating specific milestones for cash flow management.

1. The stage of current planning is expressed in drawing up a payment calendar with a mandatory breakdown by day. This document is distinguished by the maximum degree of elaboration and detailing of the estimated inflows (outflows) of funds.

2. The stage of monthly planning is formed on the basis of annual budget... The plan has been worked out deeply enough, but not in detail.

3. The stage of annual planning is built with an accuracy of up to a month. It is customary to draw up it on the basis of a long-term investment strategy. When forming this plan, it is imperative to take into account the dynamics of the main macroeconomic indicators. Differs in an average level of elaboration and detail.

4. The stage of long-term planning is drawn up for 3-5 years. It is based on the main investment goals and objectives. The detail is negligible.

The purpose of forming all of the above documents is the most accurate modeling of the balance of funds at the end of a specific period. On the basis of such calculations, it is possible with a high degree of probability to assume whether the investor has enough funds to implement existing investment projects.