MODERN APPROACHES INTERPRETATION FINANCIAL PERFORMANCE OF COMMERCIAL ORGANIZATIONS

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1 I. A. ZUEVA, Doctor of economics, Head of Department of management and marketing, Financial University under the government of the Russian Federation, Kaluga branch MODERN APPROACHES INTERPRETATION FINANCIAL PERFORMANCE OF COMMERCIAL ORGANIZATIONS Annotation: The article discusses the various theoretical and practice-oriented approaches the financial result of the commercial organization. Will give the current classification of the financial result, income and expenses on the basis of economic, financial, tax and accounting approaches. Keywords: The financial result of a commercial organization, the concept of financial results, revenues, expenses, profit. In modern conditions the special role belongs to commercial organizations, as they have been recognized numerous and the most advanced form of business organization. The main purpose of business is to maximize profit margins, since the profit - a key factor in stimulating activity, creating a stable financial footing and ensuring the implementation of projects and programs. In this regard, the financial result takes on an important role, reflecting the efficiency of the organization, the result of a skilful and successful business. The current stage of economic development determines the need for a promising approach to the assessment of financial results. As a sound approach to the assessment of financial results allows fully characterize the organization's activities and prospects of its development, it is necessary to objectively assess the impact of internal and external factors, to develop economically viable management solutions that improve the efficiency of economic entities. Methods and results of the financial valuation models are still quite controversial issues in economic theory and practice. While appreciating the results obtained by researchers, it should be emphasized that the majority of the authors reflect only some aspects of the economic substance of financial results and approaches to their assessment. Traditionally, financial results meant the results obtained from the main activities of the organization and from other operations. Financial results in the broadest sense can be characterized as intermediate - income and expenses, and how end - profit and loss organization. Financial result - a very complex economic category, so there may be different interpretations of it. For the first attempt to understand the essence of "financial result" category includes the views of the ancient Greek philosophers Plato and Aristotle. History has many areas of economic theory, influenced approaches to the understanding of the financial results. Generic approaches of different economic schools to the interpretation of the economic substance of income, expenses and financial results and are presented in Table 1 [1, p ; 2, p ; 3, p. 26].

2 Representatives and stages of development The school of Economics The theory mercantilist (T. Mann, A. Montchretien) XVI - XVIII centuries. The doctrine of the Physiocrats (F. Quesnay, Turgot R.) XVIII century. The classical theory (Adam Smith, David Ricardo) the end of the XVIII - 1st floor. XIX century. Marxist theory (Marx, Engels) 2nd floor. XIX - XX century. Neoclassical theory (A. Marshall, A. Pigou, JB Clark) end of XIX - the beginning XXI centuries. institutional theory (Veblen, John. Galbraith) XX - beginning of XXI centuries. Table 1 - The approaches to the treatment of income and expenses, financial results, formulated by different economic schools The approach to the treatment of income and expenses Costs - expenses for purchase of goods Income - money in the form of capital that is in constant motion. Source of income - foreign trade Expenses - Expenses committed in the land for the cultivation of annual work Income - wealth created annually, revenues from the sale of the nation's "pure product" Expenses - are called the factors of production (limited resources used in production) Unlike the physiocrats income - is not the value added produced by the earth, and created in the entire sphere of material management Costs - the costs of the past (materialized) and living labor Income - money form of the value of production Consumption - clear (accounting) and implicit (economic) production costs (the costs of factors of production). Buhg. costs (charging. pl. + interest on capital + zem. rent) Income (monetary revenues) - revenues from the outside, which are in the form of money; including 'Payments in kind' (free housing, free coal, gas, water), which are produced as part of the remuneration of an employee in return for payment of money Expenditure - means the use in production, as well as all kinds of services costs (research and development expenses, education, etc.) Income is income from labor productivity growth and expected returns The approach to the treatment of financial results The financial results, which are expressed in the form of profit, formed in the sphere of circulation and trade, which are a source of wealth. Profit - the difference between the sale price and the purchase price Profit is the main form of financial results is due to the natural fertility of the land Formation of financial results takes place in the sphere of production and profits, as wages and rents, is part of the cost, which in turn creates a difficulty. Profit - the difference between the income, cost of product production and sales, and income from the sale of the final product at market prices Additional value created by the labor of employees in the manufacturing process and sold through the sphere of circulation, is the main source of financial results. Those. profit - realized surplus value The double interpretation: on the one hand the financial results generated by capital and are the price of the production factor, on the other - are formed by a complex of factors of production involved. Profit (accounting) - Income (monetary revenue) minus the cost accounting. Profit (economic) - Income (monetary revenue) minus economic costs Financial results are influenced by a variety of non- economic public institutions (state, social groups, trade unions and others.). Profit comes from an objective assessment of income and expenses (not only on the production and valueadded)

3 The basis of the traditional approach to the understanding of the financial results is the neoclassical theory, since it corresponds to the most used in the world's system of national accounts, is a theoretical and methodological basis of the system. Analysis of different views on the nature and content of such economic categories as profit shows that despite the variety of concepts in economics developed two fundamentally opposing methodological approach to assessing the economic nature of the profit. The essence of this approach is presented schematically in Figure 1 [1, c. 218; 330]. The essence of the approach to the assessment of the economic nature of the profit Transmuted form of surplus value land, capital Profit - the surplus value, or that part of the entire value of the goods, which embodied the surplus - or unpaid labor of the working Marx Income from the use of all factors of production, ie, labor, Profit - the unconditional income from factors of production, it is a reward for entrepreneurial activity, technical innovations and improvements for the ability to take risks in the face of uncertainty, this monopoly revenue, etc. PE Samuelson Figure 1 - Methodological approaches to assessing the economic nature arrived Thus, the study shows that the concept under consideration at all times treated differently, constantly undergoing changes and development, becoming more complex, but so far has not developed a unified approach. Today, in the modern theory and practice also secrete a variety of approaches to the definition of income and expenses, financial results. Modern approaches to the understanding of income are shown in Table 2. Note that the basic legal documents regulating the Russian Federation and the rules of procedure of the formation of information about income and expenses of the organization, are the provisions on accounting (PBU) 9/99 "Incomes of the organization" [4] and 10/99 "Expenses of the organization" [5]. In turn, the basis of these documents laid accounting principles, which are reflected in the Regulation on Accounting 1/08 "Accounting policy of an organization". [6] The basis for the development of these provisions was the international practice of accounting. So the American Accounting Association (AAA) in the standard 1957 defines income as the aggregate monetary value of products or services, now transferred to the buyers during the a period of time [3, p. 47]. Committee on Financial Accounting Standards Board (the FASB) revenue is defined as the inflow of the organization's assets or repayment of debt (or a combination of both) as a result of the delivery or production of goods, services or other activities that constitute its core activities.

4 Source / Author The approach to the treatment of income RAS 9/99 "Revenues organization" Table 2 - Approaches to the definition of income (compiled by the author) Income recognized organization increases in economic benefits as a result of receipt of assets (cash, other property), and (or) other financial commitments, leading to an increase in the capital of the organization, except for contributions of participants (owners of property) RF Tax Code IFRS Dictionary Russian language SI and Ozhegov NY Shvedova Modern Dictionary of Economics VV Kovalev I'M IN. Sokolov JG Leontiev, OP smooth LI Horuzhy Revenue is recognized economic benefits in cash or in kind, to take into account the possibility of its assessment of the case and to the extent that such benefits can be assessed Income - increases in economic benefits (inflow or increase in assets or decrease in liabilities) for the period, which increases the capital of the i ti Income - money or goods received from the company or from any kind of activity Broadly speaking, income - any cash inflow or receipt of material assets that have monetary value. The company's revenue - an increase in its assets or reduction of liabilities, leading to an increase in shareholders' equity Two approaches to the treatment of: - From the point of theory is to increase the economic benefits the organization as a result of receipt of assets (cash, other property), and (or) reduction of liabilities in the normal course of business, leading to an increase in owners of capital of this organization, with the exception of their contributions; - From the standpoint of practice: it is the gross inflow of economic benefits arising in the course of the organization, consisting of two parts, revenue and other income Income - real or potential (depending on the method of recognition), cash flow, which increases the amount of own sources of funds Proceeds organization should acknowledge the increase in company profits during the reporting period, which occurs in the form of produce or increase assets or reduce liabilities resulting amount of capital that is not associated with the contributions of the participants of the share capital Income - Changes in the capital structure of the organization in connection with the availability of resources, defined as the result of specific, targeted actions of economic entities carried out in the framework of existing activities Similarly, lining the approaches to the category of expenditure. Table 3 presents the approaches to the understanding of the costs in the Russian accounting system. Table 3 - Approaches to costs (compiled by the author). A source The approach to the treatment of costs PBU 10/99 "Charges of the organization" Expenses recognized organization decreases in economic benefits as a result of the disposal of assets (cash, other property), and (or) the incurrence of liabilities, leading to a reduction in the capital of the organization, except for the reduction of contributions by the decision members (property owners) RF Tax Code Expenses are justified and documented costs incurred (incurred) by the taxpayer

5 IFRS Big economic dictionary Expenses - decreases in economic benefits, which is in the form of disposal (reduction of assets, increase liabilities), which leads to a reduction of capital not connected to the distribution among the founders Expenditure - reducing the assets of the company or increasing its liabilities, which arise in the course of economic activity in order to generate profits and lead to a decrease in the value of equity Costs are an outflow of economic benefits during the reporting period in the form M.A.Vahrushina of reduction or use of assets or increasing its liabilities, leading to a decrease in capital and excellent capital allocation between the participants of the organization VV Kovalev I'M IN. Sokolov LI Horuzhy VE Kerimov Three types of interpretation of the concept of "costs": - In the context of physical movement values: expenses as a sacrifice of some resource, its reduction or use to achieve their goals; - In the context of the circulation of capital: the cost-effective as the successive transformation of the resource potential of the company, with the aim of generating revenue; - In the context of the formation of financial results: the cost as the valuation amount of resources used, related to the period for which the estimated financial Consumption - real or potential cash flow, reducing the amount of own sources of funds Consumption - utilization of existing property or other proprietary rights of resources in the production and sale of goods (works, services), which caused changes in the capital structure and to obtain income, and ensure the normal functioning of the organization The decrease of funds or increase its debt obligations in the course of economic activity FASB defines expenses as a disposal or other use of the asset, or the formation of accounts payable as a result of the production of goods, services or perform other activities related to the core. FASB focuses on the disposal of assets to pay for the organization of production factors [7-49, p. 49]. Despite the fact that the Russian standards for accounting and are based on international standards, there are differences in the recognition of income and expenses. In general, modern Russian scientistseconomists are based on the interpretation of the above discussed definitions proposed in the provisions on accounting. Various authors approaches to financial results are presented in Table 4. Table 4 - Approaches to the definition of financial results (compiled by the author) A source The approach to the treatment of financial results RF Tax Code Profit (loss) - the difference between the income received and expenses determined in accordance with established procedure for the various Profit (loss) - the difference between income and expenses, including IFRS adjustments, providing capital maintenance where necessary Dictionary Russian language SI and Ozhegov NY Shvedova Big economic dictionary Dictionary financial economic terms and definitions Profit - the amount by which income exceeds the revenue costs of economic activities in the production of goods Profit - the excess of the proceeds of the sale of goods and services over the cost of production and sale of these products. It is calculated as the difference between the proceeds from the sale of the product of economic activity and the amount of production cost factors for these activities in Profit - economic category, which expresses the financial results of the economic activity of enterprises

6 Finance and credit encyclopedic dictionary VV Kovalev OV Efimova Profit - the difference between the revenues obtained from sales, fixed assets and other assets, work performed, services rendered, non-sales activities, and the amount of accrued costs for production, sale of products and the implementation of other activities. Profit (loss) - increase (decrease) in equity owners of the current period Profit (loss) - the actual outcome, the right to dispose of property owners who have HELL. Sheremet, RS Saifulin IA Form Profit (loss) - change in the company's own capital of the reporting period Profit (loss) - net income entrepreneurs on investment, reflecting its reward for the risk of entrepreneurial activity GV Savitskaya MI Cooter LI Horuzhy OI Volkov VE Anoufriev Profit (loss) - part of the net income directly received by business entities after the sale of products Positive financial result (profit) is only possible in excess of revenues over expenditures, while equity capital must not only be preserved, but also multiply Profit (loss) - economic category, characterizes the financial results of the business activity of the organization, figure that best reflects the efficiency of production, volume and quality of the products, the state of labor productivity, the level of costs. When calculating the profit made comparison of income and expenditure, and not an assessment of funds Profit (loss) - the final financial results of the business activity of economic entities - the difference between the price of a product and its cost The financial result is the difference from the comparison of the amounts of revenues and expenses of the organization. The excess of income over expenditure means increase in property organization - profit, and budget deficit - reducing property - loss It should be noted also that the traditionally accepted to consider revenues, expenditures and financial results to the financial and economic point of view. The economic approach considers income as the flow of funds (assets) at the disposal of the organization, as well as any increase in the asset that is associated with an increase in accounts payable; and consumption - any retirement funds (assets) of the organization, and it does not matter, resulting in a reduction of an asset, that is, consumption is the sale of products, goods, works or services to the organization and the emergence of trade receivables before payment [3, p.52]. From the accounting point of income and expense appear as factors of formation of financial results of the company (increase or decrease profits of losses) and have an impact on the capital owners, only after its distribution. Accounting and economic approaches to the determination of the financial result are considered as basic. The accounting (book) profit from the sale of assets in favor and determined in accordance with the accounting procedure as the difference between revenues and expenses that are recognized in the reporting period and recognized in the income statement. Under the economic profit (loss) understand the growth (reduction) of the owners of capital for a certain period and is found by the ratio of total income and total expenses of the organization (including explicit and implicit costs) [3, p. 55]. Thus, the economic interpretation of the explicit costs include in addition also internal costs that are not reflected in the accounting documents. Therefore, the accounting profit is more than the value of the implicit economic costs, which are estimated as missed opportunities.

7 Of great importance is scientifically based classification of income and expenses of the organization in the context of the financial, managerial and tax accounting presented on figure 2 [7, p. 12] and 3 [7. 13]. Note that as a result of differences in the approaches to group income and expenses in the financial, tax and management accounting differently shaped and financial results. Figure 2 - Classification of Revenue According to financial accounting can determine the financial performance of the organization, as it covers all types of income and expenses. Tax accounting generates information on the taxable profit. On the basis of management accounting data, in terms of information about income and expenses from ordinary activities, we can determine how profitable a particular type of goods (works, services). In the economic literature under the general concept of the final financial result - "profit organizations" often understand its different types, characterized by currently dozens of terms by various authors. For example, Savitskaya GV [8, c. 258] highlights the classification according to the degree of inflationary factors: nominal and real income, adjusted for inflation rate in the reporting period. She also highlights the nature of profit tax: taxable and not taxable income. The most capacious and more, we also seem to systematize proposed IA Blank [9, p. 25].

8 Figure 3 - Classification of expenditure Along with the above classifications arrived in the scientific literature and other names used: economic profit; contribution margin; accounting profit; profit after tax. Interesting and approaches that consider the profit or loss from a position of uncertainty and risk.

9 Generic approaches to classification of the final financial result of the organization represented in Table 5 [9, p , 10, p ]. The presented list of reviewed classifications reflects the diversity of types of earnings used in scientific terminology and business practice. involve: Thus, we have the theoretical understanding of the economic substance of financial performance that 1) a comprehensive description of the financial results, revenues, expenses; 2) consideration of the economic and accounting concepts; 3) synthesis and classification of financial results. Table 5 - Ordering of financial results by main classification features (compiled by the author) Classification criteria Types of income (loss) Gross profit (loss Profit / loss from sales Profit / loss before tax Taxable profit / loss Net income (loss According to Russian Basic earnings per share / loss legislation Diluted earnings per share / loss The nature of recording The nature of organization The main types of business operations organization Accounting profit / loss Economic profit / loss Profit / loss from ordinary activities Profit / loss from extraordinary events Profit / loss from sale of goods (works, services) Profit / loss on sale of property Profit / loss from extraordinary operations Main activities organizations The composition forming elements Profit / loss from operating activities Profit / loss from financial activities Profit / loss from investing activities Profit / loss on innovation Marginal profit / loss Gross profit (loss Net income (loss Dependin g on the regularity forming The nature of taxation The nature of the inflationary "clean up" "Emergency" profit / loss The regular (periodic) gain / loss Seasonal profit / loss Taxable profit / loss Profits are not taxable / loss Nominal profit / loss The actual profit / loss The adequacy of the level of formation Low profit / loss Normal profit / loss High profit / loss The period under review forming On receipt of the periodicity Profit prior (past) period / loss Profit for the period / loss Profit planning period (planned profit) / loss Periodic profit / loss Annual profit / loss

10 Character usage Capitalized profit / loss Consumed profit / loss Level of Retained profit / loss Distributed profit / loss From a position of uncertainty and risk With the bankruptcy of the position By sectors and types of production The value of the final result management Profit / loss of risk Compensation profit / loss Appropriated profit / loss Improved sanitation profit / loss Profit / loss from the sale of crop production Profit / loss from the sale of livestock products Profit / loss from the sale of products of industrial production, etc. Positive earnings (earnings in the ordinary sense of the word) Negative income (loss) From the above it can be concluded that, since the financial results of the plural in its view, are flexible from the point of view of the impact of the external and internal economic environment companies functioning, then there is a high importance of quantitative and qualitative evaluation, which is responsible for continued relevance and discussion of these issues in the current economic theory and practice. References: 1. Bartenev, SA The history of economic doctrines: a textbook. - M.: INFRA-M, p. 2. Tanygina OA Approaches to the "profit" concept in different economic schools // Economics p Deitch U.YU. Development of the accounting financial results from biotransformation of biological assets in the poultry industry: the dissertation Ph.D.: Accounting, statistics. - Moscow, p The Ministry of Finance Order of number 32n (ed. from ) "Approval of Provisions on accounting" Incomes of the organization "PBU 9/99" // "Bulletin of normative acts of the federal bodies of executive power." The Ministry of Finance Order of number 33n (ed. from ) "Approval of Provisions on accounting" Expenses of an organization "PBU 10/99" // "Bulletin of normative acts of the federal bodies of executive power." The Ministry of Finance Order of number 106n (ed. from ) "Approval of Provisions on accounting" accounting policy "PBU 1/08" // "Bulletin of normative acts of the federal bodies of executive power." VI Bogatyrev Revenue, expenses and financial results in terms of adaptation to IFRS: abstract diss. Ph.D.: Accounting, statistics. - Eagle, p Savitskaya GV Analysis of economic activity of the enterprise: the textbook. - M.: INFRA-M, p. 9. Blank IA Profit management: Textbook. allowance. - M.: Omega-L, p. 10. Manuilenko VV Sadovskaya TA Management profit organizations: Textbook. allowance. - M.: Finance and Statistics, p.