The meaning of the term is reduction.

Modern concept

In trade and economic vocabulary, this is accounting, concession in price, deferment. In other words, this is some difference between the cost of a particular product with different delivery times. A decrease in the cost of the goods may be observed as a result of a discrepancy between some of the quality characteristics specified in the contract.

In financial and economic vocabulary, such a concept as a discount forms a range of basic concepts, but in general it has 2 meanings.

1. Accounting for bills. The appearance of this term in bill circulation is not accidental, and this is explained as follows: accounting for bills is their purchase and sale, which always occurs before maturity at a cost less than, in other words, this is the amount indicated on the bill itself. It is this circumstance that suggests the hidden subtext of "discount".

1. The interest charged by banking institutions when discounting bills of exchange (the so-called discount interest). In fact, this is a "discount" expressed as a percentage of the face value.

discounter- a specialist who deals with bills of exchange, he conducts foreign exchange transactions and sells goods at discounts.

- this is a real opportunity for a commercial bank to obtain the necessary loans from the central bank. This opportunity should be seen more as a privilege.

What does it mean?

Discount policy- procedures for changing the discount rate of the Central Bank (central bank). In Russia, you can often hear the concept - refinancing rates. This policy is carried out in order to influence the cost of borrowing (we are talking about commercial banks), in order to change the money supply depending on the economic situation in one direction or another. The most important tool in this is monetary policy.

Agree, many of us want to buy quality branded products at an affordable price. Therefore, it is important to understand what a discount store, outlet, stock is, so as not to miss the novelties of this season at a price that pleasantly surprises you. Our little article-guide will help with this.

What is a discount store?

Let's take a look at the concept. Discount store, discount center is outlet, where what is called stock is realized: unsold collections, leftovers from warehouses. It can be clothing, electronics, sporting goods, appliances, etc.

Where does the stock product come from? There are several sources for it:

• Wholesaler stocks.
• Party with a small factory marriage.
• Overproduction of a certain type of product.
• Items from stores that are not sold out in the current season.
• Products of original brands, which for a number of reasons were not put up for sale.

Types of discounts

There are two main types of discount stores for shoes and clothes:

• Monobrands. Here the remains of the collection of one manufacturer are realized. Finding them is easy - the name is the same as that of a branded store, but with the prefix "discount" (for example, the discount store "Adidas"). Interestingly, although such markets have an original name, they are located in areas shopping malls, where it is difficult to meet visitors to the brand salon of the brand.
• Multibrands. Here you can find unsold items different manufacturers. Often this is a non-original product made in China. However, more and more multi-brands are displaying luxury items in their windows.

History of discounts in Russia

What is a discount store, a wide layer of the population in our country learned after the August crisis of 1998. Entrepreneurs have accumulated huge stocks of unsold balances. The crisis affected everyone: Russian manufacturers, suppliers of expensive foreign clothing, wholesalers, retailers, who chose the middle class as their main audience.

Telling what a discount store is, one cannot but recall the so-called "confiscates". They sold goods presented by structures that gave money on security - products in stock or in circulation. Due to the crisis, borrowers were unable to fulfill their obligations, and banks thus tried to at least somehow recoup their losses.

I must say that the practice of stock trading by that time was already widespread in Europe and the USA, so in Russia it only remained to put it on the right track.

Discounts and original stores

So what is the key difference between, for example, the Adidas discount store and Adidas Original? The main difference: in the branded market, you can buy a thing at an affordable price only during the sale. Discounts are permanent discount stores.

As for the products, they are delivered in the same quality as in the original market. Only, as a rule, these are things from old collections, often of rare sizes. Sometimes they may have a small factory marriage.

Discounts and Stocks

So what is the difference between a discount shoe and clothing store and a stock store? Or is it the same thing?

Discount - a very large-scale outlet of one or more brands. This is where all the goods come that the original store could not sell in a year (less often - in half a year and a half). He also turned out to be unclaimed and on sales there. Sometimes clothes, shoes with defects come here.

Stoke is also a rather large retail space. It can only be multi-brand - things come here from completely different sources. Most often they are dealer warehouses. Products are here not after branded stores, but immediately from storage.

In drains you can also find customs confiscated goods (usually Chinese made). As for its legality, it is usually imported quite legally.

Full of stocks and off-brand clothing that is sold at low prices. There are also things out of fashion, names with defects. Examples of stocks - "Fashion Factory", "Surname" and so on.

Discounts and outlets

What is an outlet? This is the same sales store, but always multi-brand. The outlet is not just big, it impresses with its scale. Here you will find items from the shelves of fashion boutiques, as well as collections that are not on sale. Some products even come here straight from the factory conveyor! The outlet has a huge selection of items, different in price and style.

Depending on the country, they (outlets) have their own advantages. For example, American prices are very democratic, while European ones offer exclusive products. In Russia, people are more familiar with the addresses of discount stores than outlets. The movement is only growing. The first outlet "Modapolis" was opened in Moscow only in 2011 on the territory of the largest center "Crocus City Mall".

Another difference between outlets: due to their scale, stores are most often located outside the city. There are also many features in common with discounts: reasonable prices, a large selection of things from famous brands.

Pros and cons of discounts

In conclusion, let's summarize the discount stores "Sportmaster", "Adidas", "Puma" and so on. Let's take a look at their pros and cons.

Obvious advantages:

• low prices;
• a large assortment;
• well-known clothing manufacturer;
• original collections.

But at the same time, buyers also note annoying disadvantages:

• Prices. They can be both low, acceptable, and practically no different from the price tags in the original stores. It all depends on the conscientiousness of the discount operator.
• Quality. Brand awareness does not give you a guarantee that you will purchase a quality product. It may have a defect, be slightly worn. Sometimes discounts also include items from 10-year-old collections. In addition to their irreparable fashionable obsolescence, there is another minus here - the physical dilapidation of such products.
• Dimensions. As a rule, the minimum number of things in popular sizes comes to discounts - mostly either too large or too small.
• Style. It is also rare to meet something elegant, unusual here. Either this is the "base" of an uncomplicated and simple design (everyday things), or bright, flashy names from past collections that were in fashion for a maximum season. Given their obsolescence, such products are not for everyone.

So we have analyzed the main features of the discount store. Now you know how it differs from the original market, outlet and stock.

Question “What is a discount?” can be answered as follows:

Discount is an ambiguous economic term. First, the "discount" can be understood as the difference between the cost indicators valuable papers(current exchange rate, face value and redemption price).

Secondly, " discount” can mean the difference that exists between the forward rate of the currency and the rate for which it would be given if bought immediately.

Thirdly, " discount” denotes the difference in prices for a certain product at different delivery times. For example, goods delivered six months later will cost less than goods delivered immediately.

Fourthly, discount"- it is also a decrease in the cost of the goods in case of its inconsistency with the declared qualities. This system works discount stores.

Fifthly, discount"- this is the deduction of interest from the loan when it is returned ahead of time lending.

At sixth, " discount» can be declared any commercially (for example, seasonal discount).

Seventh, discount”is a bank credit operation with a certain calculation of expenses and interest.

Discount Center is a store where you can find branded items from past collections at lower prices. As a rule, these are leftovers brought to one store. There are some of them of a very decent appearance, practically no different from standard stores (hangers, shelves, space and beauty), or cellars and corners, sometimes even very similar to secondhand (or even worse).
Discount Center This is NOT second hand. Abroad (already in our country) they are called outlet-shops, and as a rule, this is a very decent establishment with good quality of things.
You can buy a fake in any of these stores - you need to be able to understand the seams, the truth of labels and other quality marks. Therefore, going to discount centers is like hunting.)) However, buying things such as jeans, blouses, classic-style dresses or just things that have not gone out of fashion for several years is much more pleasant there, since the price is much lower. So that discount centers- our everything, you just need to be able to look for them, and be able to look in them, because even in the Shanel showroom in TSUM you can find boots stained with glue at the seams of the sole.

Where is it better to buy: in discount centers or on sales?

Now in the midst of winter sales. Discounts in many stores reach 50%, but this is not the limit. A little later, prices will drop even lower. In the meantime, let's discuss where it is better to buy - at these very sales or in discount centers, where, in fact, year-round sales of old collections are held. This article is relevant mainly for Russia, although it is unlikely that in Ukraine and other CIS countries the realities differ markedly from those in Russia.

How is a discount center different from a stock center?

Discount Center - this is a retail outlet (usually rather big) of a chain of stores. For example, Adidas, Puma, O'stin. The discount center of such a network receives, which could not be sold in a regular store for about one year (less often one and a half to two or six months). It is logical to assume that these clothes (and shoes, of course) remained unclaimed even at sales in this store. In addition, clothing with defects is often sent - both imperceptible and visible to the naked eye. But, in any case, the origin of clothes and shoes is obvious.

stock center - this is a retail outlet (also usually a large area), where clothes come from a variety of sources; as a rule, these are warehouses of dealers. In most cases, this kind of clothing that has not even reached retail stores, it goes to the stock center directly from the warehouse - the manufacturer, dealer (intermediary) or a chain of stores.

However, clothes can also come from a particular store. Often stock center(more precisely, the owner company) also purchases clothes on its own, usually from Chinese suppliers. There are also stock centers who sell the so-called customs confiscation. As a rule, these are Chinese clothes not quite legally imported by novice entrepreneurs.

It is worth saying that it is impossible to draw a clear distinction between stock centers and discount centers. It is difficult to determine the category of the store even by the name (the discount may turn out to be a drain and vice versa). But in terms of content - you can almost always. Stock centers are usually multi-brand, and clothes (usually unbranded) are sold at very low prices. Often it has defects of various sizes, but sometimes it looks very decent. It happens that some thing went out of fashion, and did not have time to get to the store counter.

Typical examples of stock centers: "Surname", "Fashion Factory - Discount Center".

Multi-brand and mono-brand discounts

Stock centers usually multi-brand. Discounts There are both multi- and mono-brand. In a mono-brand store (for example, Puma discount) it is supplied from one chain of retail stores (Puma). In a multi-brand discount (for example, Rimanenze Dolci), it is supplied from several stores of the operator of the chain of branded stores (for example, Hugo Boss, Pal Zileri, Iceberg and some other boutiques belong to the Bosco di Ciliegi operator).

In multi-brand discounts (with extremely rare exceptions) there is really original brand clothes. In multi-brand stocks, you can stumble upon both fakes and “brands-werewolves” (supposedly Italy, but in reality, say, Turkey).

Pros and cons of discounts

Stocks have, perhaps, only one plus - low prices. The main disadvantage is the dubious origin of clothes and shoes and, as a result, their dubious quality. Discounts better in that sense. Their obvious advantages: low prices, the obvious origin of clothing. Obvious disadvantages: the ability to stumble upon clothes with defects, the presence of clothes only from old collections, the presence of mostly clothes and shoes of large sizes.

Now consider the pros and cons in more detail. Let's start with prices. Prices can be both really low and very high. It all depends on the conscientiousness of the discount operator. There is very good discount centers, with really big discounts; There are also very mediocre ones, with small discounts. In general, a lot of reviews about various stores (including discounts) can be found on the relevant sites.

The obvious origin of clothing, of course, does not guarantee its perfect quality. But in most cases, if a defect is found, it can be returned (if this defect was not declared on the price tag or by the seller, and you did not sign a piece of paper indicating the presence of this defect). Clothing may appear slightly worn (it may have been tried on many times).

Separately, it should be noted that sometimes clothes and shoes in discounts sold very old. In especially severe cases, you can stumble upon the collections of 2005-2007. And this means not only that things could go out of fashion. This also means that they could be corny dilapidated. Clothes could be tried on at random, significantly stretched. She can be dirty. Shoes could be stored incorrectly - near the battery, for example. And if it has not yet been rubbed with cream, tried on at random (without a horn), then the purchase risks turning into a simple waste of money.

For example, Italian leather shoes for 15 thousand (at a discount - 7 thousand) that have stood in the store for a year, are discounted for another year and a half, of which half a year has a battery, tried on 18 times without a horn and never treated with cream or wax, are unlikely to serve you long years. Most likely, in a few months you will realize that it would be better if you bought shoes for this money in a regular store, even if not Italian ones. As a result, you will buy them (ordinary shoes), spending ten thousand as a result.

We are talking about expensive brands here because such mistakes in the case of expensive shoes / clothes are much more offensive. Of course, if you bought shoes for a thousand rubles, they served you for six months, and you threw them away - you will not be very offended. But when you see the shoes of the brand that you dreamed of at an acceptable price for you, you should not rush to the checkout with them. You need to carefully examine them, ask the seller how old they are, and so on. And then make a decision.

It can also wear out over a long period of time. This is especially true for clothes made of thin and delicate fabrics, such as wool 160-250s. A simple example. In one discount center we take trousers made of wool (something about 130-160s) and look at them in the light. And we see that they just shine through! At the same time, almost the same normal trousers hang nearby, for the same price. So that clothes should be carefully examined! When buying at a discount center, inspection should be given the closest attention.

Since we are talking about trousers, it is worth talking about someone else's experience, read on some forum. Bought branded trousers in Italy, in one of the outlets (in fact, multi-brand stock-discounts). For a seemingly ridiculous price - 19 euros. They were enough for exactly one day, which ended very badly (the seam came apart). Then these trousers looked at the light and saw a kind of “mesh”, into which thin wool turned.

I must say that in discounts there are usually a lot of things of large sizes and a small number of things of small sizes. In the case of men's sizes: clothes are usually from 50, a special expanse for those who have a size of 54-56; shirts - usually from 40, especially a lot - 43-44. As for women's sizes, everything is less strict. However, small size clothing also occurs. And sometimes its range is quite wide. It depends on the store.

In discounts, of course, things are also sold that do not have sizes (with rare exceptions) -. Scarves, scarves, ties, bags, briefcases, wallets, purses and so on. It should be borne in mind that belts, gloves and hats (for the most part) have sizes. The size grid of the same gloves is quite large.

Range. In discounts, you can usually find the so-called basic things - rather boring and nondescript clothes, which, nevertheless, cannot be dispensed with. These are gray and black and trousers, blue shirts and so on. As a rule, a simple and uncomplicated design. It's worth going to the discount for such things.

The other side of the range of discounts is bright, very original and sometimes extremely bold design, which did not receive much recognition from buyers or was in fashion for a very limited time - say, one season. it clothing for an amateur. T-shirts in wild colors, green jeans with rhinestones and all that stuff. However, in discounts you can also find things of an original and at the same time discreet design; elegant. You need to look for yourself (most). A lot of useful information about all kinds of discounts and stocks was found on the columbia discount website. Names such as confiscation, discount and stock after visiting the site will become clear. In addition, there is a description of some of the working centers. Good to know.

Sales

On sales clothes (and shoes, of course) of relatively recent collections are usually presented. Currently - mostly 2012, although, of course, you can stumble upon a kind of antiquity - especially in expensive stores. Sales prices are sometimes lower than in discount centers, and the choice at the beginning of the sale is very good. At the same time, a standard sale in Russia usually consists of three periods:

Onset (usually the first two weeks). Discounts 30%(sometimes - 10-30%). The choice is great, the sizes are many.
Middle (usually the next two weeks). Discounts 50%(sometimes - 30-50%). The choice is much less. Few small sizes.
End (until the last item in the category that the store wants to get rid of is sold). Discounts 70%(sometimes - 50-70%). The choice is usually extremely narrow. There are very few sizes. The design of the remaining things is an amateur.

Often all sale passes "in one period" with discounts "up to 50-70%". The duration of such a sale is usually about a month or more.

Probably, you have already decided in what period of the sale you should buy. If you are picky, selective and the size of your clothes / shoes is small, and you also do not want to spend a lot of time, it is better to go shopping at the very beginning of sales. If you are willing to spend on shopping half a day, then you can go in the midst of sales. If the whole day - you can at the end, when biggest discounts.

Finally, if you have large sizes (from 50 for women and from 52 for men), then you can even find a suitable item quickly enough even in the final period of sales. Well, "dimensionless" accessories it is wise to buy at least in the middle of the sale.

It should be noted that "global", large-scale sales There are only two times a year: in summer (end of June - mid-August) and winter (end of December - end of February). But many shops carry out and off-season sales- in spring and autumn (discounts of about 30%), as well as various promotions.

A little about the cons of sales

They also have a number of shortcomings. The most important are the queues in the fitting rooms (the more, the more discounts and the more popular the store), the queues at the box office. Scattered haphazardly clothes that sellers do not have time to pack. Constantly busy sellers: you have to wait until they are free. In addition, the probability of stumbling upon a thing with defects is higher than usual.

Finally, it is worth noting that some unscrupulous stores during the sales period do not provide real discounts of 50-70%, but virtual ones. The old price is sealed with a label with a different, higher one (for example, it was 700 rubles, they stuck 1000). And already on top of this label, a sale label is glued, sometimes with the proud inscription “50% discount” (but in fact, with a new price of 500 rubles, the discount is less than 30%). Some nimble shoppers try to get to the bottom of the real price by carefully peeling off price tags.

Sales or discounts: which is better?

If you don’t need the item urgently, it’s better to wait for the sale from the “50% discount” series. However, no one bothers you to walk through discounts: maybe the thing of your dreams is waiting for you in one of these stores. If you need some strictly defined thing, and you also have a small size, then it is better to wait until the sales start (30% discount). Finally, if you need something urgently, then, of course, you have to go to discount(or in a regular store).

The term "discount" is a broad meaning used in different economic areas, but meaning one thing - the difference in price:

• trade - a discount from the designated commodity price provided to the buyer;
• credit - the difference between the real price of the pledged property and the value;
• exchange - the purchase of bonds at a cost lower than the nominal price.

The discount is applied in the sphere of purchase and sale of goods or services. The seller announces a discount to the buyer. An entrepreneur currently pursuing a "price difference" policy expects to increase his profits as a result.

Growth Money proceeds from sales occurs with an increase in the customer base due to the applied discount. A discount is an excellent method of increasing interest in products or services that were not in demand.

The price difference is also used on the basis of negotiations between entrepreneurs. The discount policy is used in marketing when the cost of one product is underestimated and later returned to the previous price or slightly higher. At the same time, buyers attracted by the discount continue to purchase goods out of habit.

Banking discount

When issuing large loans, the bank requires their security - collateral. Discount in the banking sector - the price difference between collateral and funds received by the borrower.

The amount of the discount, in percent, which differs from the real market value of the property - the collateral coefficient. Its use by banks often causes resentment among property owners when their personal valuation of the property is not equal to the bank's.

The discount acts as a kind of insurance for a financial institution. By using the difference, the mortgage officer reduces the potential for a shortfall in funds from the sale of the mortgaged property. This is due to the likelihood of default by the borrower of obligations under the loan.

But the market valuation of the property does not guarantee the size of the loan within the value of the collateral. When issuing a loan, financial institutions accept collateral at a discount of up to 50%. The logic of the bank - the price of collateral must exceed the amount of the loan with interest and possible costs for judicial recovery loan.

The amount of the discount depends on the property, its liquidity (), degree of exploitation and other conditions.

The use of a discount on the stock exchange is similar to the banking sector. Discount - the difference between the market price of the bill and the selling price. The borrower sells the bonds to the buyer at a discount price. The condition of the bill of sale agreement states that the borrower undertakes to sell the paper after some time at the market price. Due to this, a profit equal to the discount is obtained.

Getting profit does not depend on the time of use of the bond. And if the borrower does not redeem the promissory note on time, then the creditor has the right to sell it to the other party at a nominal price and in any case make a profit. But this type of financial transactions is associated with risks for all parties, since the market value of securities can change daily.

Discount is a broad concept used in financial and trading areas. But at the heart of all definitions of the term is one thing - a discount.

Discount is the difference between the prices of the same goods with different delivery times.

Several meanings of the economic concept of discount, the process of determining the discount rate based on discount rates

Expand content

Collapse content

Discount is, definition

The discount is the difference between the prices at which a material value or commodity is currently being sold and the price of its face value when sold or redeemed

The discount is discount from the advertised list price of a good or service provided by the seller to the consumer.

The discount is purchase of bills of exchange, treasury bills or bonds at a price below par.

The discount is the difference between the price at the moment and at the time of redemption or par value of the security.

The discount is the difference between the forward rate and the rate for immediate delivery of the currency.

The discount is difference between the price of a security on the stock market this moment time and denominations of securities (price) when they are redeemed.

The discount is the difference in the price at which a commodity or material value is being sold at the present time, and the price of its face value at redemption or sale.

The discount is sum of money, which is paid in order to obtain a preferential loan. When obtaining a mortgage, the discount is deducted from the principal amount of the loan.

Concept of discount

In economic vocabulary, discount has two meanings. The first is bills of exchange. That is, it is the difference between the prices of a security on the stock market at a given point in time and the face values ​​of securities (price) when they are redeemed. The purchase and sale of securities (that is, bills) at the time of redemption is always carried out at the lowest price than the face value (amount) indicated on the bill. This process, just, can be called a discount.

8

Another definition of discount is the percentage taken by banking organizations when discounting bills. The discount rate is defined as the percentage rate at which the value of future receipts is adjusted to the present. In another way, it is called the discount rate.

Discount (English "discount" is translated as a discount) - the difference in the price at which a product or material value is currently sold and the price of its face value upon redemption or sale.

On the stock exchange, the discount determines the difference in the price of a security purchased at a given time and its present value at face value.

That is, for example, you can buy a share at exchange trading with a face value of $800 for $700, in which case the discount will be the difference of $800-$700 = $100.

The difference in the price of goods, the discount, is determined by the difference in the time of delivery of this product. Today the goods are delivered cheaper, and the next delivery will cost more.

In relation to the exchange rate, the discount represents the difference between the forward exchange rate, that is, the fixed exchange rate at the time of the transaction with payment on future period and exchange rate for immediate payment.

The discount is quite widespread in modern economy to attract interest and increase the number of sales in the desired time frame.

To attract customers, sales of goods and things are arranged, discount discounts are assigned. For example, a corporate brand selling shoes has a network of stores around the city where fresh models of shoes are sold. A discount center or stock store under the banner of this brand will sell shoes with big discounts in a certain season.

Usually in discount centers they sell last year's models of clothes and shoes.

Discount rate and its calculation

Discounting- a definition relating to the concept of "discount". It expresses a cast economic indicators different periods (years, months, half-years or quarters) to a comparable type. This is possible using the discount factor. It is calculated using the compound interest formula. And above all, it is necessary for investors to know the future returns on their investments - this is the basis of investment decisions.

Discount rate- is defined as the interest rate for converting future income streams into present value. It is applicable when discounting future NPV cash flows. The discount rate reflects money, taking into account the time factor and risks. That is, when using a discount rate, you can easily calculate the amount that an investor needs to spend in order to receive the expected income in the future.

In addition to changes in money, it is necessary to know exactly the time of the project. This is necessary in order to choose the discount rate as accurately as possible and calculate with its help the possible income from these investments.

That is why so much attention is drawn to the discount rate. The future of many investment projects, and maybe the company, depends on it. Percentage, in general concept, is the cost of capital for the investor. If the condition that the value of money can suddenly decrease in real time due to inflation is met, two interest rates can be used in the business plan.

The discount rate is the interest rate used to convert future income streams into a single present value. The discount rate is applied when calculating the present value of future NPV cash flows.

Justification of the discount rate

To perform financial and economic calculations when evaluating a project, it is necessary to determine the discount rate. Determining the discount rate is one of the most controversial issues among investors. There are several points of view on the process of determining the discount rate.

Some experts, “determining the discount rate, usually proceed from the so-called safe or guaranteed level of return on financial investments, which is provided by the state bank on deposits or in transactions with securities. or financial contract larger size risk premiums.

Others (for example, R. Braley, S. Myers) believe that the discount rate represents the opportunity cost of investing in a project, and not in the capital market, i.e. instead of implementing project X, the money can be given to shareholders, who will invest it in financial assets.

It can be seen from the figure that the opportunity cost of a project is the rate of return that the shareholders could receive if they invested their money as they saw fit. Thus, by discounting the cash flows of a project by the expected return on comparable financial assets, it is determined how much investors are willing to pay for the project.

We will proceed from the first point of view. The maximum percentage on deposits for individuals in Sberbank (from 10,000 rubles, for 2–3 years) is 14.5%. We believe that the bank's interest rate takes into account inflation. Let us assume that the investor considers this project to be low-risk. The risk premium will be 4.5%. Thus, the discount rate will be 14.5%+4.5%=19%.

Discount rate calculation

The basis for predicting the discount rate is the theoretical premise of a close relationship between the yield of debt instruments (bonds) and equity instruments (shares). In general, an investor is willing to take on more risk (buy stocks) only if the expected return on them exceeds the return on the bond plus certain risk premiums. According to the model considered here, the future required rate of return by the investor is the sum of:

Base rate for the issuer - the rate of predicted yield on currency (dollar) corporate bonds of this issuer (takes into account the premium for credit risk);

Country risk premiums for holders of equity instruments (takes into account the risk of investing in equity instruments, which is typical for the Russian equity market compared to the bond market);

Premiums for industry risks (takes into account the volatility of cash flows due to industry specifics);

Premium associated with the risk of substandard corporate governance;

Premiums for the risk of illiquidity of the issuer's shares.

In general, the formula for calculating the future discount rate can be written as follows:

Calculation of the base rate by issuer

The base rate is integral part discount rates. By your own meaning base rate shows at what minimum profitability market participants are ready to invest in a business. Contrary to popular belief, which considers the value of the base rate to be the same for all companies under consideration, the approach under consideration takes into account differences in business even at this initial stage. The base rate for each company is individual. This rate depends on financial stability specific enterprise.

The company's financial stability is determined either on the basis of a credit rating assigned to the issuer by independent rating agencies (S&P, Moody's, Fitch), or by analyzing its financial condition. Ideally, each company has its own base rate.

Thus, since the base rate takes into account the level of financial stability of the company, it really reflects the degree of risk (and, as a result, the minimum required return) that corresponds to investments in a particular company.

Calculation of the country risk premium

Country risk is the risk of inadequate behavior of official authorities in relation to businesses operating in the country in question. The more predictable the attitude of the state towards business, the more the policy pursued by the state contributes to the development of enterprises, the lower the risks of doing business in such a country and, as a result, the lower the required profitability.

Country risk can be measured and expressed in terms of the additional return that investors will demand when investing in stocks or bonds of enterprises operating in the country in question.

In order to understand what is the additional yield that investors are now demanding to compensate for country risk, it is enough to compare the yields of government and corporate bonds. At the same time, to increase the accuracy of calculations, the compared bonds should have approximately the same level of liquidity, credit quality and duration. Thus, the difference in the yield of a basket of corporate and government bonds will be due only to the presence of country risk for investors investing in corporate bonds (for government bonds, the concept of country risk is not applicable).

The resulting difference in yields shows the amount of country risk for holders of debt instruments. To convert this indicator when working with stocks, the calculated amount of country risk is multiplied by a correction factor determined by an expert.

Industry risk premium

This component of the discount rate is supranational in nature (that is, does not depend on the country in which the business is conducted) and is determined solely by internal feature industries - the volatility of their cash flows. For example, the volatility of flows in retail trade and oil production will be quite different.

The most complete attitude of investors to the comparative measure of the risk of industries is expressed in developed stock markets. They are the source of calculation of industry premiums. For each industry of interest, a set of companies under study is determined, for which the average industry discount rate is calculated.

Objective grounds for an additional industry risk premium arise when the industry average discount rate (the investor's minimum yield requirement) exceeds the prevailing yield on US government bonds, the most reliable asset for an investor. Industries with average discount rates lower than US Treasury yields are considered relatively risk-free, that is, investors do not lay down additional specific requirements that increase the SD of issuers of these industries. For all other industries, the industry risk premium is calculated as the difference between the industry's average SD and US government bond yields. Accordingly, the calculated industry premium applies to all its issuers.

Premium for the risk of poor corporate governance

This premium reflects the risks of the owner of the issuer's shares, primarily related to the withdrawal of net profit and assets from the company.

Illiquidity premium

This premium arises due to the possible difficulties of the investor in acquiring or selling a block of shares without much loss in price and time. Other things being equal, an investor will buy a more liquid asset.

Discount rate calculation methods

When calculating the discount rate for equity, two main methods are used:

Capital Asset Pricing Model (CAPM);

Aggregated method for calculating the discount rate;

Method of industry average return on assets and capital;

Determining the discount rate by expert means;

Before proceeding to the consideration of methods for calculating the discount rate for equity, we note the importance of taking into account the risk factor in business valuation.

When determining the profitability of future investments, it is necessary not only to calculate the amount of income, but also to determine the potential risk that is associated with the ownership of a particular asset.

In business valuation, risk means the estimated degree of uncertainty (certainty) in obtaining expected future income.

For a given level of expected future returns, the market will pay more if it is more likely to receive those returns, and vice versa.

There are two types of risk in business valuation:

Systematic risk characterizes the risks external to the enterprise, which it is not able to influence or prevent. Systematic risks appear under the influence of general events - such as inflation, economic recession or expansion, increase in interest rates. These events affect the state of affairs of any firm and, therefore, cannot be eliminated through the diversification of the investment portfolio (a set of financial assets of various issuers). For this reason, systematic risk is also referred to as "market" or "non-diversifiable" risk.

Non-systematic risk is associated with the financial position, activities of a particular company, with its inherent commercial and financial risks.

Based on the brief description types of risks, we will begin to consider methods for determining the discount rate for equity.

Capital Asset Pricing Model (CAPM)

This model allows a fairly satisfactory description of the relationship between risk and the expected return on assets (or cost of capital).

There are some assumptions that take place in the process of applying the CAPM model:

The model proceeds from the position that investors avoid risk, and if they accept it, they demand compensation; "risk aversion" is usually interpreted as a demand for compensation for risk;

We are talking about rational investors acting on the basis of the principle of reasonableness. Rational investors tend to diversify their investment portfolios, that is, a rational investor will never invest in one enterprise

All investors have the same information about a particular business and, accordingly, about its inherent risks, and, accordingly, estimate the expected rates of return in the same way.

This model does not take into account the costs of transactions for the purchase and sale of assets, and also does not take into account the tax factor - that is, the rate of income when providing a loan and the cost of borrowed funds are the same.

The Capital Asset Pricing Model (CAPM) is based on the principle that business is an eternal category, that is, using this model, the rate of return on a risky asset is determined. This return is a function of some risk-free return and the premium paid for the risk of owning the asset.

The risk premium is calculated as a function of the change in the price of a given asset over a certain period of time compared to changes in the market as a whole over the same period.

The basic CAPM model looks like this:

Where Re is the required (expected) rate of return on equity;

Rf is the risk-free rate of return;

Rm is the average market rate of return on any set of securities;

b is a quantitative measure of systematic risk that evaluates changes in the returns of the shares of individual companies in comparison with the dynamics of market returns;

(Rm - Rf) is the market risk premium.

The above formula can be used to estimate the expected profitability of open companies.

The risk-free rate Rf is determined in the amount of the rate of return on investments that provide the minimum return with the highest degree of probability (close to 100%).

Abroad, in the practice of business valuation, the rate of return on government securities is usually used as a risk-free rate (as a rule, at the level of 6 - 8%).

In domestic practice, at present, the issue of the risk-free rate is considered ambiguously - the following can be taken as such:

Yield rates for cash deposits banks the highest category reliability;

Discount rate of the Central Bank of the Russian Federation (from November 2000 to December 2001 25%);

When assessed in dollar terms - the rate of return of a bonded domestic foreign currency loan (VEB bonds of the 4th tranche).

The average market rate of return Rm is determined based on the amount of income in the securities market in the industry to which the company being valued belongs, over a sufficiently long period of time in retrospect. On the domestic market to determine the rate Rm, the RTS indicators ("Russian trading system”) or information agencies - such as AK&M, Rosbusinessconsulting, etc.

The value of b as a quantitative measure of systematic risk can be determined based on the following relationship:

b = Percentage change in equity earnings of the company being valued

Percentage of change in the average market quotation of shares circulating on this market

The value of b indicates how much the risk of owning specific assets is greater or less than the risk of the market portfolio. If b> 1, then the assets are considered more risky and are classified as aggressive assets. If b< 1, то данные активы являются менее рискованными, чем рыночный портфель и являются защищенными.

Thus, the higher the beta, the higher the risk. The stock price of a company for which the coefficient b is equal to 1.5, with an increasing trend in the market, will grow on average 50% faster compared to the average market level. Conversely, when the market is depressed, the stock price of this company will decrease by 50% faster than the average market price. Therefore, if the share price in the stock market falls by 10%, we can expect that the share price of this company will fall by 15%.

In the practice of business valuation, the basic formula of the capital asset valuation model is supplemented by the introduction of amendments that allow taking into account non-systematic risks. Then the formula for calculating the rate of return for equity is as follows:

where C1 is the premium for the risk characteristic of a single company;

C2 is the risk premium for investing in small business;

C3 is the country risk premium.

Consider these amendments:

The company-specific risk premium is applied if the company being valued has a specific risk. As a rule, this risk is associated with the nature of the activities of the company.

The small business risk premium is applied if the company being valued is a small business. The purpose of this amendment is to compensate for additional volatility in small business income. With regard to the total value of the premium for the risk characteristic of a single company, and the premium for the risk of investing in a small business, a recognized investment custom has developed, according to which this value is determined by an expert in the country of investment.

The country risk premium is introduced only when assessing the discount rate for foreign investors. For domestic investors, the level of country risk is reflected in the increased level of both the risk-free rate and the market risk premium. The country risk premium is individual, as it depends on individual risk preferences, knowledge and experience of specific investors. At the same time, the ratings of country risks of the country of investment, which are set by the world's leading rating companies, can be used as a guideline.

The method of cumulative construction of the discount rate

The method of cumulative construction of the discount rate for equity is used in the valuation of closed companies, for which it is difficult to find comparable open companies-analogues and, accordingly, it is impossible to use the CAPM model.

When using the cumulative method, the risk-free rate is taken as the basis, to which is added the risk premium for investing in closed companies. This premium represents the return that the investor "demands" as compensation for unsystematic risks - that is, the additional risks associated with investing in this company compared to risk-free investments.

In general, the cumulative construction model looks like this:

where Re is the rate of return required by the investor;

Rf is the risk-free rate of return;

Сi – additional premiums (allowances) for specific risks

Thus, in the process of applying the cumulative method for calculating the discount rate, it is necessary to identify and quantify the maximum more the type of risks inherent in the company.

The following risk premiums are most often taken into account:

Dependence of the company on a key figure and the presence of a management reserve - allowances are set from 0% to 5%.

Company size. (0-5%). If the company is large, occupies a monopoly position, then the specific risk will be minimal (equal to zero).

The financial structure of the company. - capital structure. (0-5%). High risk is characterized by a significant share of borrowed funds.

Commodity and territorial diversification (0 - 5%)

Diversification of buyers of the company's products and suppliers of products and services (0 - 5%).

Availability of data on the financial condition of the enterprise in dynamics relative to the financial condition of the enterprise (0 - 5%).

The appraiser decides to what extent to include the above risks in the calculation of the rate of return.

Aggregate method for calculating the discount rate

Most often, in investment calculations, the discount rate is defined as the weighted average cost of capital (WACC), which takes into account the cost of equity (equity) capital and the cost of borrowed funds. This is the most objective method for determining the discount rate. At the same time, a capital assets pricing model (CAPM) is used to determine the cost of equity. Determining the discount rate for everything invested is related to calculating the present value of the so-called "debt-free" cash flow, often used by investors who analyze the amount of cash generated by a company. To calculate it, the value of the cost of capital used by the company to finance its activities is used. Since both equity and borrowed funds are involved in such financing, the Weighted Average Cost of Capital (WACC) acts as the value of the “total” cost of capital. The weighted average cost of capital is calculated using the well-known formula:

Ks - the cost of raising equity capital,

Kd - the cost of borrowing capital,

Ws and Wd - shares of own and borrowed capital, respectively, in the capital structure of the enterprise,

T - income tax rate.

It is clear that the profitability of a new investment project must be higher than the value of WACC, otherwise it makes no sense to implement it, since it will reduce the overall value of the company. Therefore, it seems logical to use WACC as a discount rate.

The two main problems with using WACC as a discount rate are that:

WACC reflects the present value of the aggregate of sources used to finance a company's usual capital investments and, when outside the organization's usual activities, investments are exposed to completely different risks than "normal", and therefore WACC cannot be used as a required rate of return, so how it does not take into account the difference in risks of different investments;

If the scale of investment is so large that it significantly changes the structure of the company's financial sources, then WACC cannot be used as a discount rate either.

But even if we are talking about "ordinary" capital investments, then in this case, investments may involve a different degree of risk. For example, capital investments associated with the replacement of equipment, as a rule, are less risky than investments made with the aim of developing new types of products. When evaluating economic efficiency in this case, one can consider the company's weighted average cost of capital as the minimum allowable value of opportunity costs, increasing the required rate of return depending on the nature of capital investments. Thus, in this case, in determining the discount rate, expert estimates are used, which also introduces an element of subjectivity into this process.

Method of industry average return on assets and capital

The DuPont model or the industry average return on assets and capital method reflects the industry's average return on assets or capital invested. To evaluate this method, ROA (Return of Equity) and ROE (Return of Assets) indicators are used, which contain all the risks inherent in the industry of the company being valued. Therefore, the main condition for applying the DuPont model is sufficient information about the state of the industry. Dupont's model has next view:

To calculate the discount rate, the method of industry-average return on assets and capital is advantageous to use when the shares are not quoted on the stock exchange, i.e. are the least marketable. They don't reflect the real market value companies.

When using the DuPont model, companies in the industry are usually divided into certain groups, for example, into small, medium and large companies in terms of equity capital.

The indicators calculated for a particular company are compared with industry averages. Information on ROE and ROA indicators for the industry can be obtained from industry-average reviews of analytical agencies, from various industry ratings.

Market multiplier method

This method is used when there is sufficient information about analogues. It consists in calculating different levels of earnings per share. For example, allocate:

EBITDA/P -- Earnings before Interests Taxes, Depreciation and Amortization (Earnings before depreciation, interest and taxes per share);

EBIT/P -- Earnings before Interests Taxes (Earnings before interest and taxes per share);

EBT/P- Earnings before Taxes (Earnings before taxes per share);

E/P -- Earnings (Net profit per share).

The advantage of using market multiples as the discount rate is that market multiples fully reflect industry risks. The disadvantage is that the multiples do not reflect the risks that are unique to the company being valued.

Determining the discount rate by expert means

The easiest way to determine the discount rate, which is used in practice, is to establish it by expert means or based on the requirements of the investor. It should also be noted here that the discount rate used in calculations is almost always agreed upon with the investment bank that raises funds for the project or with the investor. At the same time, in the calculations, as a rule, they are guided by the risks of investing in similar companies and markets.

Real options method

Now more and more often it is proposed to use the method of real options, but its application is very difficult in terms of methodology. To take into account such risk factors as the possibility of stopping the project, changing technology, losing the market, when evaluating projects, practices often use highly inflated discount rates - 40--50%. There is no theoretical justification behind these figures. The same results could be obtained by complex calculations, in which one would still have to subjectively determine a lot of predictive indicators.

The choice of the correct value of the discount rate should, of course, be based on the main theoretical approaches to its determination. However, the art of the financial analyst involved in business valuation lies in his ability to take into account how characteristics specific project, and the actual conditions of the transaction (the nature and form of "payment" for future economic benefits acquired by the investor or creditor, its opportunity costs, etc.). As a result, the additional effort spent on working through these nuances will provide the analyst who performed them with a stronger position when negotiating the transaction price with a future investor.

The cumulative construction model is suitable for calculating the discount rate when the purpose of the valuation implies a more significant role of internal factors than external ones. The cumulative construction model can be most successfully applied in any case when evaluating equity. The choice of calculation does not depend on the market activity of the company.

The CAPM model assumes a strong influence of market factors, so it is effective to use it when the company's market activity is high, as well as when the company enters the market. The CAPM model is the most limited for calculation, because it is influenced by the maximum number of factors. It can only be used to assess equity, to assess a company whose shares are listed on the stock exchange, and also if the company's performance is typical for the market as a whole.

The determining factor in choosing the WACC model is the assessment of the investment and insurance value of the company or project. The WACC model is a universal model for evaluating invested capital. The calculation of the discount rate by this method is also influenced by the behavior of the company in the market.

The market multiplier method is used when a company is open to the market, because multipliers fully reflect industry risks. It is beneficial to use it when there is sufficient information about analogues. It lies in the calculation different kind earnings per share. The method of market multipliers is most successfully applied when the company's market activity is high and typical behavior on the market.

The method of industry-average return on assets and capital (ROA, ROE) is advantageous to use when shares are not listed on the stock exchange, i.e. are the least marketable. The indicators calculated for a particular company are compared with industry averages. The method of industry average return on assets and capital (ROA, ROE) does not depend on market activity, but can only be used to assess equity and if the company's performance is typical for the market as a whole.

The method of % rates is effectively applied in the assessment of the total invested capital, when the company's activity is typical for the industry. The advantage of this method is that the return on invested capital is determined by the market itself. Because there may be several purposes of assessment, then the further choice of calculation can be determined depending on the characteristics of the company and the availability of information. It is effective to use the % rate method when calculating the discount rate for assessing invested capital, since % rates are set by banks based on the market's need for free cash at the moment, and they take into account only market risks and do not take into account risks specific only to the company being valued. An analysis of existing methods for calculating the discount rate both in Russia and abroad allows us to conclude that it is impossible to choose any one model as the most effective and suitable for all market situations. An effective model is selected depending on the specific purpose of the assessment and on the characteristics of a particular company, as well as depending on the availability of information.

Calculation of the discount when issuing a bill

When calculating the discount, the drawer issuing his own bill of exchange takes into account:

The term until which the bill cannot be presented for payment (ie, during what period the drawer can use the funds raised from the issue of the bill);

The cost of resources (% rate) at which the drawer raises (could attract) the same amount of money for the same period.

If the contract between the drawer issuing his own bill and the future bill holder establishes the selling price of the bill, then in order to calculate the discount, it is necessary to determine the nominal (bill) value of the bill. This can be done using the formula:

wherein:

Promissory note term – the number of calendar days from the date following the date of issuance of the promissory note to the date of repayment of the promissory note indicated in the text of the promissory note.

It should be taken into account that, as a rule, it is not advisable to issue bills of exchange with a term “at sight” at a discount. After all, such a bill can be presented for payment within a year from the date of issue on any day and it is not possible to determine its period for calculating a reasonable amount of the discount and, accordingly, the yield of such a bill.

The situation for bills of exchange with a term “at sight, but not earlier than a certain date” is approximately the same, but it is still possible to calculate the discount on such a bill based on the period from the date following the date of issue of the bill to this specific date. The procedure for issuing such bills and calculating the discount on them is best determined by the accounting policy.

% rate - the rate of attracting resources for a period similar to the term of the bill. For the calculation, the interest rate is usually used, at which the drawer could attract funds for a specified period. The benchmark may be interbank loan rates, average rates on loans or deposits, the refinancing rate, etc. The procedure for establishing such rates is determined by the drawer in the accounting policy. Banks, as a rule, prescribe the procedure for setting interest rates on attracted and placed resources in accordance with the terms in the Deposit Policy.

Discount policy

Discount policy - the monetary policy pursued by central banks, which consists in raising or lowering interest rates for a loan in order to regulate supply and demand for loan capital.

This type of operation belongs to the long-used methods of regulation. The Central Bank acts as a creditor in relation to business banks. Funds are provided subject to the rediscount of bills of banks and secured by their securities. Such funds received in the central credit link are called rediscount or pawn loans. The Central Bank has the right to manipulate the interest rate at which it issues loans to banks. The possibility of establishing the "price" of the loan acts as a method of influencing the credit system.

The level of the "price of credit" determined by the central bank has received in economic science and practice the designation of the official "discount rate"8 (which is otherwise also called discount or pawn).

The loans taken from the Central Bank are provided by banks to other economic entities, but at a higher interest rate. Naturally, the interest rate policy of business banks reflects the changes that the Central Bank makes in the course of its policy. With the help of the interest rate, the Central Bank thus has an indirect effect on the ratio of supply and demand in the capital market.

An increase in the interest rate, i.e. "Rise" in the cost of credit, limits the amount of demand for borrowed resources and reduces the intention of firms to increase investment. A decrease in the rate "cheapens" credit, as a result of which the private sector (households, firms) has an increased desire for investment. This incentive is realized in the form of buying shares, production equipment or building new production buildings. This is the scheme of this mechanism. In real life, the interaction of parameters is, of course, not always so simple.

Function is important accounting policy as manipulation of the interest rate, which enhances the effect of the application of other regulatory measures of the Central Bank, namely operations on open market and setting reserve requirements. If the effect of one leverage influencing the behavior of an independent commercial bank turns out to be insufficient, then the set of measures taken by the central bank gives it the opportunity to achieve its intention.

With regard to Russia, it should be noted that within the framework of the accounting policy, the Central Bank began to practice in 1995 also a pawnshop loan secured by securities (mainly government treasury bonds).

Sources and links

vipoteku.ru - an information and reference resource that tells about the possibilities of a mortgage transaction

malb.ru - site about small business

dic.academic.ru - Dictionaries and encyclopedias on Academician

ekoslovar.ru economic dictionary

coolreferat.com - a collection of abstracts

xreferat.ru - a collection of abstracts

en.wikipedia.org - the free encyclopedia Wikipedia

operbank.ru - site about banking operations

allbest.ru - a collection of abstracts

do.gendocs.ru - Lessons, reference books, abstracts

center-yf.ru - Financial Management Center

km.ru - information multiportal

delovoymir.biz - Business World website

financial-exchange.rf - portal Financial exchange