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23<<ШУШетиМ~^©и©Мак>>#27Ш,2©1]9 / PHILOLOGICAL SCIENCES
149
УДК: 338.27
Konnov S.S., Obydennova V.I.
Financial University under the Government of the Russian Federation
Head: Glisin A.F. Doctor of Economics, Professor DOI: 10.24411/2520-6990-2019-11054 MODERN METHODS OF ESTIMATION OF CASH FLOW ELEMENTS
Abstract
At the moment, there is no unambiguous opinion on the issues offorecasting cash flows. The need to analyze the company's activities in retrospect emphasizes the importance of not only choosing a tool for forecasting, but also determining the method of calculation for the study. On the basis of such forecasting methods as the method of average growth, the method of moving average and the method of exponential smoothing, the article presents the forecasting ofcash flows on the example of a particular organization. The main problems arising in forecasting in the process of preparation of investment projects are also identified.
Key words: cash flow, cash flow forecasting, average growth, moving average, exponential smoothing.
In today's market economy, the need to forecast cash is really an urgent issue. In the process of developing business plans of the company, as well as when justifying investment projects, calculations of future cash flows are often required. Forecasting involves a detailed analysis of a large number of specific elements of income and expenditure and a weighted assessment of their future value, taking into account the relationships between all elements. It is customary to take as a basis for forecast statements of profit and loss and balance sheet, which is used to determine the effects of the capital increase and the number of available company funds.
In the process of forecasting, a number of problems can be encountered: first, bringing future payments and the residual value of assets created during the implementation of the investment project at the time of its completion to the present time; second, determining the effectiveness of the investment project associated with the assessment of potential risk and net discounted income. Moreover, it is worth noting the impact of a poorly developed stock market, the lack of an optimal basis for forecasting, high inflation and economic instability.
Carrying out any financial and economic operations is connected with cash flow, namely their receipt and outflow. This process is defined by the concept of cash flow. I. A. Blank gave the following definition of
cash flow: "This is the main indicator characterizing the effect of investments in the form of money returned to the investor. The basis of cash flow on investments is net profit and the amount of depreciation of tangible and intangible assets." [1]
The purpose of cash flow management is to ensure financial balance throughout the company's activities and its development by finding the optimal ratio of income and expenditure of funds and their coincidence in time.
In forecasting, two approaches are often used: the first-the forecasting process begins from the moment of making a forecast and gradually moves from the actual information to the future; the second - first, future goals and objectives are determined, and from them there is a movement to the present. The first approach is called search forecasting, which determines the possible state of the forecasting object in the future while maintaining the existing trends in the development of this object, ignoring assumptions about possible changes in these trends, and the second normative-target.
At the moment in the conditions of existence of a wide range of methods of forecasting of economic activity it is accepted to divide them into two big groups: qualitative and quantitative. Next, we analyze the advantages and disadvantages of each of them, as well as consider in more detail the characteristics of quantitative forecasting methods.
Table 1
Advantages and disadvantages of qualitative and quantitative
Methods Advantages Disadvantages
Qualitative forecasting methods 1. Availability regarding ownership of mathematical and statistical apparatus; 2. Active application in practice for more than 40 years 1. Lack of objectivity of forecasts as they are made on the basis of expert estimations; 2. Inaccuracy in making forecasts for the long term; 3. High requirements for qualifications and experience in the subject area.
Quantitative forecasting methods 1. Due to the use of impersonal mathematical and statistical methods, forecasts become more objective; 2. The greatest accuracy of forecasts; 3. A large number of methods and models of forecasting. 1. High cost; 2. The need to location a sufficient amount of statistical data; 3. The need to know the basics of statistics for forecasting.
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Table 2
_Features of quantitative forecasting methods [2]_
Method name Characteristic
The method of extrapolation (extrapolation methods and a weighted average) - allows you to assess the effectiveness of the use of funds; - based on the alignment of the dynamic series by the method of least squares with the further spread of the established trend in the future.
Moving average method - allows you to escape from the random fluctuations of the time series, which is achieved by replacing the values within the selected interval arithmetic mean; - it is possible to eliminate random fluctuations and obtain values correspond- ing to the influence of the main factors.
The method of exponential smoothing - it is especially effective in making medium-term forecasts; - used when forecasting only one period ahead; - simplified calculation procedure and the ability to account for the weights of the initial information.
Regression analysis - sets less stringent requirements for primary information; - the establishment of internal relationships between the variables of the complex, the construction of multidimensional functions of variables, the allocation of a minimum number of characteristics that describe the object with a sufficient degree of accuracy; - statistical methods are used mainly for the preparation and further reduction of data to the form suitable for the production of the forecast
We will carry out forecasting of net cash flows on the basis of the company A. for the analysis indicators of Net cash flow for 2009-2019 are taken. [3]
Table 3
Actual ^ and forecast data of company A
Cash flow of company A Actual value
2009 113876542
2010 128111110
2011 85407407
2012 140922221
2013 156580246 The method of ex- Moving average The method of expo-
2014 142345678 trapolation method nential smoothing
2915 156580246
2016 187896295
2017 150317036
2018 210443850
2019 209764345
2020 222977689 210104098 162963899
Forecast 2021 237023360 209934221 166184437
2022 251953787 210019160 166064324
We have made a cash flow forecast for company A in three ways: the average growth method, the moving average method and exponential smoothing. Let's visualize the results on the graph.
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Analysis of the forecast values
300000000 250000000 200000000 150000000 100000000 50000000 0
2020 2021
The method of extrapolation
Moving average method
The method of exponential smoothing
Schedule 1. Cash flow forecast analysis
2022
From the data it can be seen that the most optimistic option is possible if we proceed from the method of average growth, the most pessimistic - the method of exponential smoothing, and more realistic-the result obtained on the basis of the moving average method. However, in all three cases, it is possible to notice the trend of growth of cash flow in the studied projected period of time.
Thus, it can be concluded that there are different approaches to the assessment of cash flow forecasting, each of which has its own characteristics.
It is impractical to use the method of average growth when zero and negative values were detected at intervals, since they are not actually taken into account when calculating the average growth rate, but only the first and last values are taken into account. But it is advisable to use it when the values in the studied interval are approximately equal and there are no strong fluctuations and outliers. A plus can be called a quick application.
The moving average method is an improved method of average growth. Applying this method, it is possible to eliminate random fluctuations and obtain values corresponding to the influence of the main factors, while the disadvantage of the method of average growth is excluded, but also has its drawbacks:
1) the lag of a moving average relative to price charts;
2) low sensitivity to price chart changes
The exponential moving average method is more modern and is aimed at the most objective forecasting with the possibility of recognizing a loss, since it is invested in the method of prudent accounting, also taking into account the historically studied data (zeros and negative values). The advantage can be called modern use aimed at reducing risks. The downside-the method requires a lot of time and the possibility of taking into account a large number of risks to miss a profitable project.
So, there are many methods of forecasting. Undoubtedly, these methods should be used in combination to compare all the negative and positive trends of forecasting.
List of references
1. Blank I. A. cash flow Management / / Textbook. - Kyiv: Nika-Center, 2013. - 736c
2. Savitskaya G. V. Complex analysis of economic activity of the enterprise / / Textbook / G. V. Savitskaya. Moscow: SIC INFRA-M, 2013.- 607 c.
3. Litavina A. A. forecasting cash flow and its impact on the financial result of the organization, 2015
