Ensuring the efficiency of forestry enterprises’ potential management as an element of sustainable development

The paper is devoted to the problems of ensuring the efficiency of forestry enterprises’ potential management. It was determined that forest plays a crucial role in ensuring people’s living conditions, i.e., providing food, fuelwood, medicines, income, and employment, etc. Due to crisis tendencies in the forestry sector which were exacerbated by the full-scale war on the territory of Ukraine, the necessity of improvement of forestry enterprises’ potential management is beyond doubt. The main problems of the forestry sector of Ukraine were outlined. It was determined that the ways of improving the forestry enterprises’ potential management should be considered at national and individual enterprises levels. The peculiarities of the forestry sector reform and its planned outcomes were analyzed. It was proposed to supplement the measures of macroeconomic direction by enhancing the forest certification and implementing a participatory approach in management. Based on correlation and regression analysis, the main directions of measures for individual enterprises were defined. Such directions include reducing the duration of the operating cycle, increasing labour productivity, and increasing the rate of net income growth. The measures within each direction were proposed.


Introduction
The quantity and quality of resources available for the formation of living conditions determine humanity's existence.Forest resources are vital for human beings due to their role in society.Forests provide healthy food, fuelwood, medicines, income, and employment for people [1].Forests are also a source of renewable materials in the case of rational resource use policy [2].Forests are also important from the climate changes standpoint.According to World Economic Forum, deforestation is the factor that endangers climate on our planet, forming negative impact on natural environment and livelihoods, and almost 1.6 billion people depend on forest ecosystems for food, water, wood and employment [3].During the last decades, due to inappropriate and irrational use of forest resources, deforestation and forest degradation have aggravated worldwide.This causes damage to both the natural environment and human living conditions, resulting in a wide range of issues related to environmental depletion.Thus, efficient policy in the sphere of forest management gains a crucial role in ensuring the well-being of society as a whole.We believe that such an efficient policy should be implemented at national and regional levels and at the level of individual enterprises, especially forestry enterprises.
It should be mentioned that the efficient use and reproduction of forest benefits achieving the sustainable development goals, which are the key guidelines for the development of humanity.In 1254 (2023) 012121 IOP Publishing doi:10.1088/1755-1315/1254/1/012121 2 particular, the following goals are under the impact of forest conditions: SDG 2 "Zero hunger", SDG 3 "Good heath and well-being", SDG 6 "Clean water and sanitation", SDG 12 "Responsible consumption and production", SDG 13 "Climate action", SDG 15 "Life on land" [4].Forest ecosystems are an essential prerequisite of society's sustainability model as they provide water conservation, wind and soil control, carbon sequestration, and biodiversity [5].Thus, we can conclude that efficient forest management mechanisms are of particular importance in ensuring the sustainable development of individual countries and the world as a whole.
Efficient forest management is urgent for Ukraine, as the forest cover level has reduced significantly over the past century.The forest cover level in Ukraine is estimated at 15.9 %, while the optimal level is calculated as 20 % [6].A lower-than-optimal level of forest cover determines the presence of problems related to the depletion of the natural environment, soil erosion, and decreased resource availability.It creates a threat to ensuring the sustainable development of the country.Thus, the development of effective mechanisms of forest use is an essential and urgent task, which is intensified due to the destructive consequences of hostilities on the territory of Ukraine.Considering the above, efficient forest management mechanisms should be implemented both at the national level and the level of individual enterprises.Therefore, we consider it necessary in this context to analyze the key factors of impact on the activities of forest-user enterprises and to propose directions for improving the management of the potential of forestry enterprises.This determines our study's relevance and identifies the key tasks to be implemented within the framework of the study.

Literature review
Forest resources are among the most crucial for people's existence, alongside water and soil resources.During the last decades, the processes of deforestation due to human activity, forest fires and increasing population have intensified significantly, causing such adverse effects as climate changes, extinction of plants and animal species, and total forest resources degradation.These reasons define the necessity for a balanced approach to forest management formation.Effective forest management is also one of the constituents of sustainable development, the key goals of which were defined by the UN General Assembly.The relevance, expedience and cruciality of the issues related to effective forest management system formation have shaped considerable scientific interest in the relevant sphere.This has been especially noticeable during the last decade, which is explained by the aggravation of many crises associated with rational forest use.
Forest ecosystems are crucial for sustainable development [5].Zheng et al define that forests provide ecological, economic, and social benefits.The research is based on the idea of finding an appropriate management system in order to balance all of the aspects mentioned above.The authors use the Analytic Hierarchy Process method to define a model of indicators for forest management.The measures for effective forest management are also proposed in the paper [5].
Another research dedicated to the peculiarities of forest management was held by Knoke et al [7].The authors emphasize the necessity of providing forest resilience under climate change conditions.The stability issue is quite essential for the forest case, as production time in forestry extends for long periods, which causes the vulnerability of forest ecosystems.The authors also define a relation between forest losses and economic losses, considering the role of forests in the country's economic development.Two silvicultural management systems are analyzed in the research, i.e. continuous cover forestry and clear fell forestry [7].The research by Malindzakova et al [8] reflects forest management peculiarities and main directions.The system of indexes is used for the economic evaluation of forest management [8].Mishenina and Dvorak [9] state that one of the ways to improve forest management from a national perspective is the implementation of a public-private partnership mechanism.According to the authors, public-private partnership contributes to sustainable development, decentralization, liberalization, and capitalization of IOP Publishing doi:10.1088/1755-1315/1254/1/0121213 natural resources.The characteristic features and advantages of the public-private partnership are also considered in the research [9].
Pietarinen et al [2] investigate the relationship between forestry and sustainable development in Finland.Scientists note that not all dimensions of sustainability have the same weight in the policy of forest use; the economic aspect dominates.Considering that Finland aims to be one of the key players in the bioeconomy based on forest use, the authors emphasize the need to strengthen ecological and social aspects in forming forest policy [2].
The participatory approach benefits the formation of an effective and efficient forest management system.It promotes decentralization in the corresponding sphere [1].As Tessema and Nayak [1] state, participatory forest management contributes to sustainable management and forest ecosystems conservation, which is a vital issue for ensuring the stable development of society as a whole.The research deals with major aspects of the interaction of local communities with forest ecosystems in Ethiopia.Community forest enterprises are one of the manifestations of the participatory approach in forest management [1].According to Piabuo et al [10], the role of community forest enterprises is similar to social enterprises, as they meet economic, social, and environmental challenges.The research is based on the Cameroon community forests enterprises and is aimed at their analysis, classification and activity study considering economic, social and governance dimensions [10].
An integrated approach reflecting a combination of participatory approach and forest certification is demonstrated by Degnet et al [11].Using the example of forestry enterprises in Mozambique, the authors consider how the implementation of forest certification affects the well-being of communities living in the area adjacent to the forest [11].
Forest certification is another issue which has gained special scientific interest due to its relevance.Thus, Malek and Abdul Rahim [12] surveyed the publications dedicated to the forest certification aspect.The thematic analysis of forest certification literature dating from 2017 to 2021 was held.According to scientists, forest certification is important for achieving the sustainable development goals.The research provides a comprehensive analysis of the main trends in the forest certification literature of recent years and uses the results of the analysis to define gaps in the knowledge in the respective sphere [12].Zubizarreta et al [13] analyze the certification processes in Spain regarding forests.The authors believe that the forest certification is a driver for forest management systems to be more environmentally and socially responsible.The paper defines the main motives for certification, based on a survey of 124 certified companies in Spain.Key mechanisms for certification promotion in Spain are also defined in the research [13].
Forest certification with a relationship to forest degradation in Sweden is reviewed in the research of Villabolos et al [14].Two main certification schemes and their effects are considered in the article.The process and mechanisms of certification itself and maintaining the certificate are also defined in the paper.The authors investigate the impact of certification implementation on three indicators: environmentally important areas preserved during felling, the number of trees and high stumps left after felling, and the area set aside for conservation purposes [14].
Shvets et al [15] provide an analysis of the financial and economic activity at the example of forestry enterprises in the Zhytomyr region.The scientists have defined that the main challenges faced by the enterprises are those related to a decrease in demand, export issues, expenses increase, and inefficient human resources use.The authors' opinion on ways of solving relevant issues is provided [15].Furdychko et al [16] directs its scientific efforts to solve the problems of balanced forestry land use.The work examines the dynamics of changes in the volume of forest resources based on a comparison of data for Ukraine and Poland, analyzes the impact of individual factors on the balanced use of forestry land based on the results of the production and economic activities of state forestry enterprises [16].Tsehelnyk [17] provides a detailed analysis of the trends and conditions of the Ukrainian forestry industry and necessitates institutional changes in forest management mechanisms.Diadchenko and Saharnatska [18] consider forest enterprises management from a financial stability standpoint.The authors highlight the economic, social, and environmental components of the financial stability management model, as well as propose measures to increase the level of the corresponding indicator [18].
Summarizing the above, we should note that most scientific works are devoted to the determination of national-level levers of forest management, while the level of individual enterprises remains insufficiently covered, which determines the relevance of this study.

Objective of the research
The research aims to define ways to improve forestry enterprises' potential management based on internal factors which impact the respective enterprises functioning.The defined purpose involves solving the following tasks: to identify the role of the forest enterprises in the economy of Ukraine; to determine the consequences of the full-scale war on the territory of Ukraine; to consider ways of improvement of forestry enterprises' potential management at the national level; to detect key internal factors of impact on the functioning of the forestry enterprises; to propose measures for improvement of potential management at the level of individual enterprises.

Methodology
The methodological foundation of the research is a system method which allows to consider forest enterprises' potential management at both national level and level of individual enterprises.The set tasks involved the use of the following methods: monographic -to study and examine available publications on forest management; correlation and regression analysis -to identify key factors of impact on the formation of net profit of forestry enterprises; analysis and synthesis -to identify the key trends of forestry enterprises functioning; generalization -for formulating research conclusions; the deduction method -to propose and substantiate key measures for improvement of forestry enterprises potential management; graphical and tabular -to visualize the obtained research results.

Results of the research
Forestry is one of the essential segments in the economy of Ukraine.The sustainable development of forestry is based on the combination of ecological, economic and social functions of forests.Ukraine is a part of the world society that strives for the sustainable development of forestry.Forestry enterprises are obliged to conduct their activities based on sustainable development.
Balanced management of forestry combines a set of measures for the use, reproduction, formation, and protection of forests.The sustainable development of forestry is ensured under rational resource use, responsible consumption and reproduction.The economic activity of forestry enterprises to ensure sustainable development must be stable and efficient, that is, profitable.The enterprise's financial results depend on the sales volume of products and services.
The conditions for afforestation in Ukraine are heterogeneous, so forests are spread unevenly across the country's territory.The forest coverage of Ukraine is 15.9 %.Despite the relatively small area of forests, Ukraine ranks 9th in Europe in forest area and 7th in wood reserves.
Forestry in Ukraine, according to the "Classifier of types of economic activity", includes four groups: forestry and other activities in forestry (group 02.1), logging (02.2), collection of wild non-wood products (02.3) and provision of auxiliary services in forestry (02.4).Forest enterprises also provide services in several other essential industries: hunting, primary wood processing, food industry, etc.
According to the Land and Forest Codes, forests of Ukraine can be in state, communal, and private ownership.The vast majority of forests are in state ownership.About 1.3 million hectares (13 %) of forestry land plots in permanent use by municipal enterprises subordinated to local self-government bodies attribute to communal ownership.The generalised results of the activity of forestry enterprises of Ukraine [19][20][21] indicate the ambiguous financial performance of the industry.Over the past three years, there has been, in general, an increase in the net income from the sale of products (goods, works, and services), the net profit of enterprises, and the received amounts of budget financing.
However, financing from the general fund during 2019-2021 under budget programs was approximately 20 % of the need for budget financing.The tax burden has a significant impact on the financial condition of enterprises.On average, the percentage of paid taxes and duties on net income is 39 %.The most significant amount of taxes and fees to the budgets of all levels was paid by enterprises of the regional governments: Zhytomyr Oblast -UAH 873 million, Rivne Oblast -UAH 685 million, Chernihiv Oblast -UAH 553 million, Kyiv Oblast -UAH 534 million, Sumy Oblast -UAH 488 million, and Volyn Oblast -UAH 452 million.
According to Tsehelnyk [17], the main problems of forestry enterprises' potential management include the following: • absence of a balanced strategy of development and management in the forestry sector; • inaccurate distribution of management functions, which in some cases leads to duplication of functions or loss of their performance; • financing disbalances; • lack of effective mechanisms for stimulating the introduction of nature-preserving technologies; • lack of a transparent mechanism for the timber sale, illegal felling and circulation of illegally harvested wood; • the unsatisfactory state of ensuring the use of forests by local communities for recreational purposes.
The extremely important role of forests in terms of ecological, economic, and social sustainability of Ukraine determines the necessity to provide balanced resource-use mechanisms.It is necessary to balance the objectives of forest conservation, their ability to provide ecosystem services, the economic need for deforestation and the right of communities to profit from the exploitation of forests [16].
It should be noted that the activity of forestry enterprises is currently characterized by the presence of crisis tendencies, which are aggravated by the influence of a full-scale war.
The full-scale war in Ukraine affected the population, the economy, and the environment, including forests.Based on the materials of the EU4USociety project [22], the main problematic 1254 (2023) 012121 IOP Publishing doi:10.1088/1755-1315/1254/1/0121216 issues and prospects for developing forestry enterprises in Ukraine, particularly in war conditions, are summarised.
The main problem areas in war conditions: 1.The difficulty of demining de-occupied territories.Lands where active hostilities were fought, strewn with ammunition.Russia's active military operations complicate the speed of demining.Analysts emphasize that the cities and infrastructure will be demined firstit will take about ten years for the forests to be.
According to WWF-Ukraine and the Regional Eastern Fire Monitoring Center [23], more than fifty different types of explosive munitions can be found in the forests of Ukraine that have fallen into the zone of military operations.Conventionally, the territory of the combat zone can be divided into the following types: (a) territories where active ground combat operations were conducted; (b) territories subjected to air bombardment and shelling from long-range ground units; (c) territories of deployment of military units; (d) territories that were mined to provide resistance to enemy troops.
There is particularly little information on forest demining as of today, as surveys and demining were carried out locally, in small areas, primarily forest roads.
According to the Institute for the Study of War [23], the areas of Polissia forests that were in the zone of military operations are as follows: Zhytomyr Oblast (127,789.8ha), Kyiv Oblast (165,307.7 ha), Chornobyl Exclusion Zone (148,711.1 ha) Chernihiv Oblast (423499.0 ha), Sumy Oblast (287861.9ha).A total of 114 state forestry enterprises, 20 agricultural enterprises, 14 municipal enterprises and 12 other forest users and owners were affected by military operations among enterprises and organisations whose activities are connected with forest.The most significant number of forests that have fallen into the zone of military operations is in the Chernihiv Oblast.2. Firefighting policy.According to specialists, pristine pine forests are the most dangerous in the ignition.The map of hostilities shows that such forests are in the east of Ukraine, Polissia.Fires not only cause a loss of forest cover but also are a potential danger to the lives of residents.A possible scenario for territories with active hostilities is conservation with an analogue to the exclusion zone.WWF-Ukraine and the Regional East European Fire Monitoring Center [23] summarised that since the beginning of the war in Ukraine, fires have covered a total area of 2.4 million hectares, of which 1.5 million hectares (64 %) are in the territories with military operations and occupied territories: forests -320 thousand hectares ( The above determines the need to define the priority directions for improving the management of the potential of forestry enterprises.
We believe that it is expedient to implement improvements both at the national level and at the level of individual enterprises.It is worth noting that certain changes are already taking place at the national level, considering the forest reform.
By the Resolution of the Cabinet of Ministers of Ukraine, "Some issues of reforming the management of the forest sector" [24], the state-specialised economic enterprise "Forests of Ukraine" was founded.Thus, there was a merger of specialised state forestry enterprises belonging to the sphere of management of the State Forestry Agency.The newly created enterprise "Forests of Ukraine" will be a joint-stock company.100 % of the shares of this joint-stock company belong to the state.
The main advantages of creating a state enterprise "Forests of Ukraine" are as follows [25]: • elimination of financial imbalances (equalisation of wages, increase of investment attractiveness of stagnant enterprises); • management of forestry by EU standards and practices, resolution of the conflict of distribution of functions in the forestry sector (controlling -managing); • increasing the investment attractiveness of the industry (credit resources, EU grants for the implementation of innovation and investment projects); • detinization of the timber market, overcoming corruption, reducing illegal logging; • use of modern information technologies for forest management; • ensuring sustainable/efficient development of forestry.
We will present the consequences of implementing this reform through specific manifestations of the potential of forestry enterprises: 1. Ecological potential.The reform will allow for increasing the level of forest cover, mainly through implementing the President's Program "Green Country" and expanding the area of Ukraine's forests by 1 million hectares.Increasing forest cover will contribute to the achievement of UN Sustainable Development Goal 13 "Climate Action", and the EU Green Course Program to build a climate-neutral Europe by 2050.As a result, it will be possible to use forests tirelessly, that is, to optimize the use of wood and increase its in-depth processing.2. Production potential.The creation of a single enterprise for the organization of cultivation, maintenance, and harvesting of forests will form the prerequisites for facilitating and expanding access to quality raw materials for Ukrainian wood processing enterprises.
Simplifying the access of wood processing enterprises to forest raw materials will contribute to optimizing the use of wood and increasing its in-depth processing.This will make it possible to increase the added value created in the industry with smaller volumes of roundwood consumption.3. Labour potential.Over the past 30 years, 60,000 workers have left the industry (62 % of the total workforce).Many enterprises need help to ensure stable functioning and employee confidence in the future, leading to layoffs."Forests of Ukraine" will be able to provide the redistribution of labour resources, offering qualified workers positions throughout Ukraine with social security.4. Property potential.The reform will create conditions for the renewal of fixed assets, the material and technical base, and the purchase of modern equipment, cars, and firefighting equipment for the protection and protection of forests.It will also create conditions for the restoration of forests and the increase of forest cover.
5. Management potential.The structure of "Forests of Ukraine" provides for the optimization of management personnel, which will free up funds for the payment of highly qualified forestry specialists in various production areas.6. Information potential.Further digitalization of forestry enterprises' production processes will attract highly qualified specialists to production.
The Decree of the Cabinet of Ministers of Ukraine approved Ukraine's State Forest Management Strategy until 2035 [26].According to the Strategy, the primary goal of a forestry enterprise is to build a transparent and effective enterprise management system for obtaining profit from economic activity.But the achievement of the goal must necessarily be accompanied by the preservation and increase of the country's natural resources and the sustainable development of forestry.
The main tasks of the forestry enterprise should be [26]: • management of state property of permanent forest users, renewal of fixed assets and material and technical base of forestry enterprises, provision of enterprises with modern equipment for afforestation, and protection of forests, which are priority goals, with the aim of obtaining income for its owner -state; • organization of forest management, safety, security, rational use and reproduction of forests; • equalization of financial imbalances, increase of revenues to budgets of all levels; • implementation of measures to preserve biodiversity in forests; • conducting recreational activities; • popularization among the population of the importance of conservation and rational use of forests; • involvement of the public in the matter of forest reproduction and protection; • ensuring equal opportunities, conditions and pay for women and men and actively encouraging women to participate at all employment levels.
While we believe that the mentioned reform will benefit the improvement of forestry enterprises management, there is still room for further progress on the national level.One of the ways of improvement is to intensify forest certification processes.According to Malek and Abdul Rahim [12], forest certification is the process of assessing the compliance of forest management with defined standards, which is carried out by independent certification organizations [12].Such standards usually include economic, ecological, and social [13].This process is voluntary, but it contributes to increasing the efficiency of forest resources management and positioning enterprises in ecologically sensitive markets.The two dominating in the world schemes of certification are the Programme for the Endorsement of Forest Certification Schemes (PEFC) and the Forest Stewardship Council (FSC) [12,13].
The role of forest certification is essential due to the following facts: • forest certification promotes environmental sustainability; • acts as a tool for ecosystem services; • influences the image of forest enterprises [12]; • promotes price premiums and improved market access [14].
Although there are studies that state that forest certification has limited effects [14], we believe it is an important tool for improving the forestry enterprises' potential management with a sustainability perspective.
It should be mentioned that the appropriate processes in Ukraine started in 2001, and as of December 21, 2022, more than 4 mln ha are FM-certified (forest management) by FSC (about 42 % of the total area of the forest) [27].
Zubizarreta et al suggest that forest certification can be promoted with the use of 5 mechanisms, 3 of which are external (market, signalling, and legal mechanisms), 2 are internal (learning and moral mechanisms) [13].Thus, the mentioned mechanisms accompanied by balanced state policy in the sphere of forest certification will contribute to strengthening the respective processes, which in its turn will benefit both the sustainable development of the country and efficient forestry enterprises' potential management.
Another important way of increasing forestry enterprises' functioning efficiency is implementing the participatory approach, which involves local communities in forest management processes.In general, participatory forest management envisages engaging the local community to achieve sustainable forest management objectives [1].We believe that the following measures can assist in involving local communities in achieving sustainable forest management: • increasing the level of awareness of the local communities about the peculiarities of forest management based on sustainability and minimization of negative anthropogenic impact; • popularization of a responsible and protective attitude to forest resources; • involvement of local communities in environmental protection activities and environmental actions; • implementation of a system of grant support for local initiatives aimed at forest conservation and rational forest use.
The participatory approach can be implemented in different forms, such as decentralized forest management, participatory forest management, joint forest management and communitybased forest management [11].The participatory approach is also promoted by forest certification [11].
One of the ways of participatory approach implementation is creating community forest enterprises, which will be able to meet economic, social and environmental challenges [10].Such form of economic entities in the forestry sector will promote decentralization processes, but it also has disadvantages due to disbalances in the forestry sector of Ukraine.Thus, in our opinion, this direction of reform is currently not relevant enough in the conditions of Ukraine.
According to Mishenina and Dvorak [9], a participatory approach can be implemented through the public-private partnership mechanism.The authors state that the publicprivate partnership (PPP) mechanism is a perspective tool for economic and ecological policy implementation in the forestry sector under conditions of state and communal ownership of forests [9].Considering the fact that 73 % of Ukrainian forests are in state ownership and 13 % are in communal ownership [6], implementation of PPP programs and mechanisms could benefit the effective functioning of the forestry enterprises and forest management as a whole.
PPP programs can contribute to efficient forest management in the following ways [9]: • providing co-financing of projects, i.e. attracting investments to the forestry sector; • distribution of risks between partners; • distribution of responsibility between partners.
It should be mentioned that there is a variety of forms of PPP, which expands the possibilities of using this tool in various situations.Mishenina and Dvorak define that the agreements between forestry and recreational forest protection subcomplexes should be considered [9].Another issue that can be solved within PPP programs, in our opinion, is the proper implementation of the forest silvicultural system.Scientists define that a continuous cover forestry system is the one that benefits both ecological and economic aspects of forest management [7].Such a system envisages that the next generation of trees is established before the final crop trees have reached the optimal rotation period [7]; this promotes the balanced forest use mechanisms and contributes to the sustainable development of the country as a whole.
To conclude the main aspects related to the rational level of forest management, we believe it is important to identify key issues of the respective sphere.According to Pietarinen et al the dominant issues are: ecological modernization, civic environmentalism, and green governmentality [2].
In order to determine the ways of forestry enterprises' potential management improvement at the level of individual enterprises, it is necessary to conduct an appropriate analysis.To define priority measures for the improvement of forestry enterprises management, we find it expedient to identify key factors of impact on the basis of correlation and regression analysis.Net profit of the forestry enterprises was chosen as a dependent variable (Y ), as the respective indicator is an absolute measure of business entities' performance.We believe that such choice of the dependent variable is due to its particular importance from the enterprise development perspectives standpoint.It is the net profit which reflects the internal capabilities of the enterprise to provide necessary funding for the development initiatives.Thus, we consider it expedient to analyze the impact of individual factors on the formation of the net profit.As the independent variables the following indicators were chosen: X 1 -fixed assets to current assets ratio; X 2 -fixed assets turnover; X 3 -current assets turnover; X 4 -ratio between receivables and payables; X 5 -operating cycle duration, days; X 6 -labour productivity, ths.UAH / person; X 7 -net revenue growth rate; X 8 -material capacity; X 9 -sales profitability; X 10 -current ratio; X 11 -cash ratio; X 12 -financial leverage.The choice of the mentioned above indicators is defined by the fact that they represent, in our opinion, key aspects of resource provision and the financial condition of the forestry enterprise.Another factor that impacts the selection of the mentioned criteria is the availability of the data.All necessary data for calculating the relevant indicators are contained in the official financial statements of enterprises.So, we can conclude that the choice of the independent variables meets the following requirements: • the indicators in complex reflect the main directions of the resource provision of the forestry enterprises (e.g.technical, material, human resources); • the main complements of the financial state such as stability, profitability, and economic activity are characterized within the chosen indicators; • the data for calculating and analysis of the mentioned above indicators are available in the financial statements of the enterprises.
In the next step, we will form the observation base for correlation and regression analysis.As the research objects, 10 forestry enterprises of the Polissia region were chosen.Within the framework of this research, the following oblasts belong to the Polissia region: Volyn (SE "Horodotske forestry", SE "Manevytske forestry"), Rivne (SE "Bereznivske forestry", SE "Sarnenske forestry"), Zhytomyr (SE "Bilokorovytske forestry", SE "Korostenske forestry"), Kyiv (SE "Bohuslavske forestry", SE "Teterivske forestry"), and Chernihiv (SE "Horodnianske forestry", SE "Chernihivske forestry").The observation period is 2019-2021.Such observation period is determined due to the fact that financial statements of the enterprises for 2022 were not formed and publicized at the time of the research.At the same time, the selected period covers 2019 (the pre-crisis period due to the COVID-19 pandemic), 2020 (the crisis period), and 2021 (the period of overcoming the consequences of the crisis).Thus, the total number of observations is 30, which ensures the representativeness of the raw data for correlation and regression analysis.
The initial data for the analysis are presented in table 2.
According to the calculated data, we can note some common trends in the development of forestry enterprises: • during 2019-2020, in the activity of the vast majority of the analyzed enterprises, a reduction in activity volume is observed, while in 2021, there is a substantial increase; • high degree of production costs capacity of the enterprises' activity; • a sufficient level of liquidity; • current assets mostly dominate the structure of assets.
It should be mentioned that a high level of cost capacity is considered by scientists as one of the most crucial factors influencing the forestry enterprises functioning [15].
The next step is to analyze the factors from the interrelationship point of view, as well as to perform a multicollinearity test.The results of the correlation analysis are presented in the matrix of pair correlations (table 3).
According to the data presented in table 3, we must note that there is a relationship of varying degrees between the dependent and independent variables.The strongest (highest) level of influence on the formation of the net profit indicator (Y ) is determined by factor X 6 (labour productivity).Independent variables X 5 (the operating cycle duration) and X 7 (net revenue growth rate) are also marked by a substantial degree of connection.It is worth noting that according to the multicollinearity test, there is a substantial degree of connection between X 6 and X 7 factors, but we believe it is appropriate to leave both factors for further consideration.
The equation formed by the results of regression analysis is the following: where Y -net profit, ths.UAH, X 5 -the operating cycle duration, days, X 6 -labour productivity, ths.UAH / person, X 7 -net revenue growth rate, coefficient.According to the regression equation parameters, the determination coefficient R 2 = 0.7; that is, 70 % of the variance of the values of the dependent variable (net profit) is explained by the obtained equation.It should be mentioned that the relatively low level of determination coefficient is due to the fact that net profit formation, in addition to the internal factors analyzed in the model, is influenced by a significant number of external factors, for example, the exchange rate volatility, the balance of the foreign trade balance, the international policy of the government, the level of inflation, etc.Thus, we believe that for the purposes of the current research aimed at improvement of forestry enterprises internal management, the value of the determination coefficient is sufficient.According to the results of the F-test (Fisher's test), the constructed model is considered adequate for the sample data because F f act (20.17) > F crit (3.35) (with a probability of error of 0.05).
Thus, as a result of the built model, we can highlight key directions for increasing the efficiency of the functioning of forestry enterprises in terms of the formation of net profit: • reducing the duration of the operating cycle; • increasing the level of labour productivity; • ensuring the growth of net revenue at progressive rates.
The next step of our study is to identify key measures of forestry enterprises' potential management improvement according to the defined impact factors.

Reduction of the duration of the operating cycle.
The duration of the enterprise's operating cycle is an indicator of the rhythm of all business processes of the forestry enterprise, which is ensured by the action of internal and external environmental factors.According to the National Accounting Regulation (Standard) 1 "General Financial Reporting Requirements" [28], the operating cycle is interpreted as the time interval between the acquisition of stocks for the implementation of activities and the receipt of funds (cash equivalents) from the sale of products or goods and services produced from them.
The shortening of forestry enterprise operating cycle can be achieved through the reduction of the terms of turnover of assets, particularly in the part of stocks and receivables.Shortening the operating cycle leads to more stable financing of the company's current activities.Sufficient financing creates conditions for the uninterrupted supply of materials to the production process, which means the optimization of the duration of the production process and the sale of products based on high quality and the use of existing competitive advantages on the market.In turn, selling products should be accompanied by a rational policy of managing the company's receivables.
Forestry enterprises can achieve a decrease in turnover time of current assets under the following conditions: • implementation of economically justified stock norms; • compliance with the principle of optimal price-quality ratio when forming stocks; • improvement of logistics management and improvement of the sales policy of enterprises; • intensive reproduction of the elements of the property potential of the enterprise; • active introduction of aspects of the circular economy on the ground in forestry; • 100 % implementation of certification of forestry enterprises; • study of the product structure and increase in the specific weight of products of high demand; • effective management of receivables (control over the occurrence and state of receivables at each stage of the implementation of management decisions; control of settlements with debtors for deferred and overdue debts); • building a rational system of interaction with banks regarding the attraction of funds and the implementation of settlements, and the implementation of optimal credit policy; • constant monitoring and improvement of the company's settlement system.
The strategic management of the operating cycle requires a separate study.In forestry, the operating cycle includes economic operations for reproducing and harvesting forest resources.Growing such assets exceeds one operating cycle and is 50-70 years.

Increasing labour productivity.
Savings in the consumption of current assets helps to improve the use of production facilities and increase labour productivity.Scientific, technical, organizational, structural and socioeconomic changes are classical factors of labour productivity improvement.Personnel turnover and the problem of HR policy of forestry enterprises require balanced management steps to increase labour productivity.The war in Ukraine complicates the situation.
So, forestry enterprises can take following steps in this sphere: • make structural changes in production; • improve the material and technical level of activity and production; • improve management, organization of production and labour (improvement of the structure and rational distribution of management functions, social protection of employees, increase of the wage fund); • increase in production and sales volumes (management and structural reform of forestry enterprises along with a relative reduction of employees); • diversifying forestry enterprises' activities (expanding areas of activity and searching for new types of activities).

Ensuring the growth of net income at progressive rates.
The proposals summarized by us from the point of view of shortening the operating cycle and increasing labour productivity in the complex may be effective for the growth of the net income of forestry enterprises.This indicator is a marker of the financial and economic condition of the forestry enterprise.Also, the indicator reflects the level of economic security of the enterprise.Diversification of the activities of forestry enterprises is one of the ways of achieving the growth of net income at a faster pace.One of the options for diversification is the cultivation of energy crops on forestry lands that cannot be used for other needs and the subsequent production of products from the corresponding crops [18].This measure will contribute not only to the better use of forest resources but also will generate an additional flow of income for the enterprise.
Another important issue to be addressed for the efficient functioning of forestry enterprises is their adaptation to the conditions of the external environment.As we mentioned earlier, the process of functioning of forestry enterprises and the process of their net profit formation, in particular, are being influenced by a large variety of external factors.Thus, it is essential to form the mechanism of enterprise interaction with the environment.Such a mechanism will benefit not only to efficient functioning of the forestry enterprises, but also to reducing the negative anthropogenic influence on the environment [29].

Conclusions
As the result of the conducted research, we can conclude the following.
1. Forest is an extremely important resource that not only ensures the livelihood of mankind but is also a source of renewable resources under conditions of balanced environmental management.Forest ecosystems create conditions for people's lives, thus forming a critically important foundation for ensuring the sustainable development of any country.The forests of Ukraine cover 15.9 % of the territory, providing economic, ecological and social functions.Efficient functioning of the forestry enterprises contributes to the sustainable development of the country due to the performed functions.2. Negative trends have been observed in recent years related to deforestation, forest degradation, and a decrease in the efficiency of forestry enterprises functioning.The existing crisis trends in the forestry sector have significantly deepened as a result of the full-scale war on the territory of Ukraine, which necessitates the implementation of measures to improve the management of the potential of forestry enterprises.The main problematic issues related to the consequences of the full-scale war are the following: the difficulty of demining de-occupied territories; forest fires, economic restrictions, inappropriate closure of public access to some registers, improper ban on visiting forests where there were no hostilities.These and other threats to the efficient functioning of the forestry enterprises define the necessity of improvement of the existing enterprise management mechanism in the relevant sector of economic activity.3. Considering the complexity of the problems related to effective forest management, we are convinced that measures to increase the efficiency of the use of the forestry enterprises' potential should cover both the national level and the level of individual economic entities.It is worth noting that at the national level, there are already changes related to forestry sector reform.In particular, the creation of the state enterprise "Forests of Ukraine" will contribute to a balanced approach in the field of forest management.At the same time, we believe that it is possible to expand the priority directions of state policy in the specified area with the measures related to enhancing certification processes, as well as implementing a participatory approach in forest management.4. To determine the measures that should be implemented to improve the enterprise potential management system at the level of individual enterprises, the method of correlation and regression analysis was used.The observation base was formed by data for 2019-2021 on 10 forestry enterprises in the Polissia region.The net profit was chosen as a dependent variable as it is the indicator which reflects the economic result of the enterprise functioning.The conducted analysis made it possible to detect that the key internal factors of influence on the net profit, thus, on the efficiency of the enterprise, are as follows: the operating cycle duration, labour productivity, net revenue growth rate.5. Based on the analysis, it was found that priority measures should include reducing the duration of the operating cycle, increasing labour productivity, and ensuring high rates of net income growth.Key measures within each of the considered directions are proposed.
Considering the caveats on the model of the dependence of net profit on internal factors, it was determined that an important direction of increasing the efficiency of management of the forestry enterprises' potential is also ensuring the mechanism of interaction with the environment.6.The prospects for further research lie in the definition of strategic measures in the identified areas (in particular, regarding the management of the duration of the operating cycle), as well as in the study of the influence of external factors on the activities of forestry enterprises.

Table 1 .
[19][20][21]al results of forestry enterprises of UkraineAccording to the information of the State Agency of Forest Resources of Ukraine[19][20][21], table1summarises the main financial results of forestry enterprises of Ukraine.
Economic restrictions.Today, the rules for the implementation of forestry activities, in particular in the field of phytosanitary legality, are in force.During the war in Ukraine, the volume of illegally harvested wood remains consistently high, and such products will not be able to enter the EU market.4. Unsubstantiated and inappropriate closure of public access to some registers: open register of logging tickets, including maps of quarter-separation division; public cadastral map; a layer with the boundaries of forests and objects of the nature reserve fund on the Ecosystem portal; a single registry for environmental impact assessment -materials for cases of deforestation, a single inspection portal.5. Improper ban on visiting forests where there were no hostilities.

Table 2 .
Initial data for correlation and regression analysis of forestry enterprises.X 8 X 9 X 10 X 11 X 12 SE "Horodotske forestry"

Table 3 .
Matrix of pair correlations of independent variables