Analysis of the Operation and Financial Condition of the Enterprise

More documents

Recommendations

Info

Analysis of the Operation and Financial Condition of the EnterpriseIntangible assets are enterprise assets that do not have a physical existence, but arerequired in the performance of the enterprise business activities. Patents, licences,copyright, trademarks, expenditure for research, goodwill of the enterprise belong to thisgroup of assets.The cost of intangible assets is gradually written off against expenses.Balance sheet liabilitiesBalance sheet liabilities illustrate the sources of financing of the enterprise resourcesby the significance of their role and the term of repayment. An individual liability itemcorresponds to each source of the asset financing. Classification of the liabilities items maybe different and depend on the principles used in the classification. For example, bydividing the items by the principle of their origin and by the principle of the enterprisecapital ownership, there are two groups of liabilities distinguished: equity capital; debt capital.Classifying the items by principle of the length of use, capital can be divided asfollows: capital for short-term use; capital for long-term use.Capital for short-term use includes the short-term debts of an enterprise, while thecapital for long-term use includes long-term debt capital, share capital, the reserve capitaletc.Enterprise debt capital. In the course of its business activities every enterprise is widelyusing debt capital which is reflected in the liabilities as a short-term or a long-termliability.The repayment term of short-term debts does not exceed one year. For repayment ofshort-term debts either the appropriate current assets are used or new short-term liabilitiesare made.The following liabilities items reflect short-term debts: short-term bank loans; bills of exchange which are payable by the enterprise; trade accounts payable; customer advances or prepayments; taxation payable; dividends payable to owners; salaries payable to employees etc.Short-term bank loans or credit facilities are credit liabilities undertaken by theenterprise for one year upon receipt of a bank credit on certain conditions (interest rate,credit repayment terms etc.). Bills of exchange payable is a bill of exchange debt to becovered within a specified term within the reporting period.Trade accounts payable are the unpaid invoices issued by vendors that have to bepaid for within the financial year pursuant to the terms of delivery contracts.Customer advances or prepayments are cash assets received by an enterprise from itscustomers for the goods in the form of payment in advance, if provided for in the purchasesalescontract or the current laws and regulations.52
Analysis of the Operation and Financial Condition of the EnterpriseTaxation payable is the estimated, yet unpaid tax amounts (tax liabilities, forexample, the social insurance tax, individual income tax estimated from the salaries ofemployees etc.).Dividends payable are the accrued dividends on the capital invested to theshareholders that are not paid yet due to various reasons (shortage of free cash etc.).Salaries payable are the salaries, premium etc. payments that have not yet beendisbursed by an enterprise to its employees.Long-term liabilities are liabilities which are not repayable within the year oftaxation and the term of repayment would be more than one year.Long-term liabilities are as follows: long-term bank loans; other long-term loans and credit facilities.Long-term bank loans and credit facilities are liabilities incurred upon borrowing ofcapital from a lender – the creditor, for a longer period of time (above one year) and payinginterest on the credit borrowed in accordance with the loan or credit agreement.Other long-term liabilities can incur from debts of an enterprise or liabilities underleasing contracts for equipment or buildings etc.Equity capital as balance sheet liability element consists of the following mainitems: equity capital (share capital); reserve capital; retained earnings for the reporting year; retained earnings from previous periods.Equity capital or stock capital, or share capital is the capital invested by the ownersmade up of investments by the participants or shareholders, the amount of which isstipulated in the enterprise articles of association. Share capital is disclosed in thebalance sheet at the nominal value of shares.Investments by the enterprise participants can be in the form of both cashinvestments and property investments, for example, by investing production equipmentitems or entire production facilities.Additional capital is the increase in the book value of the share capital occurring asa result of a new share issue. Assets acquired by an enterprise as a result of shares’ saleare the additional capital of an enterprise. Besides, the equity capital may be increasedalso on the account of the proceeds from the issue (share premium) acquired on theaccount of the difference between the nominal value and the actual sales value of theshares.A source of the enterprise additional capital can be also disposal of a share ofenterprise assets at prices exceeding their book value or at a price below the book value.Retained earnings are a component part of the capital of an enterprise which hasbeen accumulated from the net income of the previous years after the deduction ofdividends to shareholders or owners. Retained earnings may appear in the balance sheetliabilities as the retained earnings from previous years, the reserve capital or net incomefor the reporting year (income as per the balance sheet less tax).The items of retained earnings reflect the increase in the capital invested.53
Page 1 and 2: Analysis of the Operation and Finan
Page 51: Analysis of the Operation and Finan
Page 103 and 104:
Dec.,2XX7Analysis of the Operation
Page 105 and 106:
Analysis of the Operation and Finan
Page 107 and 108:
Page 109 and 110:
Page 111 and 112:
Page 113 and 114:
Page 115 and 116:
Page 117 and 118:
Page 119 and 120:
Page 121 and 122:
Page 123 and 124:
Page 125 and 126:
Page 127 and 128:
Page 129 and 130:
Terms of ReferenceAnalysis of the O
Page 131 and 132:
Page 133 and 134:
Page 135 and 136:
Page 137 and 138:
Page 139 and 140:
Page 141 and 142:
show all

Analysis of the Operation and Financial Condition of the Enterprise

Create successful ePaper yourself

Delete template?

Save as template?