Indicators of the financial state of the enterprise. Coefficient method of analysis. Vertical reporting analysis

Financial activity of the enterprise

Before proceeding directly to the topic of the article, you should understand the essence of the concept financial activities enterprises.

Financial activity in the enterprise is financial planning and budgeting, financial analysis, management of financial relations and cash funds, definition and implementation of investment policy, organization of relations with budgets, banks, etc.

Financial activity solves such problems as:

• providing the enterprise with the necessary financial resources for funding its production and marketing activities, as well as for the implementation of investment policy;
• use of opportunities to improve efficiency enterprise activities;
• ensuring timely repayment current and long-term liabilities;
• determination of optimal credit conditions to expand the volume of sales (deferment, installment plan, etc.), as well as the collection of formed receivables;
• motion control and redistribution financial resources within the enterprise.

Analysis Feature

Financial indicators make it possible to measure the effectiveness of work in the above areas. For example, liquidity ratios measure the ability to repay short-term obligations on time, while financial strength ratios, which are the ratio of equity to debt, measure the ability to meet obligations in the long term. The financial stability ratios of the second group, which show the sufficiency working capital, make it possible to understand the availability of financial resources to finance activities.

Indicators of profitability and business activity (turnover) show how the company uses the available opportunities to improve work efficiency. Analysis of receivables and payables allows you to understand the credit policy. Considering that profit is formed under the influence of all factors, it can be argued that the analysis of financial results and profitability analysis allows to obtain a cumulative assessment of the quality of the financial activity of an enterprise.

The effectiveness of financial activity can be judged by two aspects:

1. results financial activities;
2. Financial condition enterprises.

The first is expressed by how effectively the company can use the assets it has, and most importantly, whether it is able to generate profit and to what extent. The higher the financial result for each ruble of invested resources, the better the result of financial activity. However, profitability and turnover are not the only indicators of a company's financial performance. The opposite and related category is the level of financial risk.

Current financial condition enterprises just means how much sustainable is the economic system. If a company is able to meet its obligations in the short and long term, ensure the continuity of the production and marketing process, and also reproduce the resources expended, then it can be assumed that, while maintaining current market conditions, the enterprise will continue to work. In this case, the financial condition can be considered acceptable.

If the company is able to generate high profits in the short and long term, then we can talk about efficient financial performance.

In the process of analyzing the financial activities of an enterprise, both in the analysis of financial results and in the process of assessing the state, the following methods should be used:

• horizontal analysis - analysis speakers financial result, as well as assets and sources of their financing, will determine the general trends in the development of the enterprise. As a result, one can understand the medium and long term of his work;
• vertical analysis - assessment of the formed structures assets, liabilities and financial results will reveal imbalances or make sure the current performance of the company is stable;
• comparison method - comparison data with competitors and industry averages will allow you to determine the effectiveness of the company's financial activities. If the enterprise demonstrates higher profitability, then we can talk about high-quality work in this direction;
• coefficient method - in the case of studying the financial activities of an enterprise, this method is important, since its use will allow you to get a set indicators, which characterize both the ability to demonstrate high results and the ability to maintain stability.
• factor analysis - allows you to determine the main factors that influenced the current financial position and financial performance of the company.

Analysis of the financial results of the enterprise

Investors are interested in profitability, as it allows you to evaluate the effectiveness of management activities and the use of capital that was provided by the latter for the purpose of making a profit. Other participants in financial relationships, such as creditors, employees, suppliers and customers are also interested in understanding the profitability of the company, as this allows you to estimate how smoothly the company will operate in the market.

Therefore, the analysis of profitability allows you to understand how effectively the management implements the company's strategy for the formation of financial results. Given the large number of tools that are in the hands of an analyst when evaluating profitability, it is important to use a combination of different methods and approaches in the process.

Although firms report net income, the overall financial result is considered more important, as a measure that better shows the profitability of a company's shares. There are two main alternative approaches to assessing profitability.

First approach provides for consideration of various transformations of the financial result. Second approach– indicators of profitability and profitability. In the case of the first approach, such indicators as the profitability of the company's shares, horizontal and vertical analysis, assessment of the growth of indicators, consideration of various financial results (gross profit, profit before tax, and others) are used. In the case of applying the second approach, indicators of return on assets and profitability are used equity, which provide for obtaining information from the balance sheet and income statement.

These two metrics can be broken down into profit margin, leverage, and turnover to better understand how a company generates wealth for its shareholders. In addition, margin, turnover and leverage ratios can be analyzed in more detail and broken down into different lines of financial statements.

Analysis of financial performance of the enterprise

It is worth noting that the most important method is the method of indicators, it is also the method of relative indicators. Table 1 shows the groups financial ratios which are best suited for performance analysis.

Table 1 - The main groups of indicators that are used in the process of assessing the financial result of the company

It is worth considering each of the groups in more detail.

Turnover indicators (indicators of business activity)

Table 2 presents the most commonly used business activity ratios. It shows the numerator and denominator of each coefficient.

Table 2 - Turnover indicators

Indicator of business activity (turnover)	Numerator	Denominator
	Cost price	Average inventory value
	Number of days in the period (for example, 365 days if using yearly data)	inventory turnover
		Average value of accounts receivable
	Number of days in the period	Accounts receivable turnover
	Cost price	Average value of accounts payable
	Number of days in the period	Accounts payable turnover
Working capital turnover		Average cost of working capital
		Average cost of fixed assets
		Average asset value

Interpretation of turnover indicators

Inventory turnover and one turnover period . Inventory turnover is the backbone of operations for many organizations. The indicator indicates resources (money) that are in the form of reserves. Therefore, such a ratio can be used to indicate the effectiveness of inventory management. The higher the inventory turnover ratio, the shorter the period of inventory in the warehouse and in production. In general, the inventory turnover and the period of one inventory turnover should be estimated according to industry standards.

High Inventory turnover ratios compared to industry norms can indicate high inventory management efficiency. However, it is also possible that this turnover ratio (and a low one-period turnover rate) could indicate that the company is not building up adequate inventory, which could hurt earnings.

To assess which explanation is more likely, an analyst can compare a company's earnings growth with industry growth. Slower growth combined with higher inventory turnover may indicate insufficient inventory levels. Revenue growth at or above industry growth supports the interpretation that high turnover reflects greater efficiency in inventory management.

Short Inventory turnover ratio (and therefore high turnover period) relative to the industry as a whole can be an indicator of slow inventory movement in the operating process, perhaps due to technological obsolescence or a change in fashion. Again, by comparing a company's sales growth with the industry, one can get the gist of current trends.

The turnover of receivables and the period of one turnover of receivables . The receivables turnover period represents the time elapsed between sale and collection, which reflects how quickly the company collects cash from customers to whom it offers credit.

Although it is more correct to use credit sales as the numerator, information on credit sales is not always available to analysts. Therefore, revenue reported in the income statement is generally used as the numerator.

A relatively high receivables turnover ratio may indicate a high efficiency of commodity lending to clients and collection of money by them. On the other hand, a high receivables turnover ratio may indicate that credit or debt collection terms are too tight, indicating a possible loss of sales to competitors who offer softer terms.

Relatively low receivables turnover tends to raise questions about the effectiveness of credit and collection procedures. As with inventory management, comparing company and industry sales growth can help an analyst assess whether sales are lost due to a strict credit policy.

In addition, by comparing bad receivables and actual loan losses with past experience and with peers, it can be assessed whether low turnover reflects a problem in managing commercial lending to clients. Companies sometimes provide information about the line of receivables. This data can be used in conjunction with turnover rates to draw more accurate conclusions.

Accounts payable turnover and accounts payable turnover period . The accounts payable turnover period reflects the average number of days a company spends paying its suppliers. The accounts payable turnover ratio indicates how many times a year a company conditionally covers debts to its creditors.

For the purposes of calculating these indicators, it is assumed that the company makes all its purchases with the help of a commodity (commercial) loan. If the volume of goods purchased is not available to the analyst, then the cost of goods sold indicator can be used in the calculation process.

High the accounts payable turnover ratio (low period of one turnover) in relation to the industry may indicate that the company does not fully use the available credit funds. On the other hand, this may mean that the company uses a system of discounts for earlier payments.

Too low the turnover ratio may indicate problems with the timely payment of debts to suppliers or the active use of soft credit conditions for the supplier. This is another example of when other metrics should be looked at to form weighted conclusions.

If the liquidity indicators indicate that the company has sufficient cash and other short-term assets to pay liabilities, and yet the accounts payable turnover period is high, then this will indicate the supplier's lenient credit conditions.

Working capital turnover . Working capital is defined as current assets minus current liabilities. Working capital turnover indicates how efficiently a company generates income from working capital. For example, a working capital ratio of 4 indicates that the company generates $4 of revenue for every $1 of working capital.

A high value of the indicator indicates greater efficiency (i.e., the company generates a high level of income relative to a smaller amount of working capital raised). For some companies, the amount of working capital may be close to zero or negative, which makes this indicator difficult to interpret. The next two coefficients will be useful in these circumstances.

Turnover of fixed assets (capital productivity) . This metric measures how efficiently a company generates returns on its fixed investment. As a rule, more high the turnover ratio of fixed assets shows a more efficient use of fixed assets in the process of generating income.

Low a value may indicate inefficiency, capital intensity of the business, or that the business is not operating at full capacity. In addition, the turnover of fixed assets may be formed under the influence of other factors not related to business efficiency.

The rate of return on assets will be lower for companies whose assets are newer (and therefore less depreciated, which is reflected in the financial statements by a higher carrying value) compared to companies with older assets (which are more depreciated and thus are reflected at a lower book value (subject to the use of the revaluation mechanism).

The rate of return on assets can be unstable, since incomes can have steady growth rates, and the increase in fixed assets is jerky; therefore, each yearly change in the indicator does not necessarily indicate important changes in company performance.

Asset turnover . The total asset turnover ratio measures the overall ability of a company to generate income with a given level of assets. A ratio of 1.20 would mean that the company generates 1.2 rubles of income for every 1 ruble of attracted assets. A higher ratio indicates a greater efficiency of the company.

Since this ratio includes both fixed assets and working capital, poor management of working capital can distort the overall interpretation. Therefore, it is useful to analyze working capital and return on assets separately.

Short the asset turnover ratio may indicate unsatisfactory performance or a relatively high level of capital intensity of the business. The indicator also reflects strategic management decisions: for example, the decision to take a more labor-intensive (and less capital-intensive) approach to your business (and vice versa).

The second important group of indicators are profitability and profitability ratios. These include the following ratios:

Table 3 - Indicators of profitability and profitability

Indicator of profitability and profitability	Numerator	Denominator
	Net profit	Average asset value
	Net profit
Gross margin	Gross profit
	Sales profit
	Net profit
	Average asset value	Net profit
	Average cost of equity	Net profit

Profitability indicator assets shows how much profit or loss the company receives for each ruble of invested assets. A high value of the indicator indicates the effective financial activity of the enterprise.

Return on equity is a more important indicator for the owners of the enterprise, since this ratio is used when evaluating investment alternatives. If the value of the indicator is higher than in alternative investment instruments, then we can talk about the quality of the financial activity of the enterprise.

Margin metrics provide insight into sales performance. Gross margin shows how much more resources the company has left for management and sales expenses, interest expenses, etc. Operating margin demonstrates the effectiveness of the organization's operational process. This indicator allows you to understand how much operating profit will increase with an increase in sales by one ruble. net margin takes into account the influence of all factors.

Return on assets and equity allows you to determine how much time it takes for the company to pay off the funds raised.

Analysis of the financial condition of the enterprise

The financial condition, as mentioned above, means the stability of the current financial and economic system of the enterprise. To study this aspect, the following groups of indicators can be used.

Table 4 - Groups of indicators that are used in the process of assessing the state

Liquidity ratios (liquidity ratios)

Liquidity analysis that focuses on movement Money, measures a company's ability to meet its short-term obligations. The main indicators of this group are a measure of how quickly assets turn into cash. In day-to-day operations, liquidity management is usually achieved through the efficient use of assets.

The level of liquidity must be considered depending on the industry in which the company operates. The liquidity position of a particular company may also vary depending on the anticipated need for funds at any given time.

The assessment of liquidity adequacy requires an analysis of the company's historical funding needs, current liquidity position, expected future funding needs, and options to reduce funding requirements or raise additional funds (including actual and potential sources of such funding).

Large companies tend to have better control over the level and composition of their liabilities than smaller companies. Thus, they may have more potential sources of funding, including owner equity and credit market funds. Access to capital markets also reduces the required liquidity buffer compared to companies without such access.

Contingent liabilities such as letters of credit or financial guarantees may also be relevant in assessing liquidity. The importance of contingent liabilities varies for the non-banking and banking sectors. In the non-banking sector, contingent liabilities (usually disclosed in a company's financial statements) represent a potential cash outflow and should be included in an assessment of a company's liquidity.

Calculation of liquidity ratios

The main liquidity ratios are presented in table 5. These liquidity ratios reflect the position of the company at a certain point in time and, therefore, use data at the end of the balance sheet date, and not average balance sheet values. Indicators of current, quick and absolute liquidity reflect the company's ability to pay current obligations. Each of them uses a progressively stricter definition of liquid assets.

Measures how long a company can pay its daily cash costs using only existing liquid assets, without additional cash flows. The numerator of this ratio includes the same liquid assets used in quick liquidity, and the denominator is an estimate of daily cash costs.

To obtain daily cash costs, the total cash costs for the period are divided by the number of days in the period. Therefore, in order to obtain cash expenses for the period, it is necessary to summarize all expenses in the income statement, including such as: cost; marketing and administrative expenses; other expenses. However, the amount of expenses should not include non-cash expenses, for example, the amount of depreciation.

Table 5 - Liquidity ratios

Liquidity indicators	Numerator	Denominator
	current assets	Current responsibility
	Current assets - stocks	Current responsibility
	Short-term investments and cash and cash equivalents	Current responsibility
Guard interval indicator	Current assets - stocks	Daily expenses
	Inventory turnover period + Accounts receivable turnover period – Accounts payable turnover period

The financial cycle is a metric that is not calculated in the form of a ratio. It measures the length of time it takes for an enterprise to go from investing money (invested in activities) to receiving cash (as a result of activities). During this time period, the company must fund its investment operations from other sources (ie, debt or equity).

Interpretation of liquidity ratios

Current liquidity . This measure reflects current assets (assets that are expected to be consumed or converted into cash within one year) per ruble of current liabilities (obligations are due within one year).

More high the ratio indicates a higher level of liquidity (i.e., a higher ability to meet short-term obligations). A current ratio of 1.0 would mean that the carrying amount of current assets is exactly equal to the carrying amount of all current liabilities.

More low the value of the indicator indicates less liquidity, which implies a greater dependence on operating cash flow and external financing to meet short-term liabilities. Liquidity affects a company's ability to borrow money. The current ratio is based on the assumption that inventories and receivables are liquid (if inventories and receivables are low, this is not the case).

Quick liquidity ratio . The quick ratio is more conservative than the current ratio as it only includes the most liquid current assets (sometimes called "quick assets"). Like the current ratio, a higher quick ratio indicates the ability to meet debts.

This indicator also reflects the fact that inventories cannot be easily and quickly converted into cash, and, in addition, the company will not be able to sell its entire inventory of raw materials, materials, goods, etc. for an amount equal to its book value, especially if that inventory needs to be sold quickly. In situations where inventories are illiquid (for example, in the case of a low inventory turnover ratio), quick liquidity may be a better indicator of liquidity than current ratio.

Absolute liquidity . The ratio of cash to current liabilities is usually a reliable measure of the liquidity of an individual enterprise in a crisis. Only highly liquid short-term investments and cash are included in this indicator. However, it should be noted that during the crisis fair value liquid valuable papers may decrease significantly as a result of market factors, in which case it is desirable to use only cash and cash equivalents in the process of calculating absolute liquidity.

Guard interval indicator . This ratio measures how long a company can continue to pay its expenses from its available liquid assets without receiving any additional cash inflows.

A guard margin of 50 would mean that the company could continue to pay its operating expenses for 50 days from fast assets without any additional cash inflows.

The higher the guard interval, the higher the liquidity. If a company's guard interval score is very low compared to peers or compared to the company's own history, the analyst needs to clarify whether there is sufficient cash inflow for the company to meet its obligations.

financial cycle . This indicator indicates the amount of time that elapses from the moment a company invests money in other forms of assets until the moment it collects money from customers. A typical operating process is to receive inventories on a deferred basis, which creates accounts payable. The company then also sells these inventories on credit, which results in an increase in receivables. After that, the company pays its bills for the delivered goods and services, and also receives payment from customers.

The time between spending money and collecting money is called the financial cycle. More short cycle indicates greater liquidity. It means that the company only has to fund its inventory and receivables for a short period of time.

More long cycle indicates lower liquidity; this means that the company must fund its inventory and receivables over a longer period of time, which may result in the need to raise additional funds to build working capital.

Indicators of financial stability and solvency

Solvency ratios are basically of two types. Debt ratios (the first type) focus on the balance sheet, and measure the amount of debt capital in relation to equity or the total amount of a company's funding sources.

Coverage ratios (the second type of metric) focus on the income statement and measure a company's ability to meet its debt payments. All of these indicators can be used in assessing a company's creditworthiness and therefore in assessing the quality of a company's bonds and other debt obligations.

Table 6 - Indicators of financial stability

Indicators	Numerator	Denominator
	Total liabilities (long-term + short-term liabilities)	Total liabilities
	Equity	Total liabilities
Debt to Equity	Total liabilities	Equity
financial leverage		Equity
Interest coverage ratio	Profit before taxes and interest	Percentage to be paid
Fixed payment coverage ratio	Profit before taxes and interest + lease payments + rent	Interest payable + lease payments + rent

In general, these indicators are most often calculated in the manner shown in Table 6.

Solvency Ratios Interpretation

Indicator of financial dependence . This ratio measures the percentage of total assets financed by debt. For example, a debt-to-asset ratio of 0.40 or 40 percent indicates that 40 percent of a company's assets are funded by debt. Generally, a higher share of debt means higher financial risk and thus weaker solvency.

Indicator of financial autonomy . The indicator measures the percentage of a company's equity (debt and equity) represented by equity. Unlike the previous ratio, a higher value usually means lower financial risk and thus indicates strong solvency.

Debt to equity ratio . The debt-to-equity ratio measures the amount of debt capital in relation to equity. The interpretation is similar to the first indicator (i.e., a higher ratio indicates poor solvency). A ratio of 1.0 would indicate equal amounts of debt and equity, which is equivalent to a debt-to-liability ratio of 50 percent. Alternative definitions of this ratio use the market value of shareholders' equity rather than its book value.

financial leverage . This ratio (often referred to simply as the leverage ratio) measures the amount of total assets supported by each currency unit of equity. For example, a value of 3 for this indicator means that every 1 ruble of capital supports 3 rubles of total assets.

The higher the ratio financial leverage the more leveraged a company has to use debt and other liabilities to fund assets. This ratio is often defined in terms of average total assets and average total equity and plays an important role in the decomposition of return on equity in the DuPont methodology.

Interest coverage ratio . This metric measures how many times a company can cover its interest payments from pre-tax earnings and interest payments. A higher interest coverage ratio indicates stronger solvency and solvency, providing creditors with high confidence that the company can service its debt (i.e., banking sector debt, bonds, bills, debt of other enterprises) from operating income.

Fixed payment coverage ratio . This metric takes into account fixed expenses or liabilities that result in a stable cash outflow for the company. It measures the number of times a company's earnings (before interest, taxes, rent, and leases) can cover interest and lease payments.

Like the interest coverage ratio, a higher fixed payment ratio implies strong solvency, meaning that the business can service its debt through core business. The indicator is sometimes used to determine the quality and probability of receiving dividends on preferred shares. If the value of the indicator is higher, then this indicates a high probability of receiving dividends.

Analysis of the financial activity of the enterprise on the example of PJSC "Aeroflot"

To demonstrate the process of analyzing financial activity, you can use the example famous company PJSC Aeroflot.

Table 6 – Dynamics of assets of PJSC Aeroflot in 2013-2015, million rubles

Indicators				Absolute deviation, +,-		Relative deviation, %
Intangible assets
Research and development results
fixed assets
Long-term financial investments
Deferred tax assets
Other noncurrent assets
NON-CURRENT ASSETS TOTAL
Value added tax on acquired valuables
Accounts receivable
Short-term financial investments
Cash and cash equivalents
Other current assets
CURRENT ASSETS TOTAL

As can be judged from the data in Table 6, during 2013-2015 there is an increase in the value of assets - by 69.19% due to the growth of current and non-current assets (Table 6). In general, the company is able to effectively manage working resources, because in the conditions of sales growth by 77.58%, the amount of current assets increased by only 60.65%. The credit policy of the enterprise is of high quality: in the conditions of a significant increase in revenue, the amount of receivables, the basis of which was the debt of buyers and customers, increased only by 45.29%.

The amount of cash and cash equivalents is growing from year to year and amounted to about 29 billion rubles. Given the value of the absolute liquidity indicator, it can be argued that this indicator is too high - if the absolute liquidity of the big competitor UTair is only 19.99, while in Aeroflot PJSC this figure was 24.95%. Money is the least productive part of the assets, so if there are free funds, they should be directed, for example, to short-term investment instruments. This will provide additional financial income.

Due to the depreciation of the ruble, the cost of inventories increased significantly due to an increase in the cost of components, spare parts, materials, as well as due to an increase in the cost of jet fuel despite the decline in oil prices. Therefore, stocks grow faster than sales volume.

The main factor behind the growth of non-current assets is the increase in accounts receivable, payments on which are expected more than 12 months after the date of the report. The basis of this indicator is advance payments for the supply of A-320/321 aircraft, which will be received by the company in 2017-2018. In general, this trend is positive, as it allows the company to ensure the development and increase of competitiveness.

The enterprise financing policy is as follows:

Table 7 - Dynamics of the sources of financial resources of Aeroflot PJSC in 2013-2015, million rubles

Indicators				Absolute deviation, +,-		Relative deviation, %
Authorized capital (share capital, authorized fund, contributions of comrades)
Own shares repurchased into shareholders
Revaluation of non-current assets
Reserve capital
Retained earnings (uncovered loss)
OWN CAPITAL AND RESERVES
Long-term borrowings
Deferred tax liabilities
Provisions for contingent liabilities
LONG-TERM LIABILITIES TOTAL
Short-term borrowings
Accounts payable
revenue of the future periods
Reserves for future expenses and payments
SHORT-TERM LIABILITIES TOTAL

A clearly negative trend is the reduction in the amount of equity by 13.4 for the study period due to a significant net loss in 2015 (Table 7). This means that the wealth of investors has significantly decreased, and the level of financial risks has increased due to the need to raise additional funds to finance the growing volume of assets.

As a result, the amount of long-term liabilities increased by 46%, and the amount of current liabilities - by 199.31%, which led to a catastrophic decline in solvency and liquidity indicators. A significant increase in borrowed funds leads to an increase in financial costs for debt servicing.

Table 8 - Dynamics of PJSC Aeroflot's financial results in 2013-2015, million rubles

Indicators				Absolute deviation, +,-		Relative deviation, %
Cost of sales
Gross profit (loss)
Selling expenses
Management expenses
Profit (loss) from sales
Income from participation in other organizations
Interest receivable
Percentage to be paid
Other income
other expenses
Profit (loss) before tax
Current income tax
Change in deferred tax liabilities
Change in deferred tax assets
Net income (loss)

In general, the process of forming the financial result was inefficient due to an increase in interest payable and other expenses by 270.85%, as well as due to an increase in other expenses by 416.08% (Table 8). The write-off of PJSC Aeroflot's share in the authorized capital of Dobrolet LLC resulted in a significant increase in the latter indicator due to the termination of operations. Although this is a significant loss of funds, it is not a permanent expense, so it does not say anything bad about the ability to carry out uninterrupted operations. However, other reasons for the growth of other expenses may threaten the stable operation of the company. In addition to the write-off of part of the shares, other expenses also increased due to leasing expenses, expenses from hedging transactions, as well as due to the formation of significant reserves. All this indicates ineffective risk management in the framework of financial activities.

Indicators

Absolute deviation, +,-

Current liquidity ratio

Quick liquidity ratio

Absolute liquidity ratio

The ratio of short-term receivables and payables

Liquidity indicators indicate serious solvency problems already in the short term (Table 9). As mentioned earlier, absolute liquidity is excessive, which leads to incomplete use of the financial potential of the enterprise.

On the other hand, the current ratio is significantly below the norm. If in UTair, the company's direct competitor, the indicator was 2.66, then in Aeroflot PJSC it was only 0.95. This means that the company may experience problems with the timely repayment of current liabilities.

Table 10 – Financial stability indicators of PJSC Aeroflot in 2013-2015

Indicators				Absolute deviation, +,-
Own working capital, million rubles
Coefficient of current assets provision with own funds
Maneuverability of your own working capital
Coefficient of provision with own working capital stocks
Financial autonomy ratio
Financial dependency ratio
Financial leverage ratio
Equity maneuverability ratio
Short-term debt ratio
Financial stability ratio (investment coverage)
Asset mobility ratio	Financial autonomy also dropped significantly to 26% in 2015 from 52% in 2013. This indicates a lower level of creditor protection and a high level of financial risks. The indicators of liquidity and financial stability made it possible to understand that the state of the company is unsatisfactory. Consider also the company's ability to generate a positive financial result. Table 11 – Business activity indicators of Aeroflot PJSC (turnover indicators) in 2014-2015 Indicators Absolute deviation, +,- Equity turnover Asset turnover, transformation ratio return on assets Working capital turnover ratio (turnover) Period of one turnover of working capital (days) Inventory turnover ratio (turns) Period of one inventory turnover (days) Accounts receivable turnover ratio (turnover) Receivables repayment period (days) Accounts payable turnover ratio (turnover) Payables repayment period (days) Lead time (days) Operating cycle period (days) Financial cycle period (days) In general, the turnover of the main elements of assets, as well as equity, increased (Table 11). However, it is worth noting that the reason for this trend is the growth of the national currency, which led to a significant increase in ticket prices. It is also worth noting that the asset turnover is significantly higher than that of UTair's direct competitor. Therefore, it can be argued that, in general, the operating process of the company is effective. Table 12 - Profitability (loss ratio) of PJSC Aeroflot Indicators Absolute deviation, +,- Profitability (liabilities) of assets, % Return on equity, % Profitability of production assets, % Profitability of sold products by profit from sales, % Profitability of sold products in terms of net profit, % Reinvestment ratio, % Coefficient of sustainability of economic growth, % Payback period of assets, year Payback period of equity, year The company was unable to generate profit in 2015 (Table 12), which led to a significant deterioration in the financial result. For each attracted ruble of assets, the company received 11.18 kopecks of net loss. In addition, the owners received 32.19 kopecks of net loss for each ruble of invested funds. Therefore it is obvious that financial efficiency company is unsatisfactory. 2. Thomas R. Robinson, International financial statement analysis / Wiley, 2008, 188 pp. 3. site - Online program for calculating financial indicators // URL: https://www.site/ru/

Financial Analysis: What is it?

The financial analysis- this is the study of the main indicators of the financial condition and financial performance of the organization in order to make management, investment and other decisions by interested parties. Financial analysis is part of broader terms: analysis of financial and economic activity enterprises and economic analysis.

In practice, financial analysis is carried out using MS Excel tables or special programs. During the analysis of financial and economic activities, both quantitative calculations of various indicators, ratios, coefficients, as well as their qualitative assessment and description, comparison with similar indicators of other enterprises are made. Financial analysis includes an analysis of the assets and liabilities of the organization, its solvency, liquidity, financial results and financial stability, analysis of asset turnover (business activity). Financial analysis allows you to identify such important aspects as the possible likelihood of bankruptcy. Financial analysis is an integral part of the activities of such professionals as auditors, appraisers. Banks are actively using financial analysis when deciding whether to issue loans to organizations, accountants in the course of preparing explanatory note to the annual accounts and other specialists.

Basics financial analysis

The basis of financial analysis is the calculation of special indicators, more often in the form of coefficients characterizing one or another aspect of the organization's financial and economic activities. Among the most popular financial ratios are the following:

1) The coefficient of autonomy (the ratio of equity to the total capital (assets) of the enterprise), the coefficient of financial dependence (the ratio of liabilities to assets).

2) Current liquidity ratio (the ratio of current assets to short-term liabilities).

3) Quick liquidity ratio (the ratio of liquid assets, including cash, short-term financial investments, short-term receivables, to short-term liabilities).

4) Return on equity (the ratio of net profit to equity of the enterprise)

5) Profitability of sales (the ratio of profit from sales (gross profit) to the company's revenue), by net profit (the ratio of net profit to revenue).

Methods of financial analysis

Typically, the following methods of financial analysis are used: vertical analysis (for example,), horizontal analysis, predictive analysis based on trends, factorial and other methods of analysis.

Among the legislatively (regulatory) approved approaches to financial analysis and methods, the following documents can be cited:

• Decree of the Federal Office for Insolvency (Bankruptcy) of August 12, 1994 N 31-r
• Decree of the Government of the Russian Federation of June 25, 2003 N 367 "On approval of the Rules for conducting a financial analysis by an arbitration manager"
• Regulation of the Central Bank of June 19, 2009 N 337-P "On the procedure and criteria for assessing the financial situation legal entities- founders (participants) of a credit institution"
• Order of the FSFR of the Russian Federation of January 23, 2001 N 16 "On approval of the" Guidelines for the analysis of the financial condition of organizations "
• Order of the Ministry of Economy of the Russian Federation of October 1, 1997 N 118 "On approval methodological recommendations on the reform of enterprises (organizations)"

It is important to note that financial analysis is not just a calculation of various indicators and ratios, a comparison of their values ​​in statics and dynamics. The result of a qualitative analysis should be a reasonable, supported by calculations, conclusion about the financial position of the organization, which will become the basis for decision-making by management, investors and other interested parties (see example). This principle was the basis for the development of the program "Your Financial Analyst", which not only prepares a full report on the results of the analysis, but also does it without user participation, without requiring knowledge of financial analysis from him - this greatly simplifies the life of accountants, auditors, economists .

Sources of information for financial analysis

Very often, interested parties do not have access to the internal data of the organization, therefore, public information is the main source of information for financial analysis. financial statements organizations. The main reporting forms - the Balance Sheet and the Profit and Loss Statement - make it possible to calculate all the main financial indicators and ratios. For a deeper analysis, you can use the statements of cash flows and capital of the organization, which are compiled at the end of the financial year. An even more detailed analysis of certain aspects of the enterprise's activities, for example, the calculation of the break-even point, requires initial data that lie outside the reporting area (data from current accounting and production accounting).

For example, you can get a financial analysis based on your Balance Sheet and Profit and Loss Statement for free online on our website (both for one period and for several quarters or years).

Altman Z-model (Altman Z-score)

Altman Z-model(Altman Z-score, Altman Z-Score) is a financial model (formula) developed by American economist Edward Altman, designed to predict the probability of bankruptcy of an enterprise.

Enterprise Analysis

under the expression " enterprise analysis"usually imply financial (financial-economic) analysis, or a broader concept, analysis of the economic activity of an enterprise (AHD). Financial analysis, analysis of economic activity refers to microeconomic analysis, i.e. the analysis of enterprises as separate economic entities (as opposed to macroeconomic analysis, which involves the study of the economy as a whole).

Business Activity Analysis (AHA)

Via business analysis organization, general trends in the development of the enterprise are studied, the reasons for changing the results of activities are investigated, plans for the development of the enterprise are developed and approved and adopted management decisions, control over the implementation of approved plans and decisions taken, reserves are identified in order to increase production efficiency, the results of the company's activities are evaluated, and an economic strategy for its development is developed.

Bankruptcy (Bankruptcy Analysis)

bankruptcy, or insolvency- this is the inability of the debtor recognized by the arbitration court to fully satisfy the claims of creditors for monetary obligations and (or) fulfill the obligation to make mandatory payments. The definition, basic concepts and procedures related to the bankruptcy of enterprises (legal entities) are contained in the Federal Law of October 26, 2002 N 127-FZ "On Insolvency (Bankruptcy)".

Vertical reporting analysis

Vertical reporting analysis- a technique for analyzing financial statements, in which the ratio of the selected indicator with other homogeneous indicators within one reporting period is studied.

Horizontal reporting analysis

Horizontal reporting analysis is a comparative analysis of financial data for a number of periods. This method also known as "trend analysis".

Financial analysis at the enterprise is needed for an objective assessment of the economic and financial condition in the periods of past, present and predicted future activities. To identify weak production areas, hotbeds of problems, to identify strong factors that management can rely on, the main financial indicators are calculated.

An objective assessment of the company's position in terms of economy and finances is based on financial ratios, which are a manifestation of the ratio of individual accounting data. The purpose of financial analysis is to solve a selected set of analytical tasks, that is, a specific analysis of all primary sources of accounting, management and economic reporting.

The main objectives of economic and financial analysis

If the analysis of the main financial indicators of the enterprise is considered as revealing the true state of affairs in the enterprise, then the results are answers to the following questions:

• the company's ability to invest in investing in new projects;
• the present course of affairs in relation to tangible and other assets and liabilities;
• the state of loans and the ability of the enterprise to repay them;
• the existence of reserves to prevent bankruptcy;
• identification of prospects for further financial activities;
• valuation of the enterprise in terms of cost for sale or conversion;
• tracking the dynamic growth or decline of economic or financial activities;
• identifying the causes that negatively affect the results of management and finding ways out of the situation;
• consideration and comparison of income and expenses, identification of net and total profit from sales;
• study of the dynamics of income for the main goods and in general from the entire sale;
• determination of the part of income used for reimbursement of costs, taxes and interest;
• study of the reason for the deviation of the amount of balance sheet profit from the amount of income from sales;
• study of profitability and reserves for its increase;
• determination of the degree of conformity of own funds, assets, liabilities of the enterprise and the amount of borrowed capital.

Stakeholders

The analysis of the main financial indicators of the company is carried out with the participation of various economic representatives of departments interested in obtaining the most reliable information about the affairs of the enterprise:

• internal entities include shareholders, managers, founders, audit or liquidation commissions;
• external are represented by creditors, audit offices, investors and employees of state bodies.

Financial Analysis Capabilities

The initiators of the analysis of the work of the enterprise are not only its representatives, but also employees of other organizations interested in determining the actual creditworthiness and the possibility of investment in the development of new projects. For example, bank auditors are interested in the liquidity of a firm's assets or its current ability to pay its bills. Legal entities and individuals who wish to invest in the development fund of this enterprise are trying to understand the degree of profitability and the risks of the contribution. Evaluation of the main financial indicators using a special methodology predicts the bankruptcy of an institution or speaks of its stable development.

Internal and external financial analysis

Financial analysis is part of the overall economic analysis of the enterprise and, accordingly, part of a complete economic audit. The full analysis is subdivided into on-farm managerial and external financial audit. This division is due to two practically established systems in accounting - managerial and financial accounting. The division is recognized as conditional, since in practice external and internal analysis complement each other with information and are logically interconnected. There are two main differences between them:

• by accessibility and breadth of the information field used;
• degree of application of analytical methods and procedures.

An internal analysis of the main financial indicators is carried out to obtain generalized information within the enterprise, determine the results of the last reporting period, identify free resources for reconstruction or re-equipment, etc. To obtain the results, all available indicators are used, which are also applicable in the study by external analysts.

External financial analysis is performed by independent auditors, outside analysts who do not have access to the firm's internal results and performance. Methods of external audit suggest some limitation of the information field. Regardless of the type of audit, its methods and methods are always the same. Common in external and internal analysis is the derivation, generalization and detailed study of financial ratios. These basic financial indicators of the company's activities provide answers to all questions regarding the work and prosperity of the institution.

Four main indicators of financial condition

The main requirement for the break-even functioning of an enterprise in the conditions of market relations is economic and other activities that ensure profitability and profitability. Economic activities are aimed at reimbursement of expenses by the income received, making a profit to meet the economic and social needs of the members of the team and the material interests of the owner. There are many indicators to characterize activities, in particular, they include gross income, turnover, profitability, profit, costs, taxes and other characteristics. For all types of enterprises, the main financial indicators of the organization's activities are identified:

• financial stability;
• liquidity;
• profitability;
• business activity.

Indicator of financial stability

This indicator characterizes the ratio of the organization's own funds and borrowed capital, in particular, how much borrowed funds per 1 ruble of money invested in tangible assets. If such an indicator in the calculation turns out to be more than 0.7, then the financial position of the company is unstable, the activity of the enterprise to some extent depends on the attraction of external borrowed funds.

Liquidity characteristic

This parameter indicates the main financial indicators of the company and characterizes the sufficiency of the organization's current assets to pay off its own short-term debts. It is calculated as the ratio of the value of current current assets to the value of current passive liabilities. The liquidity indicator indicates the possibility of converting the assets and values ​​of the company into cash capital and shows the degree of mobility of such a transformation. The liquidity of an enterprise is determined by two angles:

• the period of time required to turn current assets into money;
• the ability to sell assets at a specified price.

To identify the true indicator of liquidity, the enterprise takes into account the dynamics of the indicator, which allows not only to determine the financial strength of the company or its insolvency, but also to identify the critical state of the organization's finances. Sometimes the liquidity ratio is low due to the increased demand for the industry's products. Such an organization is quite liquid and has a high degree of solvency, since its capital consists of cash and short-term loans. The dynamics of the main financial indicators shows that the situation looks worse if the organization has working capital only in the form of a large amount of stored products in the form of current assets. For their transformation into capital, a certain time for implementation and the presence of a buyer base are required.

The main financial indicators of the enterprise, which include liquidity, show the state of solvency. The firm's current assets should be sufficient to repay current short-term loans. In the best position, these values ​​are approximately at the same level. If the enterprise has working capital much more in value than short-term loans, then this indicates an inefficient investment of money by the enterprise in current assets. If the amount of working capital is lower than the cost of short-term loans, this indicates the imminent bankruptcy of the company.

As a special case, there is an indicator of fast current liquidity. It is expressed in the ability to repay short-term liabilities at the expense of the liquid part of the assets, which is calculated as the difference between the entire current part and short-term liabilities. International Standards determine the optimal level of the coefficient in the range of 0.7-0.8. The presence of a sufficient number of liquid assets or net working capital in the enterprise attracts creditors and investors to invest in the development of the enterprise.

Profitability indicator

The main financial performance indicators of the organization include the value of profitability, which determines the effectiveness of the use of the funds of the company's owners and, in general, shows how profitable the work of the enterprise is. The value of profitability is the main criterion for determining the level of the exchange quotation. To calculate the indicator, the amount of net profit is divided by the amount of the average profit from the sale of the company's net assets for the selected period. The indicator reveals how much net profit each unit of the sold product brought.

The generated income ratio is used to compare the income of the company in question, compared with the same indicator of another company operating under a different taxation system. The calculation of the main financial indicators of this group provides for the ratio of the profit received before taxes and due interest to the assets of the enterprise. As a result, information appears about how much profit was brought by each monetary unit invested for work in the company's assets.

Business activity indicator

It characterizes how much finance is obtained from the sale of each monetary unit of a certain type of asset and shows the turnover rate of the financial and material resources of the organization. For the calculation, the ratio of net profit for the selected period to the average cost of costs in material terms, money and short-term securities is taken.

There is no normative limit for this indicator, but the company's management forces strive to accelerate turnover. The constant use of outside loans in economic activity indicates an insufficient flow of finance as a result of sales, which do not cover production costs. If the amount of turnover assets on the organization's balance sheet is overstated, this results in the payment of additional taxes and interest on bank loans, which leads to a loss of profit. Low active funds lead to delays in execution production plan and loss of profitable commercial projects.

For an objective visual examination of economic activity indicators, special tables are compiled that show the main financial indicators. The table contains the main characteristics of work for all parameters of financial analysis:

• inventory turnover ratio;
• the indicator of the turnover of accounts receivable of the company in the time period;
• value of return on assets;
• resource return indicator.

Inventory turnover ratio

Shows the ratio of revenue from the sale of goods to the amount in monetary terms stocks in the enterprise. The value characterizes the rate of sale of material and commodity resources classified as a warehouse. An increase in the coefficient indicates the strengthening of the financial position of the organization. The positive dynamics of the indicator is especially important in the context of large accounts payable.

Accounts receivable turnover ratio

This ratio is not considered as the main financial indicators, but is an important characteristic. It shows the average time period in which the company expects payment after the sale of goods. The ratio of receivables to the average daily sales proceeds is taken for calculation. The average is obtained by dividing the total revenue for the year by 360 days.

The resulting value characterizes the contractual terms of work with buyers. If the indicator is high, it means that the partner provides preferential working conditions, but this causes caution among subsequent investors and creditors. A small value of the indicator leads in market conditions to a revision of the contract with this partner. An option for obtaining the indicator is a relative calculation, which is taken as the ratio of sales proceeds to the company's receivables. An increase in the coefficient indicates an insignificant debt of debtors and a high demand for products.

The value of return on assets

The main financial indicators of the enterprise are most fully complemented by the return on assets indicator, which characterizes the turnover rate of finances spent on the acquisition of fixed assets. The calculation takes into account the ratio of revenue from goods sold to the annual average cost of fixed assets. An increase in the indicator indicates a low cost of expenses in terms of fixed assets (machines, equipment, buildings) and a high volume of goods sold. A high return on assets indicates low production costs, and a low return on assets indicates an inefficient use of assets.

Resource return rate

For the most complete understanding of how the main financial indicators of the organization's activities are formed, there is an equally important coefficient of return on resources. It shows the degree of efficiency of the company's use of all assets on the balance sheet, regardless of the method of acquisition and receipt, namely, how much revenue is received for each monetary unit of fixed and current assets. The indicator depends on the depreciation calculation procedure adopted at the enterprise and reveals the degree of illiquid assets, which are disposed of in order to increase the coefficient.

Key financial indicators of LLC

The coefficients for managing sources of income show the structure of finances, characterize the protection of the interests of investors who have made long-term injections of assets into the development of the organization. They reflect the firm's ability to repay long-term loans and credits:

• the share of loans in the total amount of financial sources;
• ownership ratio;
• capitalization ratio;
• coverage ratio.

The main financial indicators are characterized by the amount of borrowed capital in the total mass of financial sources. The leverage ratio determines the specific amounts of asset acquisitions with borrowed money, which include long-term and short-term financial obligations of the firm.

The ownership ratio complements the main financial indicators of the enterprise with a characteristic of the share of equity spent on the acquisition of assets and fixed assets. The guarantee of obtaining loans and investing investor money in the project of development and re-equipment of the enterprise is the indicator of the share of own funds spent on assets in the amount of 60%. This level is an indicator of the stability of the organization and protects it from losses during a downturn in business activity.

The capitalization ratio determines the proportional relationship between borrowings from various sources. To determine the proportion between own funds and borrowed finance, the inverse leverage ratio is used.

The indicator of security of interest payable or the coverage indicator characterizes the protection of all types of creditors from non-payment of the interest rate. This ratio is calculated as the ratio of the amount of profit before paying interest to the amount of money intended for paying interest. The indicator shows how much during the selected period the company gained money to pay borrowed interest.

Market activity indicator

The main financial indicators of the organization in terms of market activity indicate the position of the enterprise in the securities market and allow managers to judge the attitude of creditors to general activities companies for the past period and in the future. The indicator is considered as the ratio of the initial accounting value of the share, the income received on it and the prevailing market price at the given time. If all other financial indicators are in the acceptable range, then the indicator of market activity will also be normal with a high market value of the share.

In conclusion, it should be noted that financial analysis economic structure organization is important for all stakeholders, shareholders, short-term and long-term creditors, founders and management staff.

Ratio analysis is part of the financial analysis, which acts as a system of extended initial analysis of financial statements. The task of such an analysis is to provide information about economic operations, the functioning of the enterprise and, above all, its financial condition. This information is used by management in the process of managing the business environment: creditors, contractors, investors, auditors, etc. The methodology for conducting a coefficient analysis of the financial condition of an enterprise has its own characteristics, stages for each block of coefficients.

Essence of Analysis

The coefficient analysis method is a kind quantitative research and is based on indicators representing the relationship of specific financial values ​​that are important from the point of view of their relationship. The choice of indicators that can be calculated for financial companies is very wide. However, the calculation of an excessive number of indicators of the coefficient analysis of the company's financial condition can confuse the analysis. Therefore, countries with market economies usually use a limited set of the most effective indicators to characterize the versatile aspects of a company's management.

The ratio analysis method is performed on the basis of the original financial statements of the company, taking into account, in particular, the economic values ​​included in the balance sheet and financial results. When calculating the ratios, it is important to take into account the significant difference between the balance sheet, which illustrates the financial condition of the organization at the date of preparation, and the statement of financial results, which represents data for the period preceding the balance sheet date. When constructing indicators of coefficient analysis, consisting of the amounts coming from both of these documents, one should take into account the value of profits and losses. The arithmetic mean of the values ​​of balance indicators is also taken into account.

Certain values ​​of indicators when applying the coefficient method of financial analysis are evaluated by equating them to the established standards. These standards are expressed as ranges of values ​​or boundary values. The method of their horizontal analysis is applied, in which the change in indicators is assessed in subsequent periods, that is, the trends of these changes are analyzed. The interpretation of the coefficient analysis of the balance sheet also uses an assessment of the obtained values ​​against the background of the industry in which the company operates.

This is especially important due to the fact that the norms of indicators adopted in the literature are calculated for all enterprises operating in various industries, trade, Agriculture v different countries. When conducting a coefficient analysis, one should take into account the possibility of incomparability of the obtained values, due either to changes in macroeconomic conditions in the economy, or differences in the construction of individual indicators.

The name of the areas of analysis of indicators used in the literature, in which analytical indicators are classified, is not uniform.

Study of cash flows when using ratios

To conduct a coefficient analysis of an enterprise, the following coefficients for the study of cash flows are used:

• solvency indicator K1

K1 \u003d (DSn + DSp) / DSi,

where DSN - funds at the beginning;

DSP - funds received;

This ratio determines whether the company is able to provide payments of money for a certain period of time using the balance of bank accounts, cash registers or inflows for the period.

The optimal value of the coefficient when conducting a coefficient analysis of cash flows is 1.

• solvency ratio K2

K2 \u003d DSp / DSi,

where DSP - funds received;

DSi - funds that have been spent.

The coefficient means that the company has its own funds to pay off debts (or, conversely, does not have). The standard is also 1.

• self-financing interval

I \u003d (DS + KFV-DZ) / Rds,

where KFV - short-term financial investments, average values ​​for the period;

DZ - the average value of receivables for the period;

DS - cash;

Rds - average daily cash flow.

This coefficient, when conducting a coefficient analysis of cash flows, shows whether the company has the opportunity to carry out its activities without interruption with the help of monetary resources received for the sale of products.

• Beaver coefficient:

Kb \u003d (PE + Am) / (DO + KO),

where Chp - the amount of net profit;

Am - depreciation amount;

Before - obligations of the long-term period;

KO - obligations of the short-term period.

This ratio characterizes the solvency of the company. It can be calculated by cash flow. The standard is in the range from 0.4 to 0.45.

• cash adequacy indicator:

Kd \u003d DS / OP,

where DS - cash on the date;

OP- obligations for repayment.

The indicator indicates the current solvency of the company at the studied moment and period of time.

• revenue quality ratio:

Kv \u003d DS / V

It characterizes the share of cash in the company's revenue structure. With a high value of the coefficient, we can say that the company is financially stable.

• net cash flow sufficiency indicator K1:

K1 \u003d DPTd / (ZK + Z + D),

where DPTd - net cash flow for current activities;

ZK - borrowed capital;

З - stocks;

D - dividends.

Determines the sufficiency of the net cash flow generated by the organization, taking into account the funding needs

• cash flow efficiency ratio K2

K2 \u003d DPTd / DPO,

where DPO is the outflow of cash flows.

• profitability indicator of cash inflow K3

K3 \u003d CHP / NPV * 100,

where PE - net profit;

NPV - net cash flow for the period

The coefficient method of cash flow analysis allows the company to assess the effectiveness of the use of cash and finances of the company.

Liquidity research using ratios

In the coefficient analysis of liquidity, it is studied in two aspects:

• in a statistical sense: in relation to a certain moment, for example, on the balance sheet date, using the main financial statements: balance sheet and income statement and traditional ratios;
• in dynamic terms of ratio financial analysis: for a certain period, based on the cash flow statement.

Thus, a study of the company's liquidity is carried out, that is, its ability to repay short-term obligations that are payable within 1 year.

• Current liquidity indicator Ktl:

Ktl \u003d OA / KO,

where OA - the amount of current assets, t. R.;

KO - obligations of the short-term period, t.

This indicator determines how many times the assets at the disposal of the company, ways to cover their current obligations to third parties: suppliers, employees, government agencies, etc.

Determining the level of current assets and liabilities is possible only by the enterprise itself, since the information necessary to adjust current assets and liabilities is not presented in the financial statements. For this reason, unadjusted values ​​of current assets and short-term liabilities are reflected in the modified form of the coefficient:

(Z + DZ + DS + POA) / TO,

where Z - reserves;

DZ - receivable;

Ds - cash;

POA - other current assets;

TO - current liabilities

The rational value of this indicator should be within the established range. An index below 1.2 indicates a threat to the company's ability to meet its current obligations, which can directly affect the efficiency of the company's business operations. An index above 2.0 indicates an enterprise surplus, i.e. poor management.

• Quick liquidity indicator

Kbl \u003d (KDZ + FV + DS) / TO,

where KDZ is a short-term receivable, i.e.

PV - financial investments, t.

DS - cash, t.

TO - current liabilities, t.

This indicator determines how many times the current assets with a high degree of liquidity at the disposal of the company cover their current liabilities to third parties. This ratio is adjusted in relation to the current liquidity ratio for the least liquid current assets - stocks and accruals.

The optimal level of this ratio should be 1.0, that is, current liabilities should be fully covered by current assets with a high degree of liquidity. In the case of enterprises characterized by a rapid turnover of assets (for example, trading), this standard is reduced to 0.7.

A low value of this indicator may indicate liquidity problems, while a high value of this indicator indicates an unproductive accumulation of cash and a high level of receivables, which can Negative influence on company results.

Debt Analysis Using Ratios

When conducting a coefficient analysis of an enterprise, the ratio of debt to assets, to capital and equity in the debt meter is always in the denominator. It should be emphasized that the calculation of total capital also includes debt and equity.

This analysis is closely related to the coefficient analysis of the company's solvency.

• Leverage ratio - the ratio of the average value of assets to equity, calculated as an average value.
• Interest coverage ratio is EBIT divided by interest.
• The capital cost coverage ratio is the amount of rental payments and earnings before interest and taxes, divided by the amount of interest and lease fees.

Debt ratios characterize, on the one hand, the degree of debt of the enterprise, and on the other hand, its ability to repay obligations.

• Total Debt Ratio Kob:

Kob \u003d O / A,

where O is the total amount of the company's liabilities;

A is the company's assets.

The ratio of the total debt of borrowed capital Kcc determines the share of borrowed capital in financing the company's assets.

The accepted, acceptable level of participation of borrowed capital in the company's assets is within the established range. A ratio below 0.57 can be interpreted as poor management of funding sources, while a ratio above 0.67 indicates a high risk of the company losing its ability to repay its debt. In enterprises with exceptionally poor economic and financial situation the ratio of the total debt of borrowed capital exceeds 1.

• Long-term debt ratio Kdz

Kdz \u003d DO / SK,

where TO - obligations of the long-term period;

SC - equity.

This ratio, also called debt ratio, risk ratio, or leverage ratio, reports the level of coverage of long-term liabilities by equity. According to the standard for this indicator, its quantity must be within the established range. If the indicator exceeds the level of 1.0, the enterprise is considered to be heavily indebted.

• Equity debt ratio:

Kdss = OO / SK,

where OO - general obligations;

SC - equity.

This indicator informs about the level of indebtedness of the company's equity. And at the same time, about the ratio of borrowed capital to equity as a source of financing for the enterprise. It is assumed that the value of this indicator should not exceed 1.0 for large and medium enterprises and 3.0 for small enterprises.

• Debt coverage ratio based on net financial result Кп:

Kp \u003d CFR / (KR + P),

KP - capital installments;

P - percentage

This ratio determines how many times the net financial result covers the maintenance of principal payments and interest. In an enterprise with the correct financial situation, this ratio should be greater than 1.0.

• Debt coverage ratio for servicing EBIT:

Kp \u003d (VFR + P) / (KR + P),

where FVR - gross financial result;

P - interest;

KR - capital installments

This indicator shows how many times the income before taxes and interest covers the repayment of capital contributions and interest, i.e. the extent to which profits provide debt service. The minimum threshold is 1.2. The World Bank suggests that it should be more than 1.3.

• Debt service coverage from cash flow U:

Y \u003d (NFR + A) / (KR + P),

where NFR is the net financial result;

A - depreciation;

KR - capital installments;

P - percentage

This ratio determines the coverage of debt service by the net financial surplus. The optimal threshold is 1.5, i.e. the amount of profit before tax, together with depreciation, should be at least 50% higher than the annual loan payment plus interest.

The interest coverage ratio measures a company's ability to pay interest on time. If both interest and capital contributions are to be paid at the same time, there is no need to include this figure in the analysis.

The essence of financial stability

When conducting ratio analysis of financial health, financial soundness is the situation in which the financial system, i.e. financial intermediaries, markets and market infrastructures, is able to withstand economic shocks and sudden adjustments in financial imbalances.

Financial sustainability concerns the study of the indicators of the company's capital and their relationship to each other.

Due to the ratio analysis of financial stability, the likelihood of serious financial distortions in the process of financial intermediation, which can adversely affect the functioning of the real economy, is reduced.

In terms of market relations, financial stability is evidence of the stability of the company and its ability to survive. That is, it indicates the state of the company's resources now, the ability to freely apply the company's finances, while ensuring the creation of a product and covering costs.

The main goal of management when conducting a ratio analysis of the financial condition is the ability to ensure the stability of the company, whose activities are focused on generating income.

The financial stability of the company is a certain state of the organization, when the solvency is constant over time, and the borrowed and equity capital have a rational structure. As a result, stability is displayed by such a state of financial resources that corresponds to the market and indicates the need for the company's development.

Stability and resilience is formed in the process of economic work and is the main element of the company's resilience.

Study of financial stability using ratios

Tasks of studying monetary financial stability when conducting a coefficient analysis of the finances of enterprises:

• assessment of the viability and financial stability of the company, identification of violations and their circumstances;
• development of tips and ways to increase the financial stability and solvency of the company;
• efficient deployment of resources and normalization of monetary stability;
• forecasting possible monetary outcomes and probable monetary sustainability depending on different methods of resource use.

Among the main coefficients are the following.

• Financial stability coefficient:

Kf \u003d (SK + DK) / P,

where SC is the company's own capital;

DK - obligations of the long-term plan;

P - the company's liabilities.

The standard for this coefficient is 0.8-0.9. Getting into this framework characterizes the stability of the company from a positive point of view:

• The indicator of the concentration of borrowed capital is the difference between "1" and the indicator of financial stability. If the company's capital level is high, then it can be characterized positively in terms of stability. In such a situation, investors are more willing to invest in the development of the company, as they are sure that in the event of adverse factors, their investments can be returned from their own capital.
• The opposite indicator of the value of autonomy is the indicator of financial dependence, which is determined by the ratio of liabilities to the amount of equity capital and liabilities of the long-term plan.
• The agility indicator reflects the part of the capital aimed at maintaining the current functioning of the company. This indicator does not have a standard, and the trend of its growth is considered a positive moment.
• The indicator of the ratio of borrowed and own funds of the company characterizes the amount of equity per ruble of borrowed. If the value is higher than 1, there is a situation of excess borrowed funds, which adversely affects the stability of the organization.
• The indicator of the security of current assets with own working capital. It reflects how much working capital is generated by the company's own funds. The guideline value is defined above 0.1.

Profitability analysis using ratios

Profitability ratios are closely related to the results of the company, which are used in the ratio analysis of financial statements. There are no specific standards for some of the metrics in this category that are related to profit. It is assumed that the purpose of the company is to make a profit, so each of the indicators related to it should not take negative values.

• Coverage ratio of losses of previous years by current profit Кп:

KP \u003d TP / U * 100,

where TP - current profit;

Y - loss from previous years.

An index greater than 100% indicates that the company has fully covered the losses of previous years. An indicator in an open range (0%-100%) indicates that the company has covered some of the losses. If this indicator is 0%, it means that it does not generate current profit and cannot cover the losses of previous years.

• In this case, it is also advisable to calculate the accumulated loss coverage ratio with own capital Kn:

Kn \u003d SK / Y * 100,

where SC - equity;

If the ratio does not exceed 100%, the financial position of the enterprise is particularly difficult, since it cannot cover losses from equity.

• Profitability of sales Rp:

RP - VFR / D * 100,

where VFR - gross financial result;

D - income from sales.

This indicator determines the profitability of sales of the enterprise, that is, the amount of profit before tax on average for each unit of sales proceeds. This ratio is independent of the tax rate, which varies depending on the country of operation.

The optimal size of this indicator depends on the type of entrepreneurial activity. In enterprises characterized by short production cycles and the ability to sell quickly, profitability may be lower (short cycle means lower cost of freezing funds). Therefore, when evaluating this indicator, it is justified to refer to the average profitability in the industry in which the enterprise under study operates.

• Profitability of sales ROS: ROS = BSF / D * 100,

where NFR is the net financial result;

D - income from sales.

Return on sales shows the share of net profit in the cost of sales. This ratio depends on the tax rate. The lower the value of this indicator, the higher the value of sales must be realized to make a profit. A high value of this indicator indicates a high sales efficiency.

Return on assets and equity

• Return on Assets ROA:

ROA = FR / A * 100,

A - total assets

The coefficient determines what is the amount of profit for each monetary unit involved in the assets of the company. This indicator is considered the best individual indicator managerial competencies in management.

• Return on equity ROE:

ROE \u003d FR / SK * 100,

where FR - financial result;

SK - equity

The ROE ratio shows the return on equity of the company, that is, how much money is the return on the funds invested by the owners. The size of this indicator is compared with the annual return on investment, and its size should be at least equal to the inflation rate so that the enterprise does not decapitalize.

A properly functioning enterprise maintains the following relationships: ROE > ROA > ROS.

Analysis of business activity using ratios

Ratio analysis of reporting is not presented without an analysis of the company's business activity. Global Asset Turnover Ratio Cob:

Kob \u003d D / A,

where D - income from sales;

A - assets

This indicator determines how many times the company's sales exceed its assets. Its size depends on the specifics of the industry - it is low in an industry with a high capital intensity and high in enterprises with a large share of human labor. Therefore, it is especially useful for comparing the performance of companies in the same industry.

Fixed asset turnover ratio Kos:

Kos \u003d D / OS cf,

where OS cf is the average stock of fixed assets.

This indicator determines the level of revenue from fixed assets. Its average value is 1.6. This indicator is useful for evaluating enterprises with a high proportion of fixed assets in assets. When interpreting this indicator, it should be taken into account that in the case of enterprises with old fixed assets that have already been depreciated, the value of this indicator will be overestimated.

Working capital turnover ratio Kobob:

Cobob = D / OBS,

where OBs - average current assets

This coefficient determines the turnover rate of current assets (the number of turnovers made by current assets per unit of time). The higher it is, the better the financial condition of the enterprise.

Conclusion

Ratio analysis is a continuation of the preliminary analysis of financial statements. This analysis is based on the relationship of certain financial quantities that are important in terms of their relationship.

Ratio financial analysis allows you to determine the financial position of the enterprise by the following ratios:

• liquidity;
• solvency;
• debt;
• efficiency;
• financial sustainability.

Certain values ​​of the coefficient financial analysis of the enterprise by indicators are evaluated individually in the context of the enterprise environment. Such an assessment is carried out by comparison with established standards, expressed in ranges of values ​​or boundary values, as well as by their horizontal analysis, when the change in these indicators is assessed in subsequent periods, in particular, the trend of these changes.