Dyumin Alexander

Faculty of Computer Sciences and Technologies

Department of Applied Mathematics and Computer Sciences

Specialty: Economic Cybernetics

Theme of master's work:

Analysis, forecasting and transformation of profit of DS RМP “Dzerzhinskugol”

Scientific adviser: senior lecturer of Department of Applied Mathematics and Computer Sciences Krivodubskiy Oleg

Summary of master's work

Profit occupies one of the important places in the overall system of the monetary relationship of the market economy and is an essential element of the economic mechanism of the social production management. By means of this value form the activities of all enterprises of the economy are evaluated. Profit is the largest source of funding of the extended reproduction, an important criterion of its effectiveness, the main source of the funds formation of economic incentives and a major source of state budget revenues. A proper understanding of the economic nature of the profit is the basis for the improvement of the mechanism of the practical use of this category under modern conditions.

The actuality of the paper topic

At the present stage of the development of Ukraine the question of the financial condition of the enterprise remains topical. The success of the activity of any enterprise depends largely on its financial condition that accounts for the increased attention to the financing activities of the enterprise. The financial condition of the enterprise is an essential characteristic of the economic activity of an enterprise in the external environment. It determines the competitiveness of an enterprise, its potential in business cooperation, assesses the extent to which the economic interests of the company and its partners on financial and other relationships are guaranteed. The main task of the financial analysis is to reduce the inevitable uncertainty associated with economic future-oriented decision-making. Thus, financial analysis can be used as an instrument of substantiation of short- and long-term economic decisions, investments’ expediency, as a vehicle of assessing skill and quality of management, as means of future financial results forecasting. It should be pointed out that financial forecasting helps to improve the enterprise’s financial situation management. This is due to the coordination of all factors of production and sales, the interrelated activities of all departments, and division of responsibility.

The aim of the paper

The aim of the paper is the assessment of its current financial condition, as well as identification of the directions in which the work on the improvement of this condition should be carried out. However, a state of financial resources is considered as a desirable when the enterprise, freely maneuvering money, is able through its effective use, to ensure an uninterrupted process of production and sales of the products, as well as its expansion and renovation costs. It is also necessary to show the state of the enterprise for the external customers, whose number considerably increases as the market relations develop.

Methods of the research: analytical, economic and statistical analysis, factor analysis.

Research tasks

1. description of the enterprise management objects of the separate division of the mechanical-repair plant "Dzerzhinskugol" ;

2. analysis of contemporary developments of the enterprise management systems;

3. formalization of the indicators of the economic situation of the company;

4. development of the mathematical model;

5. identification of the mathematical model;

6. development of algorithm and software for decision support systems.

Alleged scientific novelty consists in:

1. carrying out a systematic analysis of the enterprise;

2. identification of the peculiarities of the functioning of the revenue and expenditure part of the enterprise’s activity;

3. design of a mathematical model of earnings forecast.

Practical expectations

Results obtained from a study of profits of the enterprise allow moving to the development of mathematical model, algorithm, profit management, improvement of the economic activity of the enterprise. The designed mathematical model will serve an assessment tool for the financial activities of the enterprise and the profit generation.

A survey of research on topic

At present, the process of analysis and forecasting of profit is one of the main processes of management. The research in this area is conducted by a number of scientists of our country. Among them Vasilenko V. A. and Tkachenko T. I. should be marked out. Their work [3] deals with theoretical aspects of strategic business management in the transition to a market economy in Ukraine. Also various approaches to the problem of enterprise management in the long term outlook with an allowance for the rising uncertainty of the environment of organizations are considered, contemporary approaches to the theory and practice of strategic management are shown. Practical recommendations for the transition of enterprises to strategic planning and management in modern conditions are given. The proper vision of the set of issues of strategic management through the prism of advanced foreign experience is proposed. Krivitsky O. R. [4] has published several articles on profit planning of an enterprise. Rusanov D. E. [7] has analyzed different tools needed to solve problems of earnings forecast. It is impossible not to mention Mickiewicz A. N. [8], whose works embrace important economic issues of the company, non-traditionally combining economic theory and management accounting. In his work Mickiewicz A. N. has proposed fundamentals of economic way of thinking and practical advices on what costs you really incur and what profit you can get. Erukhimovich I. L. [9] in his manual has consistently described the theoretical, methodological and practical issues of building operating costs, the economic nature and types of income, the concept of profitability and methods of its determination, the essence of economy and types of prices, pricing principles in market conditions, the mechanism of price formation and pricing policies of enterprises (companies), depending on the adopted strategy of management. Shevchuk D. A. [11] in his work casts light upon the processes related to pricing in different industries. The work by Solovei M. M and Romanovskaya Y. A. [10] deserves particular attention. The authors examine the legal aspects of taxation of business profits and global aspects of the formation of a tax on profit of enterprises.

Among the foreign scholars who addressed the issue of profits, one should single out Slivotski A. [1], who examined 23 models of profit in his work. The work by Williams B. [2] presents in an accessible form the recent achievements in the theory of human behavior and life of economic systems. A reasoned description of a theory of entrepreneurship and profits of enterprise is provided in the work by Knight F. H. [5]. Briest K. [6] in his work has analyzed the financial and economic state of the enterprise.

Summary of own results

The efficient management of the enterprise involves a focus not only on individual functions of structural divisions, but also a cross-cutting chain of operations that pass through the multitude of different business units. The given review deals with the activities of a separate division of the machinery and repair plant (SD MRP), which is part of the state enterprise "Dzerzhinskugol" (SE "Dzerzhinskugol").

Machinery and repair plant began with the central electromechanical workshops (CEMM), which were founded in 1901 and consisted of 6 main departments: mechanical, foundry, forge, metalwork, modeling, mining equipment (ME).

Mechanical sector specializes in the repair of pumps, fans, mounted axles, makes major repairs of the components of all kinds of mining equipment machines. The sector has mastered the production of the aerator "Prohlada", monthly completes the orders for the production of stud-bolts and taper-joints, pipe unions and adjutages, half-couplings, and more.

The successful operation of the plant is directly connected with the work of the foundry site that produces a large range of castings: steel castings - clamps, flanges, side, three-hole screw jacks, claws and cast iron - the impeller, guide vane, half-couplings, platens.

Forging shop provides parts for repairs, mounted axles, namely – nut, labyrinth ring, track 600 and 900, arbor, miner’s hack, pick, crowbar palmate, keys, hammers, tapered connection.

Fabrication shop overhauls waggons WG - 1,3; WG - 1,6; WG - 3,3, repairs pans. Also shop is engaged in manufacturing of various steel structures for the mines (skips, hatches, ventilation doors, folding doors, telephone boxes, cable boxes, pendants, gratings). For the population railings, gratings, doors, monuments, shovels, rakes, choppers, boxes, containers for waste collection, etc. are manufactured.

Mining equipment shop is unique in the structure of Dzerzhinsky MRP, it repairs equipment in the mining conditions. A distinctive feature is that the division carries out repair works without interrupting the process of coal production, and in the mines prime time overhauls coal and rock loading devices, tippers, waggons exchange complexes, equipment for boiler houses and loading and technological systems of mines.

It should be noted that to the SD MRP "Dzerzhinskugol" one of the most important places in the life of a state enterprise is assigned, since coal production in the mine depends on the qualitative and timely execution of orders, as well as on mining equipment repairs. It should be pointed out that the given department does not have its own balance and is on the balance sheet of SE "Dzerzhinskugol". Nevertheless, the implementation of the unification plan depends on the effectiveness of its work. The plan is performed under the condition of:

1. full provision with necessary materials;

2. availability of electricity;

3. the presence of orders from the mines with a complete set of documentation;

4. high productivity.

When describing the management objects of SD MRP "Dzerzhinskugol" the structure of SE "Dzerzhinskugol" was analyzed, activity analysis of the SD MRP "Dzerzhinskugol" was carried out, revenues and expenditures of the given enterprise were considered, peculiarities of the production and economic activity were defined.

As a result of the analysis of the available data a systematic analysis of production-economic and economic-financial activity of SD MRP "Dzerzhinskugol" and its structural elements was carried out.

On the basis of the analysis it is possible to formalize variables, to develop a mathematical model of earnings forecast of an enterprise.

Conclusion

The economic situation in Ukraine that developed in recent years challenges the enterprises to improve production efficiency and competitiveness of products and services through the introduction of scientific and technological progress, efficient forms of farming and production management, to overcome mismanagement and enhance entrepreneurship. Interest of enterprises in production and marketing of qualitative, merchantable products, impacts on the profit margin, which ceteris paribus is directly dependent on the volume of sales of these products.

Profit is the main source of equity capital of an enterprise. On the one hand, the profit is treated as a result of the company’s activity, on the other, as a basis for further development. Maximizing profit is the ultimate goal of any commercial activity. The going concern is the one that gets steady profits from its activity (production and sales, leasing of fixed assets, etc.). Financial results of the activity of the enterprise are characterized by the sum of profits earned and the level of profitability. In market relations the enterprise should not only seek to profit maximization, but also to the rational, optimal use of the already received profit. This will not only allow to hold its positions in the market, but also to ensure the dynamic development of its production in a highly competitive market. The search of the reserves for effectiveness increase of use of available resources of all types is one of the biggest challenges of any production. Identification and practical use of these reserves is possible only by means of a thorough financial and economic analysis.

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© DonNTU 2010 Dyumin A.