1. Property Management Depending on the Sources Difficulty
Lecture was elaborated with the help of grant project of Ministry of Education, Youth and Sports, FRVŠ n „Innovation of Subject Financing of Building Order“
Property Management Depending on the Sources Difficulty

2. Property structure in a company
Basic classification of property in a company
Long-term property
Long-term intangible property (lifetime longer then 1 year, PP min CZK)
Long-term tangible property (lifetime longer then 1 year, PP min CZK)
Long-term financial property (lifetime longer then 1 year)
Short-term property
Supplies (stocks)
Bought (material, goods)
Own production (unfinished production, intermediate products of own production, products)
Accounts receivable (receivables)
From a business contact
Tax receivables (advance tax payments are higher then real tax – tax overpaid)
In face of institutions of social and health insurance
Financial property
Money
Bank accounts
Short-term financial property
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3. Ways of property assessing in a company
Property can be assessed by:
Purchase prices
Including buying price and costs connected with purchasing (transport, manipulation with property)
Own costs
Aggregate of own costs connected with production
Used in the case of assessing of property of own production
Replacement price
Price, for that the property could be purchased (price estimate realized by expert in the case, when the property was purchased without charge)
Nominal value
In the case of ready money or valuables (post stamps)
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4. Depreciation of long-term property
It concerns about cost expressing annual decreasing of long-term property value owing to its attrition
According to the purpose of depreciation assignment it is possible to define:
Accounting depreciation
It expresses real decreasing of a property value in connection with its real lifetime (for purpose of the income tax calculation it’s necessary this depreciation to transform into tax depreciation)
Tax depreciation
It expresses maximal amount of depreciation that it’s possible to include into costs used for the income tax calculation (described by law n. 586/1992 Sb., about income taxes)
Calculation depreciation
It serves for projection of costs connected with the property attrition into the unit price of a product
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5. Calculation of depreciation
Methods of a depreciation assignment
Linear (equal) depreciation
Depreciation is equally distributed on the whole property lifetime
Digressive (accelerated) depreciation
Amount of annual depreciation is decreasing in time
Progressive depreciation
Amount of annual depreciation is increasing in time
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6. Financing of Building Order
Tax depreciation
Identification of depreciation group of the long-term property after the purchase of the property. Depreciation groups and property included into these groups are defined in the Income tax law, annex 1
Choice of linear or digressive way of depreciation that will be next used for the whole time of the property lifetime
Depreciation group
Time of depreciation 1
3 years 2
5 years 3
10 years 4
20 years 5
30 years 6
50 years
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7. Linear (equal) depreciation
In the case of linear depreciation there are defined maximal annual depreciation rates for each depreciation group:
Depreciation is calculated as a multiplication of input price of a property and annual depreciation rate for certain depreciation group
Depreciation group
First year of depreciation
Next years of depreciation 1 20 40 2 11
22,25 3
5,5
10,5 4
2,15
5,15 5
1,4
3,4 6
1,02
2,02
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8. Digressive (accelerated) depreciation
Calculation of the depreciation for the first year
Calculation of depreciation for next years of depreciation
Where
IP … input price
DP… depreciated price
k … number of whole years of depreciation (the number of years of a property lifetime)
n … number of years, for that the property has been depreciated
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9. Input price assignment
Input price of a long-term property for purpose
of the depreciation calculation can be in the
form of:
Purchase price
Own costs, if the property is produced on the company’s own
Replacement price in other occasions founded according to the special legislation (expert price)
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10. Sources of the property coverage
In-house sources (own capital)
The registered capital
The capital funds
The funds created from net (after-tax) profit
The economic result (the profit or the lost) of the past years
The economic result (the profit or the lost) of the current period
Extraneous sources (liabilities)
Long-term extraneous sources
received advance payments
back long-term commercial papers
Short-term extraneous sources
trade liabilities (the liabilities towards the suppliers)
liabilities towards the state budget (required, but still unpaid taxes)
liabilities towards the employees (still unpaid wages or another remuneration)
liabilities towards the institutions of the social and health insurance
Bank credits and loans
long-term bank credits
short-term bank credits
Reserves
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11. Ways of Property Financing
Increase of basic capital
Not divided economic result (profit) from past periods
Credits
Leasing
Financial
Operative
Backward
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12. General principles of company’s property financing
Basic principle of financing:
Long-term property should be financed by own sources and long-term extraneous sources
These sources should partly finance also short-term property
Net working capital:
Short-term property financed by long-term sources
Net Working capital (WC) = short-term property – short-term sources
WC > 0 … from the aspect of working capital the financial stability of a company is ensured
WC = 0 … effective, but from the aspect of working capital risk, position of a company
WC < 0 … long-term property financed by short-term sources, threat of a financial stability
(Remark: Financial stability expresses abilities of a company to comply its debts with own
payables from a long-time aspect)
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