Application of hedging and its influence on indicators of financial statements: analytical aspects

Abstract

Introduction. Implementation of the economic analysis of enterprises’ business activity is one of the major tasks for the efficient price risk management. This requires the formation of a reliable and complete accounting for hedges. Therefore, the given suggestions of improvement of the accounting for this process are of a great practical importance for the formation of information in financial statements. This provides accuracy, clarity, comparability and relevance of analytical support.

The aim is to substantiate the order of formation of financial reporting indicators in an accurate reflection of the financial instruments and the recognition of revenues and expenses from operations with objects and hedging instruments.

The method (methodology). Application of analysis and synthesis, grouping and summarizing promoted revealing of lacks in existing order hedge accounting reflection.

Results. Issues of formation of information provision process of hedge accounting as well as economic analysis have been considered in the article, that is the basis of the relevant decision-making in the risk management system of enterprises’ activities. Analytical support has been analyzed and the necessity of improving the entity's financial statements concerning the formation of indicators of accounting for hedging has been grounded (in particular, about the transactions with hedging instruments and hedge items). Results of the investigations in the field of issues of reflection in the financial statements information about hedging transactions have been considered.

Financial statement articles have been characterized taking into account the following suggestions concerning the improvement the process of accounting information formation about the transactions with hedging instruments and hedge items. This made it possible to analyze the changes in the enterprise activities in the condition of management’s positive decision about usage of hedging with the aim of price risk management. Thus, character of changes in the financial and economic status of the entity has been grounded through indicators of business activity, solvency, financial stability and profitability.