The activities of the enterprise can be analyzed based on certain indicators. They are calculated in order to determine how effective the functioning of a business entity is, whether it is advisable to resort to lending activities and what are its future prospects.
One of the most important areas of analysis is financial stability, which characterizes the ability of an enterprise to independently finance its activities. The level of stability is determined by a number of indicators, based on the calculation of which conclusions are drawn about the reliability of a particular business entity.
The security ratio is an indicator from the group of those that characterize financial stability. It is defined as the ratio of the company's own circulating capital and the working capital of the enterprise:
Kos = SOC / OS,
where ROC is the value of own turnover capital,
Equity circulating capital is an indicator that is the difference between the value of fixed assets:
SOK = SK-NoA,
where SK is the amount of equity capital,
NoA - non-current assets.
Sometimes, for a more accurate determination of equity capital, the value of non-current assets is deducted from the amount of equity, deferred income, and But, as a rule, this is applicable for large enterprises, because in small and medium-sized businesses, when compiling a balance sheet, the last two indicators are mainly missing.
The equity ratio indicates its ability to finance activities without resorting to the Optimal result is considered when the value of the indicator is more than 0.1. Sometimes this indicator is also defined as the working capital ratio. The algorithm for its calculation is identical to the method of the described indicator.
Along with this, there is also a ratio of stocks provision with own circulating assets. It is found by dividing its own circulating capital by the amount of reserves (the value is taken from Form 1 of the financial statements - balance sheet):
Goat = SOK / Zap, where Zap is the amount of stocks.
This indicator, as well as the equity ratio, reflects the degree of stability of the enterprise and demonstrates the extent to which inventories are covered by the enterprise itself. Its recommended value should be greater than 0.5, although than more value coefficient - the better for the enterprise. In practice, this happens quite rarely.
There are times when the values of these coefficients can be negative. This happens when non-current assets exceed own funds. Then the indicator of own turnover capital has a negative value, which, in turn, is reflected in all calculation results. This situation at the enterprise indicates that not only working capital, but also fixed assets are covered by borrowed funds.
The equity ratio is primarily calculated for manufacturing enterprises because they have large volumes of stocks available and the main source of funding is working capital. Such indicators are mainly of interest to partners and investors, because they make it possible to assess the reliability of an enterprise.
Ko = (sources of own funds. - non-current assets) / (reserves and costs + cash "other assets)
This ratio shows what part of current assets is financed from own sources. The calculation of this indicator seems illogical, since there is a lack of own circulating assets.
Analysis of the liquidity and solvency of the enterprise. The liquidity and solvency of the enterprise, i.e. the ability to timely and fully make calculations for short-term liabilities - criteria for assessing the financial condition of an enterprise.
Under liquidity any asset is understood as its ability to transform into cash, and the degree of liquidity is determined by the duration of the time period during which this transformation can be carried out. The shorter the period, the higher the degree of liquidity of this asset.
Speaking about the liquidity of an enterprise, they mean that it has working capital in an amount theoretically sufficient to pay off short-term obligations, even if the contractual maturities are violated. Solvency means that an enterprise has cash and cash equivalents sufficient to settle accounts payable requiring immediate repayment. Thus, the main features of solvency are:
Availability of sufficient funds in the current account;
No overdue accounts payable.
It is obvious that solvency and liquidity are not identical to each other. Thus, the liquidity ratios can characterize the financial position as satisfactory, but in essence this may be wrong if a significant proportion of current assets falls on illiquid assets and overdue receivables.
Assessment of liquidity and solvency can be performed with a certain degree of accuracy. In particular, within the framework of an in-depth analysis of solvency, attention is paid to the articles characterizing the availability of funds of the enterprise. This is understandable: they express the totality of cash, i.e. property that has absolute value, unlike any other property that has only relative value. These resources are the most mobile, they can be included in financial and economic activities at any time, while other types of assets can be included only after a certain period of time. The art of financial management is precisely to keep only the minimum required amount of funds in accounts, and the rest, which may be needed for current operational activities, in fast-moving assets.
Thus, for the express analysis, the more significant the amount of funds in the current account, the more likely it can be argued that the company has sufficient funds for current settlements and payments. At the same time, the presence of insignificant balances on the current account does not at all mean that the company is insolvent - funds can be credited to the current account within the next few days, some types of assets, if necessary, can easily be converted into cash.
Insolvency is evidenced, as a rule, by the presence of "sick" items in the reporting ("Losses", "Loans and loans not repaid on time", "Overdue payables and receivables", "Bills issued overdue").
Analysis of balance sheet liquidity. For the convenience of calculations and calculations, we introduce the following generally accepted designations:
Subdivision of asset items according to their degree of liquidity
A1 - the most liquid assets (line 250 + line 260);
A2 - quick-selling assets (line 230 + line 240 + line 270);
AZ - slow-moving assets (line 210 + line 140);
A4 - hard-to-sell assets (p. 190);
Subdivision of items of liability by urgency
P1 - most urgent obligations (p. 620);
P2 - short-term liabilities (p. 610);
ПЗ - long-term liabilities (line 590);
P4 - permanent liabilities (line 490 + line 640 + 650 + 660 + 670);
Table 6.10
| Assets | Passive | Payments Surplus or deficiency | |||||
| For the beginning of the year | At the end of the year | For the beginning of the year | At the end of the year | For the beginning of the year | At the end of the year | ||
| A1 | 13.806 | 10.056 | P1 | 89.542 | 126 909 | – 75.736 | –116.853 |
| A2 | 13.3196 | 207.022 | P2 | +133.196 | +.207.022 | ||
| AZ | 32.8773 | 342.063 | PZ | 411.023 | 461 240 | – 82.250 | –119.177 |
| A4 | 74.324 | 141.544 | P4 | 49.533 | 112 533 | + 24.791 | +29.011 |
To determine the liquidity of the balance sheet, it is necessary to compare the results of the selected groups for liabilities and assets. The balance is considered absolutely liquid if the following ratio is met:
A1> P1 A2> P2 AZ> PZ A4<П4.
In the analyzed enterprise, the groups of assets and liabilities are related as follows:
At the beginning of the year: A1<П1 На конец года: А1<П1
A2> P2 A2> P2
AZ<ПЗ АЗ<ПЗ
A4> P4 A4> P4
Comparison of the results of the first group for assets and liabilities, i.e. A1 and P1 (terms up to 3 months) reflect the illiquid ratio of current payments and receipts.
Comparison of the results of the second group, i.e. A2 and P2 (terms from 3 to 6 months), shows the trend of increasing current liquidity. The analysis of the third and fourth groups reflects an unsatisfactory ratio of receipts and payments.
For a comprehensive assessment of the liquidity of the balance sheet as a whole, the general liquidity indicator ( l), calculated by the formula:
l = (a1 ´ A1 + a2 ´ A2 + a3 ´ A3) / (a1 ´ P1 + a2 ´ P2 + a3 ´ PZ),
where Aj, Пj- the results of the respective groups by asset and liability,
aj- weighting factors.
From the point of view of the timing of the receipt of funds and the repayment of obligations, we will assume that a1 = 1, a2 = 0.5, a3 = 0.3, then
l beginning of the year = 13.806 + 0.5 ´ 133196 + 0.3 ´ 328773/89542 + 0.3 ´ 411023 = 0.84
l end of the year = 10056 + 0.5 ´ 207022 + 0.3 ´ 342063 / 126909+ 0.3 ´ 461240 = 0.81
This indicator reflects the decrease in liquidity during the year by 0.03. The general indicator of balance sheet liquidity considered above expresses the ability of the enterprise to carry out settlements for all types of obligations - both for the nearest and for distant ones. However, this indicator does not give an idea of the company's capabilities in terms of repayment of short-term obligations. Therefore, to assess solvency, three relative indicators of liquidity are used, differing in the set of liquid assets considered as coverage for short-term liabilities.
1. Absolute liquidity ratio(To A.L.)
This ratio is equal to the ratio of the value of the most liquid assets to the sum of the most urgent liabilities and short-term liabilities
To A.L. beginning of the year = 13.806 / 89.542 = 0.15
To A.L. end of the year = 10.056 /126.909 = 0.08
The absolute liquidity ratio shows what part of the short-term debt the company can repay in the near future. The normal limitation of this indicator is as follows: K A.L. = 0.2 - 0.5... Thus, the solvency of LLC STC Kaunsel at the time of drawing up the annual report was very low.
2. Ratio of critical liquidity(K. l .)
To calculate this ratio, accounts receivable and other assets are included in the liquid assets in the numerator of the relative indicator.
To K.L. beginning of the year = 147.002 / 89.542 = 1.64
To K.L. end of year = 217.078 / 126.909 = 1.71
The critical liquidity ratio reflects the projected payment capabilities of the enterprise, subject to timely settlements with debtors. The estimate of the lower normal bound for the coefficient looks like this:
To K.L. > 1... The critical liquidity ratio characterizes the expected solvency of the enterprise for a period equal to the average duration of one turnover of receivables.
Deb turnover debt = Revenue - net from sales / Average annual amount of deb. debt (1,618.901 / 65.723) = 24.6
Accounts receivable maturity = 365 / 24,6 = 14,8.
To increase solvency, you can give the following recommendations for managing settlements:
Monitor the status of settlements with customers,
Establish strict conditions for commodity lending,
Calculate the share of the risk of interaction with counterparties (know the financial condition of your customers).
3. Current liquidity ratio (To t.)
This ratio is equal to the ratio of the value of all current assets of the enterprise to the sum of the enterprise's short-term liabilities.
To t. beginning of the year = 328773/89542 = 3.67
To t. end of year = 342,063 / 126909 = 2.9
The current liquidity ratio shows the payment capabilities of the enterprise, assessed under the condition of not only timely settlements with debtors and favorable sale of goods and finished products, but also the sale, if necessary, of other elements of material working capital. The limitation is considered normal for this coefficient K tl> 2... The current liquidity ratio characterizes the expected solvency of the enterprise for a period equal to the average duration of one turnover of all circulating assets.
Different liquidity indicators not only provide a versatile characteristic of the stability of the financial condition of the enterprise, but also meet the interests of various external users of analytical information. So, for suppliers of raw materials and supplies, the absolute liquidity ratio is most interesting. The bank lending to this enterprise pays more attention to the critical liquidity ratio. Buyers and holders of shares and bonds to a greater extent assess the financial stability of an enterprise in terms of the current liquidity ratio.
The performed express analysis of the financial condition of LLC STC "Kaunsel" has this moment relative value, since it does not answer the main question: "How can the current financial condition affect the further course of affairs?"
Analysis of the property status, financial stability, solvency and liquidity of the balance sheet allows us to outline the general trends in the development of the financial condition of a given enterprise.
Changes have taken place in the property status of LLC STC Kaunsel, which may have a positive effect on the further financial condition. The share of non-current assets in the total value of the property from 13% to 20%. The increase was due to the growth in the amount of intangible assets. In the knowledge-intensive sphere of communication services, it is the share of intangible assets that determines high level customer service through the provision of new services.
Thus, we can conclude that the growth of intangible assets will cause an increase in revenue from the provision of additional services, attracting new customers.
A negative point that may affect the competitiveness of the enterprise is an increase in the depreciation charged on fixed assets, if this is associated with the obsolescence of fixed assets. For a more complete assessment of the impact of the composition and structure of fixed assets on the future financial condition of the enterprise, it is necessary to conduct a detailed analysis of fixed assets.
In the structure of current assets, namely stocks and costs, the unjustified, from my point of view, ratio of inventories and goods for resale causes concern. An increase in the share of inventories from 52% to 67% in the total amount of inventories and costs against the background of a decrease in the share of goods for resale (from 46% to 29%) may lead to an even greater loss of liquidity and, as a consequence, a loss of solvency.
In the structure of liabilities of the balance sheet positive point the increase in the share of own funds from 9% to 16% in the total amount of sources of funds appears to be. If the company maintains the trend of increasing equity capital at the expense of profit, then this will have a positive effect on financial stability.
The negative trend is the decrease in the share of long-term liabilities in the total amount of borrowed funds, since This will lead to an increase in the urgency of borrowed funds, which will jeopardize the company's solvency.
The analysis of financial stability revealed a lack of own circulating assets due to the low share of sources of own funds. If the company does not change the current situation by increasing the sources of its own funds, then, as a result, the solvency will constantly decrease and the dependence on borrowed funds will increase. The only way out of this situation may be to increase the share of own circulating assets.
When analyzing the liquidity of the balance sheet, low current liquidity was revealed, which can lead to a permanent payment deficit. Of course, it is not advisable to keep constantly on the account large amount cash, however, it can be recommended to convert part of the enterprise's funds into easily realizable assets.
In the analysis of the production and economic activities of any enterprise, an important role is played by the calculation of coefficients that affect its financial stability, the ability to quickly respond to changes in the industry, the company's creditworthiness and liquidity. Equity ratio also belongs to this category.
What it means, how it is calculated and how its changes affect the financial life of the company, we learn from this article.
Equity Ratio: Definition
In the production of each enterprise, its own circulating assets are necessarily involved, that is, the capital that is the property of the company. Their availability in sufficient volume is one of the main conditions for financial freedom and stability of a company in the industry. And, conversely, the absence of such capital is evidence that the current assets of the enterprise (and sometimes part of the production fixed assets) were formed at the expense of borrowed funds and, if the creditor (bank) suddenly wants to withdraw them, the organization will face financial collapse, if timely measures.
How to calculate?
This indicator, which characterizes the availability and sufficiency of own funds, determines the ratio of the share of these assets in the total volume of the company's working capital. At the end of each reporting period, the equity ratio is calculated to analyze the situation. The formula is:
K sos = C os / A, where C os - circulating own funds, A - the corresponding assets of the company.
The size of C os is calculated by reducing the amount of equity capital by the cost of non-current assets (fixed assets and intangible assets) according to the formula:
C os = K - A int
With regard to the current edition of the balance sheet form, the formula for calculating the coefficient looks like this:
K sos = (balance line (BO-1) 1300 - page BO-1 1100) / page BO-1 1200
Standard
The normal value established for the ratio at the legislative level is> 0.1, that is, 10% of the total assets of the company and is considered one of the criteria for assessing the unfavorable balance sheet structure, together with other calculated indicators. 10% is the minimum, already a critical value, allowed for the amount of own funds in the property of the organization. It shows the presence or emergence of problems - a critical level of sufficiency of own funds, low solvency and general destabilization of the enterprise.
Meaning and conclusions based on the results of calculations
The equity ratio assesses the state of the organization in terms of its solvency.
If the value of the ratio at the end of the reporting period is below 0.1, then the structure of the company's balance sheet is unsatisfactory, and its condition is close to critical. In this case, the company needs a serious revision of the adopted strategy, urgent development of urgent measures to increase financial stability, identification of negative factors that influenced the state of the organization. Sometimes radical measures are needed, for example, a change in management or production profile, the introduction of external management (if the company is a branch of a higher organization), etc. ...
Example No. 1
Let us calculate the equity ratio for the balance sheet using the following data:
Non-current assets (1st section of the balance sheet - line 1100) - 104 600 thousand rubles.
Working capital (2nd section of the balance sheet - line 1200) - 46 650 thousand rubles.
Capital / reserves (3rd section of the balance sheet - line 1300) - 129,950 thousand rubles.
K sos = (129 950 - 104 600) / 46 650 = 0.54
Based on the obtained calculation result, the following conclusions can be drawn:
The value of the coefficient is 5 times higher than the established standard (0.54 - 0.1 = 0.44);
The equity ratio of 0.54 indicates that equity in the organization's assets is 54%, that is, it exceeds half of the value of the company's property;
Such provision with own funds is characteristic for the sufficient financial stability of the company.
Example No. 2
Let's calculate the ratio of assets' own funds on the basis of other data.
Non-current assets (section 1 of BO-1 - line 1100) - 98 600 thousand rubles.
Working capital (section 2 of BO-1 - line 1200) - 15 800 thousand rubles.
Capital / reserves (3rd section of BO-1 - line 1300) - 100,000 thousand rubles.
K sos = (100 00 - 98 600) / 15 800 = 0.09
After analyzing the obtained value, the economist of the company notifies the management and provides the appropriate conclusions:
The value of the coefficient is below the critical mark by 0.01 (0.09 -, 01 = - 0.01);
Equity ratio of reserves of 0.09 shows a negligible amount of equity in the structure of the organization's assets - 9%;
Such provision with own funds speaks of a critical situation in the company - an unsatisfactory balance sheet structure, financial instability, insolvency to partners and creditors.
In conclusion, we note that it is necessary to analyze the financial condition of the enterprise on the basis of the values calculated for such an indicator as the ratio of equity. The calculation formula is simple, but the correct interpretation of the obtained values will help to take timely measures to eliminate the crisis situation.
Coefficient of provision with own circulating assets(SOS) shows the organization's sufficiency of its own funds to finance its current activities.
Calculation (formula)
According to the Order of the FSFR RF dated January 23, 2001 N 16 "On approval" Methodical instructions on the analysis of the financial condition of organizations "the ratio is calculated as follows (in the Order, he calls the ratio of equity capital):
Coefficient of provision SOS = (Equity - Non-current assets) / Current assets
The meaning of this coefficient is as follows. First, in the numerator of the formula, non-current assets are subtracted from equity. It is believed that the most low-liquid (non-current) assets should be financed from the most stable sources - equity capital. Moreover, there must still be some share of equity capital to finance current activities.
Normal value
This ratio is not widespread in Western practice of financial analysis. V Russian practice the coefficient was introduced normatively. Order of the Federal Administration for Insolvency (Bankruptcy) Cases dated 12.08.1994 N 31-r and now not in force. ) enterprises ". According to these documents, this coefficient is used as a sign of insolvency (bankruptcy) of an organization. According to these documents, the normal value of the equity ratio should be at least 0.1. It should be noted that this is a fairly strict criterion, inherent only in the Russian practice of financial analysis; most enterprises find it difficult to achieve the specified value of the coefficient.
Equity / Balance = s.1300 / s.1700
End 2013 1930008/3293652 = 0.586
Beginning 2013 1634816/2809673 = 0.582
It characterizes the independence of the company from borrowed funds and shows the share of its own funds in the total value of all funds of the company. The standard value is> 0.5, which means the level of independence of the VOMZ OJSC enterprise from creditors is included in the norm, and in the event of a requirement to pay off all debts, the enterprise will be able to satisfy them by selling 42% of its equity capital formed from its own sources.
Financial stability ratio
(Equity + Long-term liabilities) / Balance = (c.1300 + c.1400) / c.1700.
End 2013 (1930008 + 91159) / 3293652 = 0.61
Beginning 2013 (1634816 + 3912) / 2809673 = 0.58
The share of funding sources that the company can use for a long time amounted to 61%. The standard value is 80%, i.e. This suggests that OJSC VOMZ is dependent on external sources of financing and an unstable situation is possible in the future.
Debt to equity ratio (leverage)
Borrowed and attracted sources / Equity = (p. 1400 + p. 1510) / p. 1300.
End 2013 (91159 + 152431) / 1930008 = 0.13
Beginning 2013 (3912 + 0) / (1634816) = 0.002
Shows how many units of borrowed funds fall on each unit of own funds. The dynamics by the end of the year is positive, which indicates a greater dependence of the enterprise on investors and creditors. Recommended value for the enterprise< 0,7. На ОАО «ВОМЗ» данный показатель равен 0,13, что говорит о высокой финансовой устойчивости предприятия.
Permanent asset index
Non-current assets / Equity = s.1100 / s.1300.
End 2013 1191181/1930008 = 0.62
Beginning 2013 937563/1634816 = 0.57
The index of permanent assets shows what share of the sources of funds provides financing of non-current assets of the enterprise, i.e. the main is often the production capacity.
Maneuverability coefficient
Own working capital / Equity = (p. 1300 - p. 1100) / p. 1300.
End 2013 (1930008-1191181) / 1930008 = 0.38
Beginning 2013 (1634816-937563) / 1634816 = 0.43
Shows how much of your own working capital is in circulation, i.e. in the form that allows you to freely maneuver these means, and which is capitalized. The ratio should be high enough to provide flexibility in the use of the company's own funds.
A decrease in the indicator indicates a possible slowdown in the repayment of accounts receivable or a tightening of the conditions for granting a commodity credit on the part of suppliers and contractors. The increase indicates a growing ability to pay off current liabilities.
The organization does not use long-term credits and loans, since the sum of the flexibility coefficient and the permanent asset index is equal to one. Own sources cover either fixed assets or circulating assets, therefore, the amount of fixed assets and non-current assets and own circulating assets in the absence of long-term borrowed funds is equal to the amount of own funds:
Coefficient of provision of current assets with own circulating assets
Own current assets / current assets = (p. 1300 - p. 1100) / p. 1200.
End 2013 (1930008-1191181) / 2102471 = 0.35
Beginning 2013 (1634816-937563) / 1872110 = 0.37
It characterizes the presence of the company's own circulating assets, which are necessary for its financial stability. Standard value = 0.1, which indicates the ability of the company to pursue an independent financial policy.
Coefficient of provision of inventories with own circulating assets
Own working capital / Stock = (p. 1300 - p. 1100) / p. 1210.
End 2013 (1930008-1191181) / 929 206 = 0.79
Beginning 2013 (1634816-937563) / 768646 = 0.91
Shows what part of inventory and costs is financed from own sources. It is believed that the ratio of the provision of inventories with own funds should change in the range of 0.6 - 0.8, i.e. 60-80% of the company's reserves should be formed from its own sources. At OJSC VOMZ, 79% of the company's reserves are formed from its own sources, which indicates its financial stability.
The coefficient of the real value of fixed assets and material circulating assets in the property of the enterprise
(Fixed assets + Inventories) / Balance = (p. 1150 + p. 1210) / p. 1600.
End 2013 (1099172 + 929206) / 3293652 = 0.62
Beginning 2013 (871401 + 768646) / 2809673 = 0.58
Determines what share in the value of the property is made up of the means of production. Shows what potential the company has in the event of the appearance of new partners and security production process means of production. Based on the data of economic practice, a limitation is considered normal when the real value of the property is more than 0.5 of the total value of assets. Making a conclusion, we can say that the enterprise has production potential, and it is advisable for suppliers or buyers to conclude an agreement with them.
Drawing a conclusion after analyzing the financial stability of the OJSC "VOMZ" enterprise, we can say that it is dependent on external sources of financing, has sufficient autonomy and is able to satisfy the requirements of the creditor to repay debts from its own sources. Also about the financial stability of the enterprise is indicated by 79% of the formed reserves at the expense of its own sources and production potential, which is also included in the standard indicators: 0.62.