It's no secret that the stability of the financial performance of any enterprise depends primarily on the literacy and feasibility of investing financial resources in assets. That is why, for a qualitative assessment, it is necessary to study the structure of the property, as well as the sources of its formation and the reasons for their change. By the way, in more detail, as a rule, the reasons that negatively affect the financial condition of the structure are considered.
Valuation
Initially, according to the balance sheet data, it is advisable to determine the total value of the property of the structure at a specific reporting date. At the same stage, it is necessary to identify deviations for each type of property by comparing information at the end and beginning of the reporting period. It should be noted that for a detailed study of changes in the structure, it is necessary to additionally calculate the specific weight of each type of property in the total currency presented in the balance sheet, as well as to study the causes of structural changes in the property.
Next step
Further, it is logical to consider the ratio of the dynamics of current and non-current assets, as well as calculate the coefficient of property mobility. Based on these calculations, it would be appropriate to formulate the following conclusions:
- In the case of an increase in working capital and a decrease in fixed assets in the structure, one can observe a tendency to accelerate the turnover of the property complex. In this situation, the result, as a rule, is the release of a specific part of the funds and short-term investments (of course, if the percentage on the items presented has increased).
- In order to correctly characterize the property, it is necessary to calculate the coefficient of property mobility. It is presented as the ratio of the value of fixed assets to the value of property. In practice, it looks like this: Kmi = OA / WB (property mobility coefficient). The formula, as you can see, is quite simple.
What else?
The final step of the first stage is the calculation of Kmoa. The mobility ratio of working capital is presented as the ratio of the most mobile component (not only funds, but also financial investments) to the total cost of OA. It is important to note that the increase in the above ratios is an excellent confirmation of the acceleration of the turnover of the property complex of the structure.
The coefficient of mobility of working capital is as follows: Kmoa = (DS + KFI) / OA.
It should be noted that the low level of OA mobility is not always a negative factor. In the case of a high indicator of product profitability, structures usually address available resources to expand and strengthen production.
Production potential analysis
It's no secret that the financial condition of any structure is due to its production activities. That is why, when analyzing it, it is necessary to correctly assess the production potential, which should include:
- Fixed assets.
- Unfinished production.
- Industrial property.
- Future spending.
It is important that the articles presented contain only real assets in their structure. It is they who characterize the power of the structure in the production plan (provision of reserves, etc.).
Characteristic of production potential
In order to correctly represent the production potential, the following indicators are used:
- The movement, as well as the proportion of industrial assets in the total value of the property.
- The movement, as well as the proportion of fixed assets in the total value of the property of the enterprise.
- OS Wear Ratio.
- The depreciation rate in the average value.
- The presence, dynamics, as well as the proportion of capital investments, their relationship with financial.
conclusions
An increase in the share of industrial assets at the end of the year and a larger share of the corresponding assets in the total amount of the structure’s assets usually indicates a significant increase in production capabilities. It is important to note that this indicator should not be lower than 50 percent (for comparison, industry indicators are usually taken as a basis in a standard way). The share of the cost of fixed assets in the total cost of the structure’s assets is calculated as the ratio of the residual value of fixed assets to the balance sheet currency. Such a calculation is usually made at the beginning and at the end of the reporting period. Absolute indicators that are reflected in the analysis process are compared with standard ones (relevant for all structures of a particular industry).
After calculating the coefficient of wear (in other words, depreciation), a qualitative characteristic of its changes is formed. In order to correctly assess the depreciation rate of fixed assets, an indicator of the average depreciation rate (the ratio of the amount of depreciation to the initial cost of fixed assets) is used.
Analysis of the composition and dynamics of mobile devices
Based on the analysis of the structure of mobile assets (see property mobility coefficient above), it is advisable to consider the changes that took place in the composition of the OS in general terms, after which - in the context of specific articles. It will be advisable to consider the main reasons for the change in working capital:
- Profit (after all taxes have been paid).
- Depreciation deductions.
- The increase in own funds of the enterprise.
- Increase in debt on loans or loans.
- Increased payables obligations.
Working capital reduction
The main reasons for the decrease in working capital are the following points:
- Some expenses covered by the profit remaining at the disposal of a particular structure.
- Capital investments.
- Long-term financial investments.
- A significant reduction in accounts payable.
It should be noted that after absolute indicators have been identified and a general assessment has been made, it is necessary to calculate the effective use of the property.
Long-term financial independence ratio
As noted above, a number of indicators are used to assess growth potential. The property mobility coefficient discussed above characterizes the industry specifics of the structure. But in the economy there are a number of factors used in the analysis of production. Thus, the ratio of the amount of equity and long-term liabilities to the balance sheet currency reflects the share of equity in the total amount of financial sources. It is important to note that the recommended value in this case is 0.8-0.9. Stability coefficient is the scientific name for this relationship. In accordance with the financial statements of the Russian Federation, the indicator is calculated as follows:
(SK + TO) / WB = (page 1300, form 1 + Page 1400, form 1) / page 1700, form 1.
Indicator analysis
The stability coefficient is usually analyzed in dynamics. Thus, the upward trend can characterize the growth of the business activity of the structure, the expansion of its production capacities, as well as the effectiveness of the management process. It is logical that a decrease in this coefficient reflects a decrease in turnover, respectively, a decrease in the rate of development of the structure. It is important to note that the enterprise can reach the maximum level of economic growth only if the profit received is reinvested (that is, invested).
Bankruptcy forecast ratio
In case of premature detection of deterioration in the financial condition of the structure and prevention of insolvency, of course, the collapse of the business can be prevented. It is for such a case that the bankruptcy forecast coefficient is applied. This method is usually used by analysts to assess the solvency and overall well-being of a company.
What should be understood by the word bankruptcy? In accordance with the concept put forward by the arbitration court, the term is defined as one of the types of financial condition of the borrower when he is not able to satisfy the requirements of creditors or can not pay for payments of a mandatory nature.
The bankruptcy process performs two key tasks: eliminating debt to creditors and full recovery, as well as the subsequent strengthening of the company. As a rule, economists are guided by three approaches that can help identify a possible decrease in the solvency of a legal entity. Among them are the calculation of the credit ratio, forecasting solvency ratios, as well as the application of a system of criteria of an informal nature. These methods allow you to identify possible deviations in the early stages, and therefore, accelerate the neutralization of the existing threat. They constitute a specific company management system in order to prevent a crisis, including:
- Monitoring of economic condition, carried out continuously.
- An analysis of some deviations from the standard course of business of the company, as well as an assessment of the extent of the deterioration.
- Identification of factors that negatively affect the situation.
- Identification of options for the restoration of the financial work of the enterprise.
It should be noted that one of the primary signs of economic insolvency of a legal entity is the reluctance to fulfill creditor claims for a period of three months from the date of theoretical fulfillment of obligations.
