Financial mechanism of the enterprise and its elements

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2019-06-17 09:20:23

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The Financial mechanism of the enterprise represents a complex of measures on the organization of resource management system in Finance. The main strategic goal of establishing a mechanism determined by the improvement of economic indicators attesting to maximize profits.

In this regard, we can say that the financial mechanism of the enterprise is aimed at the rational use of funds. Therefore, any costs that arise in the course of the production process must be clearly justified and appropriate.

The Financial mechanism of the enterprise has some functionality:

  • Distribution;
  • Provide;
  • The control.

They All act in concert and have a deep relationship. The distribution function involves the organization of a mechanism which fully would carry out the operational movement of funds from one company to another. No less important is the system providing the company the required financial resources. Of course, to assess the effectiveness of the mechanism should carefully monitor the results of its operations. As the most striking example of such results revenue, i.e. the amount obtainable from the sale of products or services, or cost, that is, the magnitude of the costs incurred in production of goods.

We Can distinguish such elements of the financial mechanism:

  1. Methods imply different ways of influence on economic and financial relations and the regulation of the process of accumulation and distribution of funds. An example thereof is the analysis, planning and forecasting, Deposit and lending and others.
  2. Arm financial activities includes all sorts of instruments through which and by a direct effect on any aspect of the production process. The most striking levers are considered such indicators as profit, yield, interest rate, discount. In other words, all operations, by which the accretion of the value of assets from the same organization and appearance of certain liabilities of the partner. To classify the tools into primary and derivative. Assume initial cash investment in securities, obligations to creditors and uncollected receivables. Derivatives are those instruments, which were established from the primary. These include futures and forwards, swaps and other foreign exchange contracts.
  3. One of the main elements of the financial mechanism is considered to be a legal framework, which is the main regulating document all relationships in terms of transactions and operations, resulting in cash resources. Legislative framework implies the existence of  the Tax code, as well as a number of laws and normative acts that establish the basic rules of functioning of legal entities or individual entrepreneurs.
  4. In the modern conditions of the financial mechanism of the enterprise can not exist without the introduction of new products in the field of information technology. Regular update of information is the key to a successful business, as the development allows us to hold leading positions on the market of goods and services.

In addition, it is worth noting the main features of the company:

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  • Every organization has a specific structure and legal form.
  • Company engaged in the production of goods or provision of services is the main link in the chain of receipt of the product to the consumer.
  • Every legal person shall have certain obligations to the state, manifested in the form of tax payments to the budget and extra-budgetary funds.
  • The Company operates on the principle of self-sufficiency.

 


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Alin Trodden - author of the article, editor
"Hi, I'm Alin Trodden. I write texts, read books, and look for impressions. And I'm not bad at telling you about it. I am always happy to participate in interesting projects."

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