Analysis of financial ratios

Financial ratio analysis is integral part financial analysis, which is a broad area of ​​research that includes the following main areas: analysis financial statements(including analysis of ratios), commercial calculations (financial mathematics), generation of forecast reports, assessment of the investment attractiveness of the company using a comparative approach based on financial indicators [Teplova, Grigorieva, 2006].

First of all we're talking about about analysis of financial statements, which allows you to evaluate:

• o financial structure(property status) of the enterprise;
• o capital adequacy for current activities and long-term investments;
• o capital structure and the ability to repay long-term obligations to third parties;
• o trends and comparative effectiveness of the company’s development directions;
• o liquidity of the company;
• o the emergence of a threat of bankruptcy;
• o the company’s business activity and other important aspects characterizing its condition.

Financial statement analysis is very important for financial management because “what you cannot measure cannot be managed.”

At the same time, the analysis of financial statements must be considered in the context of the goals that the researcher sets for himself. In this regard, there are six basic motives for conducting regular analysis of financial statements:

• 1) investing in company shares;
• 2) provision or extension of credit;
• 3) assessment of the financial stability of the supplier or buyer;
• 4) assessment of the company’s possibility of obtaining monopoly profits (which provokes antimonopoly sanctions from the state);
• 5) forecasting the probability of bankruptcy of the company;
• 6) internal analysis of the company’s performance in order to optimize decisions to increase financial results and strengthen its financial condition.

As a result of regular such analysis, it is possible to obtain a system of basic, most informative parameters that give an objective picture of the financial condition of the organization, characterizing the effectiveness of its functioning as an independent economic entity (Fig. 2.4).

In the process of analysis, the analysis of three types of activity of the enterprise must be linked - main (operational), financial and investment.

Rice. 2.4.

Ratio analysis is one of the most popular methods of financial statement analysis. Financial ratios - These are correlations of data from different forms of enterprise reporting. The coefficient system must meet certain requirements:

• o each coefficient must have economic meaning;
• o coefficients are considered only in dynamics (otherwise they are difficult to analyze);
• o At the end of the analysis, a clear interpretation of the calculated coefficients is required. Interpreting coefficients means giving correct answers to the following questions for each coefficient:
• - how is it calculated and in what units is it measured?
• - what is it intended to measure, and why is it interesting for analysis?
• - what do high or low coefficient values ​​indicate, how deceptive can they be? How can this indicator be improved?

In order to correctly analyze the state of a particular enterprise, it is necessary to have a certain standard. For this purpose, standard and industry average indicators are used, i.e. a basis for comparison of the obtained indicator calculations is selected.

It should be remembered that coefficient analysis must be systematic. "You need to think of ratios as clues in a detective story. One or even several ratios may mean nothing or be misleading, but when combined correctly, combined with knowledge about the company's management and the economic situation in which where it is located, analysis of the coefficients will allow you to see the correct picture."

Financial ratios are traditionally grouped into the following categories (Fig. 2.5):

• o short-term solvency (liquidity);
• o long-term solvency (financial stability);
• o asset management (turnover indicators);
• o profitability (profitability);
• o market value.

Liquidity and financial stability ratios together characterize solvency companies. Turnover and profitability ratios indicate the level business activity enterprises. Finally, market value ratios can characterize investment attractiveness companies.

Rice. 2.5.

Liquidity ratios characterize the company's ability to pay off its short-term obligations. Current ratio (current ratio) is defined as the ratio of current assets to short-term liabilities:

Where OA - current assets of the enterprise as of a certain date; A - its short-term liabilities.

For creditors enterprises, especially short-term ones (suppliers), an increase in the current liquidity ratio means an increase in confidence in the solvency of the enterprise. Therefore, the higher the current ratio, the better. For managers For an enterprise, too high a current ratio may indicate ineffective use of cash and other short-term assets. However, a value of the current liquidity ratio less than one indicates an unfavorable situation: net working capital such an enterprise is negative.

Like other indicators, the current ratio is influenced by various types deals..

Example 2.3

Let's assume that a company must pay invoices to its suppliers. At the same time, the value of its current assets is 4 million rubles, the total value of short-term liabilities is 2 million rubles, and the amount of invoices presented for payment reaches 1 million rubles. Then the current ratio will change as follows.

As is obvious from the table, the value of the current liquidity ratio has increased, i.e. The company's liquidity position has improved. However, if the situation before the operation was the opposite (current assets amounted to 2 million rubles, and short-term liabilities - 4 million rubles), it is easy to see that the operation with the payment of supplier bills would further worsen the situation of the enterprise.

This simple point should be kept in mind by business managers: reducing the base of short-term financing in a situation where liquidity is unsatisfactory seems like a natural step, but in fact leads to an even greater deterioration of the situation.

Quick (quick) liquidity ratio (quick ratio) is also called the “litmus paper test” (acid test). Its calculation allows us to “highlight” the situation with the structure of current assets. The quick ratio is calculated as follows:

OA-Inv

"""CL"

Where Inv (inventories) - the amount of inventories (industrial, finished goods and goods for resale) in the balance sheet of the enterprise as of a certain date.

The logic for calculating this ratio is that inventories, although they belong to the category of current assets, often cannot be sold quickly if necessary without a significant loss in value, and therefore are a rather low-liquid asset. Using cash to purchase inventory does not change the current ratio, but it does reduce the quick ratio.

If we exclude the amount of inventories from current assets, cash (and highly liquid securities accounted for under the item "Short-term" will remain in the structure of current assets). financial investments"), and receivables. If the share of receivables in the structure of current assets is large, and the repayment period is long (long-term receivables predominate), then an enterprise, even with a good quick liquidity ratio, may find itself in a difficult situation when it is necessary to immediately pay its short-term liabilities Therefore, another liquidity ratio is calculated.

Absolute liquidity ratio (cash ratio) is defined as the ratio of the amount of cash and highly liquid securities (short-term financial investments) to short-term liabilities:

_ Cash + MS * "CL"

Where Cash- amount of funds (in cash and in current accounts); MS (market securities) - highly liquid securities (short-term financial investments) taken into account in the balance sheet of an enterprise as of a certain date. In different sectors of the economy, the value of this coefficient may vary; moreover, it is highly susceptible to the peculiarities of the credit policy adopted by the enterprise. However, the value of the absolute liquidity ratio less than 0.1 suggests that the company may experience difficulties when it is necessary to immediately pay accounts to creditors.

Financial stability indicators also called leverage ratios (leverage ratios). They aim to measure the ability of an enterprise to meet its long-term financial obligations. In the most general view these measures compare the book value of a company's liabilities with the book value of its assets or equity.

Equity concentration ratio (equity ratio) characterizes the degree of independence of the enterprise from borrowed sources financing and is calculated as the ratio of equity capital to the value of total assets of the enterprise:

Where E (shareholders equity) - the amount of own (shareholder) capital; A (assets) - the total amount of the company's assets.

Total debt ratio (debt-to-assets ratio) is calculated as the ratio of borrowed funds to the value of total assets:

Where TL (total liabilities) - the total amount of the company’s liabilities; LTD (long-term debt) - the amount of long-term liabilities; CL- amount of short-term liabilities2. In general, this ratio shows what share of the company’s assets is financed various types its creditors. It can be modified and refined depending on the purposes of the analysis (for example, the denominator can only take into account net assets, and in the numerator - only long-term liabilities).

Similar functions are performed by another coefficient often used to assess financial stability - coefficient (multiplier) of equity capital (assets-to-equity ratio), calculated as the ratio of a company’s assets to its own (shareholder) capital:

Where D- the total amount of liabilities taken into account for analysis (may or may not coincide with total amount obligations TL).

Coefficient D/e obtained by transforming formula (2.1) is called leverage ratio (debt-to-equity ratio), kFV and characterizes the capital structure of the company, i.e. the ratio of borrowed and equity funds used by it to finance its activities.

Ratios indicating the financial stability of an enterprise include interest coverage ratio (times interest earned), which measures how well a company can meet its obligations to pay interest on borrowed funds:

Where EBIT- profit before interest and taxes; / - the amount of interest on the loan paid during the analyzed period.

Since interest is cash payments, and for calculation EBIT in Since the company's expenses take into account depreciation, which is not a payment, then to clarify this indicator they often use cash supply ratio, taking into account earnings before depreciation, interest and taxes in the numerator EBITDA. Earnings before depreciation, interest, and taxes are a basic measure of a business's ability to generate cash from its operations. It is often used as a measure of available cash to meet financial obligations.

The interest coverage ratio indicates the level of riskiness of a company's operations. The higher the business risk (operating risk), the less predictable the company's profits are, as a rule, and, consequently, the less willing the suppliers of long-term debt capital are to lend to the company. Consequently, the interest coverage ratio of such a company should be higher than that of a company with lower operational risk, whose profits are predictable, and access to financial resources from creditors is much easier.

In conditions of a financial crisis, the so-called financial safety factor (financial safety ratio), calculated as the ratio of the company’s liabilities to its profits:

The value of this coefficient is determined by industry characteristics, as well as the development strategy of companies. A value not exceeding 3 is considered relatively safe.

Turnover indicators(turnover ratios) characterize the ability of an enterprise to manage assets and working capital. Total asset turnover ratio (assets turnover ratio) reflects the efficiency of the company's use of all available resources, regardless of the sources of their attraction. This coefficient shows how many times during the analyzed period1 the full cycle of production and circulation is completed. The total asset turnover ratio is calculated as the ratio of revenue from sales of products (performance of work, provision of services) to the average value of the enterprise’s assets for the analyzed period:

Where S (sales) - sales volume (revenue from sales) for the analyzed period; L - average value total assets for the same period1.

The asset turnover ratio measures the volume of sales generated by each unit of currency invested in an asset. So, if the asset turnover ratio is 1, this means that for every ruble invested in assets, the company will receive 1 ruble. revenue from product sales. A low value of the asset turnover ratio is typical for capital-intensive sectors of the economy, high for industries whose enterprises are not encumbered big amount assets. The asset turnover ratio, as a rule, is in inverse proportion to the liquidity ratio: a high value of the current ratio is usually possible where the company maintains a high level of current assets, which negatively affects the turnover ratio. The choice of priorities here is determined by the short-term financial policy of the enterprise.

Similarly to this indicator, turnover ratios are calculated for specific categories of assets: for non-current assets (non-current assets turnover ratio is also called return on assets), on current assets, inventories, receivables, payables. However, we note that depending on the purposes of the analysis, it is possible different ways calculation of turnover ratios reserves And accounts payable. Since, at the expense of accounts payable, the enterprise forms inventories that do not participate in the formation of profit, a more correct approach to calculating these indicators is based on the fact that the numerator of the formula indicates production cost (cost of goods sold, COGS). At the same time, analysts [Grigorieva, 2008] recommend uniformity in calculations when it is necessary to calculate All turnover indicators.

Asset turnover period (assets turnover period) shows the number of days required to complete one turnover of assets. For the analyzed period of one year1 this indicator will be calculated using the following formula:

The turnover period is also determined by categories of assets and liabilities. Turnover periods are most important accounts receivable (receivables collection period, RCP) And accounts payable (payables collection period, PCP). The first shows how many days on average it takes to convert sales revenue into real cash receipts. The second characterizes the average length of deferment that an enterprise enjoys in making payments to its creditors, and, consequently, the period of short-term debt financing of the company.

Turnover indicators also include the duration of the net operating and financial cycle. Clean operating cycle (net operation cycle period) shows the number of days for which a company on average needs working capital financing.

It is equal to the sum of the inventory turnover periods and accounts receivable:

Where ITP (inventories turnover period) - inventory turnover period.

The larger the net operating cycle, the longer the company requires financing and the higher the liquidity risks. However, since current assets are financed in part by short-term liabilities, primarily accounts payable, the enterprise's real need for cash in days is - pure financial cycle (net financial cycle period) - calculated by subtracting the accounts payable turnover period from the net operating cycle:

Profitability ratios characterize the efficiency of company management, measured as profitability.

Return on sales (return on sales) is calculated as the ratio of net profit to sales revenue for the analyzed period of time (in percent):

Where N1 (net income) - net profit.

Return on sales in a broad sense characterizes the efficiency of the operating activities of an enterprise. She reflects pricing policy the company, as well as the effectiveness of management’s actions to control and reduce costs. In order to emphasize the importance of a particular element of operating activity, return on sales is also calculated using modified methods: the numerator of the formula may contain, in addition to the net profit indicator, an indicator of profit before interest and taxes (EBIT) or earnings before interest, taxes, depreciation and amortization (EBITDA).

Note that there is an inverse relationship between return on sales and asset turnover. Companies with high performance return on sales is usually characterized by low asset turnover and vice versa. This is due to the fact that companies with high return on sales usually belong to industries with a high share of added value, i.e. value created directly from this enterprise by processing the product and promoting the product to the market. In such industries, due to the complexity technological processes, enterprises are forced to have significant inventories and expensive non-current assets, which naturally reduces their turnover ratio. In industries with a low share of added value, enterprises adhere to the policy low prices and do not show high return on sales, however, the need for assets is low, which increases the asset turnover ratio.

Return on assets (return on assets) reflects the efficiency of using the company's assets. It is calculated as the ratio of net profit to the average value of the enterprise’s assets for the period:

Return on assets is a very important indicator that can be used to measure the effectiveness of how a company generates its capital and manages the resources at its disposal. The fact is that assets are formed both by the owners of the company and by its creditors (see Table 2.2). Therefore, the return on assets must be sufficient to both satisfy the company's profitability requirements from its owners (the profitability of its own captain) and ensure the payment of interest on the loan, as well as the payment of taxes. Therefore, for various management and analytical purposes, this indicator is also modified: in the numerator of the formula, the most correct indicator, in addition to net profit, can be net operating profit after taxes (NOPAT) in the denominator it is possible to use the indicator “net assets” (LI), obtained by deducting the balance of short-term liabilities from the currency. If net operating profit after tax is attributed to the net assets of the enterprise, we are talking about an indicator called return on invested capital (return on capital employed), ROCE which is widely used for the purposes of analyzing and managing the value of a company.

Return on equity (return on equity) characterizes the effectiveness of investing in a company on the part of its owners. It is calculated using the following formula:

Return on equity refers to the resulting indicators of financial management. As R. Higgins put it, “it is not an exaggeration to say that many top managers have risen and fallen with the return on equity of their companies.” In the next section we will discuss in detail the factors influencing return on equity.

Market value ratios are a broad group of indicators used by external users of information (investors) and characterizing the investment attractiveness of a company. Calculating these indicators is not difficult for public companies listed on the market, however, for closed forms of business, market value indicators can be used with reservations.

Most objectively characterizes the attractiveness of a company market value of an ordinary share (price per share), R. An increase in this indicator means an increase in the company's value for its shareholders, so managers should pay close attention to stock prices. If managers act in the interests of shareholders, they should make financial decisions that will be aimed at increasing the market price of shares. The total value of all company shares is market capitalization (market value of shareholders" equity, MVE).

Earnings per share (earnings per share) shows the amount of net profit (in monetary units) per one ordinary share. This indicator

used when evaluating shares and the company as a whole and is calculated using the formula

Where Qcs- the number of common shares of the company.

Share price to earnings per share ratio (price-to-earnings ratio) characterizes the company from the point of view of investors. This indicator is widely used in investment analytics and business valuation:

The value of this coefficient is determined, firstly, by how shareholders (investors) assess the company’s development prospects, as well as their assessment of the risks with which the company is associated. This indicator cannot serve as an indicator of the current state of the enterprise, since it reflects investors' expectations regarding the future development of the company. There are known situations when a company showing low profits at the end of the year was characterized by a growing ratio, since investors believed that the difficulties were temporary and the company had good growth prospects.

Other indicators characterizing the market value of a company are discussed below.

Analysis of factors influencing company efficiency

The issue of indicators characterizing the effectiveness of both the company’s activities and its management remains controversial. IN last years within the framework of the theory of value-based management, new systems and indicators characterizing efficiency were developed. Although return on equity (ROE) As an indicator based on profit, it has significant disadvantages (listed in Chapter 1), it can be considered as a measure of efficiency, since it characterizes the profitability of investments in the company for its owners.

Let's look at the difference between return on equity and return on assets (ROA). This difference reflects the financing of the enterprise through the use of borrowed funds (financial leverage). If we multiply the numerator and denominator of formula (2.4), showing the calculation ROE for a fraction equal to 1 (L/L), we get 1:

Thus, return on equity is influenced by return on assets (i.e., the efficiency of using the entire capital of the company) and the equity ratio, which contains the financial leverage ratio [see. formula (2.1)], i.e. showing management's efforts to attract debt financing.

In turn, the return on assets indicator [see. formula (2.2)] can be transformed by multiplying by a fraction equal to one (%):

It follows that a high share of profit in revenue does not always lead to an increase in return on assets, i.e. It is necessary to efficiently manage the assets at the disposal of the enterprise.

Then return on equity can be expressed by the following formula:

Formulas (2.5) and (2.6) characterize the model of the influence of factors on the company’s efficiency (Dupont model). Thus, company management can increase efficiency (return on equity) by paying attention to:

• o efficiency of management of current activities (measured by profitability of sales);
• o efficiency of asset use (measured by the asset turnover ratio), characterizing the amount of resources required to achieve a given sales volume;
• o the efficiency of raising borrowed funds (measured by the equity ratio), as well as the share of own funds necessary for sustainable financing of the business.

These coefficients, in turn, are determined by more specific indicators that characterize various aspects of the enterprise’s activities. Thus, if we take return on equity as target characterizing the efficiency of the enterprise, you can build a tree financial indicators(Fig. 2.6).

Financial analysis: What is it?

The financial analysis- this is the study of the main indicators of financial condition and financial results activities of the organization for the purpose of making management, investment and other decisions by stakeholders. Financial analysis is part of broader terms: financial analysis 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, and their qualitative assessment and description, comparison with similar indicators of other enterprises are made. Financial analysis includes analysis of the organization's assets and liabilities, its solvency, liquidity, financial results and financial stability, analysis of asset turnover (business activity). Financial analysis allows us to identify such important aspects as the possible probability of bankruptcy. Financial analysis is an integral part of the activities of such specialists as auditors and appraisers. Financial analysis is actively used by banks that decide whether to issue loans to organizations, and accountants in the course of preparing explanatory note for annual reporting and other specialists.

Fundamentals of Financial Analysis

Financial analysis is based on the calculation of special indicators, often in the form of coefficients characterizing one or another aspect of the financial and economic activities of an organization. Among the most popular financial ratios are the following:

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

2) Current ratio (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 the enterprise’s equity)

5) Return on sales (the ratio of profit from sales (gross profit) to the company’s revenue), based on net profit (the ratio of net profit to revenue).

Financial analysis techniques

The following methods of financial analysis are usually used: vertical analysis (for example), horizontal analysis, predictive analysis based on trends, factor and other methods of analysis.

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

• Order Federal Administration in cases of insolvency (bankruptcy) dated 08/12/1994 N 31-r
• Decree of the Government of the Russian Federation of June 25, 2003 N 367 “On approval of the Rules for conducting financial analysis by an arbitration manager”
• Regulations of the Central Bank of Russia dated June 19, 2009 N 337-P “On the procedure and criteria for assessing the financial situation legal entities- founders (participants) of a credit organization"
• Order of the FSFO of the Russian Federation dated January 23, 2001 N 16 “On approval” Guidelines on conducting an analysis of the financial condition of organizations"
• Order of the Ministry of Economy of the Russian Federation dated 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 the calculation of various indicators and ratios, comparison of their values ​​in statics and dynamics. The result qualitative analysis there must be a reasonable conclusion, supported by calculations, about financial situation organization, which will become the basis for decision-making by management, investors and other stakeholders (see example). It is this principle that formed the basis for the development of the “Your Financial Analyst” program, which not only prepares a full report based on the results of the analysis, but also does it without user participation, without requiring him to have knowledge of financial analysis - this greatly simplifies the life of accountants, auditors, and economists .

Sources of information for financial analysis

Very often, stakeholders do not have access to the organization’s internal data, so the organization’s public accounting reports serve as the main source of information for financial analysis. The main reporting forms - Balance Sheet and Profit and Loss Statement - make it possible to calculate all the main financial indicators and ratios. For a more in-depth analysis, you can use the organization’s cash flow and capital flow reports, which are compiled at the end of the financial year. An even more detailed analysis of individual aspects of the enterprise’s activities, for example, calculating the break-even point, requires initial data that lies outside the reporting framework (data from current accounting and production accounting).

For example, you can get 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 financial model(formula), developed by the American economist Edward Altman, designed to predict the likelihood of bankruptcy of an enterprise.

Enterprise Analysis

Under the expression " enterprise analysis"usually mean financial (financial-economic) analysis, or a broader concept, analysis of the economic activities of an enterprise (AHA). Financial analysis, analysis of economic activities relate to microeconomic analysis, i.e. analysis of enterprises as individual entities economic activity(as opposed to macroeconomic analysis, which involves the study of the economy as a whole).

Business Activity Analysis (ABA)

By using business activity analysis organizations, the general trends in the development of the enterprise are studied, the reasons for changes in operating results are investigated, plans for the development of the enterprise are developed and approved and management decisions are made, the implementation of approved plans and decisions made is monitored, reserves are identified in order to increase production efficiency, the results of the company’s activities are assessed, an economic strategy is developed its development.

Bankruptcy (Bankruptcy Analysis)

Bankruptcy, or insolvency- this is a recognized arbitration court the debtor’s inability to fully satisfy the demands 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 Federal law dated October 26, 2002 N 127-FZ “On Insolvency (Bankruptcy)”.

Vertical reporting analysis

Vertical reporting analysis- technique of analysis of financial statements, in which the relationship of the selected indicator with other similar indicators within the same reporting period is studied.

Horizontal reporting analysis

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

One of the simple tools that allows you to focus on the most important areas of the enterprise’s activities and compare performance results various enterprises, is financial ratio analysis, which uses the calculation of financial ratios as a starting point for interpreting the financial performance of an enterprise.

Analysis of financial ratios is used to monitor the economic activities of an enterprise and to identify the strengths and weaknesses of the enterprise relative to competitors, as well as when planning the enterprise’s activities for the future.

The calculation of financial ratios focuses primarily on three key areas of business: profitability (managing the buying and selling process); resource utilization (asset management); investor income.

Financial indicators such as resource efficiency and profitability show the opportunities that ensure the efficiency of the enterprise’s economic activities, that is, the highest return with the minimum possible amount of investment and a reasonable degree of risk.

The asset turnover ratio shows the sales volume for each ruble invested by the investor in the reporting period under review and is calculated using the following formula:

Asset turnover ratio = Sales volume / Total net assets,

where, total net assets = non-current assets + current assets - current liabilities.

The asset turnover ratio can be influenced by changing either the sales volume (using marketing activities), or the amount of invested capital (by changing the structure of the enterprise's short-term capital or by changing investments in non-current assets).

Liquidity. This is an indicator of the company's ability to pay off short-term obligations using current assets. Liquidity is analyzed using two financial ratios: the current ratio and the quick ratio.

The current ratio is calculated using the following formula: Current ratio = Current assets / Current liabilities.

The current ratio shows the relationship between the value of a company's current assets, which are liquid in the sense that they can be converted into cash in the next financial year, and debt, which must be repaid in the same financial year.

The optimal amount of liquidity is determined by the economic activities of the enterprise. Most industrial enterprises The current ratio remains relatively high level, since inventories mainly consist of raw materials, semi-finished products and finished products. Therefore, if necessary, it is difficult to quickly sell them at full cost.

The quick liquidity ratio is calculated using the following formula: Quick liquidity ratio = (Current assets - Inventories) / Current liabilities.

The quick ratio shows how much of the debt can be repaid in short term at the expense of current assets, if it is not possible to convert inventories into cash.

Accounts receivables turn into cash in a relatively short period of time. Therefore, most likely, all receivables will be repaid. But it can take a long time for inventory to move through production, sale, and into accounts receivable. And enterprising buyers will not miss the opportunity to purchase goods at reduced prices, taking advantage of the desperate situation of the seller.

An acceptable value for the quick liquidity ratio is in the range from 0.8 to 1.2.

Financial institutions providing lending services experience difficulties when assessing the liquidity of inventories and feel more confident when working only with accounts receivable and in cash. Therefore, the quick ratio is more popular than the current ratio.

The profitability of an enterprise is the ratio of actual profit to sales volume. Using the profit and loss account, two indicators of enterprise profitability are calculated: net margin and gross margin.

Net Margin is calculated using the following formula: Net Margin = (Net Profit / Sales Volume) x 100%.

Net margin shows what share of sales volume remains with the enterprise in the form of net profit after covering the cost of products sold and all expenses of the enterprise. This indicator can serve as an indicator of the acceptable level of profitability at which the enterprise does not yet suffer losses. Net margin can be influenced pricing policy enterprise (gross margin and markup) and cost control.

Gross Margin is calculated using the following formula: Gross Margin = (Gross Profit / Sales Volume) x 100%.

There is an inverse relationship between gross margin and inventory turnover: the lower the inventory turnover, the higher the gross margin; The higher the inventory turnover, the lower the gross margin.

Manufacturers must provide themselves with higher gross margins compared to trade, since their product spends more time in production process. Gross margin is determined by pricing policy.

Differences in the accounting policies of enterprises, the principle of accounting at cost, the lack of acceptable comparable data, differences in the operating conditions of enterprises, changes in the purchasing power of money, intra-annual fluctuations in accounting information - all this imposes restrictions on the possibilities of analyzing ratios. When analyzing coefficients, the qualitative characteristics of goods and services are not taken into account, work force, labor relations.

It is impossible to evaluate the entire set of coefficients considered until a detailed analysis or comparison of these indicators is carried out with the previous results of the enterprise and with standard indicators for the industry as a whole. Therefore, caution should be exercised in interpreting financial indicators and not making hasty conclusions without complete information about the enterprise and the industry as a whole.

Although financial ratios are subject to the influence of conventions that arise when using accounting calculations or valuation methods, taken together these indicators can prepare the basis for further analysis of the enterprise's activities.

Financial analysis is carried out by companies not only to assess the current financial condition of the company, it also makes it possible to predict its further development. At the same time, analysts need to carefully consider the list of indicators that will be used for strategic planning.

Level analysis sustainable growth is a dynamic analytical framework that integrates financial analysis with strategic management to explain critical relationships between strategic planning variables and financial variables, and to test the alignment of corporate growth objectives and financial policies. This analysis allows you to determine the company's existing opportunities for financial growth, establish how the company's financial policies will influence the future and analyze strengths and weaknesses competitive strategies companies.

In this article we will consider the components of the analysis of financial indicators.

Any measures to implement strategic programs have their own cost. A necessary part of strategy planning and implementation is the calculation of necessary and sufficient financial resources that the company must invest.

Information for financial analysis

Most full definition the concepts of financial analysis are given in the “Financial and Credit Encyclopedic Dictionary” (edited by A.G. Gryaznova, M.: “Finance and Statistics”, 2004): “ Financial analysis is a set of methods for determining the property and financial position of an economic entity in the past period, as well as its capabilities for the short and long term." The purpose of financial analysis is to determine the most effective ways achieving the profitability of the company, the main tasks are to analyze profitability and assess the risks of the enterprise.

Analysis of financial indicators and ratios allows the manager to understand the competitive position of the company at the current time. Published reports and company accounts contain a lot of numbers, the ability to read this information allows analysts to know how efficiently and effectively their company and competing companies are performing.

Ratios allow you to see the relationship between sales profit and expenses, between fixed assets and liabilities. There are many types of ratios, usually used to analyze five main aspects of a company's performance: liquidity, debt-to-equity ratio, asset turnover, profitability and market value.

Rice. 1. Structure of the company’s financial indicators

Analysis of financial ratios and indicators is an excellent tool that provides insight into the financial condition of the company and competitive advantages and prospects for its development.

1. Performance Analysis. The ratios allow you to analyze changes in the company's productivity in terms of net profit, capital use and control the level of costs. Financial ratios allow you to analyze the financial liquidity and stability of the enterprise due to effective use systems of assets and liabilities.

2. Assessing market business trends. By analyzing the dynamics of financial indicators and ratios over a period of several years, it is possible to study the effectiveness of trends in the context of the existing business strategy.

3. Analysis of alternative business strategies. By changing the coefficients in the business plan, it is possible to analyze alternative options company development.

4. Monitoring the company's progress. Having chosen the optimal business strategy, company managers, continuing to study and analyze the main current ratios, can see a deviation from the planned indicators of the implemented development strategy.

Ratio analysis is the art of interrelating two or more indicators financial activities companies. Analysts can see a more complete picture of the company's performance over several years, and additionally by comparing the company's performance with industry averages.

It is worth noting that the financial performance system is not crystal ball, in which you can see everything that was and what will be. This is just a convenient way to summarize a large number of financial data and compare the performance of different companies. Financial ratios themselves help the company's management to focus attention on weak and strengths the company's activities, correctly formulate questions that these coefficients can rarely answer. It is important to understand that financial analysis does not end with the calculation of financial indicators and ratios, it only begins when the analyst has carried out their full calculation.

The real usefulness of the calculated coefficients is determined by the tasks set. First of all, ratios provide an opportunity to see changes in financial position or results. production activities, help determine trends and structure of planned changes; which helps management see the threats and opportunities inherent in this particular enterprise.

A company's financial reports are a source of information about the company not only for analysts, but also for the company's management and a wide range of stakeholders. For effective ratio analysis, it is important for users of financial ratio information to know the basic characteristics of major financial statements and the concepts of ratio analysis. However, when conducting financial analysis, it is important to understand: the main thing is not the calculation of indicators, but the ability to interpret the results obtained.

When analyzing financial indicators, it is always worth keeping in mind that the assessment of operating results is made on the basis of data from past periods, and on this basis extrapolation of the future development of the company may be incorrect. Financial analysis should be focused on the future.

Concepts Underlying Financial Ratio Analysis

Financial analysis is used when constructing budgets, to identify the reasons for deviations of actual indicators from planned indicators and to adjust plans, as well as when calculating individual projects. Horizontal (dynamics of indicators) and vertical (structural analysis of articles) analysis of reporting documents are used as the main tools management accounting, as well as calculation of coefficients. Such an analysis is carried out for all main budgets: BDDS, BDR, balance sheet, sales budgets, purchases, inventory.

The main features of financial analysis are the following:

1. The vast majority of financial indicators are relative values, which makes it possible to compare enterprises of different scales of activity.

2. When conducting financial analysis, it is important to apply the comparison factor:

• compare company performance indicators in trends over different periods of time;
• compare the performance of a given company with the industry average or with similar performance of enterprises within a given industry.

3. To conduct financial analysis, it is important to have a complete financial description of the company for selected periods of time (usually years). If the analyst has data for only one period, then there must be data from the enterprise’s balance sheet at the beginning and end of the period, as well as a profit statement for the period under review. It is important to remember that the number of balance sheets for analysis should be one more than the number of profit reports.

Accounting management is an important element in the analysis of financial ratios and ratios. Basic equation accounting, expressing the interdependence of assets, liabilities and property rights, is called accounting balance:

ASSETS = LIABILITIES + EQUITY

Assets usually classified into three categories:

1. Current assets includes cash and other assets that must be converted into cash within one year (for example, publicly traded securities; accounts receivable; notes receivable; current assets and advances).

2. Land property, fixed assets and equipment (fixed capital) include assets that are characterized by a relatively long service life. These products are generally not intended for resale and are used in the production or sale of other goods and services.

3. Long-term assets include the company's investments in securities, such as stocks and bonds, as well as intangible assets, including: patents, expenses for monopoly rights and privileges, copyrights.

Liabilities usually divided into two groups:

1. Current liabilities include amounts payable that must be paid within one year; for example, accumulated liabilities and bills payable.

2. Long-term obligations are the rights of creditors that do not necessarily have to be realized within one year. This category includes bond obligations, long-term bank loans, and mortgages.

Equity- These are the rights of the owners of the enterprise. In accounting terms, it is the remaining amount after deducting liabilities from assets. This balance is increased by any profits and decreased by any losses of the company.

Measures commonly considered by analysts include the statement of operations, the balance sheet, measures of changes in financial position, and measures of changes in equity.

A company's operating statement, also referred to as a profit and loss statement or income statement, summarizes the results of a company's options activities over a specific reporting period of time. Net income is calculated using the periodic accounting method used in calculating profits and costs. It is generally considered the most important financial indicator. The report shows whether the percentage of income on the company's shares decreased or increased during the reporting period after the appointment of dividends or after the conclusion of other transactions with the owners. The income statement helps owners assess the amount, timing, and uncertainty of future cash flows.

The balance sheet and income statement are the main sources of metrics used by companies. A balance sheet is a statement that shows what a company owns (assets) and what it owes (liabilities and equity) as of a specific date. Some analysts call the balance sheet a "snapshot of a company's financial health" at a particular point in time.

System of financial indicators and ratios

The total number of financial ratios that can be used to analyze a company’s activities is about two hundred. Typically, only a small number of basic coefficients and indicators are used and, accordingly, the main conclusions that can be drawn on their basis. For the purpose of more orderly consideration and analysis, financial indicators are usually divided into groups, most often into groups that reflect the interests of certain interested parties (stakeholders). The main groups of stakeholders include: owners, management of the enterprise, creditors. It is important to understand that the division is conditional and indicators for each group can be used by different stakeholders.

As an option, it is possible to organize and analyze financial indicators into groups that characterize the main properties of the company’s activities: liquidity and solvency; efficiency of company management; profitability (profitability) of activities.

The division of financial indicators into groups characterizing the characteristics of the enterprise’s activities is shown in the following diagram.

Rice. 2. Structure of the company’s financial indicators

Let's take a closer look at the groups of financial indicators.

Transaction cost indicators:

Analysis of operating costs allows us to consider the relative dynamics of the shares of various types of costs in the structure of the total costs of an enterprise and is a complement to operational analysis. These indicators allow us to find out the reason for changes in the company's profitability indicators.

Indicators effective management assets:

These indicators make it possible to determine how effectively the company's management manages the assets entrusted to it by the company's owners. The balance sheet can be used to judge the nature of the assets used by the company. It is important to remember that these indicators are very approximate, because On the balance sheets of most companies, a wide variety of assets acquired at different times are reported at historical cost. Consequently, the book value of such assets often has nothing to do with their market value, a condition that is further aggravated in conditions of inflation and when the value of such assets increases.

Another distortion of the current situation may be associated with the diversification of a company’s activities, when specific activities require attracting a certain amount of assets to obtain a relatively equal amount of profit. Therefore, when analyzing, it is advisable to strive to separate financial indicators by certain types of company activities or by types of products.

Liquidity indicators:

These indicators allow us to assess the degree of solvency of the company for short-term debts. The essence of these indicators is to compare the amount of the company’s current debts and its working capital which will ensure the repayment of these debts.

Profitability (profitability) indicators:

They allow assessing the effectiveness of the company's management in using its assets. Operating efficiency is determined by the ratio of net profit, determined different ways, with the amount of assets used to generate this profit. This group indicators are formed depending on the emphasis of the effectiveness research. Following the objectives of the analysis, the components of the indicator are formed: the amount of profit (net, operating, profit before tax) and the amount of the asset or capital that forms this profit.

Capital structure indicators:

Using these indicators, it is possible to analyze the degree of risk of bankruptcy of a company in connection with the use of borrowed financial resources. With an increase in the share of borrowed capital, the risk of bankruptcy increases, because the volume of the company's obligations increases. This group of ratios is primarily of interest to the company’s existing and potential creditors. Management and owners evaluate the company as a continuously operating business entity; creditors have a two-fold approach. On the one hand, creditors are interested in financing the activities of a successfully operating company, the development of which will meet expectations; on the other hand, creditors assess how significant the claim for debt repayment will be if the company experiences significant difficulties in repaying a long-term loan.

A separate group is formed by financial indicators that characterize the company’s ability to service debt using funds received from current operations.

The positive or negative impact of financial leverage increases in proportion to the amount of debt capital used by the company. The lender's risk increases along with the owners' risk.

Debt service indicators:

Financial analysis is based on balance sheet data, which is an accounting form that reflects financial condition company at a certain point in time. Whatever coefficient characterizing the capital structure is considered, the analysis of the share of borrowed capital, in essence, remains statistical and does not take into account the dynamics of the company’s operating activities and changes in its economic value. Therefore, debt service indicators do not provide a complete picture of the company's solvency, but only show the company's ability to pay interest and the principal amount within the agreed time frame.

Market indicators:

These indicators are among the most interesting for company owners and potential investors. In a joint stock company, the owner—the holder of the shares—is interested in the profitability of the company. This refers to the profit received through the efforts of the company’s management using funds invested by the owners. Owners are interested in the impact of the company's performance on the market value of their shares, especially those freely traded on the market. They are interested in the distribution of their profits: what share of it is reinvested in the company, and what part is paid to them as dividends.

The main analytical purpose of analyzing financial ratios and indicators is to acquire the skills of making management decisions and understanding the effectiveness of its work.

Ratio analysis is the calculation of financial ratios based on data from financial statements. Financial statements include the management balance sheet, income statement, statement of retained earnings, and cash flow statement.

Financial ratios can tell a professional a lot about the current state of the enterprise. The obtained figures are compared with standards or average performance of other companies in the same industry and under similar conditions. That is, coefficients for enterprises from different fields cannot be compared. They face different risks, capital requirements and different levels of competition.
There are 5 types of odds.

• Liquidity ratios
• Asset management ratios
• Debt ratios
• Profitability ratios
• Market value ratios

Benefits of Financial Ratios

The main reason for the popularity of financial ratios is their extraordinary simplicity: all you have to do is divide one absolute indicator another. For example:

Current ratio = working capital / current liabilities

Another important advantage of financial ratios is that the result is relative values. This means that the size of absolute values ​​does not play any role here, and you can compare the indicators of any companies.

In addition, for most indicators, average normal values ​​are determined (for example, the same current ratio must be at least 2), which allows you not only to compare the financial ratios of one company with another, but also to see how acceptable they are on their own.

Features of the analysis of financial indicators

But, unfortunately, everything is not so simple - otherwise why would we need financiers? Financial ratios have a number of features, without taking them into account you can come to completely wrong conclusions:

1. Difficulty of interpretation

Since financial ratios themselves do not convey virtually any information about the company, they can often mean anything. Low profitability of sales can be caused either by the fact that a company cannot sell its products at the desired price, or by reducing prices to gain market share. Or, say, a low value of financial leverage may be not only a consequence of real problems, but also the result of a risk minimization policy.

2. Dependence on reporting

Even if financial statements are prepared in accordance with accepted standards, the values ​​of many of the indicators required for ratio analysis may vary significantly due to different accounting methods. That is, even with the same initial data, you can get several different coefficients.

3. Lack of standardization

If certain standards have existed in financial reporting for a long time and all terms are clearly defined, then anarchy still reigns in ratio analysis. Different sources offer different definitions and even different methods for calculating coefficients. Thus, when using financial ratios, it is always necessary to clarify what exactly they mean and by what algorithm they were obtained.

4. Reference values ​​are relative

Despite the fact that certain universal norm values ​​have been proposed for most coefficients, one should rely on them with extreme caution. The “normality” of certain indicators largely depends on business conditions, and it is quite possible that the ratios of quite prosperous companies turn out to be significantly lower than normal.

• can the company invest in new projects;
• how material and other assets and liabilities relate;
• what is the loan burden and the company’s ability to repay them;
• are there reserves that will help overcome bankruptcy;
• whether there are dynamics of growth or decline in economic or financial activities;
• what reasons negatively affect performance results.

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