Co= (sources of equity – non-current assets) / (inventories and costs + cash “other assets”)
This ratio shows what part of current assets is financed from own sources. The calculation of this indicator seems illogical, because there is a lack of own working capital.
Analysis of liquidity and solvency of the enterprise. Liquidity and solvency of the enterprise, i.e. ability to timely and fully make payments on short-term obligations - assessment criteria financial condition enterprises.
Under liquidity of any asset is understood as its ability to be transformed into cash, and the degree of liquidity is determined by the length of the time period during which this transformation can be carried out. The shorter the period, the higher the degree of liquidity of this asset.
When talking about the liquidity of an enterprise, we mean that it has working capital in an amount theoretically sufficient to repay short-term obligations, even if contractual repayment terms are violated. Solvency means that an enterprise has Money and their equivalents sufficient for settlements on accounts payable requiring immediate repayment. Thus, the main signs of solvency are:
Availability of sufficient funds in the current account;
No overdue accounts payable.
It is obvious that solvency and liquidity are not identical to each other. Thus, liquidity ratios may characterize the financial position as satisfactory, but in essence this may be erroneous if current assets have a significant share of illiquid assets and overdue receivables.
Liquidity and solvency assessments can be performed with a certain degree of accuracy. In particular, as part of an in-depth analysis of solvency, attention is paid to items characterizing the availability of funds of the enterprise. This is understandable: they express the totality of cash, i.e. property that has an absolute value, as opposed to any other property that has only a relative value. These resources are the most mobile; they can be included in financial and economic activities at any time, while other types of assets can only be included after a certain period of time. Art financial management This is precisely to keep only the minimum required amount of funds in accounts, and the rest, which may be needed for current operational activities, in quickly salable assets.
Thus, for express analysis, the larger the amount of funds in the current account, the more likely it is that the company has sufficient funds for current settlements and payments. At the same time, the presence of insignificant balances on the current account does not mean at all that the company is insolvent - funds can be transferred to the current account within the next few days, and some types of assets can easily be converted into cash if necessary.
Insolvency is usually indicated by the presence of “sick” items in the statements (“Losses”, “Loans and loans not repaid on time”, “Overdue accounts payable and receivable”, “Overdue bills issued”).
Analysis of balance sheet liquidity. For convenience of calculations and calculations, we introduce the following generally accepted notations:
Division of asset items according to their degree of liquidity
A1 – the most liquid assets (line 250+line 260);
A2 – quickly realizable assets (line 230 + line 240 + line 270);
AZ – slowly selling assets (line 210+line 140);
A4 – hard-to-sell assets (p. 190);
Subdivision of liability items by degree of urgency
P1 – the most urgent obligations (p. 620);
P2 – short-term liabilities (p. 610);
LP – long-term liabilities (p. 590);
P4 – constant liabilities (line 490+line 640+650+660+670);
Table 6.10
| Assets | Passive | Payments Surplus or Deficiency | |||||
| For the beginning of the year | At the end of the year | For the beginning of the year | At the end of the year | For the beginning of the year | At the end of the year | ||
| A1 | 13.806 | 10.056 | P1 | 89.542 | 126 909 | – 75.736 | –116.853 |
| A2 | 13.3196 | 207.022 | P2 | +133.196 | +.207.022 | ||
| AZ | 32.8773 | 342.063 | PZ | 411.023 | 461 240 | – 82.250 | –119.177 |
| A4 | 74.324 | 141.544 | P4 | 49.533 | 112 533 | + 24.791 | +29.011 |
To determine the liquidity of the balance sheet, you should compare the results of the selected groups for liabilities and assets. The balance is considered absolutely liquid if the following ratio is satisfied:
A1>P1 A2>P2 AZ>PZ A4<П4.
In the analyzed enterprise, the groups of assets and liabilities are correlated as follows:
At the beginning of the year: A1<П1 На конец года: А1<П1
A2>P2 A2>P2
AZ<ПЗ АЗ<ПЗ
A4>P4 A4>P4
Comparison of the results of the first group by asset and liability, i.e. A1 and P1 (terms up to 3 months) reflect the illiquid ratio of current payments and receipts.
Comparison of the results of the second group, i.e. A2 and P2 (terms from 3 to 6 months), shows a trend of increasing current liquidity. The analysis of the third and fourth groups reflects an unsatisfactory ratio of receipts and payments.
For a comprehensive assessment of the liquidity of the balance sheet as a whole, one should use the general liquidity indicator ( l), calculated by the formula:
l = (a1 ´ A1+a2 ´ A2+ a3 ´ AZ) /(a1 ´ P1+ a2 ´ P2 + a3 ´ PZ),
Where Aj,Pj– results of the corresponding groups for assets and liabilities,
аj– weighting coefficients.
From the point of view of the timing of receipt of funds and repayment of obligations, we will assume that a1 = 1, a2 = 0.5, a3 = 0.3, Then
l beginning of the year = 13.806 + 0.5 ´ 133196 + 0.3 ´ 328773 / 89542 + 0.3 ´ 411023 = 0.84
l end of year =10056+ 0.5 ´ 207022 + 0.3 ´ 342063 / 126909+ 0.3 ´ 461240 = 0.81
This indicator reflects a decrease in liquidity during the year by 0.03. The general indicator of balance sheet liquidity discussed above expresses the enterprise’s ability to make payments on all types of obligations - both immediate and distant in time. However, this indicator does not give an idea of the enterprise’s capabilities in terms of repaying short-term obligations. Therefore, to assess solvency, three relative indicators of liquidity are used, differing in the set of liquid funds considered as coverage for short-term liabilities.
1. Absolute liquidity ratio(K a.l.)
This ratio is equal to the ratio of the value of the most liquid assets to the amount of the most urgent obligations and short-term liabilities
K a.l. beginning of the year = 13.806 / 89.542 = 0.15
K a.l. end of year = 10.056 /126.909 = 0.08
The absolute liquidity ratio shows how much of the company's short-term debt can be repaid in the near future. The normal limit for this indicator is as follows: K a.l.= 0.2 – 0.5. Thus, the solvency of Scientific and Technical Center Counsel LLC at the time of drawing up the annual report was very low.
2. Critical liquidity ratio(K k.l .)
To calculate this ratio, accounts receivable and other assets are included in the numerator of the relative indicator as part of liquid funds.
To k.l. beginning of the year = 147.002 / 89.542 = 1.64
To k.l. end of year = 217.078 / 126.909 = 1.71
The critical liquidity ratio reflects the projected payment capabilities of the enterprise, subject to timely settlements with debtors. The estimate of the lower normal bound of the coefficient looks like this:
To k.l. > 1. The critical liquidity ratio characterizes the expected solvency of the enterprise for a period equal to the average duration of one turnover of receivables.
Debt turnover debt = Revenue - net from sales / Average annual amount of debit. debt (1,618.901 / 65.723) = 24.6
Receivables maturity = 365 / 24,6 = 14,8.
To improve solvency, the following recommendations can be made for managing settlements:
Monitor the status of settlements with customers,
Establish strict conditions for commodity lending,
Calculate the risk share of interaction with counterparties (know the financial condition of your customers).
3. Current ratio (To t.l.)
This coefficient is equal to the ratio of the value of all current assets of the enterprise to the amount of short-term liabilities of the enterprise.
To t.l. beginning of the year = 328773 / 89542 = 3.67
To t.l. end of year = 342,063 / 126,909 = 2.9
The current liquidity ratio shows the payment capabilities of the enterprise, assessed subject to not only timely settlements with debtors and favorable sales of goods and finished products, but also sales in case of need of other elements of material working capital. The normal limit for this coefficient is K t.l > 2. The current liquidity ratio characterizes the expected solvency of the enterprise for a period equal to the average duration of one turnover of all current assets.
Different liquidity indicators not only provide a versatile characteristic of the stability of the financial condition of the enterprise, but also meet the interests of various external users of analytical information. Thus, for suppliers of raw materials and materials, the absolute liquidity ratio is most interesting. The bank lending to this enterprise pays more attention to the critical liquidity ratio. Buyers and holders of shares and bonds largely assess the financial stability of an enterprise by the current liquidity ratio.
The express analysis of the financial condition of LLC Scientific and Technical Center "Counsel" has this moment relative value, since it does not respond to main question: “How can the current financial situation affect the future course of business?”
Analysis of the property status, financial stability, solvency and liquidity of the balance sheet allows us to outline general trends in the development of the financial condition of a given enterprise.
There have been changes in the property status of Scientific and Technical Center "Counsel" LLC that may have a positive impact on its future financial condition. The share of non-current assets in the total value of property increased from 13% to 20%. The increase was due to an increase in the amount of intangible assets. In the knowledge-intensive sector of communication services, it is the share of intangible assets that determines high level customer service through the provision of new services.
Thus, we can conclude that the growth of intangible assets will cause an increase in revenue from the provision of additional services, attracting new clients.
A negative point that can affect the competitiveness of an enterprise is an increase in accrued depreciation on fixed assets, if this is due to the obsolescence of fixed assets. To more fully assess the impact of the composition and structure of fixed assets on the future financial condition of the enterprise, it is necessary to conduct a detailed analysis of fixed assets.
In the structure of current assets, namely inventories and costs, what is causing concern is the unjustified, from my point of view, ratio inventories and goods for resale. An increase in the share of industrial inventories from 52% to 67% in the total amount of inventories and costs against the backdrop of a decrease in the share of goods for resale (from 46% to 29%) can lead to an even greater loss of liquidity and, as a result, a loss of solvency.
In the structure of balance sheet liability items positive thing there appears to be an increase in the share own funds from 9% to 16% in the total amount of sources of funds. If the company maintains the trend of increasing equity capital at the expense of profits, this will have a positive effect on financial stability.
The downward trend in the share of long-term liabilities in the total amount of raised funds is negative, because This will lead to an increase in the urgency of borrowed funds, which will jeopardize the solvency of the enterprise.
When analyzing financial stability, a lack of own working capital was revealed due to the low share of sources of own funds. If the enterprise does not change the current situation by increasing the sources of its own funds, then, as a result, solvency will constantly decrease and dependence on borrowed funds will increase. The only way out The current situation may result in an increase in the share of own working capital.
An analysis of balance sheet liquidity revealed low current liquidity, which could lead to a permanent payment deficit. Of course, it is not advisable to constantly keep a large amount of money in an account, however, it can be recommended to transform part of the company’s funds into easily realizable assets.
7. Coefficient of supply of inventories and costs with sources of funds (calculated to determine the type of financial stability)
Koz= (Sob+∑KiZ) / ISS,
Koz - reserves coverage ratio;
Sob – own working capital (Table 6, page 1);
∑KiZ – the amount of loans and borrowings (Table 5, page 9);
ISS – sources of own funds (Table 9, page 2).
Koz 08 = (17802 thousand rubles + 5618 thousand rubles) / 23668 thousand rubles. = 0.99 = 99%
Koz 09 = (11866 thousand rubles + 5474 thousand rubles) / 23482 thousand rubles. = 0.74 = 74%
Goats 10 = (8944 thousand rubles + 23630 thousand rubles) / 26616 thousand rubles. = 1.22 = 122%
The calculation results allow us to make the following conclusions:
1. At the beginning of the period, the financial condition of Askona LLC can be defined as stable, since the ratio of the provision of reserves and costs with sources of funds is almost equal to one (0.99), and reserves and costs are slightly more than the amount of its own working capital, loans against inventory items and temporarily available funds.
2. At the end of the period, the financial condition of the enterprise improved, since inventories and costs are greater than the sum of its own working capital, loans against inventory items and temporarily available funds; the ratio of the provision of inventories and costs with sources of funds is greater than one (1.22), the financial condition of the enterprise can be recognized as absolutely financially stable. The results obtained can be presented in the form of a graph (Appendix 9).
Analysis of business activity (productivity and capital productivity)
Business activity in a market economy is usually characterized by financial performance - economic activity. Such an analysis consists of assessing the efficiency of using the organization’s material, financial and labor resources, and determining turnover indicators. The results of the analysis show the achieved level of business activity and its impact on the financial stability, competitiveness of the organization, labor efficiency of employees and their quality of life. The most important indicator business activity of an organization is labor productivity or output per employee. It characterizes the efficiency of use of labor resources and is determined by the formula: P=VPT/SSCh, where
P - productivity;
VPT – revenue (net) of the Profit and Loss Statement;
SSCH – average number working during the reporting period.
P 08 = 18,933,600 rub./ 1464 people = 12,932.79 rub.
P 09 = 29,116,950 rub./ 1531 people = 19,018.26 rub.
P 10 = 31,300,300 rub./ 1592 people = 19,660.99 rub.
We can clearly see an increase in labor productivity. As a rule, it is achieved either by increasing revenue from the sale of products, works or services, or by reducing the number of personnel of the organization. In our case, the first option takes place, because The number of personnel grew from year to year.
Another indicator characterizing the business strategy is capital productivity, which shows the efficiency of using the enterprise's fixed assets. This indicator is calculated based on the balance sheet data (line 120) and the Profit and Loss Statement (net revenue line 010) using the formula:
F=st.010/st.120
F 08 = 18933.60 thousand rubles. / 46678.00 thousand rubles. = 0.40
F 09 =29116.95 thousand rubles. / 52364.00 thousand rubles. = 0.55
F 10 =31300.30 thousand rubles. / 65350.00 thousand rubles. = 0.49
Thus, it can be seen that for every thousand rubles invested in fixed assets in 2008, 2009 and 2010. products were produced for 400, 550 and 490 rubles. respectively.
An increase in capital productivity indicates an increase in the efficiency of use of fixed assets and is regarded as a positive trend. It is achieved due to an increase in sales revenue and a decrease in the residual value of fixed assets. In our case, capital productivity decreased in 2010 compared to 2009, which will undoubtedly be a negative trend.
Cost-benefit analysis
Profit is one of the main sources of formation of the financial resources of an enterprise. Profitability, as opposed to profit, which shows results entrepreneurial activity, characterizes the effectiveness of this activity. Product profitability can be calculated as for the entire products sold, and by its individual types:
1) The profitability of all products sold can be defined as:
The percentage ratio of profit from the sale of products to the costs of its production and sale (cost);
Percentage ratio of profit from sales of products to revenue from sales of products;
Percentage ratio of balance sheet profit to revenue from product sales;
The ratio of net profit to revenue from product sales.
These indicators give an idea of the efficiency of the enterprise's current costs and the degree of profitability of the products sold.
2)Profitability individual species products depends on price and total cost. It is defined as the percentage ratio of the selling price of a unit of a given product minus its full cost to the total cost of a unit of this product.
3) The profitability of property (assets) of an enterprise is calculated as a percentage of gross (net) profit to the average value of assets (property).
4) Profitability of non-current assets is defined as the percentage of net profit to the average value of non-current assets.
5) Return on current assets is defined as the percentage of net profit to the average annual value of current assets.
6) Return on investment is defined as the percentage of gross profit to the value of the enterprise's property.
7) Return on equity is defined as the percentage of gross (net) profit to the amount of equity.
Profitability indicators are used in the process of analyzing the financial and economic activities of an enterprise management decisions, decisions of potential investors to participate in the financing of investment projects.
The main indicator is return on sales. It reflects the profitability of investing in the main production. It is determined according to the Profit and Loss Statement:
R p = (line 050 / (line 020+line 030+040))*100%
It is generally accepted that an organization is super-profitable if P p > 30%, i.e. for every 100 rub. conditional investments, the profit exceeds 30 rubles. When P p takes a value from 20 to 30%, the organization is considered highly profitable, in the range from 5 to 20% medium-profitable, and in the range from 1 to 5% low-profitable.
In our case, the calculation will be as follows:
Рп 08 = (530.1 thousand rubles / (823.2 thousand rubles +1836.6 thousand rubles +5178.3 thousand rubles))*100% = 6.76%
Rp 09 = (563.3 thousand rubles / (874.65 thousand rubles +2051.3 thousand rubles +5601.9 thousand rubles))*100% = 6.61%
Rp 10 = (596.4 thousand rubles / (926.1 thousand rubles +1966.1 thousand rubles +5625.6 thousand rubles))*100% = 7.00%
So, we can observe that our enterprise is averagely profitable, but the profitability indicator increased slightly by 2010, which is a positive trend.
Valuation of capital invested in property
The creation and increase of the enterprise's property is carried out at the expense of own and borrowed capital, the characteristics of which are shown in the liability side of the balance sheet. To analyze the capital invested in the property of the enterprise, it is advisable to compile Table 3, from which it can be seen that in the analyzed period there was a general increase in the sources of funds of the enterprise by 49,718 thousand rubles. This was due to an increase in equity capital by 14,874 thousand rubles. and borrowed capital for 34848 thousand rubles.
Table 3. Valuation of capital invested in property
| № | Index | Change | ||||||
| Specific weight, % | Specific weight, % | Specific weight, % | ||||||
| 1 | Sources of funds for the enterprise, total | 80940 | 100 | 89836 | 100 | 130658 | 100 | +49718 |
| 2 | Equity | 64978 | 80,30 | 65638 | 73,06 | 79852 | 61,12 | +14874 |
| 3 | Borrowed capital | 15962 | 19,70 | 24198 | 26,94 | 50806 | 38,88 | +34844 |
| 3.1 | Long-term capital | 74 | 42 | 70 | - 4 | |||
| 3.2 | Short-term capital | 15888 | 24156 | 50736 | +34848 | |||
| 4 | Funds required to finance non-current assets | 47176 | 53772 | 70908 | +23732 | |||
| 5 | The amount of own working capital | 17802 | 11866 | 8944 | - 8858 | |||
Looking ahead and analyzing the factors influencing the amount of own working capital (Table 6), it can be noted that the increase in own funds occurred due to an increase in additional capital by 7046 thousand rubles, reserve capital by 3630 thousand rubles and retained earnings by 4198 thousand roubles. The share of retained earnings in the total volume of own sources for the analyzed period increased by 2099 thousand rubles. This may indicate an increase in the business activity of the enterprise.
The increase in borrowed capital was due to an increase in short-term liabilities (+34,844 thousand rubles), which largely offset the decrease in long-term liabilities (-4 thousand rubles). The change in short-term liabilities, in turn, was caused by an increase in accounts payable (+19,600 thousand rubles). It should be noted that during the analyzed period, accounts receivable increased by 6,616 thousand rubles. (Table 2), which is 3 times less than the growth of accounts payable.
When analyzing the capital invested in property, it is necessary to evaluate its structure (Table 4).
Table 4. Capital structure of Askona LLC for 2008-2010
| № | Index | 2008 | 2009 | 2010 |
| 1 | Current assets, % (Table 1, page 2) | 41,62 | 40,10 | 45,68 |
| 2 | Non-current assets, % (Table 1, page 1) | 58,38 | 59,90 | 54,32 |
| 3 | Own capital, % (Table 3, page 2) | 80,30 | 73,06 | 61,12 |
| 4 | Share of coverage of current assets with equity capital and long-term borrowed funds (pages 3-2) | 21,92 | 13,16 | 6,80 |
When assessing the structure of an enterprise, the following rule is applied: elements of fixed capital, as well as its most stable part of working capital, must be financed from own and long-term borrowed funds; the rest of the current assets, depending on the size of the commodity flow, must be financed through short-term borrowings.
In general, the capital structure of Askona LLC at the beginning of the analyzed period corresponds to the rule of optimal capital structure. But in 2009 and 2010. the situation worsens; if at the beginning of the reporting period, own sources and long-term borrowed funds covered non-current assets and 21.92% of current assets, then in 2009 the share of coverage of current assets with own capital and long-term borrowed funds decreased to 13.16%, and in 2010 to 6.80%. This happened due to a decrease in the share of equity capital and long-term borrowed capital in the total amount of funds of the enterprise and due to changes in the structure of the enterprise’s property as a whole. A negative trend is an increase in the share of short-term borrowed funds of the organization. The change in the capital structure of Askona LLC can be defined as a negative trend in the activity of the enterprise, since this indicates that, in general, during the analyzed period there was an increase in the dependence of the enterprise on creditors.
Analysis of the enterprise's provision of its own working capital
Normal sources of covering inventories, costs and receivables include:
Own capital (at the expense of which own working capital is formed);
Short-term loans and borrowings;
Accounts payable for trade transactions.
To analyze the enterprise's security with its own working capital, let's draw up Table 5, from which it can be seen that the availability of its own working capital at the end of 2008 turned out to be insufficient to cover inventories, costs and receivables. A lack of own working capital may indicate an unsustainable financial situation our enterprise.
Table 5. The enterprise's provision of its own working capital
| № | Index | Change | |||
| 1 | 17802 | 11866 | 8944 | - 8858 | |
| 2 | Reserves | 23016 | 23120 | 23344 | +328 |
| 3 | Receivables from buyers and customers for goods, works, services | 568 | 1566 | 1204 | +636 |
| 4 | Advances issued | - | - | - | - |
| 5 | Total (line 2+3+4) | 23584 | 24686 | 24548 | +964 |
| 6 | Short-term loans and borrowings against inventories and expenses | - | - | - | - |
| 7 | Accounts payable for goods, works, services | 5618 | 5474 | 23630 | 18012 |
| 8 | Advances received from buyers and customers | - | - | - | - |
| 9 | Total (line 6+7+8) | 5618 | 5474 | 23630 | +18012 |
| 10 | Inventories and expenses not credited by the bank | 17966 | 19212 | 918 | - 17048 |
| 11 | Surplus (shortage) of own working capital to cover inventories, costs and receivables | - 164 | - 7346 | 8026 | +8190 |
At the end of 2009, significant negative changes occurred, which led to a sharp increase in the lack of own working capital in the amount of 7,346 thousand rubles. The reason for this was an increase in the volume of inventories and costs not financed by the bank, and a decrease in the volume of the company’s own working capital. The increase in excess inventories and costs not financed by the bank is due to the fact that the increase in inventories, costs and receivables exceeded the increase in the amount of loans and borrowings.
During 2010, there was an increase in accounts payable (+19,600 thousand rubles). The reason for this growth was a sharp increase in the company's debt to pay dividends to its founders. By the end of the year, the enterprise has an excess amount of its own working capital to cover inventories, costs and receivables, which indicates the normal financial stability of the joint-stock company.
Since at the beginning of the period there is a lack of own working capital to cover inventories, costs and receivables, it is necessary to analyze the impact various factors by their value (Table 6).
Table 6. Analysis of factors influencing the amount of own working capital
| № | Index | Change | |||
| 1 | Availability of own working capital | 17802 | 11866 | 8944 | - 8858 |
| 2 | Influence of factors | ||||
| 2.1 | Authorized capital in terms of the formation of working capital | - 22172 | - 28768 | - 45904 | - 23732 |
| 2.2 | Extra capital | 23562 | 30608 | 30608 | +7046 |
| 2.3 | Reserve capital | 4470 | 6212 | 8100 | +3630 |
| 2.4 | Retained earnings (uncovered loss) | 11942 | 3814 | 16140 | +4198 |
The data presented in Table 6 allows us to draw the following conclusions:
1. In the reporting period, the value of non-current assets increased by 23,732 thousand rubles, therefore, there is a negative trend in the change in the authorized capital in terms of the formation of working capital: in 2008, its deficiency was 22,172 thousand rubles, in 2009 it increased to 28,768 thousand rubles, by the end of 2010 increased by 17,136 thousand rubles. and amounted to 45,904 thousand rubles.
2. Additional capital in the period under review increased by 7046 thousand rubles. and amounted to 30,608 thousand rubles.
3. The amount of reserve capital during the analyzed period increased by 3,630 thousand rubles.
4. By the beginning of 2009, retained earnings decreased significantly and amounted to 3,814 thousand rubles, against 11,942 thousand rubles. last year. At the end of 2010, the value of this indicator increased by 12,326 thousand rubles. and amounted to 16,140 thousand rubles.
The total influence of factors amounted to 8858 thousand rubles, which is the amount of reduction in own working capital (Table 6, page 1).
Assessing the efficiency of using working capital at an enterprise
The main characteristic of working capital (in addition to cost and structure) is the efficiency of their use. The following indicators of efficiency in the use of working capital are distinguished:
Working capital turnover ratio;
Working capital utilization ratio;
Duration of one revolution in days;
The amount of released or additionally attracted working capital.
The calculated data for these indicators are presented in Table 7.
Table 7. Analysis of the efficiency of using working capital
| № | Index | Change | |||
| 1 | Product sales volume | 254654 | 337956 | 361554 | +106900 |
| 2 | Number of days in the reporting period | 360 | 360 | 360 | |
| 3 | One-day turnover of product sales (calculation) | 707,37 | 938,77 | 1004,32 | +296,95 |
| 4 | Average value of balances | 33690 | 36022 | 59680 | +25990 |
| 5 | Working capital turnover ratio (calculation) | 7,56 | 9,38 | 6,06 | - 1,5 |
| 6 | Working capital utilization factor (reverse page 5) | 0,13 | 0,11 | 0,17 | +0,04 |
| 7 | Duration of one revolution in days (calculation) | 47,61 | 38,38 | 59,41 | +11,80 |
Calculation to fill out the table:
OO - one-day turnover of product sales;
D is the duration of the analyzed period.
OO 08 =254654 thousand rubles. / 360 days = 707.37 thousand rubles.
OO 09 =337956 thousand rubles. / 360 days = 938.77 thousand rubles.
OO 10 =361554 thousand rubles. / 360 days = 1004.32 thousand rubles.
To ob. =Q p / Q cp ,
To ob. - working capital turnover ratio;
Q p - volume of product sales;
To ob.08 =254654 thousand rubles. / 33690 thousand rubles = 7.56
To ob.09 =337956 thousand rubles. / 36022 thousand rubles = 9.38
To ob.10 =361554 thousand rubles. / 59680 thousand rubles = 6.06
K z = Q cp /Q p,
K z. - working capital load factor;
Q p - volume of product sales;
Q cp is the average cost of balances.
To z.08 =33690 thousand rubles. / 254654 thousand rubles = 0.13
To z.09 =36022 thousand rubles. / 337956 thousand rubles = 0.11
To z.10 = 59680 thousand rubles. / 361554 thousand rubles = 0.17
PO=D/K vol. ,
PO - duration of one revolution in days;
D - duration of the analyzed period;
To ob. - working capital turnover ratio.
PO 08 = 360 days. / 7.56=47.61 days.
PO 09 = 360 days. / 9.38=38.38 days.
PO 10 = 360 days. / 6.06=59.41 days.
In the analyzed period, there was an increase in sales volume by 106,900 thousand rubles. And average cost working capital balances for 25,990 thousand rubles. These changes had the following impact on the efficiency of using working capital:
1. There was an increase in one-day turnover of product sales by 296.95 thousand rubles. This can be defined as a positive trend in the activities of the enterprise.
2. The turnover ratio at the beginning of 2010 decreased by 1.5 compared to 2008. This suggests that if at the beginning of the period under review one ruble of working capital brought 7.56 rubles. of sold products, then at the beginning of 2009 this value was 9.38 rubles, by the end of the reporting period 0.06. In other words, working capital makes 6.06 turns, which is 1.5 turns less than at the beginning of the period under study.
3. The working capital utilization factor for the analyzed period increased by 0.04 and amounted to 0.17, that is, if at the beginning of the year to receive 1 rub. sold products required 0.13 rubles. working capital, then by the end of the year this value increased and amounted to 0.17 rubles. This can be defined as a negative trend in the use of working capital.
4. There were significant fluctuations in the duration of one revolution in days from 47.61 days in 2008, to 38.38 days in 2009 and 59.41 days in 2010, that is, by 11.80 days, which, in in turn, is a negative trend in the use of working capital.
When analyzing working capital, it is necessary to assess the influence of factors on the working capital turnover ratio.
Cob = Q p / Q cp ,
Cob - working capital turnover ratio;
Q p - volume of product sales;
Q cp is the average cost of balances.
As a result of an increase in sales volume by 106,900 thousand rubles. and an increase in the average value of working capital balances by 25,990 thousand rubles. the turnover ratio in the reporting period decreased by 1.5, which was a negative trend in the use of working capital.
It should be noted that during the analyzed period there were negative changes in most indicators characterizing the efficiency of the use of working capital. Therefore, we can conclude that general trend reducing the efficiency of using working capital.
General conclusions on assessing the financial condition of Askona LLC
Based on the analysis of the financial condition of the organization, we can conclude that Askona LLC is in a difficult situation. Namely, by 2010, the critical and current liquidity ratios were below standard values, which indicates the inability of the enterprise to repay its debt to creditors.
Also a negative point is a decrease in the coefficients of financial stability, maneuverability of equity capital and financial independence. This suggests that borrowed funds account for the largest share in the total amount of financing sources.
Also, the increasing accounts receivable and payable cannot be called a positive trend, which indicates insufficient work to strengthen settlement and payment discipline in the organization.
But, despite these changes, according to some indicators there has been a trend towards improvement, namely, sales revenue has increased (Table 7, page 1) - in 2008 it amounted to 254,654 thousand rubles, in 2009 337,956 thousand .rub., in 2010 361,554 thousand rubles, although the cost has increased. It is important to note that this is caused by an increase in tailoring for third parties, and not by an increase in the production of its own products.
Conditions or deviations in the implementation of the plan must be analyzed. The plan, if appropriate, should be adjusted. Usage modern technologies management decision support allows the organization and its leader to more effectively carry out the planning process. 14. Monitoring the implementation of the plan. Security effective activities organization involves continuous...
It also comes down to summarizing the results of a study of profits and expenses for a specific type of transportation, work or service. 1.2 Goals, objectives and information base for assessing the effectiveness of the enterprise’s activities Information Support analysis reflects the entire set of simultaneously or sequentially performed operations that cause the process of accelerating development in economic enterprises...
Avoid mistakes. For impulsive people, for example, the opposite tactical line is characteristic: they are focused on success and are less sensitive to failures /3, pp. 202,203/ 3. QUALITY AND EFFECTIVENESS OF MANAGEMENT DECISIONS ON THE EXAMPLE OF JSC "MOZYR OIL REFINERY" JSC "Mozyr Oil Refinery" is traditionally high quality products and production culture. 28...
The net working capital ratio for inventories is an indicator that characterizes what share is financed.
That is, it shows what proportion of inventories, an important short-term asset, is financed by long-term capital.
Calculation formula (according to reporting)
(Line 1200 - line 1500) / line 1210 balance sheet
Standard
Not standardized, but preferably greater than zero.
Conclusions about what a change in indicator means
If the indicator is higher than normal
The company partially finances its inventories with long-term capital.
If the indicator is below normal
The company does not finance its inventories with long-term capital.
If the indicator increases
Usually a positive factor
If the indicator decreases
Usually a negative factor
Notes
The indicator in the article is considered from the point of view not of accounting, but of financial management. Therefore, sometimes it can be defined differently. It depends on the author's approach.
In most cases, universities accept any definition option, since deviations according to different approaches and formulas are usually within a maximum of a few percent.
The indicator is considered mainly free service and some other services
If you see any inaccuracy or typo, please also indicate this in the comment. I try to write as simply as possible, but if something is still not clear, questions and clarifications can be written in the comments to any article on the site.
Best regards, Alexander Krylov,
The financial analysis:
- Definition The ratio of coverage of current assets with net working capital is an indicator characterizing what proportion of current assets is financed by net working capital. That is, it shows what...
- Definition The long-term solvency ratio is the ratio of slowly realizable assets A3 to long-term liabilities P3, which are either equal only to long-term liabilities or also include...
- Definition Working capital coverage ratio own sources formation (equity ratio) is an indicator that answers the question what share of current assets is covered by own...
- Definition The functional capital agility ratio is the share of inventories in the functional capital. And functional capital (own current assets) is the difference between current assets and short-term...
- Definition Inventories 1210 are the organization's material and industrial reserves - assets: used as raw materials, supplies, etc. in the production of products for sale (for performing work, for...
- Definition Net working capital agility ratio is the ratio of net working capital to equity. The indicator is quite difficult to understand, since it is constructed illogically. In fact he...
- Definition The indicator for covering short-term obligations of the inventories is an indicator that answers the question of how much short-term obligations of groups P1 and P2 can be covered with funds that can...
- Definition The actual depreciation rate is the ratio of the depreciation amount of the reporting period to fixed assets and intangible assets used in the organization in a given period. The indicator answers...
- Definition The share of working capital in assets is the ratio of the value of current assets to the total assets of the enterprise. Current assets compared to non-current assets are noticeable...
- Definition A3 - P3 is the third inequality of solvency (all inequalities of solvency). Characterizes the current solvency of the enterprise. Answers the question: Are there enough slow-moving assets with...
— a financial indicator characterizing the sustainability of an enterprise’s business model in many aspects. What is its significance and how is the corresponding indicator calculated?
What does the inventory coverage ratio show?
The ratio under consideration refers to the key indicators of the financial stability of the company: it allows you to assess whether the enterprise has enough working capital in terms of ensuring the optimal level of inventories.
IN general case the ratio reflects the ratio of the company's own working capital to its inventories during the analyzed period. In turn, own working capital can consist of equity capital and long-term liabilities, reduced by non-current assets. In some cases, deferred income is also added to the amount of equity capital and long-term liabilities.
It is also possible that the ratio will be considered as the ratio of the difference between current assets and short-term liabilities to inventories.
There are quite a few approaches and criteria according to which the amount of reserves in an organization is determined. In many cases, Russian accountants use international experience and determine the structure of inventories, thus, in accordance with IFRS criteria.
Inventory coverage ratio: formula
In general, the formula for calculating the corresponding indicator will look like this:
KO = OS / Z,
KO - security ratio;
OS - the company's own working capital;
Z - reserves.
In turn, the OS indicator is determined by the formula
OS = (SC + DO) - VO,
SK - equity capital;
DO - long-term liabilities;
VO - non-current assets.
As we noted above, an indicator reflecting the amount of income for future periods can be added to the sum of IC and DO in the specified formula - let’s call it DBP.
Second version of the formula coefficient of provision of material reserves with own funds involves, as we noted above, considering the corresponding coefficient as the ratio of the difference between current assets and short-term debt to inventories. In this case, the formula for calculating it will look like this:
KO = (OA - KO) / Z,
OA - non-current assets of the company as a whole;
KO - short-term liabilities.
Specific values for the above indicators are taken from the company’s balance sheet, taking into account the following correspondences:
- indicator 3 corresponds to line 1210 of form No. 1, approved by order of the Ministry of Finance of the Russian Federation dated July 2, 2010 No. 66n;
- for the SC indicator - line 1300;
- for the DO indicator - line 1400;
- DBP indicator - line 1530;
- VO indicator - line 1100;
- OA indicator - line 1200;
- KO indicator - line 1500.
It can be noted that the inventory on the balance sheet (on line 1210) also includes the cost of raw materials and materials that entered production, but were not written off in the cost of production. IN in this case We are talking about the remains of work in progress.
You can get acquainted with the features of including work in progress balances in inventories in the article .
Inventory coverage ratio: interpretation
The optimal value of the coefficient under consideration is 0.6-0.8. This means that about 60-80% of a firm's inventory is produced or purchased using its own capital. If this indicator is lower, this may indicate an excessive credit burden on the business.
If it is larger, then perhaps the company’s own capital is not invested very effectively (but this, of course, is a very controversial interpretation; it is only valid in cases where loan rates are significantly lower than the profitability of the business).
Actually, the fact that the company has a sufficient amount of capital to ensure the required volumes of inventories reduces its need for loans. In general, the higher the coefficient under consideration, the more investment attractive the enterprise can be.
In some cases, the coefficient can also take a negative value. As a rule, this means that the company’s working capital indicator is also negative. More often this situation arises if the company has a high credit load, but the company’s business model may provide for the prompt conversion of inventories into revenue - if their turnover is characterized by good dynamics. If this is so, then a negative equity ratio in the company will be considered the norm.
Thus, the standard for this coefficient can be determined taking into account the specifics of the company’s business model.
The coefficient, the calculation of which we have considered, is best compared in dynamics. For example, using data on balance sheets V different years. A drawdown recorded in one period can be compensated by a sharp increase in the value of the corresponding indicator in other time periods, so its average value may well be considered to correspond to the optimal level. Investors, studying indicators of financial stability, such as the inventory coverage ratio, usually make decisions based on their consideration in the context of comparison with the results of the enterprise's activities in different periods.
Results
Inventory coverage ratio with own funds- an indicator related to those that can assess the current state of affairs in the company: the higher it is, the more stable the business model of the enterprise is usually. But successful business development is quite possible even with negative values - for example, if the enterprise produces products with a high turnover ratio.
You can learn more about the use of various indicators for inventories when organizing business management in the articles:
1. During the year, the enterprise’s policy regarding the formation of property was aimed at increasing working capital, primarily inventories - inventory items.
2. There are no “sick” items: losses, overdue receivables.
3. Own capital has increased, but its share in liabilities is decreasing. The overall increase in funds for the period was primarily due to their attraction on a borrowed basis.
4. Accounts payable and accounts receivable do not match each other. Additional analysis of the composition of accounts receivable (especially advances issued and other debtors) and accounts payable is required.
5. There was a regrouping of borrowed sources associated with a sharp increase in the share of short-term loans in them, that is, cheap borrowed funds were crowded out by more expensive ones.
These changes may affect the financial condition of the enterprise in the future. To find out their reasons, the next step is to analyze financial ratios.
Balance sheet liquidity analysis, solvency assessment.
Under solvency the enterprise understands the ability of cash resources to repay its payment obligations in a timely manner. The assessment of solvency is carried out based on the characteristics liquidity current assets, i.e. the time required to convert them into cash. The concepts of solvency and liquidity are very close, but the second is more capacious. Solvency depends on the degree of balance sheet liquidity.
Analysis of balance sheet liquidity consists of comparing assets, grouped by the degree of decreasing liquidity, with short-term liabilities, which are grouped by the degree of their repayment.
All balance sheet assets are divided into 4 groups:
|
Most liquid assets |
Short-term financial investments and cash (line 1240 + line 1250 balance sheet) |
|
|
Quickly marketable assets |
Accounts receivable (payments for which are expected within 12 months after the reporting date) – (line 1230) |
|
|
Slow moving assets |
Inventories, VAT, accounts receivable (payments for which are expected more than 12 months after the reporting date) other current assets (line 1210 + 1220 +1260) |
|
|
Hard to sell assets |
Non-current assets (line 1100) |
All liabilities are also divided into 4 groups:
The tables present the classic grouping of property and liabilities. Some modern methods of financial analysis produce a different grouping. For example, it is believed that future income should be included in the organization’s own capital or long-term receivables, in fact, a hard-to-sell asset. Each company has the right to choose its own calculation method. This material will present only the general principles of carrying out the relevant calculations and the formulation of conclusions based on the results obtained.
To determine the liquidity of the balance sheet, you should compare the results of the given groups for assets and liabilities.
The balance is considered absolutely liquid if the following ratios are met:
To check the fulfillment of this ratio for the analyzed enterprise, a table is compiled.
Balance sheet liquidity analysis
|
Value of indicators |
Value of indicators |
||||
|
Beginning of the year |
The end of the year |
Beginning of the year |
The end of the year |
||
|
1. The most liquid assets A1 |
1. Most urgent obligations P 1 | ||||
|
2.Quickly realizable assets A2 |
2. Short-term liabilities P 2 | ||||
|
3. Slowly selling assets A3 |
3. Long-term liabilities P 3 | ||||
|
4. Hard-to-sell assets A4 |
4. Constant liabilities P 4 | ||||
Based on the data in the table, conclusions are drawn.
If the first three inequalities are met, then this entails the fulfillment of the fourth, which indicates compliance with one of the conditions for the financial stability of the enterprise - the availability of its own working capital.
A comparison of the first and second groups of assets with the first two groups of liabilities shows current liquidity, which indicates the solvency of the enterprise for the period of time closest to the period under consideration.
Current liquidity is determined as follows:
TL = (A1 + A2) – (P1 + P2)
If the current liquidity value turns out to be negative, then the company is considered insolvent.
And a comparison of the results for an asset of group 3 reflects the ratio of payments and receipts in the future, thereby determining the forecast of solvency.
Prospective liquidity is calculated:
PL = A3 – P3.
In this way, it is possible to determine whether the organization is able to restore its solvency in the future.
An analysis of balance sheet liquidity carried out in this way is still approximate. The coefficient analysis of solvency is considered more detailed.
Liquidity indicators characterize the short-term solvency of an enterprise, its ability to pay off debts on time and finance current activities. Insufficiently high liquidity values may indicate a threat of bankruptcy, while excessively high liquidity means that the organization is attracting too many funds into circulation, reducing its potential profitability.
Liquidity indicators are as follows:
1. Absolute liquidity ratio shows the share of short-term debt that the company can repay in the near future using absolutely liquid assets. Characterizes the solvency of the enterprise as of the balance sheet date.
Normative value 
0.2–0.5, that is, every day the company must repay at least 20% of its accounts payable. A low value indicates a decrease in the solvency of the enterprise.
2. TO quick (critical, urgent) liquidity ratio – shows the projected payment capabilities of the enterprise, subject to timely settlements with debtors.
The ratio of cash and short-term financial investments plus the amount of mobile funds in settlements with debtors to current liabilities.
Normative value 
0.8–1.0. A low value indicates the need for constant work with debtors to ensure the possibility of converting the most liquid part of working capital into cash for settlements.
3. Current ratio (coverage) shows the sufficiency of working capital that can be used by the enterprise to pay off its obligations, what part of the current funds for loans and settlements can be repaid by mobilizing all working capital.
The ratio of current assets (current assets) to current liabilities (short-term liabilities).
Standard value 1.0 
2.0. The lower limit indicates that working capital should be sufficient to cover short-term liabilities. An excess of more than 2 times indicates an irrational investment of funds and their ineffective use.
4. Liquidation price coefficient determines the extent to which all external liabilities of the enterprise will be covered as a result of its liquidation and sale of property. The ratio of all assets of an enterprise to the amount of external liabilities.
Normative value 
1.0. A low value of the indicator indicates the insufficiency of existing assets to cover the external liabilities of the analyzed enterprise.
5. General liquidity ratio balance sheet is used for a comprehensive assessment of the liquidity of the balance sheet as a whole. Using this coefficient, changes in the financial situation of enterprises are assessed from the point of view of liquidity; allows you to compare the balance sheets of the analyzed enterprise relating to different reporting periods, as well as the balance sheets of different enterprises and find out which balance is the most liquid.
The ratio of all liquid funds of an enterprise to the amount of all payment obligations, provided that various groups liquid funds and payment obligations are included in the specified amounts with weight categories.
Normative value 
1.0. This coefficient is a general indicator of the liquidity of a business entity and is used when choosing a more reliable partner from a variety of potential partners based on reporting.
It is advisable to summarize all calculated indicators in a table.
Liquidity ratios
|
The name of indicators |
Beginning of the year |
The end of the year |
Change |
Normative value |
|
1. Absolute liquidity ratio | ||||
|
2. Quick ratio | ||||
|
3. Current ratio | ||||
|
4. Liquidation price coefficient | ||||
|
5. General liquidity ratio |
Various liquidity indicators not only provide a versatile characteristic of the stability of the financial condition of the enterprise at varying degrees accounting for liquid funds, but also meet the interests of various external users of analytical information. Thus, for suppliers of raw materials and materials, the absolute liquidity ratio is most interesting. A bank lending to an enterprise pays more attention to the quick liquidity ratio. Buyers and holders of shares and bonds of an enterprise largely assess the financial stability of the enterprise by the current liquidity ratio. Of course, first of all, liquidity indicators should be of interest to managers and financial employees of the enterprise.
In general, it is possible to assign the analyzed business entity, using these coefficients, to one or another creditworthiness class. But the difficulty is that:
Standard values of liquidity ratios for organizations of various industries have not been established;
The relative importance of the evaluation indicators has not been determined and there is no algorithm for calculating the generalizing criterion.
If an enterprise has poor liquidity indicators, but has not lost its financial stability, then it has a chance to get out of its difficult situation. But if both liquidity indicators and financial stability indicators are unsuccessful, then such an economic entity is a likely candidate for bankruptcy.
Determination of financial stability.
One of the main tasks of analyzing the financial and economic condition of an enterprise is to study indicators characterizing its financial stability. It is determined by the degree of provision of inventories and costs by own and borrowed sources of their formation, the ratio of the volumes of own and borrowed funds and is characterized by a system of absolute and relative indicators. Sustainability serves as a guarantee of survival and the basis for the stability of an enterprise’s position, but can also contribute to the deterioration of its financial condition under the influence of external and internal factors.
Thus, financial stability- the result of the presence of a certain safety margin that protects the enterprise from accidents and sudden changes external factors.
Loss of financial stability means that this enterprise will face bankruptcy in the future with all the ensuing consequences, including its liquidation, if prompt and effective measures are not taken to restore financial stability.
Financial stability analysis is carried out using absolute and relative indicators.
Absolute indicator financial stability is the conformity or discrepancy (excess or deficiency) of sources of funds for the formation of reserves with the value of reserves, obtained in the form of the difference between the value of sources of funds and the value of reserves. This refers to the provision of reserves with sources of own and borrowed funds.
To analyze financial stability, a balance sheet is compiled in aggregate form.
Aggregated balance
|
Value of indicators |
Value of indicators |
||||
|
Beginning of the year |
The end of the year |
Beginning of the year |
The end of the year |
||
|
1. Non-current assets F |
1.Equity And s | ||||
|
2. Current assets R |
2. Borrowed capital | ||||
|
Inventories and costs Z |
– long-term liabilities Kt | ||||
|
Current liabilities K t | |||||
An enterprise is financially stable if the following condition is met:
To characterize the sources of reserves and costs, several indicators are used, reflecting different degrees of coverage different types sources:
Availability of own working capital – characterizes net working capital. Its increase compared to the previous period indicates the further development of the enterprise’s activities or the effect of the inflation factor, as well as a slowdown in their turnover, which objectively causes the need to increase their mass. The presence of own working capital serves as a positive indicator for investors and creditors.
Availability of own and long-term borrowed sources for the formation of reserves and costs – the value of this indicator indicates not only how much current assets exceed current liabilities, but also how much non-current assets are financed from the organization’s own funds and long-term loans. Net working capital is necessary to maintain the financial stability of an enterprise, since the excess of working capital over short-term liabilities means that the enterprise not only can pay them off, but also has the financial resources to expand its activities in the future.
The total value of the main sources of reserves and costs – the rational formation of inventories and costs due to the total value of the main sources of funds has a positive impact on the progress of production, on the financial results and solvency of the enterprise.
Excess or shortage of own working capital
The calculation of indicators is carried out using the following formulas:
Surplus (+) or deficiency (-) of own working capital (E c):
where SK is equity capital (line 1300),
F – non-current assets (line 1100),
Z – inventories, including VAT on purchased assets (lines 1210,1220).
Reflects the amount of own working capital, incl. funds owned by an organization to cover inventories and costs. To diagnose the financial condition, it is important to study the dynamics of changes in this value. The financial position is negatively affected by both the lack and surplus of own working capital. The lack of these funds can lead the enterprise to bankruptcy due to its inability to repay short-term obligations in a timely manner.
2. Excess (+) or shortage (-) of own working capital and long-term borrowed funds for the formation of inventories and costs (E t):
where Kt is long-term borrowed capital.
This optimal amount of surplus own working capital and long-term borrowed funds for the formation of inventories and costs depends on the characteristics of the enterprise’s activities, in particular on its size, sales volumes, turnover rate of inventories and receivables, conditions for granting loans, industry specifics, etc.
3. Surplus (+) or deficiency (-) of the total value of the main sources of funds for the formation of reserves (E ∑):
where K t – short-term loans and borrowings.
Financial instability is considered acceptable if the following conditions are met: inventories plus finished products are equal to or exceed the amount of short-term loans and borrowed funds involved in the formation of inventories; work in progress plus deferred expenses are equal to or less than the amount of own working capital.
Calculation of three indicators of the provision of reserves with sources of their formation allows us to classify situations according to the degree of their stability. When determining the type of financial situation, a three-dimensional (three-component) indicator is used.
where the function is defined as follows:
Using these formulas, four types of financial situations can be distinguished.
1. Absolute financial stability, it is determined by the conditions
This type shows that inventories and costs are fully covered by own working capital, high solvency, and no dependence on creditors. In practice this rarely happens. This type of sustainability cannot be considered ideal, since the enterprise in this case does not use external sources of financing in its business activities.
2. Normal financial stability
Three-dimensional situation indicator: 
The source of covering costs is our own working capital and long-term borrowed sources. With normal stability, which guarantees solvency, the enterprise optimally uses its own and credit resources, current assets and accounts payable.
3. Unstable financial condition
Three-dimensional situation indicator: 
The source of covering costs is the total amount of sources. It is characterized by a violation of solvency: in this case, the enterprise is forced to attract additional sources to cover inventories and costs, and a decrease in production profitability is observed. However, there is still room for improvement
4. Crisis financial condition
Three-dimensional situation indicator: 
In this situation, there are overdue accounts payable and receivable and an inability to repay them on time. Cash, short-term securities and accounts receivable do not even cover accounts payable and non-performing loans. If this situation is repeated repeatedly in market conditions, the enterprise faces bankruptcy.
All of the above indicators can be presented in table form.
Table of indicators by types of financial situations.
|
Indicators |
Types of financial situations |
|||
|
Absolute stability |
Normal stability |
Unstable state |
Crisis state |
|
|
ΔE C< 0 |
||||
|
ΔE T< 0 |
||||
|
Δ E Σ > 0 |
Δ E Σ > 0 |
Δ E Σ > 0 |
Δ E Σ< 0 |
|
Absolute and normal financial stability is characterized by a high level of profitability and the absence of violations of financial discipline.
An unstable financial condition is characterized by the presence of financial discipline, interruptions in the flow of funds to the current account, and a decrease in the profitability of the enterprise.
In addition to the indicated signs of an unstable financial situation, a financial crisis is characterized by the presence of regular non-payments (overdue bank loans, overdue debts to suppliers, the presence of arrears to the budget).
To assess the financial condition, financial ratios are calculated, analyzed over time and compared with standard values.
1. Provision ratio of own working capital shows that the enterprise has its own working capital necessary for its financial stability. It is a criterion for determining insolvency (bankruptcy). The higher the indicator, the better the financial condition of the enterprise, the more opportunities it has to pursue an independent financial policy. It is defined as the ratio of own working capital to the total amount of working capital of the enterprise.
Normative value 
0,1.
2. Inventory coverage ratio with own funds shows the degree to which inventories are covered with own funds, as well as the need to attract borrowed funds. It is defined as the ratio of own working capital to the amount of inventories and costs.
Normative value 
0,6-0,8.
3. Equity agility ratio shows the ability of the enterprise to maintain the level of its own working capital and replenish working capital from its own working sources. The closer the indicator value is to upper limit, the greater the opportunity for financial maneuver. It is defined as the ratio of own working capital to the total amount of sources of own funds (equity capital).
Normative value 
0,2-0,5.
4. Autonomy coefficient characterizes independence from borrowed funds. Determines the share of the owners of the enterprise in the total amount of funds. The higher the value of the coefficient, the more stable the enterprise, and the less dependent it is on external creditors. It is determined by the ratio of the total amount of all funds of the enterprise to the sources of its own funds.
Normative value 
0,5.
5. Debt to equity ratio (or financial leverage). Shows how much borrowed funds the company attracted per 1 ruble invested in its own assets. Exceeding this limit means the enterprise's dependence on external sources of funds. Loss of financial stability (autonomy). It is determined by the ratio of all liabilities to own funds.
Normative value< 0,7.
6. Financial stability ratio . Shows the share of equity and long-term borrowed capital in the balance sheet currency.
Standard value =0.9
All of the above indicators are presented in the table.
Financial stability ratios.
|
The name of indicators |
Beginning of the year |
The end of the year |
Change |
Normative value |
|
1. Provision ratio of own working capital | ||||
|
2. Ratio of provision of inventories with own funds | ||||
|
3. Equity capital agility ratio | ||||
|
4. Autonomy coefficient | ||||
|
5. Debt to equity ratio (leverage) | ||||
|
6. Financial stability coefficient. |
One of the most important characteristics the stability of the financial condition of the enterprise, its independence from borrowed sources of funds is the autonomy coefficient. Meaning 
> 0.5 shows that all obligations of the enterprise can be covered by its own funds. Executing the constraint 
> 0.5 is important not only for the enterprise itself, but also for its creditors. An increase in the autonomy coefficient indicates an increase in the financial independence of the enterprise and a decrease in the risk of financial difficulties in future periods. From the point of view of creditors, this trend increases the company’s guarantee of repaying its obligations.
The autonomy ratio complements the debt-to-equity ratio 
. It indicates how much borrowed funds the company attracted per 1 ruble invested in its own assets. If borrowed capital approaches equity or becomes greater than it, then financial stability decreases. The value of this coefficient depends on industry specifics and the level of inflation.
A very significant characteristic of the stability of the financial condition is the maneuverability coefficient 
. It shows what part of the enterprise’s own funds is in a mobile (flexible) form, allowing relatively free maneuvering of these funds. A high value of the agility coefficient positively characterizes the financial condition, however, there are no normal values of the indicator established in practice. Sometimes in the specialized literature a value of 0.5 is recommended as the optimal coefficient value. The indicator, like the financial stability coefficient 
It is advisable to use it to analyze the work of enterprises of the same industry.
Overcoming financial instability is not easy: it takes time and investment. For a chronically “sick” enterprise that has lost its financial stability, any negative set of circumstances can lead to a fatal outcome - bankruptcy.
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