Financial decisions are the conditions for their implementation. Making financial decisions. Risks Practical work. a) There are two options

29.11.2019

1. Concept and classification of solutions

Decision-making, as well as the exchange of information, is an integral part of any managerial function. The need for decision-making arises at all stages of the management process, is associated with all areas and aspects management activities and is its quintessence. That is why it is so important to understand the nature and essence of decisions.

What is a decision? Let's try to give at first the most general characteristic. Usually, in the process of any activity, situations arise when a person or a group of people is faced with the need to choose one of several possible options for action. The result of this choice will be the decision. Thus, a decision is a choice of an alternative.

Each of us has to choose something dozens of times every day, developing our abilities and acquiring decision-making skills from our own experience. There are many examples: the choice of clothes from the existing wardrobe, the choice of dishes from the proposed menu.

Any act of an individual or action of a collective is preceded by a decision. Decisions are a universal form of behavior of both an individual and social groups. This universality is explained by the conscious and purposeful nature of human activity.
However, despite the universality of decisions, their adoption in the process of managing an organization differs significantly from decisions made in private life.

What distinguishes managerial, and in particular financial decisions?
. Goals. The subject of management (be it an individual or a group) makes a decision based not on their own needs, but in order to solve the problems of a particular organization.
. Effects. The private choice of an individual affects his own life and may affect the few people close to him. A manager, especially a high-ranking one, chooses the course of action not only for himself, but also for the organization as a whole and its employees, and his decisions can significantly affect the lives of many people. If the organization is large and influential, the decisions of its leaders can seriously affect the socio-economic situation of entire regions. For example, the decision to close a company's unprofitable facility can significantly increase unemployment.
. Division of labor. If in private life a person, when making a decision, as a rule, fulfills it himself, then in an organization there is a certain division of labor: some employees (managers) are busy solving emerging problems and making decisions, while others (performers) are already implementing decisions taken.
. Professionalism. In private life, each person independently makes decisions by virtue of his intellect and experience. In managing an organization, decision-making is a much more complex, responsible and formalized process that requires professional training. Not every employee of the organization, but only those with certain professional knowledge and skills, is empowered to independently make certain, in particular financial decisions.

Having considered these distinctive features of decision-making in organizations, we can give the following definition of a financial decision.

A financial decision is the choice of an alternative made by the manager within the framework of his official powers and competence and aimed at increasing the profit (reducing losses) of the organization.

In the process of managing organizations, a huge number of financial decisions are made with different characteristics. However, there are some common features that allow this set to be classified in a certain way. This classification is presented in the table:

Table 1. Classification of financial decisions

Let's consider it in more detail.
. The degree of recurrence of the problem. Depending on the recurrence of the problem that needs to be solved, all management decisions can be divided into traditional, repeatedly encountered in management practice, when it is only necessary to make a choice from existing alternatives, and atypical, non-standard solutions, when their search is associated primarily with the generation of new alternatives.
. The significance of the goal. Decision-making can pursue its own, independent goal or be a means to contribute to the achievement of a goal of a higher order. Accordingly, decisions can be strategic or tactical.
. Sphere of influence. The result of the decision may affect one or more departments of the organization. In this case, the solution can be considered local. The decision, however, can also be made with the aim of influencing the work of the organization as a whole, in which case it will be global.
. Implementation duration. The implementation of the solution may take several hours, days or months. If a relatively short period of time elapses between the adoption of a decision and the completion of its implementation, the decision is short-term. At the same time, the number and importance of long-term, long-term solutions, the results of which can be removed for several years, are increasing.
. The predicted consequences of the decision. Some financial decisions in the process of their implementation can somehow be adjusted in order to eliminate any deviations or take into account new factors, i.e. is correctable. Another, quite significant, part of the decisions has irreversible consequences.

Solution development method. Some decisions, as a rule, are typical, repetitive, and can be successfully formalized, i.e. taken according to a predetermined algorithm. In other words, a formalized decision is the result of performing a predetermined sequence of actions. For example, when drawing up a schedule for the repair of equipment, the shop manager may proceed from a standard that requires a certain ratio between the amount of equipment and service personnel. If there are 50 pieces of equipment in the shop, and the maintenance standard is 10 pieces per repair worker, then the shop must have five repairmen.

Similarly, when a financial manager decides to invest free funds in government securities, he chooses between different types of bonds, depending on which ones provide in given time highest profit on invested capital. The choice is made on the basis of a simple calculation of the final yield for each option and the establishment of the most profitable one.

Formalization of decision-making improves management efficiency by reducing the likelihood of error and saving time: you do not need to re-develop a decision every time the corresponding situation arises. Therefore, the management of organizations often formalizes solutions for certain, regularly recurring situations, developing appropriate rules, instructions and regulations.

At the same time, in the process of managing organizations, there are often new, atypical situations and non-standard problems that are not amenable to a formalized solution. In such cases, intellectual abilities, talent and personal initiative of managers play an important role.

Of course, in practice, most decisions fall somewhere between these two extremes, allowing both the manifestation of personal initiative and the application of a formal procedure in the process of their development. Specific methods used in the decision-making process are discussed below.
. Number of selection criteria.

If the choice of the best alternative is made according to only one criterion (which is typical for formalized decisions), then the decision made will be simple, single-criteria. And vice versa, when the chosen alternative must satisfy several criteria at the same time, the decision will be complex, multi-criteria. In management practice, the vast majority of decisions are multi-criteria, since they must simultaneously meet such criteria as: profit volume, profitability, quality level, market share, employment level, implementation period, etc.
. Decision-making form.

A person who chooses from available alternatives final decision, maybe one person and his decision will be accordingly sole. However, in modern management practice, complex situations and problems are increasingly encountered, the solution of which requires a comprehensive, comprehensive analysis, i.e. participation of a group of managers and specialists. Such group, or collective, decisions are called collegial. Increasing professionalization and deepening the specialization of management lead to widespread collegial forms of decision-making. It must also be borne in mind that certain decisions are legally classified as collegial. For example, certain solutions joint stock company(on payment of dividends, distribution of profits and losses, making big deals, election of governing bodies, reorganization, etc.) are assigned to the exclusive competence of the general meeting of shareholders. The collegial form of decision-making, of course, reduces the efficiency of management and "blurs" responsibility for its results, but it prevents gross errors and abuses and increases the validity of the choice.
. Solution fixing method.

On this basis, financial decisions can be divided into fixed, or documentary (i.e. executed in the form of any document - an order, instruction, letter, etc.), and undocumented (not having a documentary form, oral).

2. Deterministic and probabilistic solutions.

Deterministic decisions are made under conditions of certainty, when the manager has almost complete and reliable information regarding the problem being solved, which allows him to know exactly the result of each of the alternative choices. There is only one such result, and the probability of its occurrence is close to one. An example of a deterministic decision could be the choice of 20% bonds as a tool for investing free cash federal loan with constant coupon income. The financial manager in this case knows for sure that, except for extremely unlikely extraordinary circumstances, due to which the government of the Russian Federation will not be able to fulfill its obligations, the organization will receive exactly 20% per annum on the invested funds. Similarly, when deciding to launch a particular product, a manager can accurately determine the level of production costs, since rental rates, materials and labor costs can be calculated quite accurately.

The analysis of financial decisions under conditions of certainty is the simplest case: the number of possible situations (options) and their outcomes are known. You must select one of the available options. The degree of complexity of the selection procedure in this case is determined only by the number of alternative options. Consider two possible situations: a) There are two possible options; n=2

In this case, the analyst must choose (or recommend to choose) one of two possible options. The sequence of actions here is as follows: the criterion by which the choice will be made is determined; the method of “direct counting” calculates the values of the criterion for the compared options; the option with the best value of the criterion is recommended for selection.

Possible various methods solution to this problem. As a rule, they are divided into two groups:
1. methods based on discounted estimates;
1. methods based on accounting estimates.

The first group of methods is based on the following idea. Cash income, arriving at the enterprise at different points in time, should not be summed up directly; only the elements of the reduced flow can be summed. If we denote F1,F2 ,....,Fn the predicted discount factor cash flow over the years, then i-th element the reduced cash flow Рi is calculated by the formula:

Pi = Fi / (1+ r) i

where r is the discount factor.

The purpose of the discount factor is the temporal ordering of future cash receipts (income) and bringing them to the current point in time. The economic meaning of this representation is as follows: the significance of the predicted value of cash receipts in i years (Fi) from the position of the current moment will be less than or equal to Pi

This also means that for the investor the amount of Pi in this moment time and the sum Fi after i years are the same in their value. Using this formula, it is possible to bring an estimate of future income into a comparable form

Expected to enter within a number of years. In this case, the discount factor is numerically equal to the interest rate set by the investor, i.e. the relative amount of return that an investor wants or can receive on the capital he invests.

So the sequence of actions of the analyst is as follows (calculations are performed for each alternative option): the amount of required investments is calculated (expert assessment), IC ; estimated profit (cash receipts) by years Fi ; the value of the discount factor is set, r ; the elements of the reduced stream are determined, Pi ; net present effect (NPV) is calculated using the formula:

4. NPV values are compared;

5. preference is given to the option that has more

NPV (a negative value of NPV indicates the economic inexpediency of this option) .

The second group of methods continues to use predictive values of F in calculations. One of the simplest methods of this group is the calculation of the payback period of the investment. The sequence of actions of the analyst in this case is as follows: the amount of the required investment is calculated, IC; estimated profit (cash receipts) by years, Fi ; the option is chosen, the cumulative profit on which in a smaller number of years will pay off the investments made. b) The number of alternatives is more than two. n > 2

The procedural side of the analysis becomes much more complicated due to the multiplicity of options; the “direct counting” technique is practically not applicable in this case. The most convenient computing apparatus is the methods of optimal programming (in this case, this term means “planning”). There are many of these methods (linear, non-linear, dynamic, etc.), but in practice in economic research only linear programming has gained relative popularity. In particular, consider transport task as an example of choice the best option from a set of alternatives. The essence of the problem is as follows.

There are n points of production of some product (а1,а2,...,an

) and k points of its consumption (b1,b2,....,bk), where ai is the volume of output of the i -th point of production, bj - the volume of consumption of the j -th point of consumption. The simplest, so-called

So we need to solve the following problem:

E E Cg Xg -> min

E Xg = bj E Xg = bj Xg >= 0

known various ways the solution of this problem is the distribution method of potentials, etc. As a rule, a computer is used for calculations.

When conducting analysis under conditions of certainty, computer simulation methods that involve multiple computer calculations can be successfully applied. In this case, a simulation model of an object or process is built ( computer program) containing b-th number factors and variables, the values of which vary in different combinations. Thus, machine simulation is an experiment, but not in real, but in artificial conditions. Based on the results of this experiment, one or more options are selected that are basic for making a final decision based on additional formal and informal criteria.

However, few decisions are made under conditions of certainty.
Majority management decisions are probabilistic.

Decisions made under conditions of risk or uncertainty are called probabilistic.

Decisions made under conditions of risk include those whose outcomes are not certain, but the probability of each outcome is known. Probability is defined as the degree of possibility of a given event and varies from 0 to 1. The sum of the probabilities of all alternatives must be equal to one. Probability can be determined by mathematical methods based on statistical analysis of experimental data.
For example, life insurance companies, based on analysis of demographic data, can predict mortality rates in certain areas with a high degree of accuracy. age categories and on this basis to determine insurance rates and the amount of insurance premiums that allow you to pay insurance premiums and make a profit. Such a probability, calculated on the basis of information that makes it possible to make a statistically reliable forecast, is called objective.

In some cases, however, the organization does not have sufficient information to objectively assess the likelihood of possible events. In such situations, leaders are helped by experience that shows what exactly can happen with the greatest probability. In these cases, the assessment of the probability is subjective.

An example of a decision made under risk is a decision transport company insure your car park. The financial manager does not know exactly whether there will be accidents and how much and what damage they will cause, but from the statistics of traffic accidents, he knows that one in ten cars has an accident once a year and the average damage is $ 1,000 (conditional numbers). If an organization has 100 vehicles, then 10 accidents with a total damage of $ 10,000 are likely in a year. In reality, there may be fewer accidents, but more damage, or vice versa. Based on this, a decision is made on the appropriateness of vehicle insurance and the amount of the sum insured.

Analysis and decision-making under risk conditions are most often encountered in practice. Here they use a probabilistic approach, which involves predicting possible outcomes and assigning probabilities to them. In this case, they use: a) known, typical situations (such as - the probability of the appearance of a coat of arms when tossing a coin is 0.5); b) previous probability distributions (for example, from sample surveys or statistics of previous periods, the probability of a defective part is known); c) subjective assessments made by the analyst alone or with the involvement of a group of experts.

The sequence of actions of the analyst in this case is as follows:
1. possible outcomes are predicted Ak , k = 1 ,2 ,....., n ;
2. each outcome is assigned a corresponding probability pk , and

3. a criterion is selected (for example, maximizing the mathematical expectation of profit);
4. An option is selected that satisfies the selected criterion.

Example: there are two investment objects with the same forecasted amount of required capital investments. The value of the planned income in each case is not certain and is given in the form of a probability distribution:

| Project A | Project B |
| Profit | Probability | Profit | Probability |
|3000 |0. 10 |2000 |0 . 10 |
|3500 |0 . 20 |3000 |0 . 20 |
|4000 |0 . 40 |4000 |0 . 35 |
|4500 |0 . 20 |5000 |0 . 25 |
|5000 |0 . 10 |8000 |0 . 10 |

Then the mathematical expectation of income for the projects under consideration will be respectively equal to:

Y (Yes) = 0 . 10 * 3000 + ......+ 0 . 10 * 5000 = 4000

Y (db) \u003d 0. 10 * 2000 +.......+ 0 . 10 * 8000 = 4250

Thus project B is more preferable. However, it should be noted that this project is also relatively more risky, since it has a greater variation compared to project A (range of variation of project A - 2000, project B - 6000) .

Example: the manager needs to make a decision on the advisability of purchasing a machine M1 or machine M2. The M2 machine is more economical, which provides a higher income per unit of production, however, it is more expensive and requires relatively large overhead costs:

| | Fixed costs | Operating income |
| | | unit of production |
| Machine M1 | 15000 | 20 |
| Machine M2 | 21000 | 24 |

The decision-making process can be carried out in several stages:

Stage 1 . Goal definition.

As a criterion, the maximization of the mathematical expectation of profit is chosen.

Stage 2. Determination of a set of possible actions for consideration and analysis (controlled by the decision maker)

The manager can choose one of two options: a1 = (purchase of machine M1) a2 = (purchase of machine M2)

Stage 3 . Evaluation of possible outcomes and their probabilities (are random).

The manager evaluates the possible variants of annual demand for products and their corresponding probabilities as follows: x1 = 1200 units with a probability of 0. 4 x2 = 2000 units with a probability of 0. 6

Stage 4 . Estimation of the mathematical expectation of possible income:

20 * 1200 - 15000 = 9000

20 * 2000 - 15000 = 25000

24 * 1200 - 21000 = 7800

24 * 2000 - 21000 = 27000

E (Yes) = 9000 * 0. 4 + 25000 * 0 . 6 = 18600

E (db) \u003d 7800 * 0. 4 + 27000 * 0 . 6 = 19320

Thus, the option with the purchase of the M2 machine is more economically feasible.

The decision is made under conditions of uncertainty, when, due to lack of information, it is impossible to quantify the probability of its possible outcomes. This is quite common when solving new, atypical problems, when the factors to be taken into account are so new and / or complex that it is impossible to get enough information about them.
Uncertainty is also characteristic of some decisions that have to be made in rapidly changing situations. As a result, the probability of a certain alternative cannot be estimated with a sufficient degree of certainty.

When faced with uncertainty, a financial manager can use two main options:

1) try to get additional information and re-analyze the problem in order to reduce its novelty and complexity. Combined with experience and intuition, this will enable him to assess the subjective, perceived likelihood of possible outcomes;

2) when there is not enough time and / or funds to collect additional information, when making decisions you have to rely on past experience and intuition.

Conclusion

In our opinion, this essay showed the relevance of studying methods for developing financial solutions. In conclusion, a number of conclusions can be drawn:
1. A decision is a choice of an alternative. The need for decision-making is explained by the conscious and purposeful nature of human activity, it occurs at all stages of the management process and is part of any management function.
2. Decision-making (financial) in organizations has a number of differences from the choice of an individual, as it is not an individual, but a group process.
3. The nature of the decisions made is greatly influenced by the degree of completeness and reliable information that the manager has. Depending on this, decisions can be made under conditions of certainty.

(deterministic decisions) and risk or uncertainty (probabilistic decisions).
4. Complex nature of the problems modern management requires a comprehensive, comprehensive analysis of them, i.e. participation of a group of managers and specialists, which leads to the expansion of collegial forms of decision-making.
5. Making a decision is not a one-time act, but the result of a process that has a certain duration and structure. The decision-making process is a cyclic sequence of actions of the subject of management aimed at resolving the problems of the organization and consisting in analyzing the situation, generating alternatives, choosing the best one and implementing it.

Information support of functioning financial management presented with information different kind: economic, commercial, financial, etc.

Financial information includes knowledge of the financial condition of not only your company, but also its partners, competitors, information about prices and rates in the commodity and currency markets, the state of affairs in the exchange and over-the-counter markets, dividends, interest rates, etc. Possession of a reliable provides information successful work financial manager. Conventionally, all information can be divided into internal and external. Inside information is represented by company reports containing information about financial transactions. Such documents must comply with the accounting requirements adopted by the relevant government bodies. The transition from a planned economy to a market economy has changed the functions of accounting. This is due to the following reasons:

The ownership structure has changed.

State property has become only one of its types;

· competition forces business entities to look for such management solutions that will provide the necessary financial results;
· financial support from the state has ceased to be the main source of funding.

Enterprises must compete not only for the market of goods and services, but also for the credit resources of banks, the funds of potential investors. As a result of these changes, accounting is turning into a tool for collecting, processing and transmitting information about the activities of an economic entity for all interested parties: company management, investors, creditors, suppliers, buyers and the state, which must control the correctness of tax deductions. Users interested in information about the activities of the company can be divided into three groups:

Internal users
external users directly interested in the company's activities;
external users indirectly interested in the company's activities.

The first group (internal users) includes the managerial corps of the company ( management personnel), which makes decisions of an industrial and financial nature. They require timely, complete and accurate information. Financial managers provide communication of the company with external environment Therefore, they must not only prepare financial statements, but also evaluate their impact on decisions made by external users, primarily creditors and investors, since they are the ones who provide additional financing for the company.

The second group includes potential owners, creditors, suppliers and buyers, the state, employees of the company.

The third group uses information about the company's activities to protect the interests of users of the second group. These are audit services, financial consultants, stock exchanges, legislatures, lawyers, the press, news agencies, trade unions. In financial management, they use the so-called analytical financial documents, in which articles are grouped and they are of a classification nature. They include:

· balance sheet;
· report about incomes and material losses;
· cash flow statement.

In addition to these documents, the financial manager uses in his work other internal information that reflects, first of all, the dynamics of the company's development (analytical tables, various kinds of information).

The special importance of reporting for making financial decisions requires the development of certain principles, standards of financial accounting and reporting. In countries with economies in transition, including the Republic of Belarus, purposeful work is underway to transform the accounting and reporting functions of enterprises, which they perform in a planned economy, to functions in the conditions of formation market economy. Completion of this work will allow you to have all the financial information needed when using financial management methods. For information to be useful to all user groups, it must meet the following criteria and be:

reliable and truthful;
appropriate;
· neutral;
understandable;
comparable.

Accounting for each unit of information is based on the following accounting principles:

the principle of double entry;
the principle of periodicity;
the principle of a functioning enterprise;
The principle of monetary value.

The following methods of monetary valuation may be applied:

actual cost,
Current replacement cost
the current market value,
net realizable value,
The discounted value
- the accrual principle (method) assumes that income and expenses relate to the reporting period in which they occurred. Moreover, regardless of whether cash to the account or were paid in this reporting period. This method is generally accepted in international practice;
- the principle of compliance of the income of the reporting period with the expenses of the reporting period. The need for timely and complete information, both for making managerial decisions and evaluating their results, and for external users, however, implies some limitations on information. Reporting documents submitted to a wide range of users should not contain data that could harm the competitive position of the enterprise. In addition, when preparing reports, one should not allow an overestimation of assets and profits, an underestimation of liabilities.

Being an open system, financial management interacts with the economic environment, which affects the company's performance. Among the factors of this environment, which enable the financial manager to assess the consequences of decisions made, the most important are:

The economic cycle
inflation,
competition and concentration of production,
State regulation and taxation.

The economic cycle is a process of alternating ups and downs in time. business activity, plays an important role in financial management and has a strong impact on the welfare of shareholders. During a recession, the company's profit decreases, which is reflected in the payment of dividends and, as a result, in the stock price. The rise in business activity has the opposite effect. The most important business cycle indicators:

Gross domestic product (GDP), represented by two indicators
· nominal GDP (in current prices) and real GDP (in comparable prices to eliminate the influence of the inflation factor);
corporate profits measured by indicators - profit before tax and profit after tax deduction;
the unemployment of the labor force.

Inflation, like the economic cycle, affects stock prices and the financial results of a company. Of the many causes of inflation, in order to minimize its effects, the financial manager must consider at least inflationary demand and inflationary costs. Inflationary demand reflects a situation where price increases are caused by the fact that the demand for products and the demand for factors of production outstrips their supply. Increasing demand has the greatest inflationary effect. When, the economy is in a state of near full employment. Inflationary costs reflect the situation when the rise in product prices is explained by an increase in material costs and labor costs. Inflation indicators include the following:

- price deflator, showing what share of nominal GDP growth is due to inflation;
is the producer price index, which reflects changes average price, installed in the main markets of producers of consumer goods;
- consumer price index reflects changes in consumer prices for groups of goods. Let us consider the degree of influence of inflation on the decision being made using a specific example. The Bank announces an annual rate of 25% for clients wishing to make deposits. The expected rate of inflation per month will be 2%. Is it profitable to use the services of this bank? By opening a bank account, the client wants to save money from depreciation in the face of inflation and receive some income. To make a decision, he must compare the rate announced by the bank with the annual rate of inflation. At an inflation rate of 2% per month, the annual inflation index I will be

I \u003d (1 + 0.02) 12 \u003d 1.268 \u003d 126.8%. (one)

Consequently, the annual inflation rate will be 26.8%. Thus, the annual rate of 25% announced by the bank will not only not bring income to the client, but also depreciate his money by 1.8% as a result of inflation. Competition and concentration of production, as a factor in the economic environment, have a direct impact on decision-making on investment projects. Production concentration reflects historical trend competitive economy be concentrated in a relatively small number of very large corporations. Monopolistic competition is a condition that exists in some industries where prices and output are determined mainly by a few firms that dominate the industry. High degree concentration of production leads to monopolistic competition, which is called oligopoly. Market Structure It is considered oligopolistic if the following features are present:

- a few traders dominate the market for goods and services;
- companies are interconnected;
- Leading firms control prices.

For financial management, the presence of the considered factor leads to the following consequences:

The preference for many investment alternatives is directly determined by competition, since the return on investment depends on the prices set and the firm's ability to win and retain the desired market share; - the interdependence of companies affects the financing of the market. State regulation and the adopted taxation system determine the rules for managing subjects in specific conditions. State regulation is implemented through a set of legislative acts, resolutions, decrees and other legal documents of the governing bodies. Special attention should pay attention to the documents regulating such activities as credit, currency, insurance, etc.

The main goal of the science of finance is to study how people allocate scarce (in the economic sense) resources over time. The emphasis is on temporary and not other types of distribution (by regions, industries, enterprises) studied in the economy, is hallmark financial science. Decisions made by individuals about temporary resource allocation are financial decisions.

From the point of view of the person or persons making such decisions, the allocation of resources has a dual meaning. One part of the resources is expenses(costs), the other to income(income). Financial decisions are based on commensurate flows expenses and income. In term flow reflects the temporary nature of the distribution of funds.

Issues relating to the timing of resource allocation (in the broadest sense) are financial issues. People constantly have to solve problems of this kind: buy this or that thing today or tomorrow, invest money in the bank or keep at home, whether to change the received salary into dollars or not? Should I rent a vacant apartment? Buy a car for cash or in installments? Should I invest in stocks, and if so, which ones? Ego financial problems at the household level. If you are financial manager, then you may well have to deal with more complex financial problems, for example, is it worth mastering the issue new products, whether to replace old equipment with new one or limit it to repairs, where to get the money to finance these activities? If you are the head of an international financial organization, then you are faced with problems of an even larger scale: should you give a loan to the government of a developing country, what should be the parameters (value and terms) of this loan? How and from what sources will it be repaid?

We noted above that in financial problems Ah, we are talking about the distribution of scarce resources in the economic sense. This means they are not free. One or another use of the resource excludes the other, alternative usage. Emphasizing this circumstance in the economy, and in particular in finance, they say that resources have price or better value. In economics, things (material or not) that have value (value) are called assets.

Since the solution of financial problems involves a comparison of the costs (expenses) and results (incomes), it is assumed that there is some common measure to measure the cost (value) of distributed resources. In practice, the cost of resources (assets) is measured in various monetary units. But this is only one aspect of the commensurate problem.

Another aspect concerns the consideration of the time factor. If the issue of the timing of resource allocation is the hallmark of financial problems, then financial theory must provide a means to measure values at different points in time. This aspect of the problem has an aphoristic expression "time is money". Ruble, dollar, etc. today and tomorrow are different things (more precisely, different values).

Finally, we note another extremely important aspect. In all real financial problems that one has to face in practice, there is uncertainty, concerning both the amount of future expenses and the points in time to which they relate. After all, no one knows exactly their future income, what (and when) unplanned expenses will have to be incurred, what the rates will be in the bank where the money is stored, and how long the bank itself will last, what the share prices will be, etc. etc. It is the fact that financial problems are time-bound that gives rise to their inherent uncertainty. Speaking of uncertainty, we mean, of course, the uncertainty of the future, not the past. The uncertainty of the past is associated (at least in financial problems) with a lack of information and, in this sense, can be eliminated in principle (as data are accumulated and refined), while the uncertainty of the future cannot be eliminated in principle. This uncertainty inherent in financial problems leads to risk situations in their decision. Any decision in such cases, due to uncertainty, may lead to results that differ from those expected, no matter how careful and thoughtful it may be. Of course, different decisions will lead to different degrees of risk, so one of the most important goals of the decisions being made is (ceteris paribus) risk minimization.

The solution of financial problems is carried out within the framework of a functioning financial system, a set of resource (assets) markets, financial institutions and financial agents involved in the redistribution of assets and associated costs and risks.

A real practical solution to financial problems is implemented in the form of a financial process, which is a sequence of financial transactions (transactions), such as the purchase and sale of assets, taking and repaying a loan, etc. Most financial transactions and processes are aimed at obtaining the greatest return on the costs incurred. Such expenditures made to generate future income in excess of the costs incurred are called investments. Investment transactions and processes are one of the most common activities carried out within the asset market. Below we will consider investment processes in more detail.

financial management as special kind practical activities is a set of methods and specific methods of influence of the subjects of financial management on its object in order to achieve the goals of management. This impact is carried out through the financial mechanism.

financial mechanism- a system of regulation, organization and planning of financial relations, methods of formation and use of financial resources.

The composition of the financial mechanism includes: financial instruments, financial techniques, methods and models that provide subsystems.

Financial techniques, methods and models can be classified on the following grounds:

According to the degree of regulation of the main parameters and methods of application by the state, there are:

General economic methods. These are methods of financial management, the main parameters, the possibility and methods of application of which are established by law (crediting, lending operations, the system of cash and settlement operations, taxation, insurance).
Predictive-analytical methods. The mechanism for the implementation of financial management using these methods is regulated by the enterprise independently (financial planning, tax planning, financial forecasting, financial analysis).
Special methods. The use of this group of financial management methods is partly regulated by the state and partly by the enterprise (factoring operations, dividend policy, financial lease,).

According to the degree of formalization of the application mechanism, the techniques and methods of financial management are divided into:

predictive-analytical methods based on the description of analytical procedures at the logical level. These include methods such as expert assessments, scenario method, comparative analysis.
formalized methods based on strict mathematical dependencies. Among them are factor analysis, methods of economic cybernetics, optimization programming.

Most financial methods and models are used to assess and predict the financial condition of an enterprise or to assess the effectiveness of the use of the owner's finances. In modern financial management, three types of models are mainly used:

descriptive methods (descriptive). They are based on the use of financial statements (vertical, horizontal analysis, analysis of financial ratios);

methods and models of a predictive nature (predicative). Used to predict the income of the enterprise and its future financial condition (model for calculating the critical sales volume, forecast balance)

normative models that are based on a comparison of actual results with expected results - used for internal financial analysis and are mainly used in cost management

In this post, I want to talk about financial decision making and tell about how to make a financial decision what factors you should pay attention to and how not to make a mistake in your choice. In my opinion, the issue is quite important and relevant, so I recommend paying attention to it.

So, any person or family in their life is repeatedly faced with the need to make financial decisions. It can be anything, of varying degrees of importance and with various possible consequences, for example:

- Buy property now or wait, suddenly fall in price?

Well, if a person is engaged in business or investment activities, then the need to make financial decisions arises for him much more often, sometimes several of them have to be made every day. The larger the amount that a financial decision concerns, the more important such a decision is, since it can have a more significant impact on the financial condition of an individual or family.

We can formulate a definition:

A financial decision is a choice of one of the courses of action that can influence the future.

How to make this choice? How to make a financial decision? I recently came across the results of a survey conducted by a major research center. The question was: “Which sources financial information do you trust? What influences your financial decisions?” You could choose more than one answer. The results surprised me in some places, here is what the people who took part in the survey answered.

Sources of information for making financial decisions: survey results.

1. Advice from friends and relatives. This option won by a wide margin in the poll results, as much as 52% of respondents voted for it! This once again confirms that, unfortunately, it continues to remain at a very low level. I will definitely return to this point again, but for this I first need to voice the rest.

2. Councils of employees of financial institutions. This item was chosen by 25% of respondents. In principle, this option is already more or less, but also far from the best. It should be remembered that such employees always follow the policy of the institution in which they work, and will advise you what is more beneficial to them.

3. Information materials of financial companies. That is, reading their websites, reviews, analytical publications, etc. This option, which affects the financial decision, was voted by 23% of the participants. A logical question arises: will financial companies write something bad about yourself? Of course not! In fact, all their analytics is, as a rule, hidden advertising of their own products and services. In such publications, you can find only exaggerated pluses of a particular product and not a word about the minuses.

4. Analytics in the media. This option was noted by 14% of respondents. It can be said that it is quite acceptable, but only if the publication is authoritative, the author of the article is competent in financial matters (for example, this can be seen from his previous materials - previous forecasts came true), and the publication is not custom-made (but such as you probably know, it's not uncommon these days).

5. Advertising. It turns out that 14% of people still trust her. Not many, of course, but there are some! In fact, every seventh. I hope there is no need to explain that advertising has the sole purpose of selling a product or service. All! No other useful information she does not carry. And, by the way, if something is very actively advertised, be sure that you will overpay for it, because advertising is not cheap, and all costs for it are included in the final price in advance.

6. Internet resources: independent sites, blogs, forums, social networks. 10% of respondents said that they use this method to make financial decisions: they study what they write on the issue of interest on the Internet and lean towards what the majority thinks. Here I would also advise you to filter sources very seriously. For example, financial blogs and forums, such as, are one thing, and some regional or city general topics are another.

7. Recommendations from independent financial advisors and brokers. An unexpectedly high proportion of respondents for me - 9% noted this item, I thought that such services were not yet so developed in our country. What can I say here ... In my opinion, and, moreover, they may also be personally interested in directing you in the right direction. For example, to recommend in a certain bank, and for this you will receive not only your payment, but also partner commissions of that bank. On the other hand, a personal financial advisor can really be an expert in their field and give you worthwhile, practical advice on making financial decisions. In my opinion, here it is necessary to pay attention to the authority of the consultant or broker himself, as well as to what exactly he will take money from you: it is ideal to pay them only if the desired result is achieved.

8. Employer advice. 4% of respondents noted that they can make a financial decision on the advice of their employer or boss. Perhaps these are people for whom the boss is the most in their environment, who has achieved more than they do, has more experience and authority. Here you need to take into account that the employer or boss may have a completely different level of financial interests, and he may advise you on what is right for him, but not for you. Remember that the financial decision you make must be fully understandable and accessible to you.

9. Own experience. Only 1% (!) of respondents in making financial decisions are guided by own experience. This figure shows us another bitter statistic: only 1% of people have financial experience who can be trusted. And that's extremely low...

10. I find it difficult to answer. 11% of respondents did not know at all how to answer the question. That is, the process of making a financial decision is something incomprehensible and uncertain for them, they don’t even know which way to look if necessary.

Here are the statistics. And now, when all the results are in, I want to draw your attention to this amazing fact: 52% of people make financial decisions based on advice and recommendations from relatives and friends, but only 1% have financial experience they can trust! That is, the question arises: who are these relatives and relatives, to whom do you, in fact, trust your personal finances? And the answer is: they, just like you, do not understand anything about this and are included in the same 52%. That is, in fact, your financial decision-making will be based on word of mouth. Of course, if among your relatives there are competent, experienced bankers and financiers, this is another matter ...

Probably, you will ask: how then to act if everything is wrong? How to make a financial decision so that it turns out to be correct? More on this later.

The process of making a financial decision can be divided into several stages. I propose to do it in the following way.

Stages of making financial decisions.

1. Setting a financial goal. The first thing to start with is to accurately formulate. As accurate as possible! Because your financial decision will primarily depend on setting a goal.

Let's consider a simple example. “I want to put a deposit in the bank” is not correct. financial goal. It will be correct to determine why you need it: to receive additional income, to maximize savings, “so as not to spend”, to create a reserve, to save for old age, to save from inflation, etc. The financial decision will depend on what exactly you need a deposit for:

2. Identification of possible courses of action. At this stage of making a financial decision, you need to determine all possible options for achieving your goal, among which you will continue to choose.

For example, your goal is to purchase your own property. There are 2 main directions for achieving it: independent accumulation of funds for purchase or.

3. Gathering information to make a financial decision. This is perhaps the most important step. What sources of information can be - I considered above. And he wrote what to pay attention to, analyzing each of them. Once again, I want to summarize and formulate a simple rule that allows you to select reliable sources of information for making a financial decision.

The best source of information is one that is, firstly, competent, and secondly, has no personal interest in what decision you make. The more important the financial decision, the more such sources it is desirable to use.

Thus, for example, the same financial blogs and forums where competent specialists communicate can serve as good sources of information. But the best source is always your personal financial experience, of course, if you have it. It is you who will be responsible for making financial decisions, so it is pointless to shift it to someone who advised you something on the forum.

4. Analysis of the received data and decision making. When the data is collected, analyze it, look in which direction most of the sources that are authoritative for you are leaning, compare their opinion with your own and make a choice.

For example, it is convenient to do this in a table: write out all the sources in a column, and make several columns with solutions. Opposite each source, mark its solution. You can complicate the analysis to increase the accuracy of the result: give each source a certain weight.

If the vast majority of sources lean towards one decision, and this coincides with your opinion, you can make a financial decision in that direction. If opinions are significantly divided, then it may be worth postponing the decision and exploring additional sources of information.

5. Implementation of the decision. After the financial decision is made, it remains to implement it. Otherwise, why did you do all this?

6. Analysis of the results of the decision made. Well, after you have implemented your plan, analyze how everything went: was your goal achieved, did the timing of its achievement coincide with the planned ones?

If everything went well - congratulations, you can put +1 to your experience in making financial decisions, now the weight of your own opinion for making subsequent decisions should become a little more.

If the financial decision turned out to be unsuccessful and did not lead to the achievement of the set goal, carefully analyze and determine where you made a mistake, why everything did not go as planned. And try not to make such mistakes in the future: you gained experience, but, unfortunately, you had to pay for it.

I hope now you understand how to make a financial decision, what sources of information you can take into account for this, and you can do it more competently than before.

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