CONSIDERATION OF INFLATION FACTORS IN THE TACTICS OF FINANCIAL MANAGEMENT AND EVALUATION OF INVESTMENT PROJECTS TO RESTORE WAR-LOST UKRAINIAN CITIES AND THEIR INFRASTRUCTURE
Authors: Chovnyuk Yuriy , Kozupitsa Sergey , Cherednichenko Petro 
Published: September 2022

The aim of this work is not only to formulate and consider the most acute, painful and urgent problem of today's financial activity of modern Ukraine - the problem of accounting inflationary factors in financial management of domestic enterprises, but also to substantiate the basic criteria and methods of long-term and short-term financial decisions in modern complex conditions of inflation, crisis and depression of the state economy, which was destroyed by war Preparation and implementation of any financial transaction requires financial calculations. Today in Ukraine there are a number of problems related to the planning and implementation of financial operations under conditions of the war (and postwar) state and after the final Victory over the enemy of our country. Such problems include: interest accrual, development of operations plans, evaluation of final financial results of operations for their participants, making break-even changes in contracts, analysis of investment projects of reconstruction of cities, towns, settlements Ukraine destroyed by the war and their infrastructure, analysis of credit operations, etc. 

Methods of financial calculations are an integral part of quantitative financial analysis and financial management. They distinguish between dynamic and static methods of analysis. Dynamic methods take into account the factor of time in financial operations and are used in planning operations and prospective evaluation of economic projects and investments. Static methods are used in financial control, accounting, the analysis of small investment projects. The theoretical basis of financial calculation methods consists of the financial rent scheme, methods for calculating simple and compound interest, the principle of time value of money and the principle of financial equivalence.

According to the principle of the time value of money, current (modern) money has a greater value than future money. That is, one currency today has more value than one currency tomorrow. The main reasons for the depreciation of money are: inflation, risk, the tendency to liquidity.

The time factor in financial calculations is accounted for by interest (or interest) rates, which allow each present amount of money to find an equivalent value in the future.

Usually under the interest money (interest) understand the absolute amount of income (profit) from the borrowing of money. In this case, the forms of borrowing can be different: the purchase of bonds, sale on credit, lending, investing, etc. Interest is measured in monetary units. Interest rates are the ratio of interest money received over a certain period of time to the amount of debt/investment. Interest rates are usually given as a ratio (in fractions/fractions of a unit) or as a percentage/interest. In financial calculations, interest rates are used as ratios. Interest periods, that is, the time intervals to which interest rates are tied, are usually defined in years for long-term investments (i.e., discrete interest).

A distinction is also made between simple and compound interest. If the amount to which the interest rate applies is the same (fixed with no accruals), accruals are made on simple interest and the interest rate is called simple. If interest for a previous period is added to the amount owed, and interest is charged again on the resulting amount, then compound interest is meant. The corresponding rate in this case is called compound interest (the same rate used in the financial analysis of long-term investment projects). Besides, the interest rate is also used as an indicator of the profitability (return) of a transaction. Therefore, with the help of interest rates it is possible to evaluate the efficiency of financial operations and, in particular, investment projects.

The investment process combines two opposing processes: the creation of a production object - the investment process itself and the process of successive income generation. The analysis of productive investment consists in the evaluation and comparison of the effectiveness of alternative projects. Any method of evaluation is associated with the reduction of monetary values to a single point in time. Usually the interest rate at which compound interest is charged is called the comparison rate. It is usually taken at the level of the average rate on long-term loans, which is valid in the market. At the same time the risk is taken into account in the form of an appropriate term.

During financial analysis of investment efficiency, the following indicators are most frequently used: 1) net cumulative profit; 2) payback period; 3) internal rate of return; 4) profitability. Usually methods of analysis based on discounting are used, i.e. time factor is taken into account. In addition, in this study, all four of the above methods for analyzing the effectiveness of investment projects have also been adjusted for inflation factors. According to the authors, this approach is important in financial management tactics and in the evaluation of investment projects related to the reconstruction of cities, towns and settlements in Ukraine destroyed by the ongoing war with the Russian Federation, as well as their infrastructure (including transportation).