Экономические науки/3. Финансовые отношения

Karnabaev I.I., Moiseieva F.A.

Donetsk National University of economics and trade named after Mychaylo Tugan-Baranovskiy

Financial activities of business entities

The present paper casts light upon the issue of the essence of the financial activities of business entities, as well as their analytical evaluation on the example of Ternopil region.

The market economy is impossible without business - forms of management, which have a positive effect on the socio-economic development of society with employment and welfare of the majority of the population. That business sector is the guarantor of economic stability and improved living standards of its citizens.

Entities stimulation to help people overcome the effects of the global financial crisis. Note that most of this applies to small businesses, where the benefits of entrepreneurship are demonstrated to the fullest, as these institutional units require relatively less investment and faster guarantee a profit, which is the source of all budgets.

One of the main tasks for entities in a dynamic, volatile and uncertain environment is to keep on the achieved level and already on this basis, to ensure the continuity of its development. Today the effective operation of business units is virtually impossible at one hundred percent financing only their own financial resources, and in most cases uneconomical, correspondingly, financial transactions become a necessary part of it. Therefore business entities can use both borrowed and involved financial resources. In this case, the issues shaping financial income and the financial costs, that is financial activity, gain relevance.

In the current environment the functioning of entities is increasingly complicated by the influence of changes in various environmental factors on them. Taking stock of the general trend of slight improvements in recent years, we note that the business sector is not yet a decisive factor in the growth of the national economy. The financial and economic crisis that has engulfed most of the entities of Ukraine led to reduction of their financial capacity, as in 2009, the activities of nearly 40% of all economic units was unprofitable. This is due to the imbalance of assets and liabilities in duration, low proportion of their financial resources, limited networking capital and the presence of conflicts between liquidity - profitability and financial stability - liquidity.

Everything described above proves not to be in favor of effective financial activities of business entities.

The dynamics of growth of the total number of business entities in Ukraine indicates that since 1991, the economy grew by almost 12 times.

The largest growth of business entities in the early 90-ies is on average 150% - 200% annually. Between 1996 and 2003, the annual growth rate is already at about 115%. Since 2004, the changes in the entities’ increment take place: from 4.7% to 8.4% (2004 -2005) and from 3% in 2006 to 11% in 2007. In 2008-2009 the total number of business entities in Ukraine amounted to nearly 2.6 million units. The average number of entities per 10 thousand of population is 661 units, in the Ternopil region it’s 525 units. It may be noted that the figure in Ternopil, Rivne (512 units) and Chernihiv (513 units) regions is the lowest compared to other ones. This ratio is the highest in the cities of Kiev (1012 units) and Sevastopol (824 units).

Within the structure of business entities in 2009, enterprises constitute 15.8% and individual entrepreneurs - 84.2%. Structure of the companies themselves is: small - 85.1% (324 thousand units), average - 14.7% (56 thousand units), large - 0.2% (770 firms). This is 70% more compared to the same indicator of 2001. The number of registered individual entrepreneurs of Ukraine increased by 85% from 2001 to 2009. It can be concluded that the general background of high rates of increase in the number of business entities growth of individual entrepreneurs today is ahead of dynamic creation of small businesses.

Among all the entities in Ukraine outrunning quantitative growth is typical for small companies compared to medium and large. The number of active compared to the beginning of market reforms (1995) increased by 3.5 times. Moreover, by 2007, the country maintained a positive trend of increasing quantitative indicator of small businesses in almost all regions of Ukraine. Positively, in contrast to the first half of the 1990s, the formation of small businesses in recent years is not the result of the division or restructuring of existing enterprises, but through the formation of entirely new entities.

The average number of small businesses in Ukraine per 10 thousand of population in 2007 amounted to 76 units, to 72 in 2008 and 75 in 2009. Small businesses employ 2 227.4 thousand persons, in small businesses of Ternopil region there are 36.2 thousand, while the number of employed workers with the private entrepreneurs in Ukraine is higher than 4 223.5 thousand. In Ternopil this indicator is equal to 84.0 thousand people.

Thus, the data analysis showed that the absolute number of small businesses in Ukraine is growing and currently constitutes 85% of all registered companies. And it is worth noting that the change in the growth rate of small businesses shows continuous slowdown of their number. So, year 2008 was unfavorable for all businesses and small businesses in particular because of the financial crisis, which led to a certain reduction in their number. Though suspending of the growth of small enterprises may explain the saturation of the trade by them together with the simultaneous absence of the stimulus of their appearance exactly in the fields of industrial sphere.

The results of the analysis of the entities in terms of economies of Ternopil region made it possible to conclude that during the last five years, the most important were food processing, machine building and metalworking, light industry, building materials, flour-milling industry, woodworking. The leading role belongs to the food industry, where sugar, meat, dairy, alcoholic beverages, confectionery, tobacco, tinned vegetables and flour stand out.