To assess the solvency of the company oran individual is made a special calculation, in which the ratio of financial liabilities with assets takes part. In order to understand what this indicator shows and why it is needed, it is necessary to study in detail the issue of enterprise sustainability.
Very often under financial sustainabilityenterprises understand not quite what is meant by this term in financial analysis. Namely, financial stability in the everyday sense is the ability of an enterprise to withstand the blows of financial destiny, to pay for unforeseen obligations, to pay bonuses, to respond to the challenges posed by the environment. I must say that for this ability in financial analysis is also a term, but another. The ratio of financial liabilities assets, the value of which will be presented below, is very important.
In financial analysis under financial sustainabilityunderstand a very specific thing and highlight the minimum conditions for financial stability. The first of these is the excess of non-current assets over capital.
Non-current assets are assets thatused for over a year. These include cars, buildings, land. If non-current assets are larger than equity, this means that the difference between these two concepts is greater than zero.
The second minimum financial condition is the excess of inventories over debt loans. But if the first condition is not fulfilled, then the second condition is simply not considered.
Consider your own working capital, andwhy it should be above zero. If non-current assets are taken away from equity, then this difference can be called our own working capital. We buy working capital for our own capital. To understand why this is so important, consider what happens if the first condition for financial sustainability is not met.
Suppose non-current assets are financedequity and unpaid dividends. What happens if the company is suspended? In this case, short-term liabilities to counterparties will be repaid with money and receivables. In this part of the receivables will be lost.
Among the inventory will be illiquid.Therefore, to repay long-term loans will have to sell part of non-current assets. Assets will be sold at a loss. If there is no working capital, shareholders do not receive enough equity capital.
Define several stages of financial stability.
The first stage of financial sustainability is whenequity is enough to finance non-current assets and to cover inventory. The first stage of financial stability is called absolute.
Second stage:non-current assets and inventories are fully financed by equity and long-term loans. In this situation, financial sustainability is considered normal. With money and debtors we will repay short-term liabilities and pay dividends. Commodity stocks and non-current assets will guarantee the repayment of long-term loans and equity.
The most common unsustainable financialstates when inventories are partially financed by certain short-term obligations to counterparties. These obligations may be acceptable, that is, they represent short-term loans, suppliers, as well as dividends of a closed joint-stock company, if the owners agree with this. But unacceptable sources can be used - short-term obligations. These include: the wage fund, the delay in payment for deliveries in excess of the “normal” delay, taxes, dividends of an open joint-stock company.
If we use these sources toto finance inventories, in this case, the corresponding stage of financial stability will be called critical. Critical financial condition develops consistently. First, the company delays the payment of vendor bills, which is the norm.
After that, the company delays the payment of dividends. Then the company delays the salary and delays the payment of interest to the bank and taxes.
Для анализа платежеспособности предприятия, то there financial sustainability involve the ratio of financial liabilities assets. This is an indicator characterizing the solvency of the company to make payments on its obligations after all its goods that are on its balance sheet are sold. It is worth understanding in more detail.
The ratio of financial securityliabilities assets can be determined by the ratio of all liabilities of the enterprise to the total value of assets. In the process of calculations, the accountant does not use the reserves of expenses to be paid. With the help of the ratio of security, you can determine whether the company will be able to pay its liabilities at the expense of assets that have been converted into cash.
If in the process of calculation it was revealed thatratio of financial liabilities with assets for the year increased from 1.6 to 2.6, this suggests that the company has created a reserve that is able to cover all costs and losses arising in the reporting period. The increase in the ratio was due to an increase in the sources of finance revenues through which working capital was purchased.
To conduct a financial analysis of an accountantuse special formulas with which you can obtain data on the financial viability of the company. The ratio of financial liabilities assets, the formula of which is given below, is very important for financial reporting.
K = (D + K + R) / WB, where
Consider the conditions.
If the ratio of financial securityliabilities assets K3 has a value below 0.85, the company has weak financial stability and a large proportion of external borrowed funds and sources of financing.
Consider this formula for example.
Suppose you own a pharmacy network. Your capital is 50 million rubles, long-term liabilities - 40 million rubles, and the balance sheet - 95 million rubles. Having all the data, substitute in the formula:
(50,000,000 + 40,000,000) / 95,000,000 = 0.95.
As a result, we obtain the coefficient of securityfinancial liabilities assets, the ratio of which: from 0.85 to 0.95. In this example, the coefficient is 0.95, which is within the normal range. This means that this company can be considered financially stable. She can quite successfully pay her long-term bills.
In conclusion, we make a brief conclusion thatthe ratio of financial liabilities assets shows at what level is the stability of the company, whether the company will be able to pay its debts. The coefficient should be normal, not lower than 0.85. It can be used throughout many reporting periods.
