Black market for nuclear materials and technologies. International control of nuclear materials and technologies
Financing of fixed assets is the procedure for providing Money, a system of expenditure and control over their targeted and effective use. Financing methods depend on the specific operating conditions of the enterprise and changes in the direction of its development. They are determined by the characteristics of the reproduction of fixed capital and sources of financing at one or another stage of economic development.
Sources of financing for the reproduction of fixed assets are divided into own, borrowed and attracted.
Sources of firms' own funds to finance the reproduction of fixed assets include:
profit remaining at the disposal of the company;
depreciation;
depreciation of intangible assets.
The sufficiency of sources of funds for the reproduction of fixed capital is crucial for the financial condition of the company.
Profit is the basis net income enterprise, expressing the form of value of the surplus product. Its value acts as the difference between revenue from sales of products (works and services) and its full cost. At the same time, according to the company’s chosen accounting policy the amount of revenue is determined by products shipped or paid for. The full cost is established on the basis of production cost estimates and accounting data.
Profit is a general indicator of results commercial activities enterprises.
After paying taxes and other payments from profits to the budget, enterprises are left with net profit. The enterprise has the right to use part of it for capital investments of a production and social nature, as well as for environmental protection measures. This part of the profit can be used for investment as part of an accumulation fund or other similar fund created by enterprises.
After profit, the next major source of financing investments in fixed assets of enterprises is depreciation. During operation, fixed assets gradually wear out, i.e. lose their original physical properties, resulting in a decrease in their real book value.
A distinction is made between physical (material) depreciation and cost depreciation, which includes, in addition to the monetary expression of physical depreciation, a certain amount of obsolescence. Cost depreciation is compensated by accumulating funds included in the cost of products (works, services) in the form of depreciation charges. The value of the latter depends on the book value of fixed assets and the established rates of their depreciation. Typically, the depreciation rate is determined as a percentage of the book value and is differentiated based on the type of fixed assets and the conditions of their operation. The amount of depreciation charges must be sufficient for the construction or acquisition of new facilities to replace those that are decommissioned.
The depreciation fund is formed through monthly depreciation deductions and is used for simple and partially expanded reproduction of fixed assets. The direction of depreciation for the expanded reproduction of fixed assets is determined by the specifics of its accrual and expenditure: it is accrued throughout the entire standard service life of fixed assets, and the need for its expenditure occurs only after their actual disposal.
If there are insufficient own sources of financing for the reproduction of fixed assets, the enterprise has the right to attract borrowed funds.
Borrowed sources include:
bank loans;
borrowed funds from other companies;
equity participation in construction;
financing from the budget;
funding from off-budget funds.
The need for lending for capital investments arises from the frequent shortage of own funds among enterprises, which is caused by the discrepancy between the available financial resources and the needs for them for the expanded reproduction of fixed capital. In this case, credit relations arise between the borrower and the lender (bank), arising in connection with the movement of money on the terms of repayment and compensation expressed in the form of loan interest.
A long-term loan pays for construction and installation work, supplies of equipment, design products and other resources for construction. Repayment of borrowed funds for newly started construction projects and facilities begins after they are put into operation within the time limits established by the contracts. For facilities being built at existing enterprises, loan repayment begins before the commissioning of these facilities.
Raised financial resources include funds received from the issue of shares, shares and other contributions of individuals and legal entities to the authorized capital.
Thus, the issue of choosing sources of financing for capital investments must be decided taking into account many factors: the cost of attracted capital; efficiency of return from it; ratio of equity and borrowed capital; economic interests of investors and lenders.
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Sources of financing for the reproduction of fixed assets can be either own or borrowed.
Capital expenditures for the reproduction of fixed assets are, as a rule, long-term in nature and are carried out in the form of long-term investments (capital investments) for new construction, for the expansion and reconstruction of production, for technical re-equipment and to support the capacity of existing enterprises.
Through the mechanism of accelerated depreciation, enterprises of all forms of ownership have the opportunity to regulate the amount and timing of financing the reproduction of fixed assets through depreciation charges.
The sufficiency of sources of funds for the reproduction of fixed capital (as well as working capital) is crucial for the financial condition of the enterprise. Therefore, this parameter of financial condition must be constantly analyzed by the financial services of the enterprise.
The source of the enterprise's own funds for financing the reproduction of fixed assets is also the accrued depreciation on intangible assets.
The most important source of an enterprise's own funds for financing the reproduction of fixed assets is the profit remaining at the disposal of the enterprise (net profit). The directions for using net profit of an enterprise are determined in their financial plans on one's own.
Borrowed sources of financing the reproduction of fixed assets include: bank loans, borrowed funds from other enterprises and organizations, funds received from equity participation in construction, budget funds and funds from extra-budgetary funds.
Many enterprises, regardless of their form of ownership, are created with very limited capital, which practically does not allow them to fully carry out authorized activities at their own expense and leads to their involvement of significant credit resources into circulation.
Not only large investment projects are credited, but also costs for current activities: reconstruction, expansion, reorganization of production, purchase of leased property by the team and other events.
Bank loans are provided to an enterprise on the basis of a loan agreement concluded between the enterprise and a credit institution (bank). The loan agreement defines the conditions for the provision and repayment of the loan. As a rule, a loan is provided on the terms of payment, urgency and repayment. The condition for repayment of the loan is that it is secured under guarantees from other enterprises known for their financial stability, pledge of real estate or other assets of the enterprise.
A source of financing for the reproduction of fixed assets can also be borrowed funds from other enterprises, which are provided to the enterprise for a fee or free of charge. Loans to enterprises can also be provided by individual investors (individuals).
Other sources of financing the reproduction of fixed assets are budgetary allocations from state and local budgets, as well as from industry and intersectoral trust funds. Gratuitous financing from these sources actually turns into a source of own funds.
1.4. Sources of financing for the reproduction of fixed assets.
Sources of financing for the reproduction of fixed assets are divided into own and borrowed.
Reproduction has two forms:
simple reproduction, when the cost of compensating for the depreciation of fixed assets corresponds to the amount of accrued depreciation;
expanded reproduction, when the cost of compensating for the depreciation of fixed assets exceeds the amount of accrued depreciation.
Capital expenditures for the reproduction of fixed assets are long-term in nature and are carried out in the form of long-term investments in new construction, in the expansion and reconstruction of production, in technical re-equipment and in supporting the capacities of existing enterprises.
Sources of firms' own funds to finance the reproduction of fixed assets include:
depreciation;
depreciation of intangible assets;
profit remaining at the disposal of the company.
The sufficiency of sources of funds for the reproduction of fixed capital is crucial for the financial condition of the company.
Borrowed sources include:
bank loans;
borrowed funds from other companies;
equity participation in construction;
financing from the budget;
financing from extra-budgetary funds.
The issue of choosing sources of financing for capital investments must be decided taking into account many factors: the cost of attracted capital; efficiency of return from it; ratio of equity and borrowed capital; economic interests of investors and lenders.
Working capital (funds) of the company.
Working capital (current assets) is part of the capital of a company (enterprise) invested in its current assets. According to material characteristics, working capital includes: objects of labor (raw materials, supplies, fuel, etc.), finished products in warehouses, goods for resale, cash and settlement funds.
A characteristic feature of working capital is the speed of their turnover. The functional role of working capital in the production process is fundamentally different from fixed capital. Working capital ensures the continuity of the production process.
The circulation of capital covers three stages: procurement, production and marketing.
Any business starts with a certain amount of cash, which is deployed into a certain amount of resources for production.
D – T - …P…T’ – D’
Fig.1. Stages of working capital circulation.
The elements of working capital are part of the continuous flow of business transactions. The purchase results in an increase in inventories and accounts payable; production leads to an increase in finished products; sales lead to an increase in accounts receivable
debts and cash in hand and in the current account. This cycle of operations is repeated many times and ultimately comes down to cash receipts and cash payments.
Elements of working capital continuously move from the sphere of production to the sphere of circulation and return to production again. Part of the working capital is constantly located in the production sector (inventories, work in progress, finished products in stock
etc.), and the other part is in the sphere of circulation (shipped products, cash, securities, etc.).
In the practice of planning, accounting and analysis, working capital is grouped according to the following criteria:
depending on the functional role in the production process - circulating production assets and circulation funds;
depending on the practice of control, planning and management - regulated and non-standardized working capital;
depending on the sources of working capital formation - own and borrowed working capital;
depending on liquidity - absolutely liquid funds, quickly sold funds, slowly sold funds;
depending on the degree of risk of capital investment - working capital with minimal, small, medium, high investment risk;
depending on accounting standards and reflection in the company’s balance sheet - working capital in inventories, cash, settlements and other assets;
depending on the material content - objects of labor, finished products and goods, cash and funds in settlements.
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1.2 Sources of financing of fixed assets
Financing of fixed assets is the procedure for providing funds, the system of spending and monitoring their targeted and effective use. Financing methods depend on the specific operating conditions of the enterprise and changes in the direction of its development. They are determined by the characteristics of the reproduction of fixed capital and sources of financing at one or another stage of economic development.
Sources of financing for the reproduction of fixed assets are divided into own, borrowed and attracted.
Sources of firms' own funds to finance the reproduction of fixed assets include:
Profit remaining at the disposal of the company;
Depreciation;
Depreciation of intangible assets.
The sufficiency of sources of funds for the reproduction of fixed capital is crucial for the financial condition of the company.
Profit is the basis of the net income of an enterprise, expressing the form of value of the surplus product. Its value acts as the difference between revenue from sales of products (works and services) and its full cost. At the same time, according to the accounting policy chosen by the enterprise, the amount of revenue is determined by the products shipped or paid for. The full cost is established on the basis of production cost estimates and accounting data.
Profit is a general indicator of the results of commercial activities of enterprises.
After paying taxes and other payments from profits to the budget, enterprises are left with net profit. The enterprise has the right to use part of it for capital investments of a production and social nature, as well as for environmental protection measures. This part of the profit can be used for investment as part of an accumulation fund or other similar fund created by enterprises.
After profit, the next major source of financing investments in fixed assets of enterprises is depreciation. During operation, fixed assets gradually wear out, i.e. lose their original physical properties, resulting in a decrease in their real book value.
A distinction is made between physical (material) depreciation and cost depreciation, which includes, in addition to the monetary expression of physical depreciation, a certain amount of obsolescence. Cost depreciation is compensated by accumulating funds included in the cost of products (works, services) in the form of depreciation charges. The value of the latter depends on the book value of fixed assets and the established rates of their depreciation. Typically, the depreciation rate is determined as a percentage of the book value and is differentiated based on the type of fixed assets and the conditions of their operation. The amount of depreciation charges must be sufficient for the construction or acquisition of new facilities to replace those that are decommissioned.
The depreciation fund is formed through monthly depreciation deductions and is used for simple and partially expanded reproduction of fixed assets. The direction of depreciation for the expanded reproduction of fixed assets is determined by the specifics of its accrual and expenditure: it is accrued throughout the entire standard service life of fixed assets, and the need for its expenditure occurs only after their actual disposal.
If there are insufficient own sources of financing for the reproduction of fixed assets, the enterprise has the right to attract borrowed funds.
Borrowed sources include:
Bank loans;
Borrowed funds from other companies;
Equity participation in construction;
Funding from the budget;
Financing from extra-budgetary funds.
The need for lending for capital investments arises from the frequent shortage of own funds among enterprises, which is caused by the discrepancy between the available financial resources and the needs for them for the expanded reproduction of fixed capital. In this case, credit relations arise between the borrower and the lender (bank), arising in connection with the movement of money on the terms of repayment and compensation expressed in the form of loan interest.
A long-term loan pays for construction and installation work, supplies of equipment, design products and other resources for construction. Repayment of borrowed funds for newly started construction projects and facilities begins after they are put into operation within the time limits established by the contracts. For facilities being built at existing enterprises, loan repayment begins before the commissioning of these facilities.
Raised financial resources include funds received from the issue of shares, shares and other contributions of individuals and legal entities to the authorized capital.
Thus, the issue of choosing sources of financing for capital investments must be decided taking into account many factors: the cost of attracted capital; efficiency of return from it; ratio of equity and borrowed capital; economic interests of investors and lenders.
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Introduction |
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1. Direct investments: their composition and structure |
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1.1. Types of investments |
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1.2. Composition and structure of direct investments |
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2. Sources of direct investment formation |
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2.1. Classification of sources of financing of fixed assets |
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2.2. Structure and characteristics of the enterprise's own resources |
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2.3. Debt sources of financing |
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2.4. Involved funds |
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2.5. Structure of direct investment in fixed capital by sources of financing |
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2.6. Direct foreign investments |
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3. |
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Bibliography |
Introduction
In a market economy, most firms are privately owned, and almost all of the capital needed to keep these firms operating comes from private sources. The Russian economy is rapidly moving toward a market economy, industrial enterprises have been largely privatized, so many companies are faced with a completely new situation in which they can no longer ask for help from the state, but must look for other sources of financing. This means that success will be achieved by those companies that learn to find access to private capital, that is, they learn to recognize the factors that determine a company’s “attractiveness” to investors, and understand what responsibility the company has to its investor. In addition, companies will need to know where to find investors and how to present their proposals to them.
To begin with, I would like to define the concept of investment.
As you know, over time, fixed assets wear out, which directly affects the qualitative and quantitative results of the company’s current activities (labor productivity decreases, equipment downtime increases, the volume and quality of products, works and services produced decreases).
Fixed assets
are produced assets used repeatedly or continuously over a long period, but not less than one year, for the production of goods, provision of market and non-market services. Fixed assets consist of tangible and intangible fixed assets.
TO material fixed assets(fixed assets) include: buildings, structures, machinery and equipment, measuring and control instruments and devices, housing, Computer Engineering and office equipment, vehicles, tools, production and household equipment, working, productive and breeding livestock, perennial plantings and other types of material fixed assets.
TO intangible fixed assets(intangible assets) include computer software, databases, original works of entertainment, literature or art, knowledge-intensive industrial technologies, other intangible fixed assets that are objects of intellectual property, the use of which is limited by the ownership rights established on them.
In order to maintain, at least at the initial level, the capacity of an existing enterprise, it is necessary to periodically invest in modernization, medium-term and major renovation equipment, reconstruction of production, replacement of physically unsuitable fixed assets.
Reproduction of fixed capital in enterprises can be carried out either through direct investment, or through the transfer of fixed capital objects by the founders as contributions to the authorized capital, or through gratuitous transfer by legal entities and individuals. The main method of expanded reproduction of fixed capital is direct investment (capital investment).
1. Direct investments, their composition and structure
1.1. Types of investments
Investments are usually divided into straight(strategic) and portfolio(speculative).
Direct (strategic) investments are those that invest directly in production and sales (in real assets), or those that ensure ownership of a controlling stake, and therefore control over the enterprise. Direct investments are made without intermediaries between the investor and their recipient. They can only be medium- or long-term (profit should be expected no earlier than in 5-7 years).
Portfolio (speculative) investment is a purchase valuable papers on the market for the purpose of their further sale and profit.
Of course, hopes are primarily placed on direct or strategic investments. It is their absence or low level may lead to an “investment winter”, which will provoke complete deterioration of fixed assets and an irreparable collapse of the country’s economy. If you believe the forecasts of experts, this is approximately what awaits Russia in 2003; it is this year that it is expected that most of production capacity will fail completely. To avoid this, there should be not only much more direct investment than there is, but also much more than planned.
Investments are investments of capital with the aim of its subsequent increase. The capital gains resulting from the investment must be sufficient to compensate the investor for not consuming existing funds in the current period, reward him for the risk, and compensate for losses from inflation in the future period.
New construction includes the costs of constructing facilities on new sites. Expansion means the construction of the second and subsequent stages of the enterprise, additional production complexes and production facilities, as well as the construction of new or expansion of existing workshops for the main purpose. Reconstruction is a complete or partial re-equipment and reconstruction of an enterprise with the replacement of outdated equipment and automation of production. As a result, an increase in production volume is achieved based on the new modern technology, expanding the range, improving the quality and competitiveness of products.
1.2. Included in direct investment includes investments by private companies of their own capital, reinvested profits and intra-company transfers of capital in the form of loans and borrowings.
Reinvested earnings refers to the portion of a company's annual profits that is not distributed to shareholders, but is reinvested in the assets of that company. Typically, reinvested profits are the basis for a company's growth: reinvesting existing funds is easier than raising new capital.
Technical re-equipment includes a set of measures to improve the technical level of individual production areas to modern requirements by introducing new technology, mechanization and automation production processes, improving the organization and structure of production. This will ensure an increase in labor productivity and production volume. Technological structure direct investment consists of 3 elements: the acquisition of equipment, tools and inventory; expenses for construction and installation work; design and survey work, early implementation of activities for the commissioning of constructed facilities. The ratio of costs for equipment, construction and installation work and other capital investments form the technological structure of direct investment.
- Sources of financing for direct investment
The choice of methods and sources of financing for an enterprise depends on many factors: the enterprise’s experience in the market, its current financial condition and development trends, the availability of certain sources of financing, the ability of the enterprise to prepare all the required documents and present the project to the financing party, as well as the terms of financing ( cost of attracted capital). However, it is necessary to note the main thing: an enterprise can find capital only on the terms on which given time operations to finance similar enterprises are actually carried out, and only from those sources that are interested in investing in the relevant market (in the country, industry, region).
- Classification of sources of financing of fixed assets
Direct investment financing is a procedure for providing funds, a system of spending and monitoring their targeted and effective use. Financing methods depend on the specific operating conditions of the enterprise and changes in the direction of its development. They are determined by the characteristics of the reproduction of fixed capital and sources of financing at one or another stage of economic development.
Sources, forms and methods of financing direct investment in fixed capital are determined by the nature of its participation in the production process and the characteristics of construction.
Sources for the formation of investment resources can be divided into three main groups: own, borrowed, attracted.
2.2. Structure and characteristics of the enterprise's own resources
Among our own sources of investment financing main role plays the profit remaining at the disposal of the enterprise after paying taxes and other obligatory payments. Part of this profit is allocated to industrial development, can be used for any investment purpose. The company's net profit distribution policy is based on its chosen general economic development strategy.
Own financial resources of the enterprise |
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Sources generated from carrying out work using economic methods |
Sources obtained from the results of the main activities of the enterprise |
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Mobilization (immobilization) internal resources |
Depreciation deductions |
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Profit on capital works |
Profit from core activities |
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Savings from lower equipment prices |
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Other sources |
Mobilization (immobilization) of internal resources.
To carry out construction and installation work in an economic way, the enterprise must provide its own construction division with a certain amount of working capital. Working capital is needed by customer enterprises to form stocks of uncredited equipment requiring installation, to cover the costs of creating stocks of structures, parts, basic, auxiliary and other materials, low-value and wearable items, for unfinished production of construction and installation works and minimal balances of cash resources. Consequently, customers need working capital to cover costs that they incur directly and to organize the production of work performed in an economic way. The specified working capital is formed at the expense of current assets.
When determining the amount of working capital that can be used in construction, the state of the customer's payments (i.e., how much he owes to contractors and suppliers) and his accounts receivable (amounts due to the customer) are taken into account. The total amount of mutual debt changes as the construction program decreases or increases.
Profit on capital works , carried out in an economic way, is planned in the amount of 8% of the estimated cost or 7.41% of the total estimated cost of construction and installation work.
Savings from cost reduction construction and installation works is set as a percentage of the estimated cost of work or based on a plan of organizational and technical measures.
Savings from reduced equipment prices is determined by direct calculation based on the emerging dynamics.
Other sources include income from associated mining (ore, coal, gravel, etc.), which goes to the customer, depreciation charges for construction equipment when performing work in an economic way.
Own sources received as a result of the main activities of the enterprise include depreciation charges and profit from main activities.
The amount of depreciation depends on the volume of fixed assets used by the company and adopted policy their depreciation (using the straight-line or accelerated depreciation method).
Depreciation funds are one of the main sources of the enterprise's own funds. They are received as part of the proceeds from sales to the company’s current account, and all expenses for various areas of capital investments are paid directly from the current account.
Through the mechanism of accelerated depreciation, enterprises have the opportunity to regulate the amount and timing of financing the reproduction of funds at the expense of this source. The actual amounts of depreciation charges, entering the company's current account along with the proceeds from sales, are included in its working capital and begin to move independently, without connection with the depreciable property. They can remain free, be used for capital investments or invested in other types of working capital. However, the fact that in the circulation of funds of an enterprise the sources of funds practically do not differ does not mean that the nature of the formation of these funds does not affect the speed and efficiency of their use.
The sufficiency of sources of funds for the reproduction of fixed capital (as well as working capital) is crucial for the financial condition of the enterprise. Therefore, this controlled parameter of financial condition is always in the field of view of the financial manager.
According to Euromoney magazine, the volume of domestic investment in Russia has recently increased by 17%. This is a very encouraging fact, first of all, for regional enterprises, for which the chance of receiving foreign investment is very small. However, about 50% of investment investments are made from the enterprises' own funds. On the one hand, it is good that domestic enterprises have free funds, on the other hand, many of them do this, as they say, for lack of anything better, while in capital-intensive industries it is simply impossible to do without attracting third-party financing.
2.3. Debt sources of financing
Among borrowed sources of financing, the main role is usually played by long-term bank loans. This is the most common way of financing businesses. Bank financing conditions vary. For example, in a foreign bank interest rate may be LIBOR + 2%. However, a Russian enterprise applying for a loan from a foreign bank must not only have high solvency and liquidity, but also present financial statements, corresponding international standards, confirmed by one of the leading international audit firms. At the same time, the most important factor When the bank made a decision to provide a loan, there was and remains the presence of liquid collateral or reliable guarantees. It is also necessary to take into account that Russian banks practically do not have cheap resources that they can provide to enterprises for a relatively long period of 3-5 years. Recently, examples of successful financing of long-term industrial projects have appeared, for example by Sberbank. Thus, if the enterprise has liquid collateral and the terms of the loan are acceptable from an economic point of view, then you can resort to bank loans. However, they are unlikely to be the only long-term financing instrument. Typically a combination of equity and debt capital is used.
Currently, there is an exceptionally low weight of bank loans in investment financing - 3.5% (without loans from foreign banks only 2.9%). At the same time, a little more than 70% of the loans provided are loans for a period of more than 1 year and their amount is about 20% in relation to the amount of direct investment. The overwhelming majority of them, apparently, go to lending working capital and other operations. The transformation of savings into investments and intersectoral redistribution along the banking line are extremely small.
Raising capital through placement of bonds on the financial market is certainly an attractive way to finance an enterprise. Especially from the point of view of business owners, since in this case there is no redistribution of property. However, an enterprise planning to issue and place bonds must have a sustainable financial position, good prospects development, and the bond issue must be secured by the assets of the enterprise. The experience of the last two years shows that the largest Russian companies that are well known in the market, demonstrate high rates of development and operate in industries attractive to investors, such as energy and telecommunications, have a real chance of successfully placing their bonds. There is very high risk that placing bonds on the market will be unsuccessful if there is no confidence that the company’s bonds will be accepted financial market as a liquid and attractive instrument; in this case, you should refrain from using this method of financing.
Investment leasing is one of the most promising forms of attracting borrowed resources. It is considered as a type of long-term loan, provided in kind and repaid in installments.
Purchasing assets in installments is available to businesses with good financial condition and positive development trends. In this case, the asset acquired by the enterprise serves as collateral, which becomes the full property of the enterprise only after its cost has been fully paid. The company must have the amount to pay the initial fee, ranging from 10 to 50% of the cost of the acquired asset. This method of financing is mainly used for the purchase of equipment. Typically, leasing companies give preference to those types of equipment that can be easily dismantled and transported. That is why leasing operations are very common when purchasing Vehicle(ships, planes, trucks, etc.).
Equipment supplier financing(Vendor financing) is also very widespread. Many manufacturers, as a mechanism for stimulating demand, offer their customers the purchase of equipment in installments, after paying an initial advance payment. At the same time, they also give preference to reliable and dynamically developing enterprises. It is also necessary to take into account that the presence of a reputable private investor (for example, a well-known investment bank or fund), which took a risk and purchased shares of the enterprise, is a significant positive factor for manufacturers when deciding to supply equipment in installments.
2.4. Involved funds
Among the attracted sources of investment financing, it is first necessary to consider the possibility attracting share capital . This source can be used by companies and their independent structures(subsidiaries) created in the form joint stock companies. Many companies are already widely using the opportunity to attract equity capital to investment activities (for investment companies and investment funds, a similar form of raising capital is the issue of investment certificates).
For enterprises of other organizational and legal forms (except for joint stock companies), the main form of additional capital attraction is the expansion of the authorized capital through additional contributions (shares) of domestic and foreign investors.
The bulk of third-party investments from other enterprises and organizations are investments of large financial and industrial groups (FIGs). FIGs have substantial funds, which they invest in large enterprises, usually related to two or three related sectors of the economy and connected in a single technological chain. An example of this is Siberian Aluminum, MIKOM, YUKOS, Sibneft, LUKoil. But they are interested in related industries, which means that only enterprises in the petrochemical and metallurgy industries (and then only the aluminum industry) can count on investments from them.
Thus, the analysis shows that of the variety of sources for the formation of investment resources, when developing the investment strategy of a company (firm), only the main ones are taken into account:
- depreciation deductions;
- profit;
- long-term bank loans;
- investment leasing;
- issue of shares
- increase the authorized capital
The most important source of investment financing still remains the enterprise's own funds.
I would like to describe government funding in a separate line, despite the fact that its share in the total volume of investment in Russia is small (~19% - see Table 1. For comparison, in the UK the share of government investment is 40%.).
Firstly, this is the most traditional source of funding, and, therefore, trying to obtain funding from the regional administration or government is more common and does not require new knowledge and skills from management. Secondly, preparing a project for a private investor is much more difficult than for the state: the state’s requirements for disclosing information and preparing investment projects are more formal than professional. Thirdly, the state is the most loyal creditor, and many enterprises do not repay loans received from it on time without fear of being declared bankrupt. If an enterprise really has the opportunity to receive direct government funding, guarantees or a tax credit, then it must take advantage of it. Best Chances to receive funding from state budget have infrastructure, social, defense and scientific projects, which due to objective reasons unable to access financing from commercial sources. However, it should be taken into account that the total need for financing of Russian industry exceeds 1 billion US dollars, and therefore the likelihood of receiving government funding commercial enterprises is negligible and does not exceed 1%.
Table 1
2.5. Structure of direct investment in fixed capital by sources of financing (as a percentage of total)
1st half of the year |
2nd half |
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Investments in fixed assets, total |
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including by sources of financing: |
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1. own funds |
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1.1. profit remaining at the disposal of the organization |
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1.2. depreciation |
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1.3. involved funds |
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1.3.1. bank loans |
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1.3.1.1. loans from foreign banks |
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2. borrowed funds from other organizations |
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3. budget funds |
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including: |
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3.1. from the Federal budget |
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3.2. from the budgets of the constituent entities of the Federation |
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3.3. extra-budgetary funds |
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3.3.1. proceeds from the issue of shares |
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4. foreign investment |
In 2001 the share of own funds in the total volume of investments in fixed capital increased, exceeding half of the total volume of investments (more than ¼ of the total financing came from profit and about 1/5 from depreciation). The state, mainly from regional budgets, financed 1/5 of the total investment. In 2002 After the introduction of the new Tax Code, changes have emerged in the structure of own funds allocated for investment: the role of profit is decreasing (as the range of costs that includes production costs is expanding), the role of depreciation, on the contrary, has increased.
- Direct foreign investments
The influx of foreign investment into Russia is vital for achieving such goals as exiting the current crisis and the initial recovery of the economy. Given the serious technological lag of the Russian economy in most respects, Russia needs foreign capital, which could bring new technologies and modern management methods, as well as contribute to the development of domestic investment. The experience of many developing countries shows that an investment boom in the economy begins with the arrival of foreign capital. The creation of their own advanced technologies in a number of countries began with the development of technologies brought by foreign capital.
In the Law “On Foreign Investments in Russian Federation» No. 160-FZ as amended on July 25, 2002 direct foreign investments are defined as “the acquisition by a foreign investor of at least 10 percent of a share (contribution) in the authorized (share) capital of a commercial organization created or newly created on the territory of the Russian Federation in the form of a business partnership or company in accordance with the civil legislation of the Russian Federation; investment of capital in fixed assets of a branch of a foreign legal entity created on the territory of the Russian Federation; implementation on the territory of the Russian Federation by a foreign investor as a lessor of financial lease (leasing) of equipment specified in sections XVI and XVII of the Commodity Nomenclature of Foreign Economic Activity of the Commonwealth Independent States(Commodity Nomenclature of Foreign Economic Activity of the CIS), with a customs value of at least 1 million rubles.”
In accordance with this above-mentioned Law, foreign investors in Russia can be (Article 1):
1) foreign legal entities, including, in particular, any companies, firms, enterprises, organizations or associations created and authorized to make investments in accordance with the laws of the country of their location;
2) foreign citizens, stateless persons, Russian citizens with permanent residence abroad, provided that they are registered to conduct business activities in the country of their citizenship or permanent residence;
3) foreign states;
4) international organizations;
Foreign investments can be equity investments, i.e. may use a joint venture form or be wholly owned by foreign investors. To register large enterprises (with investments exceeding 100 million rubles) a special permit from the Government of the Russian Federation is required.
table 2
Receipt of foreign investments into Russia by type,
Investments |
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Total: |
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Including : |
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Direct |
million dollars
In the first half of 2002 There was a reduction in the trade balance of the Russian Federation by 23% - to $20.5 billion, which, however, did not lead to a slowdown in the growth of reserves of the Central Bank of the Russian Federation, since at the same time the deficit in the capital account decreased. Such information is contained in the macroeconomic analysis published by Alfa Bank. At the same time, the reduction in the capital flow deficit was not caused by an increase in direct investment, i.e. There has been no improvement in the investment climate in Russia, analysts say. Despite the fact that the total volume of foreign investment in the first half of this year. increased by 25% compared to the same period in 2001, foreign direct investment is still extremely insignificant - it amounts to $1.9 billion.
According to the same report, capital outflow from Russia in 2002. will amount to $20 billion in 2003-2005. - at least 15-20 billion dollars per year. According to the articles of the balance of payments of the Russian Federation, in the first half of 2002. capital outflow from Russia decreased by 24% - from $11.4 billion in the first half of 2001. up to 8.7% billion dollars in the first half of 2002
There is a “golden” rule in the investment business - if a particular market shows super-profits, then expect a lull in it next season. Surprisingly, this does not apply at all to the Russian market. So, in 2001 The Russian investment market brought 77% of profits, which was the highest in the world. For four months of 2002. this figure has already reached 48%. Other “troublemakers” are not far behind Russia, but their performance is past period 2002 still lower - 33% for the Republic of Korea, 28% for Thailand, 22% for Hungary.
- Features of investment policy in modern stage economic development
Overcoming the investment crisis is of particular importance, both in the current and strategic aspects. The current need for investment is due to the extreme deterioration of equipment. On average across the country, the depreciation of fixed production assets is 40.4%, with more than 50% in oil production and electrical engineering, 75% in oil refining, and 80% in gas processing. If the share of completely worn-out fixed assets in the country as a whole is 12.5%, then in the sub-sectors of the fuel and energy complex it ranges from 22 to 38%. By 2000 17 powerful power plants in Russia have exhausted their service life, about 25% of the equipment of electrical substations has also reached its service life.
The coming years will be critical in terms of updating equipment in the power industry. And in the strategic aspect, investments are now a key link that determines the solution to the entire complex of problems of the country’s development and economic modernization and, above all, the achievement of sustainable economic growth and high competitiveness of domestic production in the domestic and world markets.
Dynamics of investments in fixed capital and some other indicators characterizing the investment process for last years, are presented in the table:
Table 3
Growth rates of indicators characterizing the investment process (in % of previous year)
January-September |
January-September |
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Investments in fixed capital |
|||||
Industrial output volume |
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Share of gross fixed capital formation in GDP |
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Growth rate of gross fixed capital formation in GDP |
|||||
Share of gross capital formation in GDP |
|||||
Share of gross savings in GDP |
|||||
Mechanical engineering |
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Construction materials |
|||||
Construction |
Until 2002, the dynamics of investment in fixed assets generally produced an optimistic impression. Over the course of 2 years, direct domestic investment grew significantly faster than GDP and industrial production. The increase in investment demand has become a fairly stable component of overall economic growth. In 2000 the investment growth rate reached a record of 17.4%. In 2001 it decreased, still amounting to a significant value of 8.7%. In mid-2002 the volume of investments in fixed assets was approximately 15% higher than the pre-crisis level of 1997. (GDP volume by 20%, industrial production by 25%) *.
The share of investment in fixed capital in GDP began to increase slightly.
Despite some favorable developments, the current favorable situation not only does not yet provide grounds for complacency, but causes growing anxiety.
Firstly, the increase in investment starts from a very low initial level due to a long and severe recession;
Secondly, despite the increase in their share in GDP, it remains low: 14-18%. In developing and developed countries of the Pacific Rim, the share of investment in GDP is much higher. Thus, in China, Malaysia, and recently in Thailand it exceeded 40%. In addition, the share of investments in authorized capital and, in general, gross capital formation in Russian GDP lags behind the share of gross savings, which reflects capital flight from the country. According to available indirect estimates, the annual capital balance for several years exceeds 20 billion. $ annually.
Third, according to data for 9 months of 2002. there has been a significant reduction in the growth rate of investments in fixed capital and their lag behind the dynamics the most important indicators production
Fourth, the absolute amount of direct domestic investment sharply lags behind the need for it. According to calculations of the Ministry of Economic Development of the Russian Federation, over the next 15 years, annual investments in real sector economy in the amount of 3 trillion. rubles In fact, in 2001 they amounted to almost two times less - 1599.5 billion rubles. Based on the scale of investments made in 2001, it will take 50 years to solve this problem, taking into account the fact that the share of investments in industry is slightly more than 40% of their total amount - more than 100 years.
Fifthly, the influx of foreign capital is insufficient. Although the total inflow of capital into the Russian Federation is growing from year to year, the volume and share of foreign direct investment has decreased to 27.9% of the total volume, whereas in 2000. was 40%, and in 1999 - 44.6%.
At sixth, a very heterogeneous intersectoral structure of investments - different sectors are provided with them very unevenly. And this unevenness is still increasing. Investments in the fuel industry and transport are increasing most significantly. The share of all investments in the fuel industry in 2000 was. 18.5% (approximately ½ of investment in industry), in transport - 21.5%. In 2001 the corresponding figures were 21.2, 52 and 23%. Moreover, among investments in transport, the overwhelming majority is in pipeline transport. In other words, the structure of investments preserves the export and raw materials orientation of the development of the Russian economy, and has not yet become a factor in the accelerated development of the manufacturing industry.
Conclusion
Attracting national and foreign investments into the Russian economy on a large scale pursues long-term strategic goals of creating in Russia a civilized, socially oriented society characterized by a high quality of life for the population, which is based on a mixed economy, which involves not only joint effective functioning various forms property, but also the internationalization of the market for goods, labor and capital. And foreign capital can bring scientific and technological progress and advanced management experience to Russia. Therefore, the inclusion of Russia in world economy and attracting foreign capital - necessary condition building a modern civil society in the country. Attracting foreign capital to material production much more profitable than obtaining loans to purchase necessary goods, which are still wasted haphazardly and only increase public debts. The influx of foreign investment is also vital for achieving medium-term goals - overcoming the current socio-economic crisis, overcoming the decline in production and the deterioration in the quality of life of Russians. It must be borne in mind that the interests Russian society, on the one hand, and foreign investors, on the other, do not directly coincide. Russia is interested in restoring and updating its production potential, saturating the consumer market with high-quality and inexpensive goods, developing and restructuring its export potential, pursuing an anti-import policy, and introducing Western management culture into our society. Foreign investors are naturally interested in a new springboard for profit from the vast domestic market of Russia, its natural resources, skilled and cheap labor, achievements national science and technology and... even its environmental safety.
Therefore, our state faces a difficult and rather delicate task: to attract foreign capital to the country without depriving it of its own incentives and directing it through measures economic regulation to achieve public goals. When attracting foreign capital, one must not discriminate against national investors. Enterprises with foreign investment should not be given tax benefits that are not available to Russian enterprises engaged in the same field of activity. As experience has shown, such a measure has virtually no effect on the investment activity of foreign capital, but leads to the emergence of former domestic production enterprises with formal foreign participation claiming preferential taxation.
We must strive to create a favorable investment climate not only for foreign investors, but also for our own. And it’s not about finding them funds to make investments. Russian private capital also needs guarantees against forced seizures and arbitrariness of the authorities, an insurance system against non-commercial risks, as well as stable working conditions when making long-term investments.
BIBLIOGRAPHY:
- Enterprise finance - textbook. Edited by N.V. Kolchina, UNITY, 1998.
- Corporate Finance - a textbook for universities. V.V. Bocharov, V.E. Leontyev.
- "Peter", St. Petersburg, 2002
- Comprehensive analysis and control of investment activities, D.A. Endovitsky, “Finance and Statistics”, Moscow, 2001.
- Economic growth and investment, collection of scientific articles, “Economic Education”, Moscow, 1998.
- “Economic Issues”, No. 1, 2003. V. Starodubovsky “The Crooked Road of Direct Investment”
- “MEiMO”, No. 2, 2003 F. Gabaidulina “Foreign direct investment, TNC activities and globalization”
- the federal law“On foreign investments in the Russian Federation” No. 160-FZ as amended on July 25, 2002.
- “Financial Management No. 4” / 2001 “Selection of methods and sources of financing”, Sinelnikov D.A.
- All-Russian classifier fixed assets