Improving the Micro-Level Financial Planning through Complementary Targeting

Abstract

The article concretizes dominance of targeting as a phenomenon for keeping inflation at the macro-level, and to improve advertising activities at the micro level. The success of the relevant instrument in anti-inflation and advertising policies actualizes the possibility of targeting key financial indicators of the organization that are important for its owners and financial administration, but are often overlooked on the part of its managers. The article closer defines the theoretical provisions for improving financial planning at the micro level by introducing complimentary targeting in the activities of commercial organizations. An algorithm and a key indicator are proposed, which be the «target» of the corresponding targeting. As such an indicator, the profitability of assets is substantiated, the target value of which in quantitative parameters should exceed the price of using bank loans. It is determined that in modern conditions with regard to commercial organizations in Ukraine, the profitability of assets should be equal to or exceeding 30%. Appropriate targeting at the micro-level is substantiated as a tool for smoothing and harmonization of contradictions between owners of large-scale commercial organizations and their managers of both the medium and the senior level. Ignoring the rule of necessity of exceeding the profitability of assets over bank loan rates is identified in the activities of a number of public joint stock companies that are leaders in terms of tax payments in Ukraine. In addition, the prevalence of the practice of using bank loans by relevant public joint stock companies, even with a «strong» balance sheet and a high level of liquidity and solvency, is specified. The dominance of the use of bank loans in the activities of leading industrial enterprises in the country instead of issuing their own bonds in the absence of exceeding the profitability of the assets of these enterprises over the price of bank loans indicates the underdevelopment of the domestic stock market and further increases the level of relevance of the targeting of the asset profitability indicator.

Keywords

• targeting
• planning
• asset profitability
• financial planning system
• advertising