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The issue of investment property owned by the enterprise is relevant at all stages of its development. Investment property can be land or a building, or parts of a building, or both, which are held by the owners rather to generate rental income, increase current period profit, and thereby the equity value of the enterprise. The owners do not hold the investment property to be used in the production or supply of goods and/or services, or for administrative purposes, or for sale in the ordinary course of business. Real estates (land and/or a building) are sated as investment property due to their specific purpose in their use. The enterprise should prepare and disclose an estimate about the circumstances that objectively allow to classify a property as investment property. It should develop and adopt criteria allowing it to make estimates in time based on the indicated of the accounting regulations – national or international accounting standards. For the purposes of the true and fair presentation of income, costs, financial performance, financial position, financial stability, cash flows and business efficiency, such criteria should be disclosed. Investment properties generate economic benefits that are different and independent from the economic benefits that the enterprise expects to receive from the other assets it owns and controls. The article examines the circumstances that require the company's long-term tangible assets (land and/or buildings) to be reported as investment properties in its financial statements. The leading criterion here is the specific use by the enterprise of the investment properties it owns. In order to be recognized, valued and presented in the financial statement as an investment property, a given land or building must be able to generate independent inflows of cash that are different from the inflows of cash achieved by the other assets of the enterprise. The article examines the criteria for recognizing investment properties, their initial valuation, the subsequent costs associated with them, as well as their subsequent valuation. The subject of the research are the main business operations related to the investment properties of the enterprises, which should find accounting coverage. The requirements for disclosure of information about investment properties in the financial statements of enterprises are derived. The purpose of the article is to propose a methodology for the analysis of the investment properties of enterprises, based on the information presented in the financial statements. [ABSTRACT FROM AUTHOR]

The issue of enterprise’s capital structure is relevant at all phases and stages of its development. The capital structure has direct impact both on the return of the entire invested capital, and on the return of equity and borrowings as well. The ratios between equity and borrowings and between borrowings and equity directly influence the yield of equity. Furthermore, the use of borrowings to finance the enterprise’s business may turn out to be a factor with positive impact for the improvement of equity yield. This is due to the financial leverage effect. From the perspective of resources, the enterprise’s capital is invested in, its structure influences both the assets’ turnover – in aggregate and individually in terms of fixed tangible assets and short-term assets, and the asset-based return as well. This publication is written due to some inconsistent, and I would say, scientifically wrongful statements related to issues of the enterprise’s capital structure. One of these statements provoked me to write this article, and namely, the opinion that the enterprise may close the current reporting period with accounting profit, i.e. positive financial result, but actually, it sustains losses for the same reporting period, as it has used loans from a bank institution for its business, thus “eating” the accounting profit for this period. Such opinion really gives ground for reflection. The object studied in this publication covers the capital structure, and its subject matter – the ratios between the different components of the enterprise’s capital. On this basis, this publication highlights the methodology for analysis of enterprise’s capital structure. It provides methodological guidance for the analysis, which is summarized as follows, according to the systemic approach and the methods of scientific knowledge: 1) analysis of the general structure of the capital; 2) analysis of the structure of equity and 3) analysis of the structure of borrowings. It defines the system of indicators for analysis and assessment of the enterprise’s capital structure. The author’s objective is to introduce research and creative approaches for analysis of the enterprise’s capital structure. I would expand this objective in terms of the application of these approaches in general, when analyzing all items within the contents of the enterprise’s financial and business analysis. [ABSTRACT FROM AUTHOR]

Profitability is an economic category of fundamental importance for the theory and practice of the economic analysis. It is a generalized relative indicator that characterizes the effectiveness of the activity of business subjects that function in different sectors and their related industries of the national economy. The object of this publication covers the enterprise’s profitability calculated on revenue basis. The subject matter of the study refers to the profitability on revenue from sales of products basis (profitability of revenue). The article consistently substantiates the methods for analysis of revenue-based profitability and profitability on net revenue from sales of products basis. It highlights different options and models for analysis, thus binding the different aspects of the enterprise’s business. It determines the power and direction of the direct factors’ impact on the changes of profitability calculated on the basis of the total amount of revenue and the amount of net revenue from sales of products. It further substantiates the objectively existing relations and dependencies both between revenue-based profitability and the indicator ‘Costs per revenue of BGN 100’ (revenue effectiveness), that characterizes the effectiveness of the overall business, as well as those between profitability of sales and the indicator ‘Full cost per production of BGN 100’, that characterizes the effectiveness of the enterprises’ operations carrying out industrial business as their principal activity. The author’s objective is to improve the methods for analysis of profitability calculated on revenue basis and net revenue from sales of products basis. The profitability analysis is a typical example of external analysis. It is carried out by using data from the enterprises’ financial statements, which are public. The information obtained from the analysis is designed to meet the information needs of external users of information disclosed in the enterprises’ financial statements. The information obtained from the analysis enable them to make informed decisions for the relevant enterprise and their business contacts with them. The resultative analytical information is useful for the internal users – the financial management and the management of each enterprise in general, in order to elaborate and make informed, justified and efficient decisions for the development of its business, the achievement and maintenance of market and financial stability, as well as financial balance in short- and long-term perspective. [ABSTRACT FROM AUTHOR]

This publication highlights the methodology for analysis of production net sales revenue. It consistently presents an analysis of the deviation of production net sales revenue for the current period versus the previous period. This deviation is subject to the influence of three direct factors: 1) Changes in the natural volume of sold products. 2) Changes in the product range structure of sold products. 3) Changes in the net sales price of products. The impact of these direct factors may be established both in absolute and in relative terms. For this purpose, the author uses different elements of the method of the financial and business analysis: methods of comparison, adjustment of indicators, subsequent substitution, index method, etc. Analysis is made for the dynamics of production net sales revenue for more years in a row, by identifying both their average dynamics and the variation for the whole period of time. To this end, the author has used the dispersion analysis. The object of research in the article is the net revenue from product sales. The object of study is explained through the methodology for analysis, which is the subject matter of the study presented in the article. The methodology for analysis is complex system of sequentially implemented interconnected stages. The following stages can be distinguished: 1) Information provision of the analysis. 2) Analysis of the dynamics of net revenue from product sales for the current versus previous period with a multiproduct structure of production. 3) Analysis of the average annual dynamics of the net revenue from sales of the production for the analyzed period. 4) Analysis of the variation of the actual around the average actual net revenue from sales of the production for the analyzed period. 5) Analysis of the dynamics of net revenue from product sales by product group. The author’s objective is to suggest improved methodology for analysis of production net sales revenue. The author presents her vision being well aware that the methodology for analysis of production net sales revenue may be successfully used in the business practice for the management of enterprises and their business both in operating and in strategic aspect. The information obtained from the analysis is useful for the financial management of the enterprise for making the right decisions for its development, for achieving market and financial stability and its good positioning in the competitive market. [ABSTRACT FROM AUTHOR]

The issue of expenses on materials in the enterprises with industrial principal activity is relevant at all stages and phases of their development. This is due to the following facts: 1) expenses on materials have the biggest relative share in the cost of production; 2) expenses for the industrial enterprise’s principal activity have direct impact on the financial result from sale of products; 3) in addition to revenue, any enterprise’s expenses are one of the direct factors that influence the formation and measurement of its financial performance for different reporting periods; 4) through financial performance, expenses and revenue influence the behavior of a number of relative indicators that characterize the effectiveness of business, such as profitability. The object of study in this publication refers to the expenses on materials in the industrial enterprise’s principal activity and the methodology for their analysis. It highlights both the information provision and the methodological guidelines for analysis of expenses on materials. It presents the methodology for analysis and evaluation of the absolute savings or the absolute overspending of expenses on materials in the principal activity. The following four direct factors exert influence on the difference between the actual expenses on materials in the industrial enterprises’ principal activity for the current year versus the previous year (absolute savings or absolute overspending), and namely: 1) changes in the physical amount of products; 2) changes in the product range structure; 3) changes in the expenses on each type of material for the manufacturing of a unit of each type of product (consumption rates); 4) changes in the prices per unit of each type of material. Through the elements of the financial and business analysis method, we determine the impact of each factor on the achieved absolute savings or absolute overspending of direct expenses on materials in the cost of industrial production. Furthermore, this article describes the guidelines for analysis of the relative savings or overspending of materials in the enterprises’ principal activity. It highlights the guidelines for analysis of the effectiveness of costs on materials for the manufacturing of products. The author’s objective is to suggest an improved methodology for analysis of expenses on materials in the industrial enterprises’ principal activity. Based on the information obtained from the analysis, timely, informed and proper decisions for effective control of expenses on materials in the cost of industrial products may be designed and made. [ABSTRACT FROM AUTHOR]

The indicator ‘Full cost of production of BGN 100’ is a key business indicator that characterises the effectiveness of the operations of enterprises that carry out industrial activity as their principal activity. Such indicator is calculated as a percentage ratio between the full cost of production and the production value at net sales prices. The value of this indicator may be calculated in different aspects. For example, costs comprised in the full cost of production may be classified:  by economic elements, i.e. depending on the economic nature and composition of costs. From this perspective, objective opportunities are created to analyse and assess the impact of changes in the costs by economic elements within the scope of the full cost of production, on one hand, and on the other hand, the influence of the changes in the net production sales revenue on costs by economic elements basis on the changes that have occurred in the full cost of production of BGN 100 for the current versus the previous period;  as conditionally fixed and variable costs, allowing to analyse and assess the impact of both the changes in the amount of these costs and of the efficiency of net production sales revenue on the basis of conditionally fixed and variable costs comprised in the full cost of production of BGN 100;  by types of activities, i.e. classification of costs, depending on their economic nature, content and incurrence venue (by functional purpose). The main source of information for the needs of the analysis of the full cost of production of BGN 100 is the accounting information kept in the enterprise. Such data are created and contained in the synthetic, financial account ‘Production sales revenue’. The object studied in this publication refers to the indicator ‘Full cost of production of BGN 100’, and its subject covers the direct factors that influence the change of actual versus reference full cost of production of BGN 100, and the methods for analysis and assessment of such impact. In particular, the article presents a model for analysis of full cost of production of BGN 100 with classification of costs comprised in the full cost of production by types of activities. The author’s objective is to suggest different options and guidance for improvement of the methodology for analysis of the indicator ‘Full cost of production of BGN 100’. One of the options is to extend and deepen the analysis of this indicator by studying the costs by types of activities, which form the full cost of the industrial products. The usefulness of the resultative information is based in its actual use for making informed, proper, timely and efficient decisions for the management of the full cost of production and of the effectiveness of the enterprise’s operations. Moreover, the indicator of full cost of production of BGN 100 is directly related to the net production sales revenue-based profitability (profitability of sales) – a summary indicator that characterizes the effectiveness of the industrial enterprise’s operations. This information is also useful because the factors having influence on the dynamics of the full cost of production of BGN 100 are factors that affect the change of profitability of sales. The impact of these factors is equal in value but opposite in terms of direction. This is due to the economic nature of two relative indicators for effectiveness of the enterprise’s operations – full cost of production of BGN 100 and profitability of sales. [ABSTRACT FROM AUTHOR]

The indicator “Full cost per production of BGN 100” is a key business indicator that characterises the efficiency of the operations of enterprises carrying out industrial activities as their principal business. This indicator is calculated as percentage ratio of full cost of production to the production value by net sales prices. The relevance of this indicator and the methods for its analysis is due to the following facts: 1) The impact of three direct factors on the dynamics of the full cost per production of BGN 100 may be identified, assessed and controlled: changes of the product range structure; changes of the full cost per product unit within the composition of sold products; changes of net sales prices of products. 2) The impact of expenses comprised in the full cost of production may be identified by classifying them on the basis of appropriate criteria. For example: with view of the expenses’ relation to and dependence on the volume of sold products, they may be classified as conditionally fixed and variable; classification of expenses by economic items: expenses on materials; expenses on staff, including wages and salaries and social security and health insurance expenses; expenses on amortisation and other expenses. Classification of expenses by types of activities: expenses for principal activity; expenses for sale of products and administrative expenses. 3) Efficiency may be analysed, assessed and controlled both by types of activities and by types of industrial enterprise’s expenses. The main source of information for the needs of the analysis of full cost per production of BGN 100 is the accounting information created in the enterprise. Data are contained in the synthetic, financial-resultative account “Sales revenue”. The object studied in this publication is the indicator “Full cost per production of BGN 100”, and its subject matter covers the direct factors affecting the change of actual versus basic full cost per production of BGN 100, as well as the methods for analysis and evaluation of such influence. The author’s objective is to suggest guidelines for improvement of the methods for analysis of the indicator “Full cost per production of BGN 100”. The analytical information so obtained is useful with view of the opportunities for being used in the process of making informed, proper, timely and efficient decisions for the management of cost of sold products and the efficiency of the operations. Furthermore, the full cost per production of BGN 100 indicator is directly related to the net sales revenue-based return (profitability of sales) – a summary indicator for the efficiency of the industrial enterprise’s business. This information is also useful with view of the fact that the factors affecting the dynamics of the full cost per production of BGN 100 are factors that influence the change of profitability of sales with the same value but with opposite signs. This is due to the economic nature of the two factors for efficiency of the enterprise’s operations mentioned above. [ABSTRACT FROM AUTHOR]

Drafting accounting information about the benefits of employees hired by the enterprises in the Republic of Bulgaria under employment contracts with regard to their service is based on the provisions of the Labour Code, Social Security Code, Health Insurance Act, the annual acts adopted by the National Assembly: State Budget Act; State Social Security Scheme Budget Act; National Health Insurance Fund Budget Act, and on the provisions of the applicable accounting standards – Accounting Standard 19 (AS 19) “Employee Benefits”, and International Accounting Standard 19 (IAS 19) “Employee Benefits”. According to AS 19 the provisions of which are used by the enterprises that apply the national accounting regulations, employee benefits comprise: short-term benefits, post-employment benefits; other long-term benefits; termination benefits; equity compensation benefits. The object of this publication refers to post-employment employee benefits payable due to termination of the employment or official relationships. We speak about different benefit plans. They are defined as formal or informal agreements by virtue of which the employer provides benefits to members (one or more) of its staff post their employment upon termination of their employment or official relationships. These post-employment benefit plans may comprise: defined contribution plans; defined benefit plans; multiple employer plans; state plans and equity compensation (benefit) plans. The subject matter of this publication refers to post-employment defined benefit plans. Under these plans, the enterprise’s liability is updated in a way that does not differ materially from the amounts that are subject to payment to the employees post their employment. In accordance with AS 19 “Employee Benefits” defined benefit plans comprise two items: assets under the plan and liabilities for payment of defined benefits. The author’s objective is to systemize in this publication some major issues relevant to the defined benefit plans, such as: 1. the enterprise that participates in the plan should measure the fair value of assets and the present value of the liability for payment of retirement benefits to its employees in the future; 2. the amount of expenses or income under the plan is stated in the enterprise’s statement of income and expenses for the current reporting period; 3. actuary gains and losses are the changes in the amount of the liability for payment of defined benefits to employees – they are stated in the liability side of the enterprise’s balance sheet; 4. actuary gains and losses are the changes in the fair value of assets under the plan – they are stated in the asset side of the enterprise’s balance sheet; 5. methods for measurement, accounting and follow-up analysis of actuary gains and losses under the plan. The abovementioned issues determine the relevance of the defined benefit plans for employees post their employment in the enterprise. [ABSTRACT FROM AUTHOR]

Copyright of Knowledge: International Journal is the property of Institute for Knowledge Management and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Profit is a key economic category. Enterprise’s profit is an important absolute indicator that describes the efficiency of the overall business of the enterprise. By comparing the profit with the respective reference, we define a number of important relative indicators that demonstrate the business efficiency. These are the return indicators calculated on different bases (assets, invested capital, equity, fixed capital, revenue, costs, etc.). The above background gives rise to the relevance of issues related to the analysis and evaluation of the enterprise’s financial performance. The object under consideration in the publication refers to the different values of financial performance: accounting profit or loss; tax profit or loss; balance sheet profit or loss; operating profit or loss of the enterprise. As a subject of this study we can define the methods for analysis of different values of profit or loss of the enterprise, respectively. The tasks identified for the achievement of this objective may be systemized as follows: 1) identification of the deviation of the balance sheet financial performance for the current period in comparison to the reference period (previous period, business plan, etc.); 2) analysis and evaluation of the impact of the direct factors on the deviation of the balance sheet financial performance for the current period in comparison to the reference period; 3) based on the information obtained as a result of the analysis, one can identify measures that the management should implement in order to improve the financial performance and to achieve financial stability of the enterprise from operational and strategic point of view. The analysis of enterprise’s financial performance is made on the basis of the accounting information. Data that are necessary for the analysis of both accounting and balance sheet financial performance are contained in the enterprise’s statement of income and expenses. In general, this is an external analysis as it is carried out on the basis of the enterprise’s financial statements, which are public. The information necessary for the analysis of the financial performance from sales of products, respectively goods and services, is accounting information created within the enterprise. This is internal information generated as a result of the synthetic and analytical accounting and the trial balances with regard to the calculation of the sales financial performance. The analysis of financial performance from sales of products, goods and services is a typical internal analysis. The information resulting from this analysis is of confidential nature and is intended for use by internal users of information only. [ABSTRACT FROM AUTHOR]

The COVID-19 pandemic that has occurred at global level at the end of 2019 caused unprecedented health and economic crisis. The pandemic put the enterprises from different sectors and industries of the Bulgarian economy to test. For the purposes of restricting the spread of COVID-19, on the 13th of March 2020 the National Assembly of the Republic of Bulgaria declared state of emergency, which continued until the 13th of May 2020. Then individual anti-epidemic measures remained valid in the country. However, during the autumn of 2020 and during the spring and autumn of 2021 the number of new cases increased and therefore some additional measures and restrictions were introduced for the business and the population of the country. The measures undertaken by the national government for restricting and overcoming the consequences of the pandemic and for getting through the resulting health, economic and social crises had direct impact on the business of the enterprises and made them change their priorities. For the time being, the energy crisis and the increase of price of electricity, gas and a number of other goods also have direct impact on the enterprises’ business and its effectiveness. Under the conditions of the corona crisis and the partial closure of the country’s economy, the revenue of many small and medium-sized enterprises decreased, and sometimes such decrease is considerable. At the same time, there are enterprises whose revenue records increase. This is due to the fact that such enterprises managed to adapt to the new conditions determined by the COVID-19 pandemic and to carry out their business successfully. Management decisions for the optimization of the mix structure of offered products, goods and services and its relevance to the market demand under the crisis pandemic conditions play crucial role to this effect. The decrease of the enterprises’ revenue in the context of the corona crisis, all other things being equal, had direct impact on their financial performance and therefore on their margin. It’s worth noting the fact that under the conditions of crisis, enterprises’ expenses increased. It’s about the additional expenses incurred for staff tests as well as other corona crisis-related expenses. The object of this publication refers to the number of employees, revenue, profit and cost-effectiveness of leading small and medium-sized enterprises in the Textile sector, Textile, Clothing and Shoe Manufacturing industry of the Bulgarian economy. The subject matter of the study covers some key absolute and relative indicators for analysis of staff, revenue, profit and cost-effectiveness of leading small and medium-sized enterprises in this industry. It contains comparative analysis of the above indicators for 2020 in comparison to 2019 of leading small and medium-sized enterprises pursuing activity in the Textile, Clothing and Shoe Manufacturing industry in Bulgaria. It is aimed at determining the impact of the COVID-19 pandemic crises on the key performance indicators of the business of small and medium-sized enterprises in this sector of the Bulgarian economy. On the basis of the analysis results, one can define and make decisions and apply relevant measures for improvement of the financial indicators that characterise the enterprises’ business and its effectiveness. [ABSTRACT FROM AUTHOR]

Solvency is a key indicator that characterizes the financial position and the financial stability of an enterprise. The issue of solvency is relevant at all stages and phases of enterprise’s development. The relevance of this issue is due to the fact that solvency is a key business indicator that characterizes enterprise’s capability to: 1) settle its current liabilities to different creditors – financial institutions, suppliers, tax and social security system, etc.; 2) settle its liabilities in long-term perspective; 3) organize and carry out its normal course of business in flawless and routine manner; 4) achieve and maintain stable financial position and financial equilibrium; 5) continue as going concern and keep on functioning successfully from operational and strategic point of view. The information obtained from the enterprise’s solvency analysis is intended for a wide range of internal and external users. Such information is crucial and useful for the owners of the capital, the financial management and the management in general for the purposes of making informed, justified and effective decisions for the management of the enterprise and its business. The information obtained from the enterprise’s solvency analysis is useful for the various creditors of the enterprise – financial institutions, suppliers, National Revenue Agency, etc. The objective of this publication is to present the indicators for analysis and assessment of enterprise’s solvency and to suggest on this basis guidelines for improvement of its analysis methods. The following tasks have been defined to achieve this objective: 1) to clarify the nature of the term “solvency”; 2) to distinguish the terms “solvency” and “liquidity” and to identify their specific features; 3) to define and classify the indicators for analysis and assessment of enterprise’s solvency; 4) to define the improved methods for analysis of enterprise’s solvency. Various scientific methods have been used in the process of this study – induction, deduction, analysis and synthesis, as well as the relevant methods of the financial and business analysis – the methods of comparison, elimination, etc. The study of enterprise’s solvency-related issues is based on the historic-logical and systemic approach. The author believes that namely the systemic approach perspectives may contribute to the identification and study of the objectively existing relations and dependences among the individual aspects of enterprise’s business and to the determination of the power and the direction of the impact of the factors on the occurred changes in the resultative indicators’ values. This point of view of the author allows to analyze and assess the enterprise’s solvency from two perspectives: 1) as a separate object of the analysis (resultative indicator); 2) as a factor affecting the dynamics of other key business indicators, such as the effectiveness of the enterprise’s business. [ABSTRACT FROM AUTHOR]

Enterprise’s financial statements may be defined as structured presentation of information about the financial position, financial performance and cash flows in the form of assets, liabilities, equity, income, costs, and cash flows. Based on this information, one can analyze the enterprise’s income and costs, financial performance, financial position, financial stability, financial equilibrium, cash flows and operations efficiency. The object studied in this publication refers to the costs of the enterprises that apply the national accounting base of the Republic of Bulgaria – the National Accounting Standards, and its subject covers the specific areas of the analysis and the cost analysis methods. The aim is to present the capabilities and the methodical areas of the cost analysis based on the data from the enterprise’s financial statements, and in particular, the information from the Statement of Income and Costs. Based on the data of the enterprise’s Statement of Income and Costs, e can make analysis in the following methodical areas: general cost assessment; analysis of income per costs of BGN 100 (cost effectiveness); analysis of costs by economic elements; analysis of gross cost-based return; analysis of net cost-based return with regard to the cost effectiveness. The overall assessment of enterprise’s costs comprises investigation of the amount, composition, structure and dynamics of costs. The aim of this analysis is to identify the change of costs in absolute values both in aggregate and by groups and specific types of costs for the current period with reference to the previous period, and their change in relative values. For management purposes, the average growth rates of costs in general and by types of costs in long-term perspective can be identified, the trends in their development can be described, etc. When analyzing the income per costs of BGN 100, we are able to determine the impact of the direct factors on the dynamics of this indicator of cost effectiveness. In their nature, these are the enterprise’s total amounts of costs and income, and their impact may be detailed by groups and by specific items within their composition. This enables us to identify the strength and direction of each cost and income item’s impact on the dynamics of the indicator that characterises the cost effectiveness. Based on the resultative analytical information, the management may make timely, justified and proper decisions for the enterprise’s cost management and their effectiveness. Income per costs of BGN 100 is directly related to the net income-based return. Therefore, the factors that affect the change of the cost effectiveness indicator further affect the change of net income-based return. Based on the data of the Statement of Income and Costs, we can analyze the amount, composition, structure and dynamics of the enterprise’s operating costs classified by economic elements. The opportunity to identify the profit from sale of products, goods and/or services in aggregate, based on the data of the Statement of Income and Costs, is also of great importance for the management for the purposes of calculating the operating cost-based return on that basis – an indicator that characterises the effectiveness of enterprise’s operations. [ABSTRACT FROM AUTHOR]

Copyright of Knowledge: International Journal is the property of Institute for Knowledge Management and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Financial statements present information, which is used for the analysis of the revenue and expenses, the financial performance, the financial position, the cash flows, and the efficiency of the overall business of an enterprise. The statement of income and expenses provides information for the analysis of enterprise‘s revenue in the following methodological directions: total assessment of revenue, including analysis of the amount, composition, structure and dynamics of revenue; analysis of expenses per revenue of BGN 100 (revenue efficiency); analysis of net sales revenue, including analysis of its amount, composition, structure and dynamics; analysis of revenue-based return with regard to the revenue efficiency. The statement of income and expenses is a source of information and analysis of enterprise‘s expenses. The methodological directions for analysis are as follows: total assessment of expenses, including analysis of the amount, composition, structure and dynamics of expenses; analysis of revenue per expenses of BGN 100 (expense efficiency); analysis of enterprise‘s operating expenses classified by economic elements; analysis of expense-based return with regard to the expense efficiency. The information from the statement of income and expenses is used to analyze the enterprise‘s financial performance, and namely: analysis of the accounting (gross) financial performance (accounting profit or accounting loss, respectively), analysis of the book (net) financial performance. Upon making the relevant prior calculations, it is possible to analyze the financial performance from sales – total production, goods and services. The balance sheet of the enterprise contains information, which is used to analyze the financial position of the enterprise. The methodological directions for this analysis are as follows: analysis of capital and capital structure; analysis of assets and property structure; analysis of liquidity and solvency of the enterprise, and the other assetliability balance sheet ratios. The information from the statement of cash flows may be used to analyze the amount, composition and dynamics of cash flows in general and by types of activity carried out by the enterprise – operating, financing and investing activity. Based on the information in the enterprise‘s financial statements one could analyze return calculated on different bases: capital; equity; borrowings; fixed capital; assets; manufacturing assets; revenue; sales revenue; expenses. The object of this study refers to the information contained in the financial statements of the enterprise. For the purposes of this publication, we consider the Conceptual Framework for the Financial Reporting, and in particular, the aspects relevant to the qualitative characteristics of the information contained in the financial statements and its usefulness for the purposes of the management of any enterprise. The objective of the general purpose financial reporting is to provide the necessary, complete, sufficient and timely information about the enterprise, which is useful for the existing and potential investors, lenders and other creditors, when making decisions related to the enterprise‘s operations and the provision of resources for its business. The subject of this study covers the methodological directions for analysis of the information from the enterprise‘s financial statements. The objective of this study is to present the opportunities to enhance the analysis of enterprise‘s financial statements. [ABSTRACT FROM AUTHOR]

Together with fixed tangible assets and material resources, labour is among the key factors, which are necessary for the business of every enterprise and for the functioning of the national economy. As a result of the use of labour provided by the workforce, enterprises incur labour costs that comprise expenses for wages and salaries (remunerations) and expenses for social security and health insurance of workers and employees. In their nature, employers’ labour costs are wider in scope than employee benefits. Accounting of employee benefits of enterprises that apply the national accounting regulations – National Accounting Standards applicable in the Republic of Bulgaria, is governed by accounting standard 19 (AS 19) “Staff income”. For the purposes of AS 19 “employees” means all persons who work (provide employment or official service) in the enterprise, as well as the persons who work under management and supervision contracts, service agreements and other contracts. For the purposes of proper accounting of different economic operations related to employee benefits under employment agreements, AS 19 gives definition of employee benefits. Employee benefits are determined as forms of remuneration paid by the enterprise to the employees in return of their work. The standard sets out different types of employees’ remunerations (benefits): short-term benefits; termination benefits; equity compensation benefits; other long-term benefits; post-employment benefits (termination of employment or official relationships). The standard defines the methodology for accounting and disclosing of expenses that enterprises incur with regard to the employee benefits. The enterprise is required to recognize obligations (liability) to the employees, where they have provided services in return of benefits payable in future. At the same time, the enterprise should recognize employee benefits when it consumes the economic benefit formed as a result of the employees’ work in return of their benefits. The object of this publication refers to the employee benefits and remunerations, and its subject matter covers the remuneration of employees and their supervision. It is aimed at presenting key guidance for accounting of employer’s expenses for remunerations and of employee benefits. On the basis of accounting information, one could optimize the methodology for analysis of the employer’s expenses for remunerations. [ABSTRACT FROM AUTHOR]

The issue of liquidity is crucial and relevant in all phases and at all stages of the development of any entity. Entity‟s liquidity characterises its ability to settle its current liabilities (obligations) with the available current (short-term) assets. Entity‟s liquidity is analyzed and assessed by means of a system of indicators. The amount of net working capital is an absolute indicator for this analysis. The relative indicators for analysis comprise various ratios of overall, quick, immediate and absolute liquidity and the ratios of revenue liquidity, capital liquidity, etc. The interest in the indicators for entity‟s liquidity analysis and assessment is determined by the opinions that exist in literature with regard to the fact that liquidity may be analyzed by using a single indicator or that the low-value liquidity indicators should be ignored in the decision-making process. The opinion of the author of this publication is that a system of indicators should be used for the analysis and assessment of the entity‟s liquidity. We believe that each indicator gives important, useful and different information that is needed for the proper liquidity management. The overall liquidity ratio gives the entity‟s management important information about the amount and dynamics of the inventories that it possesses. On this basis, one should analyze the amount, composition, structure and dynamics of these assets. Based on the resultative information, correct and justified decisions for the management of inventories, and therefore for the management of the entity‟s overall liquidity, could be made. Furthermore, the National Revenue Agency is able to find manipulations in the financial statements – in this particular case, manipulations with the amount of inventories stated in the entity‟s balance sheet. The quick liquidity ratio gives important information about receivables from customers. The analysis should go deeper to study the amount and composition of receivables from customers, as well as the structure of receivables from customers, depending on their collection periods. On the basis of the resultative analytical information, the management can make justified and effective decisions to shorten the collection period of receivables from customers. The immediate liquidity ratio is important in the event there is significant risk of inability to collect the receivables from customers. For example, due to the crisis resulting from the COVID-19 pandemic, a great number of entities are closed for business or subject to restrictions, and the indebtedness among them has therefore significantly increased. In such situations, entities may rely on their most quickly liquid assets – available cash and short-term financial assets (short-term investments). The absolute liquidity ratio also gives important information with regard to the liquidity management. Analysis should go further to identify the sources of formation of cash. For example: from entity‟s operating activity, longand/or short-term borrowings; single business transactions – sale of fixed tangible asset or materials, etc., as well as cash proceeds from the national budget or from European Union operational programs for overcoming the consequences of the COVID-19 crisis. The aim of this publication is to demonstrate the need of using a system of absolute and relative indicators for analysis and assessment of entity‟s liquidity. The object of study refers to the entity‟s liquidity, and its subject – to the indicators of its analysis. [ABSTRACT FROM AUTHOR]

The movement and availability of cash flows in the process of the entity’s activity are crucial for its normal and trouble-free course. The methodological and methodical guidelines for cash flow analysis are relevant at all phases and stages of the development of an entity. These matters are especially relevant under the conditions of crisis. In the current pandemic situation due to the COVID 19 crisis, the matter of the availability of cash flows and their movement (cash inflows and outflows) is also important with view of the entities’ ability to continue as “going concern”. The net cash flow is equal to the difference between the cash inflows and outflows from all entity’s activities. The positive net cash flow is a necessary but not a sufficient condition for the entity’s liquidity and solvency. With view of the entity’s position and future development, one needs to analyze the movement of cash flows, as well as the net cash flows in general and by types of activities – operating, investing and financing activities, on continuous basis. The net cash flows from operating activity are calculated as a difference between the cash inflows and outflows from this activity. Here we speak about trade receivables, trade payables, wages and salaries, payables to state institution for social insurance contributions and corporate income tax, as well as other cash receivables and payables received or made with regard to the entity’s operating activity. The analysis and assessment of the turnover rate, liquidity and rate of return of the net cash flows from operating activity is very important for the management of every entity. Based on the resultative analytical information, the management is able to make justified and proper managerial decisions for the development of the entity’s operating activity. This is a prerequisite for making decisions with regard to other entity’s activities as well, for example, capital structuring, financial policy, investments and investment policy in short- and long-term perspective. The net cash flows from investing and financing activity are also calculated as differences between the cash inflows and outflows from these activities. The object of this publication highlights the entity’s cash flows – in general and by types of activities. The subject of the study covers the matters related to the methodological and methodical guidelines for analysis of the entity’s cash flows. The analysis of cash flows is made on the basis of the information contained in the Statement of cash flows according to the direct method. The indicators for analysis and assessment of cash flows are systemized. The aim is to improve the methods for analysis of the entity’s cash flows by presenting different issues under the conditions of crisis. [ABSTRACT FROM AUTHOR]

In 2015, the world leaders adopted the UN Sustainable Development Programme whose goals comprise accelerated economic development, eradication of poverty, defense of human rights, ensuring prosperity for all and protection of the Earth. The achievement of these goals requires a new model of integrated development of the social market economy, democratic governance, social justice and environment protection. Industrial enterprises’ sustainable development suggests and requires objective symbiosis between the economic, social and environmental development of their business. One of the factors for attaining sustainability of enterprises’ economic development is the range of the products they offer. The issue of the sold product range structure is a milestone in the course of enterprises’ activity. It is topical at all phases and stages of their development due to the following reasons: 1) Changes in the product range have direct impact on the dynamics of both productions cost and net sales. 2) Changes in the product range have immediate impact on the gains from sale of products in terms of its calculation as a difference between net sales and cost of sold products. 3) Gains from sale of products is a factor that directly affects the net sales-based rate of return (return of sales or marketing efficiency). Therefore, changes in the product range also affect the changes in the return of sales. 4) Through the net sales and the full cost of products, the changes in the product range have impact also on the dynamics of enterprise’s total revenue and expenses. 5) Through the gains from sale that has the biggest relative share in the enterprise’s profit, the changes in the product range also affect the dynamics of its accounting, and book profit, respectively. Such connection is also evident due to the manner of calculation of the profit as a difference between the amount of revenue and the amount of expenses of the enterprise. 6) Return of sales is a factor that has impact on the dynamics of the rate of return of enterprise’s production capital. Thus, through the return of sales, the changes in the product range also affect the rate of return of production capital. This publication highlights the product range and the product range structure, and its subject matter covers the methodologies for their analysis in terms of the impact of the changes in the product range on the dynamics of the key indicators that characterize the activity of industrial enterprises and its effectiveness. The analytical information so obtained is useful for the enterprises’ management with view of making objective, timely and reasonable decisions for optimization of the product range. On this basis, they are able to make various decisions for achieving and maintaining financial and market stability of the enterprises and sustainability of their economic development. [ABSTRACT FROM AUTHOR]

Manpower is among the key production resources and a factor affecting the industrial enterprise‘s business. As an object of business analysis, enterprise‘s manpower is analyzed and evaluated in three directions: provision, use and effectiveness of its use. The effectiveness of manpower use is analyzed with the indicator for labor productivity. As an independent object of business analysis, annual labor productivity changes under the influence of three direct factors: man days worked by one worker, average duration of working day and hourly labor productivity. At the same time, the annual labor productivity is a factor that has direct impact on the volume of industrial products manufactured by the industrial enterprise and on the labor resources-based rate of return. In its turn, labor resources-based rate of return, as an indicator describing the end effectiveness of manpower use, is a factor that influences the labor cost-based rate of return. Labor cost comprises wages and salaries and social security of staff hired by the enterprise under employment agreement. The indicator of labor cost-based rate of return describes the end effectiveness of costs incurred for the functioning of manpower involved in the industrial enterprise‘s business. A model for analysis of labor cost-based rate of return is developed through the determined factor modelling method. This model allows to identify and evaluate the impact of the following factors on the dynamics of labor cost-based rate of return: 1) changes of labor productivity; 2) changes of staff structure; 3) changes of average salary per person in the respective staff category; 4) changes of the average amount of costs for social security per person in the respective staff category; 5) changes of net sales-based rate of return. The indicator labor cost-based rate of return is the object of this report, and the subject of this study covers the methodology for analysis of this indicator based on the improved analysis model. This methodology is verified with data for an enterprise that pursues industrial activity as its principal business. It is aimed at proving the practical usefulness of the applied methodology for analysis of labor cost-based rate of return. The analytical information so obtained enables the industrial enterprise‘s financial management to make justified and timely decisions for the management of manpower costs. [ABSTRACT FROM AUTHOR]

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The main objective of an enterprise is to achieve business efficiency and added value for the owners. The efficiency of enterprise's business, considered as a separate object of the business analysis, may be expressed either as a ratio of achieved results to the resources used for their achievement, or as a ratio of input resources to the achieved results, due to the use of the same resources. As a resultative indicator, efficiency may be analysed and assessed in three aspects. The first of them refers to the efficiency of use of the enterprise's production resources. We speak about the enterprise's fixed tangible assets (production fixed capital), short-term assets (working capital) and workforce. The second aspect refers to the efficiency of income and expenses, and the third one - to the enterprise's rate of return calculated on varied bases. Rate of return is a summary indicator that characterises the efficiency of the overall business of an enterprise. Enterprise's rate of return may be analysed and assessed in two aspects. On one hand, rate of return is studied as a resultative indicator by identifying and evaluating the impact of direct factors on its dynamics. On the other hand, rate of return is analysed and assessed as a factor indicator that has impact on the dynamics of other key business indicators that characterise the enterprise's business. Two approaches for studying and evaluating of enterprise's rate of return as a resultative indicator exist in the theory and practice of business analysis. These are the accounting and the financial approach. The accounting approach is based on the use of profit to calculate enterprise's rate of return. By means of this approach, the profit is compared to different bases that may be as follows, depending on the determined objectives and tasks and on the needs of information of the enterprise's management: assets, capital, equity, expenses, revenue, etc. Furthermore, different values of profit may be also used - accounting profit, book profit, profit from principal activity, profit from sales, etc. The financial approach for analysis of business efficiency is based on the added value for capital owners. The object studied in this publication is the rate of return calculated as a percentage ratio of the book value to the average amount of enterprise's assets (accounting approach). The studied subject is the model of the economic added value, which is a kind of connection between the accounting and the financial approach for analysis and evaluation of business efficiency. This publication is aimed at presenting a model that binds the economic added value and the enterprise's asset-based rate of return. [ABSTRACT FROM AUTHOR]

Short-term assets are enterprise‘s resources that are involved in its business within the frames of one reporting period and their value is fully carried over to the finished product. In their nature, these are the working capital that can be classified as enterprise‘s liquid assets. The question of short-term assets‘ turnover is topical at all stages and phases of the enterprise‘s development due to the following more important reasons: 1) The acceleration of short-term assets‘ turnover results in the release of resources that can be used in accordance with the decisions made by the enterprise‘s management, and the deceleration of turnover results in difficulties for the business due to shortage of working capital. 2) The acceleration of the turnover of this working capital results in increasing the level of total rate of return of assets, and vice versa – the total rate of return of assets decreases as a result of the deceleration of short-term assets‘ turnover. 3) Turnover of working capital is a factor affecting the enterprise‘s liquidity. 4) The efficient control of the objective dependence between the rate of return and the liquidity suggests and requires analyzing and evaluating the turnover of enterprise‘s short-term assets. This publication studies the turnover of short-term assets, and its subject covers the methodology for analysis of the turnover of these resources of the enterprise. The aim of this study is to present a complex methodology for analysis of short-term assets‘ turnover, and the acceleration or decelerations of their turnover are analyzed from two perspectives. On one hand, they are analyzed as a resultative indicator by identifying the strength and direction of impact of direct factors. On the other hand, acceleration or deceleration of working capital‘s turnover is analyzed as a factor affecting the dynamics of other important business indicators – assets- and liquidity-based rate of return. For the purposes of achieving the aim of this publication the following tasks are defined: 1) The information provision of the analysis is clarified. 2) The indicators for analysis of short-term assets‘ turnover are determined. 3) It is identified whether the turnover of enterprise‘s short-term assets is accelerated or decelerated – as a whole, by groups and by types of assets. 4) The amount of released and the additionally involved short-term assets, respectively, as a result of acceleration, respectively, deceleration of their turnover, is determined. 5) The impact of direct factors on acceleration, respectively, deceleration of short-term assets‘ turnover is identified. 6) The methodologies for analysis of the impact of changes of short-term assets‘ turnover on the total rate of return of assets and on liquidity are determined. Methodologies for analysis of short-term assets‘ turnover are useful both for external and internal users of information. Based on the resultative analytical information, external users build their strategy to establish business contacts with the enterprise. Internal users are able to carry out comprehensive analysis of short-term assets‘ turnover and to make justified and proper decisions for the management of the working capital and the business of the enterprise in operative and strategic aspect. [ABSTRACT FROM AUTHOR]