Ratios of financial stability: formulas, calculations. Financial stability analysis

Every working company must be effective. The meaning of any business is an increase in income and a decrease in the number of expenses to maximize net profit.

There are many ways and options to study the effectiveness of the functioning of an enterprise in a particular industry and in different markets for products.

Why use the coefficients for assessing financial stability?

The results of the enterprise can be considered both in the long and short term. At the same time, the same indicators in different periods should be interpreted differently. Such work results can be estimated by the profit it receives, asset turnover, production profitability, study financial stability ratios, and in many other ways.

Let us consider in more detail how to determine the stability of the enterprise, its coefficients, as well as how to properly analyze them.

Financial stability is such a characteristic that helps to judge how confidently an enterprise can engage in its business activities.

Utility

Analyzing financial ratios sustainability, you can understand whether the enterprise is functioning stably, is it profitable or not. You can also judge how to attract and efficient use of cash resources. In addition, correctly calculated financial stability ratios allow us to understand the dynamics of capital flows, profits, as well as credit and solvency, which is important when assessing the prospects for investment and development of the organization.

A similar analysis can be carried out by audit companies that hire organizations, as well as individual services located in the enterprise structure.

You need to understand the processes that occur in the enterprise

Before considering the financial stability ratios in more detail, it is worth noting that it is not enough just to be able to calculate them and know the approximate boundaries within which you can talk about the correct choice of certain development vectors, as well as the fidelity of the flow of production processes within the enterprise. You need to have an idea of ​​the processes that occur both within the enterprise and beyond, the field of activity and the possible risks that certain business sectors may face. And if one judges an enterprise using financial stability ratios, their calculation formulas, not understanding their essence, then it is possible to draw false conclusions that do not correspond to the real state of affairs.

All indicators can be divided into two interconnected blocks: absolute and relative.

Absolute indicators

This group includes such indicators and financial stability ratios, the calculation formulas of which characterize the level of possible coverage of all reserves by their sources:

1. SOS allows you to see the number of own current assets. It is calculated by subtracting fixed assets from the amount of capital and reserves of the enterprise: SOS = (K + P) - An.
2. FC (availability of functioning capital). It helps to see the presence of attracted and own sources from which reserves are formed.In order to calculate the FC, it is necessary to subtract the non-current assets of the company from the sum of the capital of the enterprise, free reserves and liabilities that have a long term: FC = (K + Pc + PD) - An.
3. OI (the amount of liabilities from which reserves and costs are formed). It is calculated by subtracting fixed assets from the sum of own and long-term liabilities, short-term loans of the enterprise: OI = (Ps + Pd + Zk) - An.

Each absolute indicator of financial stability corresponds to an indicator of ЗЗ (an indicator of confirmation by sources of reserves and costs).

Indicator values ​​are characterized by types of financial situations.

Consider the different situations in which there may be an enterprise, depending on the values ​​of the absolute indicators. After the calculations, it is necessary to make an analysis according to the types of financial situation.

The indicator of the financial situation of the enterprise by the presence of its own current assets, which is calculated as SOS - ЗЗ, can have the following values:

• if the indicator is ≥ 0, then this indicates absolute independence;
• if the indicator is <0, then this may indicate normal independence, an unstable or crisis state.

The indicator of the functioning capital of the enterprise, which is calculated as FC - ЗЗ, takes the following values:

• if the indicator is ≥ 0, then this may indicate absolute or normal independence;
• if the indicator <0, then this may indicate an unstable or crisis state.

Accordingly, the indicator of the total volume of the main sources from which stocks and costs are formed is calculated by the formula OI - ZZ and shows the following:

• if the indicator is ≥ 0, then this may indicate absolute, normal independence or an unstable state of the enterprise;
• if the indicator is <0, then this indicates a crisis state.

Now consider what the concepts of absolute, normal independence, as well as an unstable and crisis state mean.

Absolute independence

When an enterprise is completely independent of external sources of financing, it is completely protected from external factors of influence from investors and creditors.

This situation is almost never found and is considered a rare exception. In addition to what she says about good financial stability, such a value of the indicator may also indicate that management does not know how or does not want to attract borrowed funds from external sources.

Normal independence

Such a financial condition of the enterprise guarantees good solvency, and also indicates the correct adoption of managerial decisions regarding business activities.

Ratios of financial stability and solvency can timely warn management about the implementation of the wrong policy of the enterprise.

Unstable state

If the indicators confirm this state, then this means that the company has problems with solvency or we can expect them in the near future. This can be corrected by reducing receivables, as well as the number of days required for a full inventory turnover.

Crisis state

Perhaps this situation is something that no director or manager would like to face. If all indicators have values ​​characterizing such a state, then it is urgently necessary to revise the methods of doing business. Such an enterprise cannot function without external loans. At the same time, short- and long-term loans, not to mention equity, are not enough to provide working capital coverage.

It is impossible to draw conclusions by analyzing financial stability ratios, the normative values ​​of which may be different depending on the business sphere.

It is extremely important to see in time the trend in the dynamics of indicators so that you do not suddenly find yourself in a trough, which is called the bankruptcy of the enterprise.

Let's consider relative indicators

The analysis of relative indicators is based on a comparison of current values ​​with those that were in previous years. Compare:

• actual ratios of financial stability of the organization of the current year and similar indicators of a certain period of the last year;
• actual ratios with regulatory values;
• actual ratios with similar data of competing enterprises;
• actual ratios with values ​​that are observed in the industry of the enterprise.

The coefficients for assessing the financial stability of the enterprise, which are analyzed in this method:

1. Autonomy. By calculating this indicator, you can determine the proportion of equity in the total amount of all sources of financing the activities of the enterprise. It is defined as the ratio of equity to all assets of the enterprise: Ks / (Ao + An).
2. Capitalization. It is used to calculate the ratio of own and borrowed funds. It is defined as the ratio of long-term liabilities to the sum of long-term liabilities and equity: Пд / (Пд + К).
3. Fundraising. It helps to determine how much of the working capital depends on borrowed funds in the short term. Calculated as the ratio of long-term liabilities to the sum of long-term liabilities and own assets: Пд / (Пд + Ас).
4. Financing. Allows you to determine how much is financed at the expense of own funds, and how much thanks to external loans. In order to calculate it, it is necessary to find the ratio of equity to the amount of borrowed funds: K / Pz.
5. Maneuverability (quick circulation ability) of equity. This indicator helps determine how many monetary units are net working capital for 1 CU own cash. Calculated as the ratio of low liquid assets to the amount of equity: Anl / Ao.
6. The ratio of the debt of suppliers and buyers (receivables and payables). It helps to understand how much accounts payable is in 1 CU accounts receivable. In order to calculate this ratio, it is necessary to find the ratio of two debts: Zd / Zk.

The financial stability ratios given above are the most popular and exist in almost any financial literature.

In fact, there are other factors. Experienced economists from different companies can calculate financial stability ratios, both known to a wide audience and those about which nothing is written in the literature. They even use those that they come up with on their own, relating to a strictly specific enterprise.

Analysis of financial stability as the main way to determine the stability of the enterprise

The financial stability ratios show the current state of the enterprise, and in addition, they can predict its development, but for this it is recommended to use all the information in a complex. Thanks to this, it is possible to determine the dependence of the well-being of the enterprise on the change in various factors that affect its business.

What conclusions can be drawn?

Spending financial stability analysis, the coefficients must be examined in depth, identifying the causes that led to such values. It is possible that unsatisfactory indicators are only a temporary phenomenon associated with obtaining a loan or a delay in payment for goods by a large customer.

In any case, the first thing you need to pay attention to the results of the activity is profitability. Indeed, the main indicator of the success of any business will be the net profit that the owner puts in his pocket.If economic activity is unprofitable, then no good indicators will indicate the correctness of doing business.

In addition, for the full picture, you need to do an analysis of the balance sheet, to assess the profitability, liquidity of funds, as well as the level of solvency of the enterprise, before drawing conclusions about the feasibility of doing business.