The financial and economic subsystem
Management of the Company
In market conditions for effective production, trade and other activities, each company must have some financial resources.
Availability and adequacy of financial resources ensure the viability of the company, its current performance and potential of growth.
The modern market economic system is usually focused on their own and borrowed funds (capital).
Financial and economic subsystem includes the development of strategic and operational plans, determine the amount of financial resources (capital) for the implementation of the company, the sources of their formation, usage trends, accounting and control of the tasks and others.
The size of the equity of the enterprise is always in his possession and possession is the sum of the initial capital in the form of statutory fund of funds invested in its operations and its financial resources generated or received by the company during the period of its activity.
Starting the size and source of funds is authorized (share) capital, which is the amount of capital necessary to ensure that the company (joint stock company) started its activity. Its size is determined by statute or agreement on the establishment of the company.
In modern conditions the wide joint-stock companies (transformation of state enterprises into joint stock companies) being the main form of seed capital stock is used to cover the necessary current and long-term costs.
Internal financial resources generated by industrial, commercial and other activities and then cover all necessary expenses, payment of tax and other obligatory payments, current consumption, is owned enterprise and is invested in its further development - the growth of primary and own working capital.
The main sources of own funds of enterprises are: 1) the net income of the company; 2) means special purpose funds that are part of the production cost and partly at the disposal of the company; 3) the fund value revaluation of inventory; 4) proceeds from the sale of their own property business after paying sales taxes; 5) depreciation to restore the value of fixed assets and intangible assets.
Used their financial resources on consumption (financial incentives, social development, payment of dividends, training) and the formation of assets (development of logistics, finance and innovative investments, replenishment of working capital and other purposes).
Regarding external financial resources, they formed outside through the involvement of the company for an indefinite period of own funds of other entities or individuals savings.
The main form of attracting external own funds are additional fees for the replenishment of the authorized fund in joint stock companies - the additional issue of shares.
In business, there may be other forms of attracting foreign own financial resources (non-repayable financial assistance, sponsorship and donations, prizes, etc.).
In addition, if necessary (due to the lack of financial resources), the company can use the internal (short and long) loan in cash or in the form of a condition of his return and paying a certain percentage (lending rate).
However, the latter requires careful economic rationale (efficiency) to attract such funding.
Effective management of financial and economic enterprise subsystem provides the necessary growth in production, trade, service provision and therefore profits.
All considered management subsystem are in constant interaction, interdependence and work to achieve common goals of the company.