The profitable objects of business valuation are. Income approach to business valuation. Choosing the amount of profit to be capitalized

The income approach allows for a direct assessment of the value of the enterprise, depending on the expected future income. This method is based on the assumption that the potential investor will not pay for this business an amount greater than the present value of the future income from this business. It is believed that the owner will also not sell his business at a price lower than the present value of future income. Therefore, the parties will come to an agreement on a market price equal to the present value of future income. This approach to valuation is considered the most acceptable from the point of view of investment motives. An investor who invests in an operating enterprise does not buy a set of assets consisting of buildings, structures, machinery, equipment, intangible assets, etc., but a stream of future income, which allows him to recoup the investment, make a profit and increase his well-being.

Thus, the income approach is always used to determine the investment value of a business (the value for a specific investor) and very often to determine the reasonable market value (the assumed value that balances supply and demand in the open market, i.e. the value for an abstract buyer).

Within the framework of the income approach, two groups of methods can be distinguished:

• - capitalization method,
• - the method of discounting cash flows.

The main difference between the methods is that the so-called representative income (net profit, profit before taxes, gross profit) for one time period (usually a year) is taken during capitalization, which is converted into an indicator of the present value by simply dividing by the capitalization rate.

Discounted cash flow method.

The market valuation of a business largely depends on what its prospects are - when determining the market value of a business, only that part of its capital that can generate income in one form or another in the future is taken into account. At the same time, it is very important when exactly the owner will receive these incomes, and with what risk it is associated. All of these factors affecting the valuation of a business allow the discounted cash flow method to be taken into account.

Using this method, you can:

• - predict the cash flow of the enterprise;
• - calculate the discount rate;
• - determine the market value of the business by the method; discounted cash flows.

The business value obtained by the DCF method is the sum of the expected future income of the owner, expressed in current values. Determining the value of a business using this method is based on the assumption that a potential investor will not pay for this business more than the present value of future income received as a result of its operation (in other words, the buyer does not actually acquire property, but the right to receive future income from ownership property). Likewise, the owner will not sell his business at a penalty below the present value of projected future earnings. It is believed that as a result of their interaction, the parties will come to an agreement on a market price equal to the present value of future income.

The discounted cash flow method is based on an attempt to determine the value of a company (business) directly from the value of all different types income that can be received by investors investing in this company.

This method of assessment is rightfully considered the most adequate in terms of investment motives, since it is quite obvious that any investor who invests in an operating enterprise ultimately buys not a set of assets, consisting of buildings, structures, machinery, equipment, intangible values, etc. etc., but a stream of future income, which will allow him to recoup his investment, make a profit and increase his well-being. From this point of view, all enterprises, no matter what sectors of the economy they belong to, produce only one type of marketable product - money.

The discounted cash flow method can be used to value any going concern. Nevertheless, there are situations when it objectively gives the most accurate result of the market value of the enterprise.

The application of this method is most justified for evaluating enterprises with a certain history. economic activity(preferably profitable) and in the stage of growth or stable economic development. This method is less applicable to the valuation of enterprises suffering systematic losses (although a negative value of the value of the business may be a fact for making management decisions).

Reasonable care should be taken when applying this method to evaluating new ventures, however promising. The lack of retrospective earnings makes it difficult to objectively predict the future cash flows of the business.

The main stages of an enterprise valuation using the discounted cash flow method.

• 1. Choice of model (type) cash flow.
• 2. Determination of the duration of the forecast period and its unit of measurement.
• 3. Conducting a retrospective analysis of gross proceeds from sales and its forecast.
• 4. Analysis and preparation of the cost forecast.
• 5. Analysis and preparation of investment forecast.
• 6. Calculation of the amount of cash flow for each year.
• 7. Determination of an adequate discount rate. Calculating fair value ratios.
• 8. Calculation of the value of the cost in the post-forecast period.
• 9. Calculation of the present value of future cash flows and value in the post-forecast period, as well as their total value.
• 10. Making final amendments.

The choice of definition (type) of cash flow, which will be used in the model.

In general, the scheme for calculating the cash flow accepted in international practice falls into two stages. The first is to display the net profit after taxes.

Table 1 - The first stage of calculating cash flow

The second stage is the derivation of the indicator of net free cash flow based on the indicator of net profit.

Table 2 - The second stage of calculating cash flow

The above calculation scheme illustrates one of two cash flow models existing in the world practice, a cash flow model for equity capital... The result of the calculation for this model is the reasonable market value of the equity (shareholder) capital of the enterprise. Accordingly, the discount rate used in this model is the discount rate for equity capital based on the cost of raising (rate of return) equity capital.

The second model is called the cash flow model for all invested capital (in Western literature, the term "debt-free cash flow model" is more common). The result of the calculation according to the second model is the reasonable market value of the enterprise's capital, both its own (shareholder's) and borrowed. There are two main differences when calculating the cash flow from the model for equity, firstly, the previously deducted interest payments on long-term debt are added to the net profit after taxes; reduced by the amount of income tax; secondly, the discount rate is the so-called weighted average cost of capital (WACC), that is, “that is, the value that takes into account the cost of raising both equity and borrowed capital. The weighted average cost of capital is calculated using the following formula:

WACC = k d (1 - t c) w d + k p w p + k s w s, (6)

where k p is the cost of raising borrowed capital;

t c - corporate income tax rate;

k p is the cost of attracting equity capital (preferred shares);

k s - the cost of attracting share capital (ordinary shares);

w d - the share of borrowed capital in the capital structure of the enterprise;

w p - the share of preferred shares in the capital structure of the enterprise;

w s - the share of ordinary shares in the capital structure of the enterprise.

Determination of the duration of the forecast period and its units of measurement. Under the DCF method, enterprise value is based on future cash flows rather than past cash flows. Therefore, the task of the appraiser is to develop a cash flow forecast (based on forecast reports on the movement Money) for some future time period, starting from the current year. The forecast period is the period that should continue until the company's growth rates stabilize (it is assumed that stable long-term growth rates or an endless stream of income should take place in the post-forecast period).

Determining the adequate length of the forecast period is not an easy task. On the one hand, the longer the forecast period, the greater the number of observations and the more mathematically justified the final value of the enterprise's current value. On the other hand, the longer the forecast period, the more difficult it is to forecast specific amounts of revenues, expenses, inflation rates and, accordingly, cash flows. According to the prevailing countries with developed market economies practice the forecast period for the assessment of the enterprise can be / depending on the purpose of the assessment and the specific situation, from 5 to 10 years. In countries with economies in transition, where the element of instability is high, adequate long-term forecasts are especially difficult.

In my opinion, it is permissible to reduce the forecast period to 3 years. At the same time, the accuracy of the result increases the division of the forecast period into smaller units of measurement: half a year or quarters.

Retrospective analysis of gross sales proceeds and its forecast.

The next stage of business valuation using the DCF method - the development of a forecast of gross revenue - according to many experts, is the most important element of forecasting cash flow. Many case studies show that fluctuations in gross revenues in forecasts often lead to dramatic changes in value. Analysis of gross revenue and its forecast requires detailed consideration and taking into account a number of factors, including:

range of products;

production volumes and product prices;

retrospective growth rates of the enterprise;

demand for products;

inflation rate;

available production facilities;

prospects and possible consequences of capital investments;

the general situation in the economy, which determines the prospects for demand;

the situation in a particular industry, taking into account the existing level of competition;

the share of the evaluated enterprise in the market;

long-term growth rates in the post-forecast period;

plans of managers of the given enterprise.

The general rule of thumb is that the forecast for gross revenues should be logically consistent with the retrospective performance of the enterprise and the industry as a whole. Estimates based on projections that differ markedly from historical trends look suspicious. In forecasting gross revenues, it is imperative to take into account three main components of any growth: inflationary rise in prices; growth in demand for products and, as a result, growth in sales volumes throughout the industry; and an increase in sales volumes of a particular company. As you know, inflation rates are measured using price indices, which characterize the average change in the price level over a certain period. For this, the following formula is used:

I p = Е P 1 x G 1 / Е P 0 x G 1, (7)

where I p? inflation index;

P 1? prices of the analyzed period;

P 0? base period prices;

G 1? the number of goods sold in the analyzed period.

Within any industry, at least a few businesses are competing for their market share. And here different options are possible. You can increase your share in a shrinking market at the expense of unsuccessful competitors, or vice versa, lose your share in a growing market. In this regard, it is important to accurately assess the size and boundaries of the market segment in which the company intends to operate. You can refer to such an example from the recent practice of the well-known consulting firm Sagana Corrogation. The Russian company, which produces motors for vacuum cleaners, operates on the market of manufacturers of domestic vacuum cleaners. The company occupies 30% of this market. Despite this, the demand for motors is constantly falling, although the total number of customers is not decreasing. The problem is that at present on the Russian market, domestic vacuum cleaners cannot compete with similar products of Asian and European production. The result is that domestic vacuum cleaners are being forced out of the market. The figures show that 30% of the market of manufacturers of domestic vacuum cleaners, which are clients of this enterprise, hold only 1.5% of the entire Russian market of vacuum cleaners. Therefore, the task of the appraiser is to determine the trend of changes in the share of the real market held by the appraised enterprise in terms of demand and needs of end users. In this case, it is advisable to analyze the following factors:

• 1. Market share owned by the company at a given time.
• 2. Retrospective trend of this share change (constancy, decrease or increase).
• 3. Business plan of the enterprise. Particular attention should be paid to how the company plans to maintain or increase its market share (by reducing prices, additional marketing costs or by improving the quality of products).

Analysis and preparation of cost forecasts.

At this stage, the evaluator should:

take into account retrospective interdependencies and trends;

study the structure of costs, in particular, the ratio of fixed and variable costs;

estimate inflation expectations for each cost category;

examine one-time and extraordinary items of expenditure that may appear in the financial statements for past years, but will not occur in the future;

determine depreciation charges based on the current availability of assets and from their future growth and disposal;

Compare the projected costs with those of competitors or similar industry averages.

Effective and consistent cost management is inextricably linked to the provision of adequate and high-quality information about the cost certain types products and their relative competitiveness. The ability to constantly "keep abreast" of current costs allows you to adjust the range of manufactured products in favor of the most competitive positions, build a reasonable pricing policy firms, realistically assess individual structural units in terms of their contribution and effectiveness.

Cost classification can be made according to several criteria:

by composition: planned, predicted or actual;

in relation to the volume of production: variable, constant, conditionally constant;

by the method of attribution to the cost price: direct, indirect;

by management function: production, commercial, administrative.

For business valuation, two classifications of costs are important. The first is the division of costs into constant and variable, that is, depending on their change when the volume of production changes. Fixed costs do not depend on changes in production volumes (for example, administrative and management costs; depreciation charges; sales costs, net of commissions; rent; property tax, etc.). Variable costs (raw materials and materials, wages of the main production personnel, fuel and energy consumption for production needs) are usually considered proportional to the change in production volumes. The second classification is the division of costs into direct and indirect. It is used to assign costs to a specific type of product.

Clear and uniform division into direct and indirect fixed costs it is especially important to maintain uniform reporting across all departments. At one level of reporting, fixed costs can be direct, and at another (more detailed) they can become indirect.

The amount of own working capital (in the Western literature the term "working capital" is used) is the difference between current assets and current liabilities. It shows what amount of working capital is financed from the funds of the enterprise.

Calculating the amount of cash flow for each year.

There are two main methods for calculating the amount of cash flow: indirect and direct. The indirect method analyzes the cash flow by line of business. It clearly demonstrates the use of profits and the investment of disposable funds.

The direct method is based on the analysis of cash flows by items of income and expense, that is, by accounting accounts.

When calculating the amount of cash flow for each forecast year, you can be guided by the following diagram (illustrating the indirect method for calculating DP):

Table 3 - DP from core business

Table 4 - DP from investment activities

Table 5 - DP from financial activities

The total change in cash should be equal to the increase (decrease) in the cash balance between the two reporting periods.

Calculation of an adequate discount rate.

From a technical, that is, mathematical, point of view, the discount rate is the interest rate used to recalculate future (that is, spaced from us in time for different periods) income streams, of which there may be several, into a single value of the current (today's) value, which is the basis for determining the market value of a business. In the economic sense, the role of the discount rate is the rate of return on capital invested in investment objects of comparable level of risk required by investors, or, in other words, this is the required rate of return on the available alternative investment options with a comparable level of risk at the date of assessment.

If we consider the discount rate on the part of an enterprise as an independent legal entity, separate from both the owners (shareholders) and from creditors, then we can define it as the cost of attracting capital by the enterprise from various sources. The discount rate or cost of raising capital should be calculated in such a way as to take into account three factors. The first is that many enterprises have different sources of attracted capital, which require different levels of compensation. The second is the need for investors to take into account the cost of money over time. The third is a risk factor. In this context, we define risk as the likelihood of receiving expected future returns.

The calculation of the discount rate depends on what type of cash flow is used as the basis for the valuation. For the cash flow for equity, a discount rate is applied equal to the owner's required rate of return on capital invested; for the cash flow for all invested capital, a discount rate is applied equal to the sum of the weighted rates of return on equity and borrowed funds(the rate of return on borrowed funds is the bank's interest rate on loans), where the weights are the shares of borrowed and own funds in the capital structure.

There are various methods for determining the discount rate, the most common of which are:

for cash flow for equity:

capital asset valuation model;

cumulative construction method;

for the cash flow for all invested capital:

weighted average cost of capital model.

In accordance with the capital asset valuation model, the discount rate is found by the formula:

where R is the rate of return required by the investor (on equity);

R f - risk-free rate of return;

Beta coefficient (is a measure of systematic risk associated with macroeconomic and political processes in the country);

R m is the total profitability of the market as a whole (the average market portfolio of securities);

S 1 - award for small businesses;

S 2 - the premium for the risk specific to an individual company;

С - country risk.

First of all, it should be noted that the capital asset valuation model (CAPM - in the commonly used abbreviation for English language) is based on the analysis of stock market information arrays, specifically - changes in the profitability of freely traded shares. Application of the model to derive the discount rate for closed companies requires additional adjustments.

As a risk-free rate of return in world practice, the rate of return on long-term government debt obligations (bonds or bills) is usually used; it is believed that the state is the most reliable guarantor for its obligations (the likelihood of its bankruptcy is practically excluded). However, as practice shows, government securities in Russia are not psychologically perceived as risk-free. To determine the discount rate, the rate on investments with the lowest level of risk (the rate on foreign currency deposits with Sberbank or other most reliable banks) can be taken as a risk-free rate. It is also possible to rely on a risk-free rate for Western companies, but in this case it is necessary to add country risk in order to take into account the real investment conditions existing in Russia. For the investor, it represents an alternative rate of return, which is characterized by a practical absence of risk and a high degree of liquidity. The risk-free rate is used as a starting point, to which the assessment of various types of risk characterizing investments in a given enterprise is tied, on the basis of which the required rate of return is built.

Beta is a measure of risk. In the stock market, two types of risk are distinguished: specific for a particular company, which is also called unsystematic (and which is determined by microeconomic factors), and general market, characteristic of all companies whose shares are in circulation, also called systematic (it is determined by macroeconomic factors). In the capital asset valuation model, the beta coefficient is used to determine the amount of systematic risk. Beta is calculated based on the amplitude of fluctuations in the total return on the stock of a particular company compared to the total return on the stock market as a whole. The total return is calculated as follows.

Total return on the company's share for the period = the market price of the share at the end of the period minus the market price of the share at the beginning of the period plus dividends paid for the period divided by the market price at the beginning of the period (expressed as a percentage).

Investing in a company whose stock price, and therefore the overall profitability, is highly volatile, is more risky, and vice versa. The beta coefficient for the market as a whole is 1. Therefore, if a company has a beta coefficient of 1, this means that the fluctuations in its total profitability are fully correlated with fluctuations in the profitability of the market as a whole, and its systematic risk is different among the market average. The overall profitability of a company with a beta of 1.5 will move 50% faster than the market. So, for example, if the average market return on a stock falls by 10 ° / o, the overall return on that company would fall 15%.

Beta ratios in world practice are usually calculated by analyzing statistical information of the stock market. This work is carried out by specialized firms. Beta data are published in a number of financial directories and in some periodicals analyzing bond markets. Professional appraisers, as a rule, do not calculate beta coefficients themselves.

The indicator of the total market profitability is the average market profitability index and is calculated by specialists based on long-term analysis of statistical data.

Calculation of the value of the cost in the post-forecast period.

Determination of value in the post-forecast period is based on the premise that the business is capable of generating income beyond the forecast period. It is assumed that after the end of the forecast period, business income will stabilize, and in the residual period there will be stable long-term growth rates or infinite uniform income.

Depending on the prospects for business development in the post-forecast period, one or another method of calculating the discount rate is chosen. The following calculation methods exist:

• - on liquidation value: This method is used if the company is expected to go bankrupt in the post-forecast period with the subsequent sale of existing assets. When calculating the residual value, it is necessary to take into account the costs associated with the liquidation and the urgency discount (in case of urgent liquidation). This approach is inapplicable for assessing an operating enterprise that makes a profit, and even more so one that is in the stage of growth;
• - based on the value of net assets: the calculation technique is similar to the calculation of the liquidation value, but does not take into account the costs of liquidation and the discount for the urgent sale of the company's assets. This method can be used for a stable business, the main characteristic of which is significant tangible assets.
• - the method of "supposed sale": it consists in converting the cash flow into value indicators using special coefficients obtained from the analysis of historical data on sales of comparable companies. Since the practice of selling companies on the Russian market is extremely scarce, the application of this method to determining the final cost is very problematic;
• - Gordon's model: capitalizes the annual income after the forecast period into measures of value using a capitalization ratio calculated as the difference between the discount rate and long-term growth rates. In the absence of growth rates, the capitalization ratio will be equal to the discount rate. Gordon's model is based on a forecast of stable income in the residual period and assumes that the values ​​of depreciation and capital investment are equal.

The final cost is calculated in accordance with the Gordon model using the formula:

V (term) = CF (t + 1) / K - g, (9)

where V (term) is the cost in the post-forecast period;

CF (t +1) - cash flow of income for the first year of the post-forecast (residual) period;

K is the discount rate;

g - long-term growth rate of cash flow.

The final cost V (term) according to the Gordon formula is determined at the end of the forecast period.

The resulting business value in the post-forecast period is brought to current values ​​at the same discount rate that is used to discount the cash flows of the forecast period.

Calculation of the present value of future cash flows and the value in the post-forecast period, as well as their total value

When applying the DCF method in the valuation, it is necessary to summarize the present value of the periodic cash flows that the subject of valuation brings in the forecast period and the present value of the value in the post-forecast period, which is expected in the future.

The preliminary value of the business value consists of two components:

• - the present value of cash flows during the forecast period;
• - the current value of the cost in the post-forecast period.

After the preliminary value of the enterprise value has been determined, final amendments must be made to obtain the final value of the market value. Among them, two stand out: an adjustment for the value of the value of non-performing assets and an adjustment for the amount of equity working capital.

The first amendment is justified by the fact that when calculating the cost, we took into account only those assets of the enterprise that are engaged in production, making a profit, that is, in the formation of cash flow. But any enterprise at any given time may have assets that are not directly involved in production. If so, then their value is not included in the cash flow, but this does not mean that they have no value at all. Currently, many Russian enterprises have such non-functioning assets (mainly real estate and machinery and equipment), since due to the protracted decline in production, the level of utilization of production capacities is extremely low. Many of these assets have a value that can be realized, for example, on sale. Therefore, it is necessary to determine the market value of such assets and add it to the value obtained by discounting the cash flow.

The second amendment is the accounting of the actual value of own working capital. In the discounted cash flow model, we include the required amount of equity working capital tied to the forecast level of sales (usually determined by industry norms). The actual value of the company's own working capital, which is at its disposal, may not coincide with the required one. Accordingly, a correction is necessary: ​​the excess of own working capital must be added, and the deficit must be subtracted from the value of the preliminary cost.

As a result of the company's valuation using the DCF method, the value of the controlling liquid block of shares is obtained. If a non-controlling stake is being evaluated, then a discount must be made.

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Course work

Assessment of the value of an enterprise with an income approach

Introduction

business profitable value

A lot of attention is paid to business assessment in modern Russia. Enterprises are sold, bought, merged with each other, some go bankrupt and come under the control of another owner.

In our country, many firms have even been created that, for a certain fee, assess the value of a business.

In modern literature, there are several main approaches. This is a costly approach, it takes into account the state of the research object. The second approach is comparative, it compares analogs, and based on them, the value of the business is deduced. The third approach is profitable. It takes into account the net profit and risks of the enterprise.

The purpose of this work is to conduct a business valuation.

The object of research is JSC "Elecond".

Work tasks:

1. To study the theoretical foundations of business valuation approaches.

2. Estimate the cost of JSC "Elecond" using the income method.

The coursework includes two chapters. The first chapter presents a business valuation and its role in the activities of an enterprise, a classification of the main approaches to business valuation.

The second chapter describes a brief description of JSC "Elecond", analysis of the main performance indicators of JSC "Elecond", profitable approach to business valuation.

1. Approaches toappraisalebusiness: theoretical basis

1.1 Otsenkabusinessand her rolein the activities of the enterprise

Business valuation is the value of an enterprise as a property complex that can generate income for its owner.

Business appraisal includes in-depth financial, organizational and technological analysis of the enterprise. Past, present and forecasted income, development prospects and competitive environment in this market.

The role of business valuation is great. Every business owner should know the real value of their business. This is necessary in case of selling a business, to attract investments, etc.

1.2 Classificationmain approachesin the assessment of the business of the enterprise

There are three main approaches to business valuation:

1. Profitable.

2. Costly.

3. Comparative.

Consider a profitable approach.

The income approach is based on cash flows. Cash flows represent the movement of the monetary system in the process of making settlements or payments and receiving the latter. Cash flows are composed of receipts (inflows) of cash and payments (outflows).

Let's consider a comparative approach. It is based on comparing the value of its assets with similar marketable assets. The basis of this approach is the opinion of the free market, expressed in the prices of completed transactions of purchase and sale of similar companies or their shares (stakes).

The comparative approach is used where there is a sufficient database of sales and purchases. Therefore, the price of the actually completed transaction takes into account the market situation as much as possible.

The cost approach is used if it is impossible to find an analogue object, there is no experience in the implementation of such objects, or the forecast of future income is not stable.

The cost approach assumes the determination of the value of a business based on the calculation of the costs required for the creation or acquisition, protection, production and sale of an intellectual property object at the time of valuation.

2 . Cost estimateOJSC « Elecond "

2.1 a brief description ofOJSC « Elecond "

JSC "Elecond" is one of the leading manufacturers and suppliers of aluminum, niobium and tantalum capacitors to the Russian market, the CIS and the Baltic states.

The history of the enterprise begins with the fact that on January 22, 1963, the Council of Ministers of the USSR issued a decree No. 121 on the construction of a plant for the production of electrical capacitors in Sarapul.

In 1968 the plant began its work on the production of oxide-semiconductor capacitors. To ensure compliance production plans and the development of the technological process in 1974, a special design bureau was created at the enterprise, which performed a number of works on the introduction of advanced technologies for the production of oxide-semiconductor capacitors, and also developed new types of capacitors. In addition to capacitors, the enterprise has been producing consumer goods and industrial and technical purposes since 1975.

On February 10, 1993 the enterprise became a joint stock company. The shareholders include the Ministry of Property Relations of the Udmurt Republic, financial industrial group Uralskie Zavody, a number of individuals and legal entities.

JSC "Elecond" was created without limiting the period of its activity, is legal entity... Acts on the basis of the charter and legislation of the Russian Federation.

Legal address: 427968, Udmurt Republic, Sarapul, st. Kalinina, 3.

The main goal of the company is to make a profit. For this, the following tasks are solved:

1. Release of high quality products that are in demand in the market.

2. Search for new sales markets.

3. Incentives for staff.

4. Creation of new jobs, etc.

Currently, the enterprise is operating in crisis conditions, but this did not affect its activities in any way. There was no reduction in staff, wages, and workweeks. This is due to the fact that the company has large government orders.

Open Joint Stock Company "Elecond" carries out the following main activities:

Development, production and sale of electronic products (IET), including with the use of precious metals, production of special-purpose products and other products for industrial and technical purposes;

Development, production and sale of military products;

Ensuring the protection of information constituting a state secret in accordance with the tasks assigned to the society within the limits of its competence;

Production and sale of consumer goods;

Implementation of design, research, development and technological work, technical, technical and economic, legal and other expertise and advice;

Trade, trade and intermediary, purchasing, sales, creation of wholesale and retail trade divisions and enterprises;

Organization and holding of exhibitions, sales exhibitions, fairs, auctions, auctions, both in the Russian Federation and abroad;

Provision of services to enterprises Catering, including the organization of the work of restaurants, cafes, bars, canteens;

Conducting entertainment, variety, cultural events;

Production and processing of agricultural products;

Export-import operations and other foreign economic activity in accordance with the current legislation;

Provision of services for the transmission of electrical and thermal energy;

Carriage of passengers by road;

Development of communication facilities and provision of communication services;

Non-state (private) security activities solely in the interests of their own security within the framework of the security service created by the society;

Other types of activities not prohibited by the legislation of the Russian Federation.

Governing bodies of the Open joint stock company Elecond are:

General Meeting of Shareholders;

Board of Directors;

General manager.

The supreme governing body is the general meeting of shareholders, at which the board of directors and the general director are elected.

The Board of Directors of the Open Joint Stock Company "Elecond" carries out general management of the company's activities, with the exception of resolving issues attributed by federal laws and the Charter to the competence of the general meeting of shareholders.

Management current activities of the company is carried out by the executive body - the general director of the company. Competence general director all issues related to the management of the current activities of the company, with the exception of issues attributed to the competence of the general meeting of shareholders and the board of directors of the company.

The general director has several departments directly subordinate (second department, legal department and department of technical and economic research). His deputies are directly involved in the areas: chief engineer, for economic issues, chief accountant, for production and marketing, for commercial issues, for personnel, security and social issues, head of the quality service.

The personnel of the plant is divided into four categories: managers, specialists, workers, employees.

As can be seen from Table 1, workers occupy the largest share in the structure of personnel by category. So, in 2013 the share of this category was more than 67%, in 2014 - more than 69%, and in 2015 - more than 68%. Thus, there is a decrease in the proportion of workers in 2015 compared to 2014.

It is also necessary to conduct a qualitative analysis of personnel, it is presented in table 2.

Based on table 2, the following conclusion can be drawn. The largest number of personnel falls on the age from 30 to 40 years for all analyzed periods, less by the age under 20 years. In general, the structure of personnel by age has not undergone major changes during the analyzed periods.

Table 2. Qualitative analysis staff of JSC "Elecond"

As for the education of personnel, as can be seen from the table, the largest number is accounted for by personnel with secondary specialized education. The positive aspects include an increase in the number of personnel with a higher education, and a decrease in personnel with a secondary education.

It can also be seen from the table that, in terms of work experience against the background of hiring new employees, the number with work experience of up to 5 years has grown, and by other criteria of work experience, there has also been an increase.

2.2 Analysiskey indicatorsactivities of JSC « Elecond "

Analysis of the main economic indicators allows us to identify the dynamics of the deviation of revenue, cost, to track the growth rates of these indicators, since the dynamics of these indicators has a direct impact on gross profit.

Analysis of the main indicators of JSC "Elecond" is presented in table. 3.

Table 3. Analysis of key performance indicators

The data in Table 3 show that in the reporting period in 2015 compared to the base year 2013, the company's revenue increased by 37.9%, cost growth was 35.3%, gross profit increased by 40.2%. In addition, selling expenses increased significantly by 68.8%, and administrative expenses - by 43.8%. Sales profit growth was 32.7%. The amount of net profit increased by 25.4%.

Thus, the activity of the company is profitable and profitable.

In table 4 we will consider the indicators characterizing the financial condition of OJSC Elecond.

Based on Table 4, the following conclusions can be drawn. The average monthly revenue of the enterprise increased in 2015 compared to 2013 by 30,178 thousand rubles. Its growth rate was 40.3%. This fact is a positive moment in the activities of the enterprise and speaks of the expansion of the scale of production.

Table 4. Analysis of indicators of the financial condition of JSC "Elecond" for 2013-2015.

In 2015, compared to 2013, the share of cash in revenue increased, which increases the company's ability to fulfill its obligations in a timely manner.

The indicator characterizing the overall solvency of the enterprise in 2015 in relation to 2013 is increasing. The recommended dynamics for this indicator is growth.

The debt ratio of the enterprise in 2015 is lower than the indicator of 2013. A decrease in this indicator is definitely a positive trend.

The degree of solvency for current liabilities in 2015 in relation to 2013 is decreasing. Negative dynamics of the degree of solvency for current liabilities caused by an imbalance in the rate of borrowed funds and the rate of growth of income from economic activities.

Coefficient of coverage of current liabilities by current assets has a growth dynamics. In general, the growth of this indicator indicates an increase in the company's solvency.

Equity capital in circulation tends to grow, which is a positive trend.

The share of equity capital in current assets in 2015 in relation to 2013 increased, which indicates an increase in the degree of provision of the enterprise with its own circulating assets.

The financial autonomy ratio in 2014 tended to grow; there were no dynamics in 2015 compared to 2013. On the whole, this suggests that the financial dependence of the enterprise has not grown or decreased.

In 2015 compared to 2013, there is an increase in the duration of current assets. The duration of the turnover of funds in production, as well as funds in calculations, also increases.

The return on working capital in 2015 decreased in relation to 2013 from 0.27 to 0.20, which is a negative trend.

Return on sales decreased from 0.21 to 0.20, a negative trend is also a negative moment in the financial activities of the company.

The indicator of profitability of products shows that in 2013, the value of sales per ruble accounted for 44 kopecks; in 2014, the profit per ruble of sales amounted to 42 kopecks. profit, in 2015 - 44 kopecks. arrived.

In 2015 in relation to 2013, the return on equity indicator decreases, which is a negative trend.

The return on permanent capital decreased from 0.28 to 0.18, which can also be attributed to negative dynamics.

In 2014-2015. in relation to 2013, the profitability of core activities decreased from 0.27 to 0.26.

Summing up, we can draw the following conclusion. At this point in time, the enterprise is solvent and financially stable, at the same time, a set of measures is needed to increase the stability, solvency, liquidity of the enterprise in order to minimize financial risks.

2.3 Income approachToappraisingkeOJSC « Elecond "

The profitable approach to business valuation is the most common in our time. The advantages of this approach are that it takes into account the impact on the value of the enterprise of such important factor, as profitability, than compensates for the disadvantages of other approaches. Since buying a business is an investment option, profitability is the main criterion for investment attractiveness. It is impossible to convince an investor to invest money in a business by simply summing up the assets of an enterprise. Therefore, the income approach is a priority when assessing the value of an enterprise, which determines the choice of this method.

One of the methods of the income approach is the discounting method. To use this method, it is necessary to calculate the discount rate (Table 5).

Table 5. Calculation of the discount rate

The discount factor at a rate of 17% is presented in table 6.

Table 6. Discount factor

In 2015 JSC "Elecond" opened a new production - the production of LED lamps. Due to this, JSC "Elecond" plans to increase its net profit by 30% in 1 year, by 35% in the second year, by 37% - from 3 to 5 years.

Let's calculate the net profit for each year:

P1 = 342323 * 1.3 = 445,020 thousand rubles.

P2 = 445,020 * 1.35 = 600,777 thousand rubles.

P3 = 600777 * 1.37 = 823,064 thousand rubles.

P4 = 823,064 * 1.37 = 1,127,598 thousand rubles.

P5 = 1,127,598 * 1.37 = 1,544,809 thousand rubles.

The results are displayed in Table 7.

Table 7. Calculation of the value of a business with an income approach

As a result of calculations, we received that the cost of the enterprise of JSC "Elecond" will be 527964.45 thousand rubles.

101124 * 1200/1000 = 124,948.8 thousand rubles.

We got that the market value will be 124,948.8 thousand rubles.

It turns out that the market value by discounting is higher than the value of the company if we take into account the market value of the share.

Let's calculate the cost of OJSC "Elecond" by the method of capitalization of net profit (Table 8).

Table 8 .. Calculation of the value of OJSC "Elecond" by the method of capitalization of net profit

Thus, the cost of OJSC "Elecond" by capitalization of net profit will amount to 27,781,831 thousand rubles.

Let's compare all three methods (Table 9).

Table 9. Comparative analysis of the assessment of JSC "Elecond" by the income approach

As can be seen from Table 9, the calculation of the value of JSC "Elecond" by the method of capitalization of net profit differs from the method of discounting and the method by the value of shares. The high price according to the capitalization method is due to the fact that the calculations take into account the average capitalization rate, and it is always lower than the actual one. The most attractive is the discounting method.

Conclusion

In conclusion, we will draw the following conclusions.

There are three main approaches to business valuation: profitable, comparative, costly.

The object of the research was JSC "Elecond", the main activity of which is the production of capacitors.

The calculation of the cost of JSC "Elecond" was carried out using an income approach using:

Discounting method;

At the market value of the shares;

Net profit capitalization method.

As a result of calculations using the discounting method, we obtained that the value of the company Elekond OJSC will amount to 527,964.45 thousand rubles.

According to the market value of the shares, the value of the enterprise will be 124,948.8 thousand rubles.

According to the method of capitalization of net profit, the cost of OJSC "Elecond" will be 27,781,831 thousand rubles.

The most attractive is the discounting method.

Bibliography

1. Volkov I.M., Gracheva M.V. Design analysis. - M .: UNITI, 2011 .-- 450 p.

2. Godii A.M. Branding: Tutorial... Ed. 2nd revised and add. - M .: Publishing house "Dashkov and K", 2013. - 424 p.

4. Morozov V.Yu. Marketing Basics: A Study Guide. Ed. 5th rev. and add. - M .: Ed. "Dashkov and K", 2011. - 148 p.

5. Pivovarov K.V. Business planning. - M., Publishing and bookselling center "Marketing", 2011. - 215 p.

6. Simionova N.E., Simionov R.Yu. Assessment of the value of an enterprise (business). Moscow: ICC "Mart", Rostov n / a: Publishing center "Mart", 2012. - 464 p.

7. Utkin E.A., Kotlyar B.A., Rapoport B.M. Business planning. - M., EKMOS Publishing House, 2011. - 446 p.

8. Chernyak V.Z., Chernyak A.V., Dovdienko I.V. Business planning. - M., Publishing house RDL, 2012 .-- 238 p.

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Income approach is a method of assessing an income-generating enterprise (business) based on capitalization or discounting of the monetary approach that is expected in the future from this enterprise.

The income approach is represented by two main methods:

Discounted cash flow method;

Profit capitalization method.

The income can be: cash flow, profit, dividends. In Russian practice, the most reasonable is the use of cash flow as an indicator of income. This is due to the fact that profit is, firstly, an indicator that varies greatly, and, secondly, it may be strongly underestimated.

Discounted cash flow method

The business value obtained using the discounted cash flow method (DCF) is the sum of the expected future income of the owner, expressed in current values.

Determining the value of a business using this method is based on the assumption that a potential investor will not pay for this business more than the present value of future income received as a result of its operation (in other words, the buyer does not actually acquire property, but the right to receive future income from ownership property). Likewise, the owner will not sell his business at a price lower than the present value of projected future earnings. It is believed that as a result of their interaction, the parties will come to an agreement on a market price equal to the present value of future income. At the heart of the discounted cash flow method is an attempt to determine the value of a company (business) directly from the value of all different types of income that investors who invest in this company can receive. This method of assessment is rightfully considered the most adequate in terms of investment motives, since it is quite obvious that any investor who invests in an operating enterprise ultimately buys not a set of assets, consisting of buildings, structures, machinery, equipment, intangible values ​​and etc., but a stream of future income, which will allow him to recoup his investment, make a profit and increase his welfare.

The discounted cash flow method can be used to value any going concern. The main stages of an enterprise valuation using the discounted cash flow method:

1) Choosing a model (type) of cash flow.

2) Determination of the duration of the forecast period and its unit of measurement.

3) Carrying out a retrospective analysis of gross proceeds from sales and its forecast.

4) Analysis and preparation of the cost forecast.

5) Analysis and preparation of investment forecast.

6) Calculation of the amount of cash flow for each year.

7) Determination of an adequate discount rate. Calculating fair value ratios.

8) Calculation of the value of the cost in the post-forecast period.

9) Calculation of the present value of future cash flows and value in the post-forecast period, as well as their total value.

10) Making final amendments.

11) Choosing a cash flow model.

In general, the scheme for calculating the cash flow accepted in international practice falls into two stages.

The first is to display the net profit after taxes.

The second stage is the derivation of the indicator of net free cash flow based on the indicator of net profit.

The above calculation scheme illustrates one of two cash flow models existing in the world practice. Cash flow model for equity. The result of the calculation for this model is the reasonable market value of the company's equity capital. Accordingly, the discount rate used in this model is the discount rate for equity capital based on the cost of raising (the rate of return) of this capital.

The second model is called the total capital invested cash flow model (the "debt-free cash flow model"). The result of the calculation according to the second model is the reasonable market value of the enterprise's capital, both equity and debt.

In our example, we will calculate the cost of cash flow for equity.

Determination of the duration of the forecast period and its units of measurement.

Under the DCF method, enterprise value is based on future cash flows rather than past cash flows. Therefore, the task is to develop a cash flow forecast (based on forecast cash flow reports) for some future time period, starting from the current year. The forecast period is the period that should continue until the company's growth rates stabilize (it is assumed that stable long-term growth rates or an endless stream of income should take place in the post-forecast period).

According to the practice prevailing in countries with developed market economies, the forecast period for assessing an enterprise can be /, depending on the purposes of the assessment and the specific situation, from 5 to 10 years. In countries with economies in transition, where the element of instability is high, adequate long-term forecasts are especially difficult, and in our opinion, it is permissible to reduce the forecast period to 5 years. At the same time, the accuracy of the result increases the division of the forecast period into smaller units of measurement: half a year or quarters.

The next stage of business valuation using the DCF method is the development of a forecast of gross revenue - the most important element of forecasting cash flow. Fluctuations in gross revenues in forecasts often lead to dramatic changes in value.

Analysis of gross revenue and its forecast require detailed consideration and consideration of a number of factors, including:

Range of products and services provided;

Production volumes and product prices;

Retrospective growth rates of the enterprise;

Demand for products and services;

Inflation rate;

Available production facilities;

Prospects and possible consequences of capital investments;

The general situation in the economy, which determines the prospects for demand;

The situation in a specific industry, taking into account the existing level of competition;

Market share of the evaluated company;

Long-term growth rates in the post-forecast period;

The plans of the managers of this enterprise.

The general rule of thumb is that the forecast for gross revenues should be logically consistent with the retrospective performance of the enterprise and the industry as a whole. Estimates based on projections that differ markedly from historical trends look suspicious.

In forecasting gross revenues, it is imperative to take into account three main components of any growth: inflationary rise in prices; growth in demand for products and, as a result, growth in sales volumes throughout the industry; and an increase in sales volumes of a particular company.

Analysis and preparation of cost forecasts.

At this stage you need:

Consider retrospective interdependencies and trends;

Study the structure of costs, in particular, the ratio of fixed and variable costs;

Estimate inflation expectations for each cost category;

Examine one-time and extraordinary items of expenditure that may appear in the financial statements for previous years, but will not occur in the future;

Determine depreciation charges based on the current availability of assets and from their future growth and disposal;

Compare projected costs with competing businesses or similar industry averages.

The key word when it comes to production costs is smart economy. If it is systematically achieved without compromising quality, the company's products remain competitive. For a correct assessment of this circumstance, it is necessary, first of all, to clearly identify and control the reasons for the emergence of certain categories of costs.

For business valuation, two classifications of costs are important. The first is the division of costs into fixed and variable, that is, depending on their change when the volume of production changes.

Fixed costs do not depend on changes in production volumes (for example, administrative and management costs; depreciation charges; sales costs, net of commissions; rent; property tax, etc.).

Variable costs (raw materials and materials, wages of the main production personnel, fuel and energy consumption for production needs) are usually considered proportional to the change in production volumes.

The classification of costs for fixed and variable costs is used primarily in the analysis of break-even, as well as to optimize the structure of products. The second classification is the division of costs into direct and indirect. It is used to assign costs to a specific type of product.

Analysis and preparation of an investment forecast.

Investment analysis includes three main components:

The amount of own working capital is the difference between current assets and current liabilities. It shows what amount of working capital is financed from the funds of the enterprise.

Calculating the amount of cash flow for each year.

There are two main methods for calculating the amount of cash flow: indirect and direct. The indirect method analyzes the cash flow by line of business. It clearly demonstrates the use of profits and the investment of disposable funds.

The direct method is based on the analysis of cash flows by items of income and expense, that is, by accounting accounts.

The total change in cash funds should be equal to the increase (decrease) in the balance of funds between two reporting periods.

Calculation of an adequate discount rate

From a technical, that is, mathematical, point of view, the discount rate is the interest rate used to recalculate future income streams, of which there may be several, into a single value of the current (today's) value, which is the basis for determining the market value of a business.

In the economic sense, the role of the discount rate is the rate of return on capital invested in investment objects of comparable level of risk required by investors, or, in other words, this is the required rate of return on the available alternative investment options with a comparable level of risk at the date of assessment.

There are various methods for determining the discount rate, the most common of which are:

For cash flow for equity:

Capital asset valuation model;

Cumulative construction method;

For the cash flow for all invested capital:

Weighted average cost of capital model.

The first way is using the capital assets model. This method is used for cash flow for equity. In its classic version, the model formula looks like this:

R = Rf + H [(Rm -Rf] + S1 + S2 + C, (1)

where: R is the rate of return required by the investor (on equity);

Rf is the risk-free rate of return;

Rm is the total profitability of the market as a whole (the average market portfolio of securities openly traded on the stock market);

I - beta coefficient (is a measure of systematic risk associated with macroeconomic and political processes in the country)

S1 - award for small businesses;

S2 is the premium for non-systematic risk specific to an individual company;

C - country risk.

When using this method, difficulties arise in determining the beta coefficient. Calculated by a statistical method, this ratio evaluates the change in the profitability of shares of individual companies in comparison with the change in the profitability of the stock index. In this case, it is necessary to consider its stability over time. In addition, at present there is no consensus on what is more correct to choose as one or another element of the model. You can also indicate that the use of this method of calculating the discount rate is limited to several industries. These are the oil and gas and petrochemical industries, power engineering, communications, and the metallurgical complex.

In this paper, the capital asset valuation model is not applied, since this technique is applicable to companies whose shares are freely traded on the stock market. The company is a closed company, its shares have zero profitability as an instrument of exchange transactions.

The second way to calculate the discount rate is the WACC (Weighted Average Cost of Capital) model. This method is used for the cash flow for all invested capital and is determined by the following formula:

R = kd (1-tc) wd + kpwp + ksws, (2)

where: kd is the cost of the borrowed capital,

tc - income tax rate,

wd - the share of borrowed capital in the capital structure of the enterprise,

kp - value of preferred shares,

wp - fraction of preferred shares,

ks - the cost of ordinary shares,

ws - share of ordinary shares.

Since a cash flow model was chosen for equity capital, this method is also not applicable.

Therefore, the third method was chosen as the basis for calculating the discount rate - the method of cumulative construction, which best takes into account all types of investment risks associated with both factors of a general nature for the industry and the economy, and with the specifics of the evaluated enterprise. This method is especially applicable in cases when an enterprise is being evaluated, the organizational and legal form of which is not a joint stock company.

The method is based on an expert assessment of the risks associated with investing in the assessed business. The discount rate is calculated by adding all identified risks and adding them to the risk-free rate of return. Investments in the Russian market are characterized by an increased level of risk, which leads to a higher discount rate. The general premise is that the greater the risk, the higher the expected rate of return on invested capital. In this case, the premium for each type of risk is determined in the range from 0% to 5%.

Western valuation theory defines a list of the main factors that must be analyzed. The sources are the materials of the World Bank.

Calculation of the value of the cost in the post-forecast period

Determination of value in the post-forecast period is based on the premise that the business is capable of generating income beyond the forecast period.

It is assumed that after the end of the forecast period, business income will stabilize, and in the residual period there will be stable long-term growth rates or infinite uniform income.

Depending on the prospects for business development in the post-forecast period, one or another method of calculating the discount rate is chosen. The following calculation methods exist:

By residual value: this method is used if the company is expected to go bankrupt in the post-forecast period with the subsequent sale of existing assets. When calculating the residual value, it is necessary to take into account the costs associated with liquidation and the discount for urgency (in case of urgent liquidation). This approach is inapplicable for assessing an operating enterprise that makes a profit, and even more so one that is in the stage of growth;

At net asset value: the calculation technique is similar to the residual value calculation, but does not take into account the costs of liquidation and the discount for the urgent sale of the company's assets. This method can be used for a stable business, the main characteristic of which is significant tangible assets.

The "assumed sale" method: consists of converting cash flow into value indicators using special coefficients obtained from the analysis of historical sales data of comparable companies. Since the practice of selling companies on the Russian market is extremely scarce, it is absent, the application of this method to determining the final cost is very problematic;

Gordon's model: Capitalizes post-forecast annual income into values ​​using a capitalization ratio calculated as the difference between the discount rate and long-term growth rates. In the absence of growth rates, the capitalization ratio will be equal to the discount rate. Gordon's model is based on a forecast of stable income in the residual period and assumes that the values ​​of depreciation and capital investment are equal.

The final cost is calculated in accordance with the Gordon model using the formula:

V (term) = CF (t + 1) / K - g (3)

V (term) - the cost in the post-forecast period;

CF (t +1) - cash flow of income for the first year of the post-forecast (residual) period;

K is the discount rate;

g - long-term growth rate of cash flow.

The final cost V (term) according to the Gordon formula is determined at the end of the forecast period.

The resulting business value in the post-forecast period is brought to the current value at the same discount rate that is used to discount the cash flows of the forecast period, minus the cash flow growth rate in the post-forecast period.

Calculation of the present value of future cash flows and the value in the post-forecast period, as well as their total value.

When applying the DCF method in the valuation, it is necessary to summarize the present value of the periodic cash flows that the subject of valuation brings in the forecast period and the present value of the value in the post-forecast period, which is expected in the future.

The preliminary value of the business value consists of two components:

The present value of cash flows during the forecast period;

The current value of the cost in the post-forecast period.

After the preliminary value of the enterprise value has been determined, final amendments must be made to obtain the final value of the market value. Among them, two stand out: an adjustment for the value of the value of non-performing assets and an adjustment for the amount of equity working capital.

The first amendment is justified by the fact that when calculating the cost, we took into account only those assets of the enterprise that are engaged in production, making a profit, that is, in the formation of cash flow. But any enterprise at any given time may have assets that are not directly involved in production. If so, then their value is not included in the cash flow, but this does not mean that they have no value at all.

Currently, many Russian enterprises have such non-functioning assets (mainly real estate and machinery and equipment), since due to the protracted decline in production, the level of utilization of production capacities is extremely low. Many of these assets have a value that can be realized, for example, on sale. Therefore, it is necessary to determine the market value of such assets and add it to the value obtained by discounting the cash flow.

The second amendment is the accounting of the actual value of own working capital. In the discounted cash flow model, we include the required amount of equity working capital tied to the forecast level of sales (usually determined by industry norms).

The actual value of the company's own working capital, which is at its disposal, may not coincide with the required one.

Accordingly, a correction is necessary: ​​the excess of own working capital must be added, and the deficit must be subtracted from the value of the preliminary cost.

As a result of the company's valuation using the DCF method, the value of the controlling liquid block of shares is obtained.

If a non-controlling stake is being evaluated, then a discount must be made.

The income method is the best choice for determining the value of most companies. However, when determining the value of an enterprise based on future income, it is important to take into account some nuances. In particular, determine the time frame for drawing up a cash flow forecast, choose a method for calculating cash flow and determine the terminal value of the company. After the calculations, it is worth checking if something has been overlooked.

The essence of the income approach is that the value of an enterprise is determined on the basis of the future income that it can bring to its owner. With regard to specific calculations, there are two main methods operating with information about the forthcoming business income: discounting and capitalization of cash flows. Let us dwell on discounting in more detail; it is more often used in practice to assess an operating enterprise. When using it, the order of actions will be as follows:

• determination of the forecasting period;
• preparation of a cash flow forecast;
• calculation of terminal value (future business value at the end of the forecasting period);
• business value calculation - the sum of discounted cash flows for the forecasting period and terminal value;
• making final adjustments.

Alexander Matyushin, Deputy Director of the Appraisal Department of FBK Grant Thornton, explains more about what the profitable approach is.

Now let's take a look at everything in order and pay special attention to the nuances of assessing the value of a business using the discounted cash flow method.

Determination of the forecasting period

For how long to make a cash flow forecast to assess the value of the company? As a rule, the lower of the following three values ​​is taken as the forecasting period:

• the time at which strategic investors usually enter a similar business;
• the period during which the annual performance of the enterprise can be predicted most reliably (5–10 years);
• time after which the company will either generate constant cash flows, or a stable dynamics will appear - the cash flow from year to year will grow (decrease) at approximately the same rate.

Preparing a cash flow plan

There are two ways to calculate cash flows - direct and indirect. When using the direct method to build a forecast, gross cash flows are analyzed by their main types based on the data accounting... The turnovers on the corresponding accounts (sales, settlements with suppliers, short-term loans, etc.) are adjusted for changes in inventory balances, receivables and payables, in order to ultimately receive only those transactions that were paid for in real money. The method is accurate, but incredibly laborious and not informative enough - it does not allow tracing the transformation of net profit into cash flow. Therefore the indirect method calculating cash flow preferable. We will talk about it further.

Cash flow classification. The simplest is to divide flows by type of activity: operating, investment and financial. However, this structure of cash flows is not enough to predict.

It is important to consider that cash flow for equity or invested capital can be used to calculate the value of a business. The cash flow for invested capital is projected on the assumption that all funds invested in the company, including loans, are considered equity. Hence, interest payments are not counted as a diversion of funds. In the case of a cash flow forecast for equity capital money spent on servicing loans is taken into account as usual (see table).

table Scheme for calculating cash flow by the indirect method

Which approach to take depends on how well the company's current capital structure matches industry funding trends. In the general case, it is customary to use the model for calculating the cash flow for the invested capital to estimate the value. If the evaluated company is fundamentally different in its ability to attract borrowed money from similar companies or operates only on its own funds, then it is more correct to predict the cash flow for equity capital. Such a rarity, therefore, we will talk further about the forecast of cash flows for the invested capital.

One more nuance. Quite often, real cash flow is used for forecasts, which does not take into account inflation. At the same time, when it comes to the activities of a Russian enterprise, the rise in prices for different groups of goods has significant differences, which can affect business profitability ... Therefore, estimating the value of a company operating in emerging markets on the basis of nominal cash flow (adjusted for inflation) will be more accurate. Now, in more detail about how and what to take into account when forecasting the indicators used to calculate cash flows using the indirect method: revenue, cost, equity, depreciation, etc.

Future income and expenses. Let's start with the revenue, after calculating which we can safely undertake the valuation of the enterprise. Its forecasting methods can be roughly divided into two groups: detailed and trend. A detailed forecast of revenue is quite laborious, since in the context of the main product groups, it is necessary to plan future sales volumes and prices for them (including the dynamics of price changes). The so-called trend methods are based on historical statistics. All of them involve the use of mathematical modeling methods.

As for the cost price, if we do not take into account the most time-consuming and reliable method of forecasting costs based on the workshop cost (when there is a forecast for revenue in kind, it is possible to predict the cost based on volume), there are still two options that allow us to estimate future costs ... The first is trending. The logic will be approximately the same as in the case of revenue. The second is detailed cost planning linked to the revenue forecast. For example, if the cost of raw materials and supplies is 10 percent of revenue, and the company is stable, it can be assumed that the ratio will remain the same throughout the forecast period.

But to use both a trend and a detailed method of assessing the value of a business, a preliminary analysis of costs for the previous two to three years is required. The goal is to identify costs that are atypical for future activities. It is possible that the aforementioned 10 percent of material costs are the result of an unjustifiably expensive purchase, and usually they do not exceed 9 percent. Of course, such costs must be excluded from the cost price before the forecast is made and the costs must be increased by those amounts that were saved one-time, for example, during two or three deliveries, it was possible to reduce transportation costs by 15 percent. And that is not all. It is only reasonable to predict costs based on their share of revenue for variable costs. Therefore, in the course of the analysis, it is necessary to clearly determine which costs are variable and which are fixed. The latter in the forecast will change only under the influence of inflation. But the change in variable costs will occur both due to an increase (decrease) in production volumes and an inflationary component.

Own working capital. When constructing a cash flow forecast using the indirect method, it is required to determine the amount of own working capital (ROC):

Equity working capital = Current assets - (Current liabilities - Short-term loans)

To determine the amount of working capital, the following procedure can be recommended. First, make an adjustment to current assets as of the valuation date, namely:

• To reduce "accounts receivable" by the amount of bad debt;
• deduct the cost of illiquid or spoiled material assets from inventory. But it is possible that the stocks according to the reporting data will have to be increased - by the amount of the excess of their market price as of the valuation date over the value at which they are recorded;
• reduce current assets by the amount of cash and short-term financial investments.

Secondly, current commitments will also have to be adjusted. Namely, to increase the amount of unaccounted short-term liabilities. And add interest and penalties for late payments to accounts payable. Thus, taking into account all adjustments, the value of own working capital at the time of the assessment will be obtained.

In order to predict RNS, you can act in at least two ways. More accurate - item-by-item planning of current assets and liabilities using indicators of their turnover. If the revenue is planned, the existing turnover indicators will not change (suppose, this assumption is made by management), it is quite simple to calculate the values ​​of the indicators used in calculating the equity working capital. Another way is to plan on a large scale, based on the indicator of the share in revenue. For example, calculate the ratio of current assets to revenue in currently or based on historical analysis. And then, knowing what income is planned, calculate current assets through a previously determined ratio.

Capital investments and depreciation. When planning the cash flow from investment activities, it is necessary to determine the company's need for capital investments. Most often, in practice, a methodology is used that assumes that the assessed company will at least maintain the existing fixed assets (OS) in working order. Accordingly, capital investments are the costs of their replacement, which can be determined individually for each fixed asset or in aggregate.

In the first case, for each unit of non-current assets through a period corresponding to its remaining real economic life, a full replacement investment is estimated. The amount is determined based on the current market value of similar fixed assets. It is important not to forget to take inflation into account, because assets will be available only after a while. The disadvantage of this approach to forecasting investments is the extreme laboriousness and cumbersome calculations.

The second option will give a less reliable result. The amount of investment is assumed to be equal to the real depreciation. It is calculated as the ratio of the market value of all assets to the weighted average remaining service life of the property according to RAS. And again, it is important not to forget to take inflation into account in order to get the real market value of the fixed asset in the future (or rather, for each year of the forecast period).

Important note. Everything that was said above about the investment forecast was based on the assumption that the company will not increase production capacity. This is not always the case. Therefore, the procedure for calculating the investments required for the expansion of activities is determined, as a rule, individually for each business. If we talk about some general trends, then there is the following pattern. As statistics show, the cost of creating an additional unit of capacity ranges from 68 to 93 percent in relation to the cost of the same unit of capacity for facilities that are built from scratch.

A few words about the forecast of depreciation charges. Depreciation can also be calculated individually for each inventory unit (based on the known rate and book value of the asset) until the asset is replaced. After replacement, the calculation is performed taking into account the new original cost.

Calculation of the terminal value of the company

Terminal value (or reversal) - the value of the enterprise after the forecasting period. The reversal can be simply specified, for example, when calculating the value of a business as an investment project with a predetermined cost of exit, or calculated using standard market valuation methods (comparative or income approach).

The comparative method for assessing reversion is rarely used. The fact is that it involves the use of multiples that are applied to the financial performance of the company. And since the calculations are made for a date in the distant future, it will be necessary to predict not only financial indicators, but also multipliers, which is quite difficult. Therefore, in the overwhelming majority of cases, the income approach is used, in particular the capitalization method. All calculations are based on the assumption that after the forecast period, the company will consistently generate cash flow that changes at a constant rate:

V term
CF n- net cash flow in last year(n) from the forecasting period, rubles;
Y- discount rate, units;
g- long-term growth rates of cash flow, units.

As a rule, the growth rate of cash flow is determined taking into account the fact that in the post-forecast period it is not planned to increase the production capacity of the enterprise. It turns out that the flow will change mainly due to inflation. But the growth rate can be determined on the basis of inflation, if the production capacity at the end of the forecast period is loaded at 100 percent. Otherwise, in the indicator, apart from price changes (as in finished products and for materials and services written off to the cost price), it is necessary to take into account the possible additional loading of production to the industry average level. To determine the growth rate of cash flow, future price dynamics are taken into account, and not those inflation indices that were laid down in the forecast period.

Business valuation

The company's value is equal to the sum of the discounted cash flows for the forecast period and the discounted terminal value:
, where

i- number of the forecast period, usually a year;
n- the duration of the forecasting period, years;
CF i- cash flow of the i-th year, rubles;
V term- terminal value of the company, rubles;
Y- discount rate, units

In assessing the value of a business, everything is simple, except for one thing. important moment worth paying attention to. Since the overwhelming majority of enterprises have income and expenses relatively uniform throughout the year, it is more correct to discount at the middle of the year (i-0.5). The same applies to the terminal cost. The correctness of the calculations made can be checked by comparing the discounted cash flows for the forecast period and the discounted terminal value. Typically, the latter value (discounted reversal) is less. In most cases, with a forecast period of about five years, the current terminal value is no more than 50 percent of the total business value.

Recent adjustments

After all the above calculations have been performed, you need to make sure that nothing has been overlooked.
Forgotten assets. Usually, when determining the value of a company with an income approach, only cash flows from operating activities are taken into account. But an enterprise may have assets that do not affect them in any way. Accordingly, their market value is added to the final valuation result.

Net debt. If, when evaluating the company, cash flows were calculated for all invested capital, then the result will reflect the cost of both equity and borrowed funds. To determine the value of a business for its owners, it is necessary to deduct the borrowed funds, or rather the amount of net debt (loans and borrowings minus cash and short-term financial investments). Despite the seeming simplicity of calculating this indicator, difficulties may arise depending on the characteristics of a particular enterprise. For example, equity capital may be reflected in the company's balance sheet under the guise of loans, in fact, long-term loans may be recorded as short-term due to the fact that they are renewed annually, etc.

The method of calculating the discount rate, the classification of cash flows by type of activity, the nuances of determining the cash flow of the post-forecast period, the model for assessing the company's value in an income way in Excel can be downloaded from the link at the end of the article in the electronic version of the Financial Director magazine.