Madatova O.V.Academy of Marketing and Social Information Technologies – IMSIT, Krasnodar, Russian Federation mokb@bk.ru
Importance The research evaluates intra-group gains and losses of the holding company in order to optimize them with external income and expenses remaining uncertain. Objectives When the holding structure comprises several companies, financial results will be unevenly distributed. Therefore, intra-group debt burden will also be unevenly allocated. In this respect, financial results should be distributed among the companies in an optimized manner, thus avoiding unreasonable losses. Tax accruals and payments reduce financial results, being an important part of costs. In the mean time, the holding company allocates income tax liabilities unevenly among its operating entities. Tax accruals can be distributed among the entities of the holding company in an optimized manner by adjusting values of intra-group companies. It constitutes the objective of the research. Methods Intra-group gains and losses of the holding company can be handled using the financial model of the holding company as implemented in MS Excel Solver. The model has been built considering uncertainties and using mathematical tools of the probability theory. Results The financial model allows considering fluctuations of external revenue and expenses of each company, thus facilitating the decision making process in relation to allocation of intra-group accruals, and managing financial results of the companies. Conclusions and Relevance The method for managing intra-group gains and losses helps the holding company promptly handle financial results of the companies, assuming that revenue and purchase pricing remain uncertain. It also streamlines income tax offsetting in operating activity as much as possible. The method is used in the budgeting process of the large energy holding group.
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