Initial capital represents the resources necessary to start the operation of an enterprise.
The amount and direction of spending initial capital largely depend on the specifics of the business entity’s activities, its projected scale, and the external conditions of the business. As a rule, initial capital provides the minimum requirements for acquiring the necessary types of property and meeting current financial obligations. In order to determine its volume, economic calculations are carried out to confirm the need to finance specific elements of production. These calculations are made by direct or analytical method.
Direct method
Justification of the need for funds is preceded by a planned calculation of the costs of producing a unit of output. Then the amount of funds required to produce its first two or three batches is calculated. This allows you to create reserves of material assets that ensure the stability of the enterprise at the beginning of its existence. The amount of funds to pay for the required priority services is established, as a rule, as a percentage of the planned value of long-term and short-term assets.
Thus, the general formula for calculating the volume of initial capital is as follows:
K p = V a + Z p + U + T + R.
where K p is the volume of initial capital; B a is the cost of acquisition (rent) of long-term assets; Z p - the cost of minimum production inventories; U is the amount of payment for priority services, T is the amount of costs for wages of production and management personnel; R - the amount of expenses for registering an enterprise.
In a multi-industry enterprise, the necessary resource requirements are calculated for each type of activity, and their total amount represents the amount of initial capital.
Analytical method
The method is based on statistical data characterizing the average size of initial financial resources invested in similar enterprises. Since such data is difficult to obtain, the amount of initial capital based on it is calculated approximately, which negatively affects the functioning of the enterprise.
After calculating the required amount of initial capital, the enterprise faces the task of finding sources of financing:
Innovation fund is a fund created to finance the latest scientific and technical developments and risky projects on both a non-repayable and repayable (credit) basis. It is formed mainly through contributions from enterprises and banks.
Thus, the cost of own initial capital is the difference between the total volume of initial capital (K p) and the amount of borrowed funds invested in it (loan, leasing).
At the time of state registration, the authorized capital of business entities must already be formed. Enterprises of various organizational and legal forms independently determine their size (in the charter or constituent agreement).
Example. The required amount of initial capital for the creation of JSC “Put” is determined in the amount of 95 million rubles. The authorized capital of the newly created JSC “Put” is registered in the amount of 9 million rubles. The difference between the required amount of initial capital and the authorized capital is 86 million rubles. (95 million rubles - 9 million rubles) - the founders must find additional funds from their own and borrowed sources. The founders' savings amounted to 15 million rubles, their property that can be used in production - 10 million rubles, long-term assets (land ownership, information support) - 20 million rubles. In addition, to start its activities, the company will have to attract a loan in the amount of 41 million rubles (86 million rubles - 15 million rubles - 10 million rubles - 20 million rubles).
During the life cycle of an enterprise, its authorized capital may be fragmented, increased or decreased. Changes in the authorized capital are permitted by decision of the owners of the enterprise following the results of a meeting for the year with mandatory changes to the constituent documents. In addition, if at the end of the second and each subsequent financial year the value of the net assets of the joint-stock company is less than the authorized capital, the company is also obliged to declare and register its decrease in the prescribed manner. If the value of net assets is less than the minimum size of the authorized capital, the company is subject to liquidation.
Financial calculations are based on the concept of the time value of money, which can be expressed by the following expression: “a ruble is more valuable today than in the future.” This conclusion is determined by a number of factors:
firstly, a monetary unit at the disposal of a person can be used both for consumption and for multiplication purposes, while a monetary unit that is expected to be received in the future is deprived of the opportunity to receive additional income today, and also has the risk of non-receipt.
secondly, in an inflationary economy, money has the objective feature of depreciation and loss of purchasing power, from which it follows that in an inflationary environment one and the same monetary unit can buy more today than in the future.
In financial calculations, temporary incomparability and payment for refusal of consumption are taken into account using the operations of accumulation and discounting.
One of the most important definitions underlying most financial calculations is interest money.
Interest- this is income from the provision of capital in debt in various forms (loans, credits, etc.), or from investments of an industrial or financial nature.
Interest rate– this is a value characterizing the intensity of interest accrual.
The amount of income (interest) received is determined based on the amount of invested capital, the period for which it is lent or invested, the size and type of interest rate (rate of return).
Capitalization (increase) of debt– this is an increase in the amount of debt due to the addition of accrued interest (income).
Capitalization rate (accretion)– a value showing how many times the initial capital has grown.
Accrual period– the period of time during which interest is calculated. The accrual period usually coincides with the loan term. The accrual period can be divided into accrual intervals.
Accrual interval – This is the minimum period after which interest accrues.
There are two ways to calculate interest:
Decursive method of calculating interest. Decursive interest (loan interest) is calculated at the end of each accrual interval based on the amount of capital provided.
Anticipatory (preliminary) method of calculating interest. Anticipatory interest (discount rate) is calculated at the beginning of each accrual interval based on the accrued amount.
With both methods of calculating interest, interest rates can be either simple, if applied throughout the entire accrual period to the initial amount of money, or complex, if after each accrual interval they are applied to the accrued amount.
Simple bets Loan interest is usually used in short-term financial transactions (no more than a year), when the accrual interval coincides with the accrual period, or when interest is paid to the lender after each accrual interval. Complex bets Loan interest is usually used in long-term financial transactions (more than a year), when an increase in the principal amount is implied.
Depending on the method of determining the duration of a financial transaction, either exact or ordinary (commercial) interest is calculated. In the first case, the exact number of days of the loan is used. In the second case, the approximate number of days of the loan is taken, when the length of the month is taken to be 30 days, and the length of the year is taken to be 360 days. The date of loan issuance and repayment is always counted as one day.
The capabilities of the enterprise will be clear when they analyze the capital requirements necessary for the practical implementation of some entrepreneurial idea or project.
For example, if we are able to choose what to produce - furniture or children's toys made of wood - we can make one or the other decision depending on the amount of capital. If we have the opportunity to receive 1 million monetary units as initial capital, then we may decide to start producing furniture; If our capabilities are limited to only 50 thousand monetary units, then we will decide to start producing children's toys from wood.
The structure of the initial capital depends on the enterprise's needs for equipment, raw materials, etc., necessary to begin the normal production process. To create the necessary capital structure, an entrepreneur:
A) acquires all technical elements of production (buildings, structures, equipment, transport, etc.) (T/e);
B) purchases raw materials, tools (C);
C) creates a reserve of funds to pay wages during the first production cycle (from the start of production until the receipt of payments for sold products) (Salary);
D) creates a reserve fund (R/f).
At the same time, the manufacturer determines the size of the required initial capital: for T/e, 200 thousand monetary units are needed (100 thousand for the building, 50 thousand for equipment, 50 thousand for adapting the building to the specific needs of production), for C - 50 thousand monetary units, for salary. 25 thousand monetary units, total - 300 thousand monetary units.
Rice. 2.1 "Determining the amount of initial capital."
T/e. With salary R/f
200 thousand 50 thousand 25 thousand 25 thousand
Identification of the economic efficiency of future production.
Any investment in production is an advance investment. It is important for an entrepreneur to find an answer to the question of how, in what form and within what time frame the advance can be returned. The return of capital advanced into production is possible only through identifying the amount of profit received in the process of production and sale of products. An entrepreneur must know what the payback period of the project is.
However, the entrepreneur is interested not only in the return period of the invested capital, but also in the rate of capital increase, which is associated with the need to identify net profit. In order to determine the possible amount of net profit from the implementation of this idea, the entrepreneur carries out business calculations. Calculations are based on two immutable requirements:
1 accounting of all possible expenses;
2 accounting for income at the minimum acceptable level and accounting for expenses at the maximum acceptable level to reduce the degree of risk.
Of course, this approach should be based on taking into account the real situation. Calculations will include:
1 determination of possible income;
2 calculation of possible expenses;
3 identification of net income.
Each entrepreneur will use his own methodology when making calculations.
For example.
Figure 2.2 "Structure of possible income and expenses:"
A b c d e f h i j l m n o p
A - depreciation charges on the cost of all technical elements used in the production process
B - property tax (limit amount 0.5% of the book value of all property of the enterprise);
B - road tax (local tax levied in those regions whose local authorities have made such a decision; road tax in Moscow is 0.4% of the price of the purchased product);
D) cost of raw materials per one commodity unit;
D) road tax on purchased raw materials;
E) the planned wage fund per one commodity unit;
G) payroll tax (37% of the amount to be paid as wages;
3) payments to the employment fund (local tax, in Moscow - !% of the accrued wage fund;
I) VAT regarding the paid salary fund. together with all payments from this fund, i.e. 28% of the amount (e+f+h);
K) planned profit;
K) VAT regarding the planned profit (28% of K);
M) income tax (32% of the amount k + l);
H) additional profit;
O) VAT on additional profit (28% of n);
P) income tax in terms of additional profit (32% of the amount n + o).
The separate inclusion of planned profit and additional profit is methodically justified, because otherwise the entrepreneur will rely on the “residual principle” of identifying the profitability of production. In this case, he consciously plans the minimum acceptable level of profit for him, at which production will be considered expedient.
When thinking about the problem of establishing an enterprise, an entrepreneur first of all strives to predict the profitability of a future project. At the same time, the identified profit margin will allow the entrepreneur to come to the conclusion that the project is profitable. Typically, a new entrepreneur uses borrowed (not equity) capital. This means that when making calculations it is necessary to take into account the fee for using such borrowed funds (loan interest).
Tax problems
The tax pressure of the state and local authorities does not act as a stimulator, but quite often as a brake on the development of entrepreneurship. Entrepreneurs often seek to “evade taxes” in such a situation, taking advantage of the opportunities provided to them by current legislation or simply hiding their income. Many of these methods are known.
The burden of income tax can be eased in two ways: either take advantage of benefits, or try not to show profits in reporting. The possibilities of using the first method are limited due to the abolition of most benefits. There are quite a few tricks to hide profits. The most common is inflating costs, which include not only profits, but also consumer expenses of the owners and employees of the company. At the same time, this allows you to save on contributions to social insurance and the pension fund, as well as on income tax, since in this case there is “payment in kind”. The company maintains apartments for its managers (under the guise of “office premises”), company vehicles, buys furniture, consumer electronics, subscribes to newspapers, magazines, etc., etc. Some companies purchase “uniforms” for their employees (fur coats, sheepskin coats, leather jackets, suits, boots, etc.). As a result of all this, a thriving company may appear low-profitable or even unprofitable in its reporting.
There is another method of concealing profits from taxation: the client pays for the goods in the form of a targeted payment to your development fund (i.e. to already distributed profits). However, since 1992, tax inspectors have counted these amounts as sales revenue, and therefore targeted payments have to be sent somewhere else (for example, to create some kind of charitable organization - a self-help fund), but this is much more complicated.
From progressive income tax and salary fund. you can also dodge. There are proven techniques for avoiding taxes on excess profitability. The most common of them are: “side contract”, when a front company, usually owned by the same owners as the main enterprise, is involved as a co-executor of the work. For the main enterprise, payment for the services of a co-executor of the contract is included in the costs, which reduces profitability to the required level. In a similar way, it is possible to avoid taxes on excess of the standard amount of funds for wages: the same person receives a salary for the same work at several enterprises. A more complex version is called "Russian nesting doll". Its essence is that the same product or service on its way to the consumer passes through several colluding enterprises. Each of them increases its costs and artificially reduces the level of profitability to the level taxed at the minimum tax rate.
And finally, the most radical way of tax evasion is to conceal income and expenses from any accounting at all during cash transactions. The procedure for turning non-cash money into cash, and unaccounted for it, is called “cashing out.” In order to have unaccounted cash, it is necessary to collect it from the buyer and show it as expenses.
Under strong pressure from the existing tax system, a special structure of domestic business is being formed - a small business group consisting of several firms connected with each other not only by permanent partnerships, but also by a unique system of participation: their co-owners, as a rule, are the same persons. The key figure in a business group is often the informal president of one of the firms, and the person in charge of financial operations (financial director or chief accountant). The enterprises included in the group have inflated production costs, enormous inventories and fixed assets. Most of the personnel work for them under contract contracts, often holding their main jobs in the public sector of the economy. The bulk of wages and business income is paid in kind or through cash.
After reading this chapter, you will know:
- o decursive and anticipatory methods;
- o taking into account the impact of inflation.
Calculation of the value of an enterprise (business), like most economic calculations, is based on the calculation of interest using a decursive or anticipatory (preliminary) method and the theory of annuities.
Interest- is income in various forms from the provision of financial resources (capital) in debt or investment.
Interest rate- an indicator characterizing the amount of income or the intensity of interest accrual.
Increment factor- a value showing the ratio of the accumulated initial capital.
Accrual period- the period of time after which interest is accrued (income is obtained). The accrual period can be divided into accrual intervals.
Accrual interval- the minimum period after which part of the interest is accrued. Interest can be calculated at the end of the accrual interval (decursive method) or at the beginning (anticipatory or preliminary method).
Decursive method
Decursive interest rate (loan interest) is the ratio of the amount of income accrued for a certain period to the amount available at the beginning of this period.
When, after accruing income for a period, this income is paid, and in the next period interest income is accrued on the original amount, then the accrual formula is used simple interest rates.
If you enter the notation:
i (%) - annual loan interest rate (income); i - relative value of the annual interest rate; I - the amount of interest money paid for the period (year);
P - the total amount of interest money for the entire accrual period;
R - the amount of the original amount of money (present value);
F- accrued amount (future value);
k n - growth factor;
P - number of accrual periods (years);
d- duration of the accrual period in days;
TO - length of year in days K = 365 (366), then the decursive interest rate (i):
Hence (6.1)
Then the increase factor:
If the growth interval is less than one period (year), then
Determining the amount of the accrued amount F (future value) is called compounding (compounding).
Example. Credit 25,000 rub. issued for 3 years at a simple rate of 12% per annum. Determine the accrued amount.
According to formula (6.1):
Example. Credit 25,000 rub. issued for 182 days, an ordinary year, at a simple interest rate of 12% per annum. Determine the accrued amount.
According to formula (6.2):
Sometimes there is a need to solve the inverse problem: determine the value of the initial (current, reduced) amount R (present value), knowing what the accumulated amount should be F (future value):
Determining the value of the initial (current, reduced) amount R (present value) is called discounting (discounting).
Example. After 3 years you need to have an amount of 16,500 rubles. What amount in this case should be deposited at a simple rate of 12% per annum.
By transforming formulas 6.1-6.3, we can get
Interest rates may vary from time to time.
If during different accrual periods P , P 2 ,..., n N , different interest rates are used i 1 , i 2 ,..., i N , Where N- the total number of accrual periods, then the amount of interest money at the end of the accrual periods at the interest rate i 1 :
Where n 1 - number of accrual periods at the interest rate i 1 at the end of the accrual periods at the interest rate, etc.
Then, during JV accrual periods, the accrued amount (N- number of the last period) for any:
where the growth factor: (6.5)
Example. Loan in the amount of 250,000 rubles. issued for 2.5 years at a simple interest rate. Interest rate for the first year i = 18%, and for each subsequent six months it decreases by 1.5%. Determine the accrual factor and the accrued amount.
According to formula (6.5): k n = 1 + 0,18 + 0,5 (0,165 + 0,15 + 0.135) = 1,405.
According to formula (6.4): F = 250,000 x 1,405 = 351,250 rubles.
Inverse problem:
If p to = 1, then , (6.7)
where is the growth factor:. (6.8)
Example. Loan in the amount of 250,000 rubles. issued for 5 years at a simple interest rate. Interest rate for the first year i
According to formula (6.8): k n = 1 + 0,18 + 0,165 + 0.15 + 0,135 + 0,12 = 1,75.
According to formula (6.7): F = 250,000 x 1.75 = 437,500 rub.
When, after accruing income for a period, this income is not paid, but is added to the amount of money available at the beginning of this period (to the amount that created this income), and in the next period interest income is accrued on this entire amount, then accrual formulas are used compound interest.
If we add to the presented notations:
i c - relative value of the annual compound interest rate;
k nc - compounding factor in case of compound interest;
j- the nominal rate of compound loan interest, at which the interval rate of compound loan interest is calculated, then for the accrual period equal to a year, the accrued amount will be: . For the second period (a year later): etc.
Through P years, the accumulated amount will be:
where is the growth factor k nc equal to:
Example. Credit 25,000 rub. issued for 3 years at a compound rate of 12% per annum. Determine the accrued amount.
According to formula (6.9)
Solving the inverse problem:
where is the discount factor.
The discount factor is the reciprocal of the compounding factor:
Example. After 3 years you need to have an amount of 16,500 rubles. What amount in this case needs to be deposited at a compound rate of 12% per annum.
Comparing the accumulation coefficients when calculating simple and compound interest, it is clear that when p> 1. The more accrual periods, the greater the difference in the amount of the accrued amount when calculating compound and simple interest.
Other parameters can be defined:
P is not an integer, then the increase coefficient can be represented in two forms:
Where P - not a multiple of an integer number of compounding periods;
Where P = p c + d- the total number of accrual periods (years), consisting of integer and non-integer accrual periods; p p d- number of days of non-integer (incomplete) accrual period; K = 365 (366) - number of days in a year; i c - relative value of the annual compound interest rate.
Both options are valid, but give different values due to different calculation accuracy.
Example. Credit 25,000 rub. issued for 3 years 6 months at a compound rate of 12% per annum. Determine the accrued amount.
- 1) F= 25,000 (1 + 0.12) 3.5 = 25,000 x 1.4868 = 37,170 rubles;
- 2) F= 25,000 (1 + 0.12) 3 (1 + (180: 365) 0.12) = 25,000 x 1.4049 x 1.0592 = 37,201 rub.
The annual compound interest rate i 1 , i 2 ,..., i N may vary during different accrual periods n 1 , n 2 ,..., n N .
Then the accrued amount at the end of the first accrual period (year):
In the second period (a year later):
In the n-period (for P periods (years)):
Then the increase factor:
Example. Loan in the amount of 250,000 rubles. issued for 5 years at a compound interest rate. Interest rate for the first year i = 18%, and the following year it decreases by 1.5%. Determine the accrual factor and the accrued amount.
According to formula (6.14): k nc = (1 + 0,18)(1 + 0,165)(1 + 0,15)(1 + 0,135)(1 + 0,12) = 2,0096.
According to formula (6.13): F = 250,000 x 1.75 = 502,400 rub.
Inverse problem:
If compound interest is calculated at intervals, i.e. several times during the period, then the accrual formula for the interval
Where j = i - nominal rate of compound interest; T - number of accrual intervals in the period (quarterly, monthly, etc.).
The income for the interval is added to the amount of money available at the beginning of this interval.
Then the accrued amount during interval accrual for each period through P periods (years) will be
In addition, you can define other parameters:
Example. Credit 25,000 rub. issued on n = 3 years at a compound rate of 12% per annum, payment semi-annually t = 2. Determine the accrued amount.
According to the formula (6/16) 
.
If the number of compounding periods P is not an integer, then the increase coefficient can be represented as
Where p p - the number of whole (full) periods (years) of accrual; R - the number of whole (full) accrual intervals, but less than the total number of intervals in the period, i.e. R< m;d - the number of days of accrual, but less than the number of days in the accrual interval.
Example. Credit 25,000 rub. issued for and = 3 years 8 months, 12 days at a compound rate of 12% per annum, payment semi-annually T = = 2. Determine the accrued amount.
Entrepreneurship Notes
Under initial capital understand the amount of money that needs to be invested to implement the project. To determine the size of the initial capital, produce consolidated assessment amount of funds for project implementation. Moreover, the sizes of fixed and working capital are assessed separately. This is necessary primarily due to the significant difference in the turnover rate.
The basis of aggregated calculations is technological process, which underlies the project, various standards and market characteristics. The most important characteristics of the technological process are the time required and the method of performing the work. This predetermines the choice of equipment, tools, and production space.
The second characteristic is the characteristics of the market in which the product is supposed to be sold. The most important characteristics are: market capacity and demand characteristics, including at least an expert assessment of the elasticity of demand.
Based on aggregated data on the volume of demand, which is determined through market research, and on the labor intensity of manufacturing the product, basic aggregated calculations of the required amount of equipment, production space and the number of performers are carried out. All calculations must be carried out for individual groups of equipment and individual professions of the performer.
To calculate the number of performers, it is determined effective time fund for one employee.
Production areas for organizing production are determined either on the basis of the average amount of area required to install a unit of equipment or on the basis of the standard area required to produce a unit of product.
If the overall dimensions of the product are significantly smaller than the overall dimensions of the equipment, then in this case the required area is determined based on the area occupied by the equipment. If the overall dimensions of the product are comparable to or exceed the dimensions of the equipment, then the area is determined based on the area norm for a unit of product.
The production area is divided into 3 categories:
The main production area is the area where the production process is carried out.
Auxiliary area;
The area required for recreation and sanitary and hygienic needs.
Auxiliary area necessary to service basic production processes, determined according to industry standards. Household area determined based on their sanitary and hygienic norms per person.
It is advisable to determine the number of line managers based on controllability standards. It is believed that the rational number of subordinates for a manager is 8-12 people.
The number of employees in the functional services of the management apparatus is determined by developing a staffing table, where the list of positions is determined based on management functions, and the number of employees for each function based on the labor intensity of performing each function.
Having various data on the amount of necessary equipment and the size of the area, you can calculate the required amount of fixed capital.
The next stage of assessing the initial entrepreneurial capital is a comprehensive calculation of the required amount of working capital.
For an aggregated calculation of the required amount of working capital, you can use planned calculations of the cost value.
Cost price– the amount of costs for production and sales of products. There are a number of classifications of costs included in the cost price.
Based on the principle of inclusion in cost costs are divided into direct and indirect. Direct – costs that can be attributed to the cost of specific equipment (costs of raw materials, salaries of main workers, salaries of management personnel). Costs of this kind that cannot be attributed to a specific product are calculated indirectly.
Costs are classified in relation to the production process. All costs are divided into basic and overhead. The main ones are the costs associated with the implementation of the technological process of production. Overheads are costs associated with maintenance and management.
It is very important dividing costs into variable and semi-fixed. Variable costs include all costs that are directly proportional to the volume of production. Costs that do not depend on the volume of production are conditionally constant (periodic because they are constant within a certain volume of production or periods of time).