Financial relations of legal entities based on the principles that relate to the basis of their economic activities.
What are the principles of corporate finance exist?
The following principles of corporate finance:
- self-regulating.It means giving businesses the freedom to implement activities for the scientific and technical and industrial development on the basis of financial, material and human resources.Legal entity plans its own activities, income and expenses on their own, depending on demand.
- sustainability.Costs must pay income and other own financial resources.The company is financed by its own funds, as well as making the necessary taxes to the state budget.
- self-financing.It does not simply mean the return, and the formation of their own internal and external financial resources.
- Division sources formation finsredstv on debt and equity.When the seasonal nature of the production share of the sources of borrowing increases, and the seasonal nature of industries is not the basis of proprietary sources.There must be a balance between debt and equity sources.
- the availability of financial reserves.It is used in order to ensure the sustainability of the organization with the market fluctuations and the issues of increasing property liability for non-fulfillment of obligations to partners.
There are other principles of corporate finance.
- planned.Used to ensure that the sales volume and cost requirements of the sales, the volume of investments.
- Financial ratio terms.It is necessary to minimize the time between receipt of funds and their use.
- flexibility.If the planned sales volume is not achieved, must be capable of maneuvering.
- to minimize the financial costs.That is, investment financing and other costs necessary to carry out the cheapest way.
- rationality.To be achieved the greatest efficiency of the invested capital, with minimal risk.
- financial stability.It shall be the financial independence and solvency of the company.
These principles of corporate finance are not exhaustive.
principles of organization of the finance businesses.
- economic independence.Legal entity alone, regardless of the form of ownership allocate their money for profit.Organizations may acquire securities forming the share capital of another legal entity, to keep their material resources in accounts at commercial banks.
- self-financing.The costs of production, its development and implementation should be repaid in full.
- material interest.The company is interested in making a profit from their activities.
- liability.The company is responsible for the results of financial - economic activity.
- Providing financial reserves.
Finance and the financial system of the Russian Federation.
financial system of the Russian Federation consists of the state budget, public credit, budget funds, stock market, funds, insurance and finance organizations of different ownership forms
These financial ratios are divided into general state finances, which provide macro-level needs of expanded reproduction;finance business entities that are used to provide micro-level reproduction of cash.
