Lecturer Usachev V.A.

students – Gogiya E, Buzhinsky E

Donetsk National University of Economics and Trade, Ukraine

Analysis of the financial statements to make investment decisions

At present the problem of investment activities has become one of the most important in the process of economic reform in Ukraine. Search and mobilize sources of investment, on the one hand, and the implementation of a program of investment, on the other hand, were relevant in all areas of economic activity. Instability in the investment markets is observed both in Ukraine and abroad, which puts the investor before the tough choice on investment of free funds in securities, financial instruments, bank or business. In accordance with the investor determines the investee companies among those industries that have the best prospects for development and can provide the highest efficiency investments. In this important role acquires assessment of investment attractiveness of the enterprise.

Investment attractiveness of the enterprise depends on many factors, such as general characteristics of the company, the characteristics of its technical basis, the range of products, production capacity, places the company in the market, the characteristics of management of authorized capital, business owners, volume and profit trends using it.

Problems of financial statement analysis are investigated in the works of foreign scientists and economists R.Adamsa, L.A.Bernstayna, P.S.Bezrukyh, R.L.Deylyza, D.R.Karmaykla and other. Among domestic scientists, this problem is reflected in scientific studies at M.T. Belukha, F.F. Butyntsya, S.F. President, G.M. David, M. Kuzhelnyi, E.V. Mnich, P.Y. Khomyn and other.

Despite the obvious importance of the issues mentioned, it studies of domestic science at present can not be considered sufficient, especially against the background of research comparing the problems of accounting and economic analysis.

The purpose of this paper is to study the role of analysis of financial statements in making investment decisions further improving performance on the definition of investment attractiveness of enterprises.

Taking a managerial decision, investors must create a portfolio of investments or choose an investment project that will not only save your money but will provide a specified level of profit, profitability and growth of capital invested in a project. The investor must be sure that its investments wisely used, are directed at the development of enterprise and protected from possible abuse. In circumstances where the investor is not involved in management of the company, it is interested not only in the effective disposal of investments that the company has received, but also in the systematic communication of accurate information about the financial condition of the company.

In today's dynamic market conditions dramatically increased the need for information about the property, the current activities of the company and its results. Without such data it is impossible to make the right investment decisions to further development. That is why a significant role as an important

information sources acquired financial statements.

Investment decisions are closely associated with the analytical data of accounting, management accounting, budgeting and reporting developed that affect the rationale and efficiency in decision-making. Based on the fact that the result of investment decisions can be both positive and negative processes (gains or losses), the investor must have before a plan of action strategy for building effective management decisions and economic analysis of future investment object.

For businesses and individuals the most important is to assess how financially independent object is investing and whether such investments will bring profits or other benefits to their owners, or be able to pay its obligations debtors and for how long. This list could go on for a long time, but its peculiarity is the need for information about the financial condition and results of operations of economic entities. Indicators that allow for this information contained with the financial statements.

Financial statements are based on the credentials. It is special that combines accounting data, statistical and operational accounting. That is why this kind of reporting is the main source of information for assessing the financial condition of the company.

Financial statements should reflect the cumulative property and financial situation of enterprises, institutions and the operating results for the period.

As stated in the law "On Accounting and Financial Reporting in Ukraine" and in "General requirements for financial reporting" user accounts – there are natural and legal persons who need information about the company to make decisions.

Financial statements are the main source of information about its activities. Performance reporting company to use the most control over the production and financial plans to identify gaps and determine how to address them. [4]

Reporting indicators are used to analyze economic activity in certain areas of production, identify the positive and negative aspects, causes deviations from the objectives, identifying internal reserves for improving the efficiency of the enterprise.

Only on the basis of complete, timely and accurate information, the investor may decide to invest in the securities business.

The fundamental basis of the valuation of investment and business decisions is the stage of financial and economic analysis [6].

In particular, when assessing investment attractiveness of enterprises rely recommended the following main characteristics:

- absolute liquidity ratio,

- rate the overall liquidity

- ratio of financial stability,

- coverage ratio of equity commitments. [7]

It should be noted that the analysis of economic literature indicates a lack of consensus on the use of solvency ratios and financial stability.

Analysis of financial stability (solvency) of the company is calculated based on the following factors:

• solvency ratio (autonomy) - calculated as the ratio of equity to total company balance sheet and shows the proportion of equity in total assets, advances in its activity (normative value -> 0.5);

• funding ratio - calculated as the ratio of borrowed and equity funds and describes the dependence on borrowed funds (normative value - <1 reduction);

• ratio of own working capital - calculated as the ratio of net working capital to the value of current assets of the company and the security company shows its own working capital (regulatory value -> 0.1);

• mobility rate equity - shows the proportion of equity used to finance current operations. Calculated as the ratio chystohooborotnoho to equity capital (normative value -> 0 increase).

In order to provide useful and necessary information for purposes of managing and analyzing enterprise financial stability but these factors are also invited to apply additional indicators:

• financial dependence ratio - ratio is inverse to the coefficient of autonomy, shows that the sum of the total value of property companies accounted for 1 USD. equity (normative value - <2);

• coefficient of financial stability - is calculated as the ratio of equity and borrowed (normative value -> 1);

• concentration ratio of capital - describes the share of capital in the total capital of the company (normative value - <0.5);

• ratio of long-term liabilities - defines the part of long-term debt in total sources of (normative value - <0.2);

• ratio of long-term borrowing - describes the proportion of long-term loans in total sources of which can be directed to implement long-term programs (normative value - <0.5).

Considered consider optimal performance by the number and effective for management and investment decisions. The calculation of these indicators will allow to fully evaluate the status and trends in the financial stability of the company.

The approach to the analysis of financial statements and accounts of all financial stability particularly convenient in the management company not only to detect and correct problems in the current work, but also to develop and take action to improve the effectiveness of particular production and marketing operations, rational use of available resources, increase solvency and financial stability of the enterprise, as well as to inform potential investors and contract enforcement.

Financial Statements - an important management tool, based on accounting data as continuous systems and continuous documentation of business processes, orderly synthesis of information on the status of assets and liabilities of the company. It reflects and enables you to evaluate the results, predict trends of increasing efficiency and plays an important role in making management and investment decisions.

The main role in managing investments belongs to analysis. Therefore, a necessary condition for investment is to give investors timely, complete and accurate information about the investment attractiveness of the company using the calculation of effective indicators of solvency and financial stability.

Promising avenue for further research is to develop and improve the quality of data and accurate reflection on accounts of the full range of relevant information about complex transactions, assets, capital, liabilities, results of the enterprise. When providing reliable basis for analysis of financial reporting and decision rationale management solutions for investors is simple and straightforward, and most importantly - the most accurate and reliable.

Literature

1. Law of Ukraine "On Accounting and Financial Reporting in Ukraine" / / Accounting 2001: National standards. - 2001. - January 29. - P. 12-19.

2. Regulations (standard) A 1 "General requirements for financial reporting" / / All about accounting. - 2005. Feb. 8 (№ 13). - P.3 - 5.

3. Economic analysis / [FF Butynets, S. Shkaraban, EV Mnich et al.]: Ed. F.F Butyntsya. - Zhytomyr: private "Ruta", 2007. - 704 p.

4. Reporting companies: Training. Guide students in "Accounting and Auditing" / ed. YA Chains, DM Fesenko, ZM Levchenko. - K. TSUL, 2005. - 656 p.

5. Mayorov TV Investing: Textbook / T.V.Mayorova. - K. TSUL, 2004. - 376 pp.

6. Models and methods of decision analysis and audit: a manual / Ed. FF Butyntsya. - Zhytomyr: private "Ruta", 2004. - 352 p.

7. DSL-Tsalko YS Financial analysis. Tutorial / Yu.S.Tsal-Tsalko. - K. TSUL, 2008. - 566 p.

8. Shevchuk VR Strategic management accounting: teach. Guide (for students. Higher. teach. bookmark.) / VR Shevchuk, Ed. AM Kovalyuk. - K.: Alert, 2009. - 176 p.