Balance Sheet Assets Research Articles

Improving the reliability of the financial statements of the tenant enterprise

Improving the reliability of financial statements in the interests of external users is the main task to be solved in the process of its preparation. The ongoing reform of the accounting system in connection with the updating of federal standards causes changes in the procedure for the formation of financial reporting indicators. The article examines the impact of the federal lease accounting standard on the reliability of information presented in the financial statements of the tenant enterprise. The difference in approaches to the definition of reliable reporting in the Russian accounting system and international standards is analyzed.The authors consider the consequences of applying the standard in three main areas: the emergence of a new object of the balance sheet asset, the reflection of lease liabilities as part of accounts payable of the balance sheet liability, and the disclosure of other information about lease transactions in the explanatory notes to the statements. The procedure for determining the right to use the leased object using discounting rules is described. The concept of the fair value of the leased object and its difference from the market value is given.Special attention is paid to the importance of the professional judgment of an accountant for the formation of reliable reporting indicators.

Analysis of inventory with the example of Kloeckner & Co SE

International accounting is generally considered to be a new field of accounting. In order to comply with the trend of increasing internationalization of economic development, the field of accounting has been made more conceptually developed and practically useful and precise. Research on the main elements of international accounting focuses on accounting standards and financial reporting standards for multinational companies. According to economic reality, companies are involved in the manufacture of products, such as goods or services. At the end of each financial year, these inventories must be valued in order to show the value on the balance sheet at the relevant reporting date. Inventories are thus part of the working capital and thus affect the liquidity of the company. Now, the central issue in valuing inventories is to measure all payments related to production or purchases and to allocate them to individual inventories as acquisition costs or production costs. Inventories play an important role in terms of balance sheet assets and are interpreted by IAS 2. In the situation of the global financial crisis, the application of inventory models in the working capital management of companies is becoming more and more indispensable. For enterprises, a large amount of working capital needs to be used in the procurement and storage of goods, and many enterprises often have improper ratios of inventory funds, which in turn affects the normal operation of the enterprise. Inventory modeling theory is widely applied in enterprise working capital management, which can strengthen the ability of enterprises to deal with problems flexibly, and can respond to changes in consumer demand and competitive situation in a timely manner, and can develop countermeasures and solutions that are better than other competitors.

Profitability determinants of companies in IT industry: case of Ukraine

Purpose. To identify patterns of profitability of IT enterprises by quantitative evaluation of the relationship of profitability of enterprises with the structure of capital and assets, taking into account the level of business activity and the main economic activity, as well as the formation of appropriate recommendations. Methodology. The empirical basis of the study was the aggregate performance of enterprises whose main economic activity belongs to Chapter 62 of the NACE “Computer programming, consultancy and related activities” during 2013–2020. Correlation and regression analysis was used to build a multifactor model of linear regression, which describes the dependence of return on assets from the ratio of long-term and short-term liabilities and provisions to liabilities of the balance sheet, the ratio of current assets to balance sheet assets, total assets and main economic activity. Findings. It has been established that the capital structure of IT companies is unsatisfactory due to the dependence on external sources of funding, including current liabilities, which have a negative impact on return on assets. It has been found that the structure of assets is dominated by current assets, the growth of which has a positive impact on the profitability of enterprises in the industry. This indicates the need to optimize non-current assets, given the level of their involvement in the production process. It is proved that by expanding markets, it is possible to ensure further growth in profitability of enterprises in the industry, as business activity has a positive effect on return on assets. The return on assets varies depending on the main type of economic activity. Originality. The relationship is identified between the efficiency of IT companies and the structure of their capital and assets, business activity and type of economic activity. Practical value. The applied value of the study is the ability to predict the profitability of assets of IT companies depending on the structure of sources of funding for their activities and areas of asset placement, business activity and the main type of economic activity. The recommendations can be used to improve the state policy of digital economy in terms of justifying the need to encourage business owners to reinvest profits, to involve enterprises more actively in national digital projects and support the product business model.

Multipliers Based on Assets and Equity as an Indicator of the Investment Attractiveness of Domestic Vertically Integrated Oil and Gas Companies

Subject. The article focuses on ratios of the market capitalization or enterprise value to balance sheet assets or equity of the twenty five leading publicly traded oil and gas companies within 2008 through 2018. Objectives. The aim of the study is to trace key trends in ratios of the market capitalization or enterprise value to balance sheet assets or equity of corporations in the oil and gas industry, as well as identify the key trends in their changes within the studied period, and establish factors that caused those changes. Methods. For the study, I used the methods of comparative, financial and economic analyses, summarizing financial reporting data. Results. The article establishes that the multipliers studied are acceptable for assessing the value of oil and gas companies, but it is preferable to use asset-based ratios. The multiples of the ratio of market capitalization to assets or market capitalization to equity in the oil and gas industry are characterized by a decrease, and the lack of stability of values does not allow using these ratios for other dates in valuation. It is necessary to analyze in detail the results of financial and economic activities and the structure of assets in order to select an analogue company, especially in times of crisis. There is a country factor in the stock market valuation of oil and gas assets. The influence on the market capitalization of the size of the debt component in the structure of total capital has been established. An increase in the level of debt burden over time was revealed. It is advisable to use an indicator of enterprise value that includes net debt instead of market capitalization when there is a difference in debt burden between the assessed corporation and the analogue company. Conclusions and Relevance. The overall decline in profitability and the increase in debt load in the stock market sector of the global oil and gas industry should be taken into account when using multipliers based on assets and shareholder capital in the assessment of the value of oil and gas corporations through a comparative approach. The findings can be used to appraise the value of oil and gas assets as part of the comparative approach and decide on actions for raising the market capitalization of publicly traded oil and gas corporations.

Treatment of the elements of depreciation of fixed assets in the Accounting Policy

This article examines the issues involved in treatment of the elements of depreciation of fixed assets in the Accounting Policy of transport companies. The cost of fixed assets has a significant weight in the balance sheet of transport organizations. The reliability of the assessment of this type of property depends on the correct calculation of depreciation and the choice of its elements. The use in calculations of liquidation and fair value influenced the amount of book value (formerly “written down”), and in general the amount of balance sheet assets. The article analyzes accounting changes with respect to depreciation due to the enactment of the FSBU (Federal Accounting Standard) 6/2020, and substantiates the need to develop new forms of accounting documents to reflect the elements of depreciation on receipt of fixed assets as well as to record information about changes in each element of depreciation (useful life, residual value, the method of depreciation) for each year during the useful life in connection with the requirement FSBU 6/2020. The author identifies the relationship between the method of establishing a useful life and the method of depreciation and examines the reflection of sufficient information in the Accounting Policy on the elements of depreciation.

МЕТОДОЛОГІЧНІ АСПЕКТИ ОБЛІКУ І АУДИТУ ГОТОВОЇ ПРОДУКЦІЇ ТА ЇЇ ЗБУТУ НА ПРОМИСЛОВОМУ ПІДПРИЄМСТВІ

The article analyzes the current state of the Ukrainian and world oil markets. The set of theoretical, organizational and methodological principles of accounting and auditing is clarified to clarify the methodological aspects of accounting and auditing of finished products and their sales. The organization of accounting and auditing of finished products is studied, the directions of improvement of accounting and auditing of finished products and the process of its sale at JSC “Ukrtransnafta” is determined. The analysis of financial and economic indicators of the enterprise showed that almost all indicators of the asset balance of JSC “Ukrtransnafta” during 2019–2020 have positive dynamics. Only the depreciation of fixed assets decreased by 9.8% (due to the purchase of new equipment), other current assets – by 24.5%, long-term receivables – by 19.67% and prepaid expenses – by 61.6 %%. During 2020 other non-current assets increased the most – by 422%, other current receivables increased by 300%, Cash and cash equivalents increased by 234%. Analysis of the structure of the balance sheet asset showed that non-current assets in 2019 amounted to 74.5%, and in 2020 – 81.6%, so non-current assets are the main assets of JSC “Ukrtransnafta”, among which fixed assets are 78.7% in 2019 and 81% in 2020, unfinished capital investments 19.9% in 2019 and 17.8% in 2020. During 2020 other long-term liabilities have undergone the greatest changes. They increased by 400%. Current accounts payable on advances increased by 204%, current income tax liabilities increased by 148%, current liabilities for goods, works and services increased by 110%. Negative dynamics was present in the following indicators: current liabilities in: insurance settlements – decreased by 17.9%, other current liabilities decreased by 16%. A study of the structure of liabilities of the balance sheet showed that the main share of liabilities is equity, in addition, its volume continues to grow: in 2019 equity is 83.2% of the balance sheet currency in 2020 – was already 85.9%. Long-term and current liabilities in 2018 was a little more than 8%, but in 2020. Great Danes increased to 9.5% and short-term decreased to 4.5%. Among equity, the main share in the structure is occupied by Capital in revaluations – 66.3% in 2019 and 62.8% in 2020, on the second position is additional capital – 21.3% in 2019 and 19% in 2020, on the third – retained earnings: 7% in 2019 and 13.4% in 2020. Indicators of net income and cost of goods in general increased during the study period from 2016 to 2020. Among the revenues of JSC “Ukrtransnafta” the main share falls on the income from the sale of goods and services, which averages 78% in recent years. Also quite a significant share of income of JSC “Ukrtransnafta” falls on other operating income, which on average for the period 2016–2019 is 14%, and 2020 – 21%. Analysis of the dynamics of other operating income showed that they grew the most in 2017 (almost 40 times), significantly increased in 2014 (138%) and in 2016 (90%). For internal use, “Ukrtransnafta” JSC proposed to improve analytical accounting for accounts 26 “Finished goods” and 70 “Sales income”, it is recommended to open third and fourth order accounts to these accounts to display information on the type of finished product and its sales. The main transformational adjustments that may occur depending on the characteristics of individual characteristics of finished products and their sales at JSC “Ukrtransnafta” are summarized. Improvement of accounting and audit of finished products and their sales of JSC “Ukrtransnafta” was carried out on the basis of network modeling of finished products and their sales at JSC “Ukrtransnafta”, as a result of which it was found that the duration of audit of finished products and its sales JSC “Ukrtransnafta” is 21 days, it requires 2 auditors. The efficiency ratio of auditors’ working time will be 50%. After the optimization of the location in time of the audit, it amounted to 58.93%, i.e. increased by 8.93% compared to the original version.

An Analysis of Concentration and Competition in the Banking Sector of the Republic of Serbia

Abstract The degree of the banking sector concentration is a structural variable and refers to the number of banks in the system and the degree of their market power. The importance of measuring concentration in the banking sector stems from the causal relationship between the market structure and the competitive behaviour of market participants. Traditional models measuring the banking sector competition proceed from the market structure and concentration measures. In contrast, modern approaches to measuring competition rely on non-structural models and analysis of the behaviour of market participants. The paper analyzes the degree of concentration and competition in the banking sector of the Republic of Serbia. The traditional and most frequently used indices, the concentration ratio and the Herfindahl-Hirschman index, are used to measure concentration. The values of these indices show low banking sector concentration but a rise in the observed period. The values of the comprehensive industrial concentration index and the entropy coefficient confirm the concentration absence in the banking sector of the Republic of Serbia. In addition to the usual banking sector concentration measures, the authors use the Linda index to assess the banking sector concentration and competitiveness, to show the absence of an oligopolistic structure in terms of total balance sheet assets, lending and deposit activity of banks.

Understanding the Asset Growth Anomaly

Components of balance sheet asset growth driven by earnings management contributed to the asset growth anomaly in the past. These components of balance sheet asset growth are no longer related to returns and this has contributed to the disappearance of the asset growth anomaly. I provide evidence that the Sarbanes-Oxley Act reduced earnings management induced mispricing which I relate to the asset growth anomaly. More broadly, these findings point towards changes in the regulatory environment as a novel driver of equity market anomalies.

Облікове забезпечення кругообороту капіталу

Economic globalization, digitalization of management processes, introduction of new forms of business organization, implementation of the concept of sustainable development are factors that affect the process of capital turnover and determine the need to improve its accounting support. The purpose of the article is to search for options for improving the accounting for capital turnover at the enterprise in modern conditions of a dynamic market environment. The economic essence of capital was disclosed and the capital turnover was identified as an object of accounting. The capital turnover in the enterprise is carried out constantly and is expressed through the turnover of funds that must be reflected in the accounting system. The analysis of the presentation (classification) of assets in the reporting was carried out, and it was found that all assets of an economic entity are in economic circulation, although the order and circulation period of various assets is not the same. Therefore, the division of assets into non-circulating and circulating assets is incorrect, since it contradicts the real essence of economic phenomena. It was proposed to change the approach to the presentation of assets in the reporting and rename the sections “Non-circulating assets” and “Circulating assets” in the Balance Sheet (Statement of financial position) of Ukrainian enterprises to “Non-current assets” and “Current assets”, respectively. It was proposed to place the balance sheet asset items in descending order of liquidity of assets. In particular, the first item will be “Money and their equivalents”, and then other items depending on the liquidity of assets. Accounting for business transactions must be kept according to the stages of capital turnover. In order to accounting for the sale of goods, works and services, it is advisable to use one synthetic account, on the debit of which it shows the sold products at their cost price, and on the credit – at the selling prices.

QUANTITATIVE EASING AS THE MAIN INSTRUMENT OF UNCONVENTIONAL MONETARY POLICY

After the fall of Lehman Brothers in September 2008, the financial crisis turned into a global crisis and had a negative impact on the real economy. During the crisis, there has been a significant decrease in key macroeconomic indicators, such as GDP, short-term interest rates, unemployment and inflation. The GDP growth rate had taken a negative value in developed countries. Inflation was below 1 percent, and deflation was observed in Japan, which in turn slowed down economic development. Central banks responded to the crisis with a change in interest rates, but this was not enough to calm financial markets and improve the real economy. Most central banks have developed many new monetary policy tools, including communication strategies, credit policies, and large asset purchases. These new measures are often called “unconventional” monetary policies. The purpose of the article is to study quantitative easing as one of the unconventional measures of monetary policy. Methodology. The article uses general scientific and special methods: generalization, systematization, economic and statistical analysis, graphic and comparison methods. This allowed us to study the theoretical foundations of the quantitative easing policy, determine the economic background for these measures application, analyze the development stages and the basic rules of functioning policy. The quantitative easing policies usage was also examined on the examples of the Federal Reserve, the European Central Bank, the Bank of England and the Bank of Japan. Results. The main trends and economic conditions, under which these methods can be used in future, were identified using an analysis of the quantitative easing application background. The policy’s main components analysis provides a clear understanding of the quantitative easing essence. As a result of the unconventional monetary policy usage, there has been a significant expansion of the USA, Japan and the Eurozone central banks' balances, which amounts to more than 10 trillion USD. Due to this process, central banks have become key bondholders. Practical meaning. The given results analysis will determine that kind of unconventional monetary policy effectiveness and the possible consequences of a significant increase in the central banks’ balance sheet assets. Value/originality. In the article, the conditions, under which unconventional monetary policy has been applied, are systematized and the four central banks’ quantitative easing policy is compared.

Розкриття інформації позабалансового обліку у фінансовій звітності підприємства

Off-balance sheet accounting data plays an important role in the management of the enterprise and should be disclosed in the reporting, because the transactions recorded on off-balance sheet accounts may in the future cause changes in the balance sheet assets, liabilities, income, expenses and financial results of the enterprise. The purpose of the article is to summarize the theoretical and methodical bases of the disclosure of off-balance sheet accounting data in the financial statements of the enterprise and to develop recommendations for their improvement to form the quality information support of the management system of business entities. The critical analysis of the theory and practice of disclosure the off-balance sheet items in the financial statements has made it possible to determine problematic aspects and outline directions for their improvement in accordance with the information needs of external and internal users. The improvement of the financial statements of the enterprise, namely Notes to the annual financial statements, was proposed by introducing the section Information about off-balance sheet items. In this section the data about the availability and movement of off-balance sheet items will be disclose in the context of classification groups: values that not owned, but temporarily owned, operated, or stored; conditional rights and obligations of the enterprise; objects of operational control. Authors recommend disclose the value of intangible, long-term biological and other non-current assets that are leased out under operating leases in the notes to the annual financial statements. In addition, the depreciation should be disclosed in the context of depreciation of property, plant and equipment, non-current assets, non-current assets. It will ensure the clarity and accessibility of the reporting information and will help to increase the confidence of potential investors and partners to enterprise.

Odnos kretanja bilansnih stavki i likvidnosti - primer bankarskog sektora Srbije

The subject of research in this paper are eight balance sheets (based on regular annual financial statements), with the aim of finding out the effect of fluctuations in balance sheet items on the movement of commonly used liquidity ratios on a sample of 10 leading Serbian banks in terms of balance sheet assets (Banca Intesa, Komercijalna, UniCredit, Societe Generale, Raiffeisen, AIK, Eurobanka, Erste Bank, Postanska stednionica i Vojvodjanska), by applying Pearson's correlation coefficient for the period 2010-2017. The four most commonly used liquidity ratios were used as dependent variables, while individual balance sheet items (part of the liquidity formula) were used as independent variables. According to the conducted research, Serbian banking sector recorded positive performance i.e. was sufficiently liquid, from 2010 to 2017. Furthermore, very strong correlation was observed between an increase in cash and an increase in bank liquidity, while there was a moderate correlation between an increase in cash and average total liabilities. Moreover, the increase in loans and receivables from banks and other financial institutions had a significant impact on the increase of liquidity, as well as on the increase in provisions and equity. Finally, the increase in the value of owned property and deposits had a negative impact on liquidity ratios.

Istraživanje internih indikatora finansijske stabilnosti osiguravajućih društava u Republici Srbiji

Dynamic changes in the insurance sector require a new system of performance measures, which enables monitoring of multiple business segments of insurance companies and meets the information requirements of a large number of different stakeholders. In this regard, in the Republic of Serbia a multidimensional system of performance measures is used - the CARMEL framework, made according to the methodology of the International Monetary Fund. Due to the fact that these indicators indicate the effectiveness of different business segments, the analysis of the performance of insurance companies cannot be based only on one of these groups. Assessment of financial stability and ranking of insurance companies can be performed using different data mining algorithms. The obtained results show that key internal factors for the financial stability of insurance companies change under different economic conditions. During the period of the financial crisis the greatest impact on the financial stability of insurance companies had the quality of management, but also the earning capacity and profitability and liquidity of insurance companies. The classification of insurance companies according to their performance is compared with the official rankings offered by the supervisory body based on the value of the balance sheet assets and the value of premiums paid. It can be concluded that the largest insurance companies are not the most successful in all economic conditions. Inadequate capital management, as well as the inability to generate insurance and investment portfolios, has led to a drastic decrease in the profitability of these insurance companies.

Komparativna analiza pokazatelja likvidnosti najvećih banaka Srbije - indikator merenja performansi

Under the influence of globalization, there are changes in regulation and liberalization of the movement of people and capital, the trend of modification and modernization of the way banks operate. In this paper we analyzed the liquidity of ten largest banks in the Republic of Serbia according to the balance sheet assets for the period from 2010 to 2017, with the aim to see why oscillations in liquidity indicators occur. The subject of research in this paper is a comparative analysis of the ratio of liquidity indicators, with a review of the movement of the reference interest rate and the movement of non-performing loans, and by means of publicly published regular annual reports of ten banks operating in the Republic of Serbia and quarterly reports of the National Bank of Serbia, in order to define the relationship between the movements of the listed components. As the participation of the 10 largest banks according to the criterion of the amount of the balance sheet assets is 44% to 77%, the average values of their performances largely approximate the performances of the entire banking system of the Republic of Serbia.

Management Knowledge Assets: A Review of the Models Used to Measure and Report Intellectual Capital

Contemporary organisations in both public and private sector are often examined not only in terms of their core functional business but also in how they have adapted to a knowledge-based and innovation-driven economy. As such, knowledge-based assets are considered as a source of sustainable advantage. The magnitude of change in the proportion of value creation by these intangible investments has caused a paradigm shift and the recognition of an increasingly important role for intellectual capital (IC). There is also a growing interest in developing business reporting models that are more comprehensive than that of traditional accounting-based reporting, which has been shown to be inadequate to report the value of intellectual capital. Researchers and academics have attempted to build models for IC reporting. In this paper, eleven IC measurement models are critically reviewed and a framework of IC valuation and reporting based on capabilities is suggested. The capabilities enhanced by IC could be reported in combination with the tangible assets in an IC capability balance sheet. The IC capability model offers a clear starting point for a new thinking in evaluating intangible assets as a firm business resource.

ANALISIS PENGENDALIAN INTERNAL COMMITTEE OF SPONSORING ORGANIZATIONS TERHADAP PIUTANG USAHA PADA CV. KOMBOS MANADO 1

Accounts receivable is an element of current assets in the company's balance sheet arising from the sale of goods, services or lending to debtors whose payments are generally given within 30 days to 90 days. This research was conducted to analyze internal control committee of sponsoring organizations to accounts receivable at CV. Kombos Manado 1 and analyze the factors of delay in payment of accounts receivable on CV. Kombos Manado 1. The research method used is descriptive method and the type of research used is qualitative descriptive. The results obtained that the Internal Control Committee Of Sponsoring Organizations Against Accounts Receivable on CV. Kombos Manado 1 has been running quite well. Of the 5 (five) internal control components of the committee of sponsoring organizations, namely the control environment, risk assessment, control procedures, monitoring, information and communication, only a weakly categorized control environment. The obstacle faced by the receivable officer is the delay of payment of receivable from the customer. There are 2 (two) factors the customer is late to pay the receipt of the negligence of the company and negligence from the customer (insurance).Keywords: Analysis, Internal Control, Accounts Receivable.

The deteriorating usefulness of financial report information and how to reverse it

There is a wide-spread and growing dissatisfaction with the relevance and usefulness of financial report information, particularly among investors and corporate executives. The dissatisfaction is corroborated by extensive research which consistently documents a growing gap between capital market indicators and financial information, more so for reported earnings. The reported earnings of most firms no longer reflect enterprise performance. I trace the deterioration of the usefulness of financial information to: (1) the abandonment by accounting standard-setters of the traditional income statement (matching) model in favour of a balance sheet (asset valuation) model, and (2) standard-setters’ failure to adjust asset recognition rules to the fundamental shift in corporate value-creating resources from tangible to intangible assets. I conclude this paper with change proposals to restore the usefulness of financial information to investors.

NPAs-A comparative analysis of public sector, private sector and foreign banks in India

The accumulation of huge non-performing assets in the balance sheets of banks has become a serious issue from the past decades. Non-performing loans in banking sector is not just a problem but proves fatal to the economic growth of the country. NPAs reduce the profitability of banks, weaken its financial health and erode its solvency. In this study, an attempt has been made to compare the performance of public sector, private sector and foreign banks in India with special reference to NPAs. For this purpose four banks from public sector-Punjab National Bank, Andhra Bank, Bank of Baroda and United Bank of India from private sector banks-HDFC Bank, Axis Bank, Federal Bank and INDUSIND Bank from Foreign Banks-Barclays Bank, DBS bank ltd., CTBC and HSBC are selected. A comparative analysis of all three categories is made on the basis of gross and net NPAs. The study concludes that there is huge difference in NPAs of public, private and foreign banks. PSB's are highly pressurised by NPA's. NPAs are not confined to PSB's also but are present in private and foreign banks as well. So, they are more competent in making plans for recovering funds from borrowers (both individuals and institutional). The public sector banks are required to lend money to weaker sections of the society also, where the chances of recovery is almost negligible. Concerned over high level of bad loans in the banking system there is need to devise a mechanism to detect stressed assets early so that corrective steps can be taken.

A Model for settlement of health insurance organizations' debt to health service delivery institutions.

Background: Sukuk is a type of financial instrument backed by balance sheet and physical assets. This applied and descriptive study aimed at providing solutions to the problems faced by insurance companies in the health sector. Methods: In this study, we achieved operational models by reviewing the release nature and mechanism of any of the securities and combining them. Results: According to the model presented in this study, 2 problems could be solved: settling the past debts and avoiding future debts. This model was deigned based on asset backed securities. Conclusion: Utilizing financing instruments (such as Sukuk), creating investment funds, and finding a solution to this problem, this study was conducted in 2 aspects: (1) models that are settling old debts of the organization, and (2) models that prevent debts in the future.

The Deteriorating Usefulness of Financial Report Information and How to Reverse It

There is a wide-spread and growing dissatisfaction with the relevance and usefulness of financial report information, particularly among investors and corporate executives. Such dissatisfaction is supported by extensive research which consistently documents a growing gap between capital market indicators and financial information, particularly so for reported earnings. I trace the deterioration of the usefulness of financial information to: (1) the abandonment by accounting standard-setters of the traditional income statement (matching) model in favor of the balance sheet (asset valuation) model, and (2) the failure to adjust asset recognition rules to the fundamental shift in corporate value-creating resources from tangible to intangible assets. I conclude this paper with change proposals to restore the usefulness of financial information to investors.