Basic financial ratios for analyzing the activities of an enterprise. Analysis of financial ratios Analysis of financial ratios consists

Financial ratios are relative measures financial condition enterprises. They are calculated in the form of ratios of absolute indicators of financial condition or their linear combinations.

Relative system financial ratios according to economic meaning can be divided into a number of characteristic groups:

• - indicators for assessing the profitability of the enterprise
• - evaluation indicators business activity
• - indicators for assessing market stability
• - indicators for assessing the liquidity of balance sheet assets as the basis for solvency.

Assessment of enterprise profitability.

Indicators for assessing the profitability of an enterprise - characterize the profitability of the enterprise and are calculated as the ratio of the profit received to the funds spent or sales volume.

Profitability indicators are the most generalized performance indicator economic activity. Depending on the basis of comparison, the return on total capital is distinguished, production assets. equity, etc.

1) Return on total capital ratios show how much book or net profit is received per 1000 rubles of property value:

Balance sheet profit

Total return on equity = ______________________ x 100% (1)

Property value

Net profit

Net return on equity = ____________________ x 100% (2)

Property value

2) Efficiency ratios for the use of own funds reflect the share of balance sheet or net profit in the enterprise’s own funds:

Overall profitability Balance sheet profit

equity = _____________________ x 100% (3)

Own funds

Net profitability Net profit

equity = ______________________x 100% (4)

Own funds

Return on equity shows how much profit is received from every 1000 rubles invested by the owners of the enterprise. This indicator characterizes the efficiency of using invested share capital and serves as an important criterion for assessing the level of stock quotes. The coefficient allows you to estimate the potential income from investing in securities various enterprises.

The overall profitability ratio of the enterprise is compared with the overall return on equity ratio. The difference between these indicators characterizes the attraction of external sources of financing.

3) The profitability of production assets is calculated by the ratio of the amount of profit to the cost of fixed assets and material working capital:

Total profitability balance sheet profit

production assets =___________________________ x100% (5)

working capital

Net profitability net profit

production assets =_________________________ x 100% (6)

Fixed assets + material

working capital

In Russian practice, these indicators are of great importance, since they reflect the share of profit for every thousand production assets.

4) Profitability of fixed assets (capital return):

Balance sheet profit

Total capital return = ___________________________ x 100% (7)

funds and other non-current assets

Net profit

Net capital return = ___________________________ x 100% (8)

The average value for the period of basic

funds and other non-current assets

Profitability of fixed assets and other non-current assets reflects the efficiency of use of fixed assets and other non-current assets, measured by the amount of profit per unit cost of assets. The growth of this indicator indicates an excessive increase in mobile funds, which may be a consequence of the formation of excess inventories, overstocking of finished products as a result of a decrease in demand, excessive growth of accounts receivable, or Money

5) Return on sales (the difference between these indicators in the numerator of the formulas, i.e. in financial results reflecting a certain aspect of economic activity):

Net profit on Enterprise net profit

1000 rubles of revenue =_________________________________x100% (9)

Revenues from sales

Profit from sales Profit from sales of products

Products for =_________________________________ x100% (10)

1000 rubles of revenue Sales revenue

Total profit on book profit

1000 rubles of revenue =________________________________х100% (11)

Revenues from sales

These ratios show how much profit is per unit products sold. The growth of this indicator is a consequence of rising prices with fixed costs for the production and sale of goods and services or reducing costs at constant prices. A decrease in profitability of sales indicates a decrease in prices with constant costs of production and sales of products or an increase in costs with constant prices, i.e. about a decrease in demand for the company's products.

6) The profitability of financial investments is calculated by the ratio of income received from securities and from equity participation in the authorized capital of other enterprises to the cost of financial investments:

Income from + income from

Return on equity securities

financial investments =______________________________ x100% (12)

Cost of financial investments

7) The return on equity and long-term borrowed (permanent) capital serves to assess the efficiency of using the entire long-term capital of an enterprise:

Total profitability balance sheet profit of permanent = x100% (13)

borrowed funds

Total profitability net profit of permanent = ________________________________________ x100% (14)

capital Own + Long-term

borrowed funds

Estimated profitability indicators for 1996 - 1998 are shown in Table 7.

Table 7.

Profitability indicators.

The data in Table 7 allows us to draw the following conclusions. In general, for the analyzed enterprise there is an improvement in the efficiency of use of its property. For each ruble of property value, the enterprise in 1996 had the following results: book profit 12.3, net profit 10.0. This means that for 1 ruble of property value, JSC KMS received 12 kopecks of balance sheet profit and 10 kopecks of net profit. Accordingly, for 1997 these indicators are 10.2 and 8.4 - this indicates a deterioration in the profitability of the enterprise. The best figures were obtained in 1998 - 16 kopecks of balance sheet and 11 kopecks of net profit per 1 ruble of property value. Analysis of return on equity allows us to draw similar conclusions, the most profitable year 1998 - 20.8 and 14.2, respectively, i.e. from each ruble of equity capital, 20.8 kopecks of balance sheet profit and 14.2 kopecks of net profit were received. Less profitable is 1996, whose figures are 15.0 and 12.5, respectively. And the worst indicators were obtained in 1997 - 13 kopecks of balance sheet profit and 11 kopecks of net profit per 1 ruble of equity capital.

In Russian practice, indicators of profitability of production assets are of great importance, because reflect the share of profit for each ruble of production assets. For JSC ISS these values ​​are 39 and 27 for 1998, 25 and 28 for 1997, and 23 and 18.8 for 1996.

Profitability of non-current assets reflects the efficiency of use of fixed assets and other non-current assets, shows the amount of profit per unit cost of funds. In our case, these indicators are 23.4 gross profit and 16 net profit for 1998, 13.5 and 11, respectively, for 1997, and 16 13.3 for 1996.

Return on sales, which shows how efficiently and profitably the enterprise operates, was for 1996. These values ​​are 10.4, 13.3 and 12.8, respectively, i.e. 10.4 kopecks of net profit per ruble of revenue, 13.3 kopecks of profit from sales of products for each ruble of revenue and 12.8 kopecks of gross profit per 1 ruble of revenue. For 1997, net profit per ruble of revenue was 7.1, profit from product sales per 1 ruble of revenue was 9.4, and total profit per 1 ruble of revenue was 8.7. From the analysis of 1996 and 1997. it can be seen that there has been a decrease in the profitability of sales ratios - this indicates a decrease in prices with constant production costs or an increase in production costs with constant prices, i.e. about a decrease in demand for products. The indicators for 1998 changed significantly - these values ​​are equal to 8.6 net profit, 13.7 profit from product sales and 12.6 total profit per 1 ruble of revenue. Such a change in indicators is a consequence of rising prices with constant costs for the production and sale of goods or a decrease in costs with constant prices. Considering the economic situation in the country, as well as the prosperity of this enterprise, both of these reasons are justified. Because There are no short-term financial investments in the balance sheet of JSC ISS, then the return on financial investments indicator is not calculated.

Assessment of business activity.

Relative financial indicators can be expressed both as ratios and as percentages. Indicators of business activity are more clearly presented in coefficients.

Capital return:

Revenues from sales

Capital return =___________________________ (15)

Property value

2) Return on assets:

Return of main sales revenue

production means =_________________________________ (16)

and intangible assets Average cost of fixed assets

and intangible assets

Working capital turnover:

working capital =________________________________________ (17)

Average cost of current assets

Inventory turnover:

Cost of goods sold

Inventory turnover =_________________________________ (18)

Average inventory value

Accounts receivable turnover:

accounts receivable = ______________________________ (19)

average value

accounts receivable

The accounts receivable turnover ratio shows the expansion or reduction of commercial credit provided by the enterprise. If the ratio is calculated based on sales revenue generated as bills are paid, an increase in this indicator means a decrease in credit sales. A decrease in this case indicates an increase in the volume of credit provided.

6) Average receivables turnover period:

Average turnaround time 365

accounts receivable = _____________________________________________________ (20)

debt Receivables turnover ratio

debt

The average receivables turnover period characterizes the average repayment period of receivables.

7) Bank asset turnover:

Turnover revenue from sales

banking assets=_______________________________________ (21)

Average free cash flow

8) Equity turnover:

Turnover revenue from sales

equity =__________________________ (22)

Own funds

The equity turnover ratio shows the rate of turnover of equity capital, which for joint stock companies means the activity of funds at risk to shareholders. A sharp increase in this indicator reflects an increase in the level of sales, which should be largely provided by loans and, therefore, reduce the share of owners in the total capital of the enterprise. A significant decrease reflects a tendency towards inactivity of part of own funds.

9) Mobile assets turnover rate:

turnover = _______________________________________ (23)

mobile means Average for the period + Average for the period

inventories and costs amount of cash

funds and other assets

The turnover ratio of mobile assets shows the turnover rate of all mobile (both tangible and intangible) assets of the enterprise. The growth of this indicator is positive.

10) Accounts payable turnover ratio:

Product sales revenue ratio

turnover = ________________________________________ (24)

creditor

debt Average accounts payable for the period

The accounts payable turnover ratio shows the expansion or reduction of commercial credit provided to the enterprise. An increase in this indicator means an increase in the speed of payment of the enterprise's debt, a decrease means an increase in purchases on credit.

11) Average turnover period of accounts payable:

Average turnaround time 365

accounts payable = _____________________________ (25)

Turnover ratio

accounts payable

The average period of turnover of accounts payable reflects the average period of repayment of the enterprise's debts (with the exception of obligations to banks and other loans).

Estimated indicators of business activity are presented in Table 8.

Table 8.

Business activity indicators

As can be seen from Table 8, the capital productivity ratios for JSC ISS are 0.965 for 1996, 1.173 for 1997. and 1.279 for 1998, i.e. 965 rubles are per 1000 rubles of property value in 1996, similarly 1173 rubles and 1279 rubles are per 1000 rubles of property value for 1997 and 1998, respectively.

The capital productivity ratio shows how many rubles of sales revenue are per 1000 rubles of the enterprise's fixed assets. In this case, these values ​​are 1.282, 1.547 and 1.870 for 1996, 1997 and 1998. Accordingly, this figure increases every year, which indicates the efficient use of available resources by the enterprise.

The turnover of working capital for this enterprise over the last 3 years was 4.58 5.01 and 4.35 turnovers per year, so the turnover period for 1996 was 79.7 days, for 1997 - 72.8 days and 1998 - 83.9 days, at the same time, for most civilized countries the working capital turnover standard is 3 turns, i.e. approximately 122 days. Thus, when compared with developed countries, the turnover is very high. There is also an increase in the inventory turnover ratio - it is equal to 5.1 7.3 and 9.1 revolutions, i.e. the turnover is 71.9 days, 49.9 days and 40.1 days, respectively. This positively characterizes the sales activities of the enterprise, and also indicates an increase in demand for finished products.

The turnover of accounts receivable for JSC KMS for 1996 is 30.04 for 1997 - 15.97 for 1998 - 11.43. A decrease in this indicator may indicate an increase in the volume of loans provided. The average turnover period of accounts receivable, in this case, is 12.2 22.9 31.9, respectively, for 1996, 1997, 1998. This trend of increasing indicators can be given a negative assessment, because The average receivables turnover period characterizes the average repayment period of receivables.

The turnover of bank assets is equal to the following values

93.4 - for 1996, 88.9 - for 1997. and 56.3 for 1998. The increase in the company's cash resources affected the decrease in turnover.

The equity turnover is 1.25, 1.49 and 1.75, respectively, for each year analyzed. This indicator shows how many rubles of revenue per 1,000 rubles of equity. Therefore, for 1996 - 1246 rubles. revenue accounts for 1000 rubles. own funds and turnover lasts 304 days, for 1997 - 1496 rubles. for 1000 rub. own funds and turnover rate of 244 days and for 1998, the turnover of own funds lasts 208 days and 1,748 rubles. proceeds from sales account for 1000 rubles. own funds. The growth of this indicator, as in our case, reflects the trend towards greater employment in the production of the enterprise's own assets.

The turnover ratio of mobile assets shows the turnover rate of all mobile assets, both tangible and intangible, of an enterprise. For a given enterprise, it is equal to the working capital turnover ratio.

The accounts payable turnover ratio is 7.64, 10.08 and 12.98, respectively, for the three periods analyzed. The growth of this indicator, as for JSC ISS, means an increase in the speed of payment of the enterprise’s debt.

The average period of turnover of accounts payable reflects the average period of the company's debts. for this case, these indicators are 47.77 36.21 and 28.12 or 7.6 10.1 and 12.9 days, respectively, for 1996, 1997, 1998.

assessment of market stability.

Financial stability coefficients - characterize the degree of protection of the interests of investors and creditors.

1) One of the most important characteristics of the stability of the financial condition of an enterprise, its independence from borrowed sources funds is the autonomy coefficient equal to the share of sources of funds in the total balance sheet:

Own funds

Autonomy coefficient =_________________________________ (26)

Property value

A fairly high level of autonomy coefficient in the USA and European countries is considered to be 0.5 - 0.6. In this case, the risk of creditors is minimized: by selling half of the property formed from its own funds, the company can repay its debt obligations, even if the second half, in which borrowed funds were invested, is for some reason depreciated. In Japan, this indicator can be reduced to 0.2, since contractual obligations are very strictly observed there and great importance is attached to the reputation of the company.

An increase in the autonomy coefficient indicates an increase in the financial independence of the enterprise and a decrease in the risk of financial difficulties in future periods. From the point of view of creditors, this trend increases the company’s guarantee of its obligations.

2) The inverse indicator of the autonomy coefficient is the share of borrowed funds in the value of the property:

Debt amount

Debt ratio = ___________________________ (27)

Property value

Share of borrowed funds = 1- Autonomy ratio

3) The autonomy coefficient complements the ratio of borrowed and equity funds, equal to the ratio of the value of the enterprise’s liabilities to the value of its own funds, or it can be calculated using another formula:

Ratio factor 1

debt and equity = ______________________ - 1 (28)

Autonomy coefficient

The higher the value of the indicator, the higher the degree of risk for shareholders, since in case of failure to fulfill payment obligations, the possibility of bankruptcy increases. The critical value of the indicator is taken to be 1. An excess of the amount of debt over the amount of equity indicates that the financial stability of the enterprise is in doubt.

• 4) While maintaining the minimum financial stability of the enterprise, the ratio of borrowed and equity funds should be limited from above by the value of the ratio of the cost of the enterprise’s mobile funds to the cost of its immobilized funds. This indicator is called the ratio of mobile and immobilized funds and is calculated by dividing current assets (section 2 of assets) by immobilized assets (section 1 of assets).
• 5) A very significant characteristic of the stability of the financial condition is the maneuverability coefficient, equal to the ratio of the enterprise’s own working capital to the total amount of sources of own funds:

Maneuverability coefficient=________________________________ (29)

Own funds

It shows what part of the enterprise’s own funds is in mobile form, allowing relatively free maneuvering of these funds. High values ​​of the agility coefficient positively characterize the financial condition, however, there are no normal values ​​of the indicator established in practice. Sometimes in the specialized literature 0.5 is recommended as the optimal coefficient value. The calculation of own working capital occurs by deducting the amount of fixed assets from the enterprise’s own funds, the remaining value is the enterprise’s own working capital.

6) In accordance with the determining role played for the analysis of financial stability absolute indicators provision of the enterprise with funds from the sources of formation of reserves and costs, one of the main relative indicators of the stability of the financial condition is the coefficient of provision with its own working capital, equal to the ratio of the value of its own working capital to the cost of the reserves and costs of the enterprise:

Own working capital

Security ratio=______________________________ (30)

own circulating Cost of inventory and expenses

means

The normal limit for this indicator is:

The coefficient of provision with own working capital is 0.6 - 0.8.

7) Important characteristic the structure of the enterprise's funds gives the property coefficient industrial purposes, equal to the ratio of the sum of values ​​(taken from the balance sheet) of fixed assets, capital investments, equipment, inventories and work in progress to the balance sheet total.

Based on business practice data, the following indicator limitations are considered normal:

Industrial property ratio 0.5 or 50%

If the indicator decreases below the critical limit, it is advisable to attract long-term borrowed funds to increase property for production purposes, if the financial results in the reporting period do not significantly replenish the sources of own funds.

8) To characterize the structure of the enterprise’s sources of funds, along with the coefficients of autonomy, the ratio of borrowed and equity funds, and maneuverability, private indicators should also be used, reflecting various trends in changes in the structure of individual groups of sources.

The short-term debt ratio expresses the share

Short-term liabilities loans ratio

short-term debt = ___________________________ (31)

total amount owed

9) The ratio of accounts payable and other liabilities expresses the share of accounts payable and other liabilities in total amount obligations of the enterprise:

Accounts payable and other liabilities ratio = 1 - Short-term debt ratio

In our case, it is equal to: as of 07/01/96 - 0.48 and at the beginning of the year - 0.423.

10) Data on the enterprise’s debt must be compared with the debts of debtors, the share of which in the value of the property is calculated using the formula:

Accounts receivable

Accounts receivable ratio=_________________ (32)

Property value

11) The financial stability of the enterprise is also reflected in the share of its own and long-term borrowed funds (for a period of more than a year) in the value of the property:

Share of own funds long-term borrowed funds

Own =__________________________________________ (33)

and long-term

borrowed funds Cost of property

Estimated indicators for assessing market stability are given in Table 9.

Table 9.

Indicators for assessing market sustainability.

From the data in Table 9, the autonomy coefficient for JSC ISS as of January 1, 1996 was 0.81, as of January 1, 1997 - 0.84, as of January 1, 1998 - 0.81, and at the end of the analyzed period - 0. 82, which indicates a fairly high independence of the company from external financial sources.

The share of borrowed funds at the beginning of 1996 was equal to 0.19, but by the end of the year it decreased by 0.03, but the next year 1997 was less prosperous and this indicator rose to the previous level - 0.19, but by the end of 1998 g. it amounted to 0.18, which indicates a positive trend in the structure of the balance sheet. The ratio of borrowed and equity funds for this enterprise as of 01/01/1996 was 0.23, as of 01/1/1997 this indicator decreased to 0.19, and as of 01/1/1998 and 01/1/1999 it was equal to 0.23, which, as already indicated, indicates a fairly high independence from external sources of financing. In our case, the ratio of mobile and immobilized funds as of January 1, 1999 was 0.45, and if we compare it with previous indicators, we can see that the ratio of borrowed and equity funds is in the range from 0 to 0.45, which indicates about the fairly stable independent state of the company. On January 1, 1998, this coefficient was 0.33, on January 1, 1997 - 0.28, and on January 1, 1996 - 0.27.

The maneuverability coefficient shows what part of the enterprise’s own funds is in mobile form, allowing these funds to be freely maneuvered. The optimal coefficient value is recommended to be 0.5. In our case, the indicators did not reach the optimal level and amounted to -0.03 on 01/1/96, -0.03 on 01/1/97, -0.04 on 01/1/98 and -0.04 on 01/1/99. -0.09, however, the upward trend in this coefficient can be assessed positively.

The coefficient of provision with own working capital has limits of 0.6 - 0.8. For JSC ISS these figures were 0.13 - as of 01/01/96, 0.13 as of 01/01/97. 0.23 as of 01/01/98 and 0.54 - as of 01/01/99. this is significantly less than the standard coefficients, which indicates that the enterprise is insufficiently provided with funds from the sources of stock formation and costs. However, there is a favorable trend towards its increase, especially in 1998 this figure more than doubled

An important characteristic of the structure of an enterprise's funds is provided by the coefficient of assets for production purposes. The standard value is 0.5 or 50. A high property ratio was obtained for the analyzed period: 0.95 - as of 01/01/96, 0.94 - as of 01/01/97, 0.87 - as of 01/01/98 and 0.83 - as of 01/01/99, that is, the value of this indicator is normal and since the beginning of the year there has been a downward trend.

The short-term debt ratio, in this case these are bank loans, was 0.32 as of 01/01/96; as of 01/01/97, the indicator decreased to 0.22, and it more than doubled by the end of 1997. up to 0.46. During 1998, a downward trend appeared and as of January 1, 1999 it amounted to 0.42.

The accounts payable ratio for this enterprise was 0.68 at the beginning of 1996, 0.78 at the end of the year; during 1997 this figure decreased to 0.54, and by the end of 1998 it increased by 0.004 and amounted to 0 ,58.

The accounts receivable ratio at the beginning of the analyzed period was 0.025 and over 3 years it grew rapidly at the end of 1996 - 0.039, at the beginning of 1998 - 0.11 and at the end of 1998 - 0.13. This increase is negative in nature, because funds are diverted from circulation, which threatens to reduce profits.

The share of own and long-term borrowed funds was as of 01/01/96 - 0.81, as of 01/01/97 - 0.88, as of 01/01/98 - 0.85 and as of 01/01/99 - 0.82. Such high performance they say that the financial stability of the enterprise is beyond doubt.

Assessing the liquidity of an enterprise.

The general liquidity indicator discussed above expresses the enterprise’s ability to make payments on all types of obligations - both immediate and remote. This indicator does not give an idea of ​​​​the company's capabilities in terms of repaying short-term obligations. Therefore, to assess the solvency of an enterprise, three relative indicators of liquidity are used, differing in the set of liquid funds considered as covering short-term obligations. When calculating these indicators, short-term liabilities are taken as the calculation base.

1) Absolute liquidity ratio.

This ratio is equal to the ratio of the value of the most liquid assets to the amount of the most urgent obligations and short-term liabilities. The most liquid assets are cash and short-term securities. The company's short-term liabilities are represented by the sum of the most urgent obligations and short-term liabilities:

short-term

cash ratio financial investments

absolute liquidity = ________________________________ (34)

Short-term liabilities

The maximum theoretical value of this indicator is 0.2 - 0.35.

Intermediate coverage ratio for short-term liabilities (critical liquidity ratio).

To calculate this ratio, accounts receivable and other assets are included in the numerators of the relative indicator in liquid funds:

Short term

intermediate cash financial receivable

investment debt ratio

coatings =__________________________________________ (35)

Short-term liabilities

The liquidity ratio reflects the projected payment capabilities of the enterprise, subject to timely settlements with debtors. The theoretical value of the indicator is considered sufficient at the level of 0.7 - 0.8.

3) Coefficient current liquidity or coverage ratio. It is equal to the ratio of the value of all current (mobile) assets of the enterprise to the amount of short-term liabilities.

the value of the indicator should not fall below one. According to other data, a value greater than one is considered normal for it:

Short term

interim cash financial receivables inventories and

investment ratio debt costs

coatings =________________________________________________ (36)

Short-term liabilities

The coverage ratio characterizes the expected solvency of the enterprise for a period equal to the average duration of one turnover of all working capital.

4) Solvency indicators also include the share of inventories and costs in the amount of short-term liabilities:

Inventories and costs

Share of inventories and costs =_______________________________________ (37)

in current liabilities Current liabilities

Estimated indicators for assessing balance sheet liquidity are presented in Table 10.

Table 10.

Indicators for assessing balance sheet liquidity

The absolute liquidity ratio shows how much of the company's short-term debt can be repaid in the near future. The maximum theoretical value of this indicator is 0.2 - 0.35. This indicator is especially important for investors. The absolute liquidity ratio characterizes the solvency of the enterprise as of the balance sheet date.

For JSC ISS this indicator is 0.04 - as of 01/01/96, which indicates the low current liquidity of the enterprise, as of 01/01/97 - 0.08, as of 01/01/98 - 0.07, and at the end of the analyzed period this indicator was a much larger amount - this means that in the near future it can pay off 19% of its short-term liabilities.

The intermediate coverage ratio for short-term liabilities characterizes the expected solvency of the enterprise for a period equal to the average duration of one turnover of receivables. This indicator is of particular interest to shareholders. The standard value of the indicator is 0.6-0.8.

For this enterprise, as of 01/01/96 it is equal to 0.17 or 17%, as of 01/01/97 - 0.35 or 35, which confirms the data of the previous indicator about the low current solvency of the enterprise. at the end of 1997 and the beginning of 1998. this indicator was equal to 0.64, which is within the normative value; this indicates the normal current solvency of the enterprise. As of 01/01/99 the intermediate coverage ratio for short-term liabilities is 0.89 - this exceeds the standard values ​​and characterizes the high solvency of the enterprise.

The coverage ratio shows the payment capabilities of the enterprise, assessed subject to not only timely settlements with debtors and favorable sales of finished products, but also the sale, if necessary, of other elements of material current assets. Liquid funds must be sufficient to meet short-term obligations, i.e. the value of the indicator should not fall below one.

For JSC ISS this figure is 1.09 1.36 1.32, respectively, at the beginning of 1996, 1997, 1998, 1999. - all indicators are greater than one, and the growth of this coefficient characterizes a positive trend towards increasing the short-term solvency of the enterprise.

Share of inventories and costs in short-term liabilities as of 01/01/96. equal to 0.91 as of 01/01/97. - 1.03 as of 01/01/98 - 0.67 and as of 01/01/99 - 0.71, the values ​​of the indicator indicate that the amount of inventories and costs excluding data as of 01/01/97. does not exceed the amount of short-term liabilities, and the upward trend in this ratio is assessed positively.

Thus, for the analyzed period 1996 - 1998, OJSC Stavropol Dairy Plant has a dynamic development model.

The organizational structure of JSC MKS ensures a fairly stable financial condition of the enterprise. This is confirmed by the analysis of the financial results of the enterprise.

During the analysis, an increase in profitability indicators is observed. The highest value of the enterprise's profitability ratios was obtained for 1998 - the total return on capital is 16%, the net profitability is 11%, which indicates the efficient use of the enterprise's property.

Analysis of business activity ratios also allows us to draw a conclusion about the improvement of the enterprise’s activities, since there is an increase in capital productivity ratios, capital productivity, and high turnover of working capital. The indicator of receivables turnover deserves a negative assessment, since the average repayment period for receivables has increased.

Analysis of indicators of market stability indicates a fairly high independence of the company from external sources of the enterprise, and during the analyzed period there was a significant improvement in all indicators of market stability with the exception of the accounts receivable ratio. The accounts receivable ratio has increased and this change is negative in nature, since funds are diverted from circulation.

Indicators for assessing balance sheet liquidity, if not consistent, are extremely close to the standard values ​​of the coefficients, which characterizes the normal solvency of the enterprise.

Modern requirements for the results of analysis of the financial condition of an enterprise from a wide range of external users force us to look for new sources of financial data in addition to accounting, which for a long time was sufficient to form an information base financial analysis.

Information for financial analysis

The information for performing an analysis of the financial condition of an enterprise, according to published textbooks, manuals and guidelines, is the official accounting (financial) statements of the organization. Only in very rare cases has any author decided to recommend primary data accounting and specifically indicated the sources and methods of calculation and their application in the analysis.

Allows the analyst to understand the competitive position of the organization at the current time. Public reporting of commercial organizations contains a lot of numbers; the ability to read this information allows analysts to know how efficiently and effectively their company and competing companies are working.

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

Figure 1. Structure financial indicators

Analysis of ratios and indicators is a tool that provides an idea of ​​the financial condition of the organization, its competitive advantages and development prospects.

1. Performance Analysis. This group indicators allows you to analyze changes in 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. N 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 study of the relationship between two or more indicators characterizing the financial activities of an organization. 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 system of financial indicators 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 enterprises. Financial ratios themselves help the company's management to focus attention on the strengths and weaknesses of the company's activities, and to correctly formulate questions that these ratios 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 make it possible to see changes in the financial position or results of production activities, help determine trends and the structure of planned changes; which helps management see the threats and opportunities inherent in this particular enterprise.

A company's financial reports are about the company not only for analysts, but also for the management of the enterprise and a wide range of external users. 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.

System of financial indicators and ratios

The total number of financial ratios that can be used to analyze the activities of a commercial organization is about two hundred. As a rule, only a small number of financial indicators are used and, accordingly, the main conclusions that can be drawn on their basis.

When conducting analysis, financial indicators are usually divided into groups, most often into groups that reflect the interests of certain stakeholders. The main groups of such persons 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.

Analysis of financial indicators involves at least three stages:

Stage 1. Selection of the necessary indicators to illuminate a specific aspect of the organization’s financial situation, for example solvency.

Stage 2. Development of financial indicators that quantitatively express the analyzed side of the organization’s financial position, for example, the overall solvency ratio.

Stage 3. Evaluation of numerical values ​​of indicators (coefficients).

To control business entities and create guidelines for adoption management decisions such values ​​are normalized. The specifics of these norms are established as a result of the combination of many factors, including administrative interests, accumulated experience, common sense, etc. Their purpose is to serve as objective evaluation criteria, as well as unique beacons in establishing and maintaining the course of economic development in a given direction. However, it seems that effective guidelines should be more flexible, taking into account relevant differences by region, type of activity of economic entities, etc.

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; management efficiency; profitability (profitability) of activities.

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

Figure 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 transaction costs allows us to consider the relative dynamics of shares various types costs in the structure of the enterprise's total costs 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 allow us 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 activities, when specific types of 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: Allows you to evaluate the effectiveness of the company's management 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 of indicators is formed depending on the emphasis of the effectiveness study. 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 funds 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 the financial condition of a company at a certain point in time. Regardless of which ratio describing the capital structure is considered, the analysis of the share of borrowed capital essentially 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 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. The owners are interested in the impact of the company's performance on market value 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.

Financial ratios reflect the relationships between various reporting items (revenue and total assets, cost and accounts payable, etc.).

The analysis procedure using financial ratios involves two stages: the actual calculation of financial ratios and their comparison with basic values. The industry average values ​​of the coefficients, their values ​​for previous years, the values ​​of these coefficients for the main competitors, etc. can be selected as the basic values ​​of the coefficients.

The advantage of this method is its high "standardization". All over the world, the main financial ratios are calculated using the same formulas, and if there are differences in the calculations, then such ratios can be easily converted to generally accepted values ​​using simple transformations. In addition, this method allows us to exclude the influence of inflation, since almost all coefficients are the result of dividing some reporting items by others, i.e., not the absolute values ​​appearing in the reporting are studied, but their ratios.

Despite the convenience and relative ease of use of this method, financial ratios do not always make it possible to unambiguously determine the state of affairs of the company. As a rule, a strong difference between a certain coefficient and the industry average or from the value of this coefficient at a competitor indicates the presence of an issue that requires more detailed analysis, but does not indicate that the company clearly has a problem. A more detailed analysis using other methods may reveal the presence of a problem, but it may also explain the deviation of the coefficient by features of the enterprise’s economic activities that do not lead to financial difficulties.

For Internet companies, regular calculation of financial ratios is a convenient tool for monitoring the current state of the enterprise. In the conditions of a rapidly growing network market, their relative nature makes it possible to exclude the influence of many factors that introduce distortions into the absolute values ​​of reporting indicators.

Various financial ratios reflect certain aspects of the activity and financial condition of the enterprise. They are usually divided into groups:

· liquidity ratios. Liquidity refers to the company's ability to repay its obligations on time. These ratios operate on the ratio of the values ​​of the company's assets and the values ​​of short-term and long-term liabilities;

· coefficients reflecting the efficiency of asset management. These coefficients serve to assess the compliance of the size of certain company assets with the tasks performed. They operate with such quantities as the size of inventories, current and non-current assets, accounts receivable, etc.;

· coefficients reflecting the company's capital structure. This group includes coefficients that operate on the ratio of equity and borrowed funds. They show from what sources the company’s assets are formed, and how financially the enterprise depends on creditors;

· profitability ratios. These ratios show how much income a company generates from its assets. Profitability ratios allow for a comprehensive assessment of the company’s activities as a whole, based on the final result;

· market activity coefficients. The coefficients of this group operate with the ratio of market prices for the company's shares, their nominal prices and earnings per share. They allow you to assess the company's position on the securities market.

Let us consider these groups of coefficients in more detail. The main liquidity ratios are:

· current (total) liquidity ratio (Current ratio). It is defined as the quotient of the size of the company's current assets divided by the size of short-term liabilities. Current assets include cash, accounts receivable (net of doubtful accounts), inventories and other quickly realizable assets. Current liabilities consist of accounts payable, short-term accounts payable, accruals for wages and taxes and other short-term liabilities. This ratio shows whether the company has enough funds to pay its current obligations. If the value of this ratio is less than 2, then the company may have problems paying off short-term obligations, expressed in delayed payments;

· Quick ratio. In essence, it is similar to the current ratio, but instead of the total volume of current assets, it uses only the amount of current assets that can be quickly converted into cash. The least liquid part of working capital is inventory. Therefore, when calculating the quick ratio, they are excluded from current assets. The ratio shows the company's ability to pay off its short-term obligations in a relatively short time. It is believed that for a normally functioning company its value should be in the range from 0.7 to 1;

· absolute liquidity ratio. This ratio shows what portion of short-term liabilities the company can pay off almost instantly. It is calculated as the quotient of dividing the volume of funds in the company's accounts by the volume of short-term liabilities. Its value is considered normal in the range from 0.05 to 0.025. If the value is below 0.025, then the company may have problems paying off current obligations. If it is more than 0.05, then perhaps the company is using available funds irrationally.

To assess the effectiveness of asset management, the following coefficients are used:

· Inventory turnover ratio. It is defined as the quotient of dividing sales revenue for the reporting period (year, quarter, month) by the average amount of inventory for the period. It shows how many times during the reporting period inventories were transformed into finished products, which, in turn, were sold, and inventories were again purchased with proceeds from sales (how many “turnovers” of inventories were made during the period). This is the standard approach to calculating inventory turnover ratio. There is an alternative approach based on the fact that products are sold at market prices, which leads to an overestimation of the inventory turnover ratio when using sales revenue in its numerator. To eliminate this distortion, instead of revenue, you can take the cost of products sold for the period or, which will give an even more accurate result, the total amount of expenses of the enterprise for the period for the purchase of inventory. The inventory turnover ratio greatly depends on the industry in which the company operates. For Internet companies, it is usually higher than for ordinary enterprises, since most Internet companies operate in the online retail or service industries, where turnover is usually higher than in manufacturing;

· asset turnover ratio (Total asset turnover ratio). It is calculated as the quotient of dividing the sales revenue for the period by the total assets of the enterprise (average for the period). This ratio shows the turnover of all company assets;

· accounts receivable turnover. It is calculated as the quotient of dividing sales revenue for the reporting period by the average amount of accounts receivable for the period. The ratio shows how many times during the period receivables were generated and repaid by customers (how many “turnovers” of receivables occurred). A more visual version of this ratio is the average period for repayment of receivables by customers (in days) or the average time for receiving payment (Average Collection Period, ACP). To calculate it, the average accounts receivable for the period is divided by the average sales revenue for one day of the period (calculated as revenue for the period divided by the length of the period in days). ACP shows how many days, on average, pass from the date of shipment of products to the date of receipt of payment. The current practice of Internet companies in Russia, as a rule, does not provide for deferred payment to customers. For the most part, Internet companies operate on a prepaid or pay-at-delivery basis. Thus, for the majority of Russians network enterprises the ACP indicator is close to zero. As Internet business develops, this figure will increase;

· accounts payable turnover ratio. It is calculated as the quotient of dividing the cost of products sold for the period by the average amount of accounts payable for the period. The ratio shows how many times during the period accounts payable arose and were repaid;

· capital productivity ratio or fixed asset turnover ratio (Fixed asset turnover ratio). It is calculated as the ratio of sales revenue for the period to the cost of fixed assets. The ratio shows how much revenue each ruble invested in the company’s fixed assets generated during the reporting period;

· equity capital turnover ratio. Equity refers to the total assets of a company minus liabilities to third parties. Equity consists of the capital invested by the owners and all profits earned by the company, minus taxes paid on profits and dividends. The coefficient is calculated as the quotient of dividing sales revenue for the analyzed period by the average equity capital for the period. It shows how much revenue each ruble of the company's equity brought in during the period.

The company's capital structure is analyzed using the following ratios:

· share of borrowed funds in the asset structure. The ratio is calculated as the quotient of the volume of borrowed funds divided by the total assets of the company. Borrowed funds include short-term and long-term obligations of the company to third parties. The ratio shows how dependent the company is on creditors. The normal value of this coefficient is about 0.5. In addition to this coefficient, the coefficient of financial dependence is sometimes calculated, defined as the quotient of dividing the volume of borrowed funds by the volume of equity funds. A level of this coefficient exceeding one is considered dangerous;

· security of interest payable, TIE (Time-Interest-Earned). The coefficient is calculated as the quotient of profit before interest and taxes divided by the amount of interest payable for the analyzed period. The ratio demonstrates the company's ability to pay interest on borrowed funds.

Profitability ratios are very informative. Of these, the most important are the following:

· Profit margin of sales. It is calculated as the quotient of net profit divided by sales revenue. The coefficient shows how many rubles of net profit each ruble of revenue brought in;

· return on assets, ROA (Return of Assets). It is calculated as the quotient of net profit divided by the amount of the enterprise's assets. This is the most general ratio that characterizes the efficiency of a company’s use of the assets at its disposal;

· return on equity, ROE (Return of Equity). It is calculated as the quotient of net profit divided by the amount of common share capital. Shows the profit for every ruble invested by investors;

· income generation coefficient, BER (Basic Earning Power). It is calculated as the quotient of earnings before interest and taxes divided by the company's total assets. This ratio shows how much profit per ruble of assets the company would earn in a hypothetical tax-free and interest-free situation. The coefficient is convenient for comparing the performance of enterprises that are in different tax conditions and have different capital structures (the ratio of equity and borrowed funds).

The coefficients of an enterprise's market activity make it possible to assess the company's position on the securities market and the attitude of shareholders to the company's activities:

· stock quotation ratio, M/B (Market/Book). It is calculated as the ratio of the market price of a share to its book value;

· income per ordinary share. It is calculated as the ratio of dividend per ordinary share to the market price of the share.

This note was written as part of the course preparation

Let me start with a small philosophical digression... :) Our organizations are very complex, i.e. entities that, as a result of the interaction of parts, can maintain their existence and function as whole. Systems that function as a whole have properties that differ from the properties of their constituent parts. These are known as emergent properties. They "emerge" when the system is running. By dividing a system into components, you will never discover its essential properties. The only way to know what emergent properties are is to make the system work. Emergent properties cannot be measured by any of our senses. They only measure manifestation emergent properties. In this regard, distortions are possible if you limit yourself to measuring only one or several parameters.

From the above, it becomes clear why the company’s work cannot be characterized by a small number (let alone one!) indicator. Success is an emergent property that cannot be measured by profit, profitability, market share, etc. All these parameters characterize success to one degree or another. However, the financial indicators we will now look at are typical indicators of success. With my philosophical digression, I only wanted to warn against making this or that indicator absolute, as well as against introducing a management system based on a small number of indicators.

Profitability (profitability) indicators

Sales margin= (Sales income – (minus) Cost of products sold) / Sales income (Fig. 1)

Rice. 1. Sales margin

Download the note in format, examples in format

It is clear that the sales margin depends both on the trade margin and on what expenses we include in the cost price. The most relevant, from the point of view of making management decisions, is the approach when only fully variable costs are included in the cost (for more details, see and).

Operating expenses= Cost of goods sold + Selling expenses + Administrative expenses
Sales profit = Sales income – Operating expenses

Profitability of core activities= Profit from sales / Income from sales (Fig. 2).

Rice. 2. Profitability of core activities (or profitability of sales)

The results of unusual transactions should not be included in income and expenses so as not to distort the indicators of core activities (in the example, “other expenses” and “other income” are not included in the calculation of the parameter).

Performance indicators

Sales profit (also known as operating profit or profit from operations) is the profit on the assets of all those who contributed to those assets, therefore this profit belongs to those who provided the assets and must be distributed among them. The efficiency (profitability, profitability) of using assets can be determined by dividing one of the profit indicators (Fig. 3a) by one of the balance sheet indicators (Fig. 3b).

Rice. 3. Four types of profit (A) and three types of assets (B)

Two indicators are considered the most relevant.

Return on equity ratio(Return On Equity, ROE) = Net profit (profit after taxes, see (4) in Fig. 3a) / Average annual value of equity (shareholder) capital (see Fig. 3b). ROE shows the return on shareholders' equity.

Return on total assets ratio(Return On Total Assets, ROTA) = operating profit (or profit before interest and taxes, see (1) in Fig. 3a) / Average annual value of total assets (see Fig. 3b). ROTA measures a company's operating efficiency.

For the convenience of managing the return on total assets, management breaks the ROTA ratio into two parts: return on sales and turnover of total assets:

ROTA= Return on sales * Turnover of total assets

Here's how this formula comes about. A-priory:

Return on sales and turnover of total assets are not the most convenient operating indicators, since they cannot be influenced directly; each of them depends on the totality of individual results obtained in different areas of activity. To achieve the desired values ​​of these two indicators, you can use a system of lower level indicators.

To increase profitability, they usually increase sales margins and also reduce operating expenses, including:

• Direct costs for materials and wages
• Manufacturing overhead
• Administrative and commercial expenses

To increase the turnover of total assets, increase the turnover:

• Inventory (warehouse)
• Accounts receivable

Turnover indicators

For trading companies characterized by a significant share of current assets. For example, the company's statements, which we use for illustration (Fig. 4), show that the share of equity capital in 2010 was only 3% (2276 / 75,785). It is clear why so much attention is paid to the optimization of current assets.

Accounts receivable turnover= Accounts receivable * 365 / Revenue,
that is, the average duration of loans (in number of days) issued to customers.

Inventory turnover= Inventories * 365 / Cost of goods sold,
that is, the average number of days of inventory storage from the moment of receipt from suppliers until the moment of sale to customers

Accounts payable turnover= Accounts payable * 365 / Cost of goods sold,
that is, the average duration of loans (in days) provided by suppliers.

Along with turnover (in days), turnover ratios are used, showing how many times the asset “turned around” during the year. For example,

Accounts receivable turnover ratio= Revenue / Accounts receivable

In our example, the accounts receivable turnover ratio in 2010 was = 468,041 / 15,565 = 30.1 times. It can be seen that the product of turnover in days and the turnover ratio gives 365.

Rice. 4. Turnover indicators

Turnover indicators (Fig. 4) mean that in 2010 the company on average needed to finance the cash gap, which was 23 days (Fig. 5).

Rice. 5. Cash flow cycle

Rice. 6. Calculation of the quick liquidity ratio

Economic added value

Recently, the concept of economic value added (EVA) has become popular:

EVA= (Profit from ordinary activities – taxes and other mandatory payments) – (Capital invested in the enterprise * Weighted average cost of capital)

How to understand this formula? EVA is the enterprise’s net profit from ordinary activities, but restored (that is, increased) by the amount of interest paid for use borrowed capital , and then reduced by the amount of the fee for all capital invested in the enterprise. And this last [payment] is determined by the product of the invested capital by its weighted average cost. Why is interest added to net profit for the use of borrowed capital? Because this interest will later be deducted as part of the fee for the entire capital invested. What capital is considered invested? Some analysts believe that only the capital that needs to be paid for, that is, equity and debt. Other analysts believe that all capital, including loans received from suppliers of goods.

Where does the weighted average cost of capital (WACC) come from? Some analysts believe that WACC should be determined by the market value of similar investments. Others are that you need to calculate the WACC based on the exact numbers of a specific company. Last way, unfortunately, implements the principle of planning “from what has been achieved.” The higher the return on equity, the higher the WACC, the lower the EVA. That is, by achieving higher profitability, we increase shareholder expectations and reduce EVA.

There is ample evidence that EVA is the performance measure most closely associated with shareholder value. Creating value requires management to be careful with both profitability and capital management. EVA can serve as a measure of management quality (but don't forget the philosophical digression made at the beginning of this section).

Indicators calculated on the basis of financial statements and Russian specifics

If the data management accounting, as a rule, reflect relevantly financial position company, then when analyzing accounting forms, you need to be aware of which indicators reflect the real state of affairs, and which are elements of tax evasion schemes.

To understand how accounting forms (and financial indicators based on them) are distorted, here are several typical schemes for illegal tax optimization:

• Inflating the purchase price (with a kickback), which affects the decrease in sales margins and, further down the chain, the net profit
• Reflection of fictitious contracts that increase administrative and commercial expenses and reduce taxable profit
• Fictitious warehouse purchases or purchases of services that exist only on paper (for which payment is not provided), significantly worsen inventory turnover, accounts payable, and liquidity.

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

Financial activities at the enterprise– financial planning and budgeting, financial analysis, management of financial relations and funds, determination and implementation of investment policy, organization of relations with budgets, banks, etc.

Financial activities solve such problems as:

• providing the enterprise with the necessary financial resources for financing its production and sales activities, as well as for the implementation of investment policy;
• taking advantage of promotion opportunities efficiency activities of the enterprise;
• ensuring timely repayment current and long-term liabilities;
• determination of optimal credit conditions to expand sales volume (deferment, installment plan, etc.), as well as collection of generated accounts receivable;
• motion control and redistribution financial resources within the boundaries of the enterprise.

Feature of the analysis

Financial indicators allow you to measure the effectiveness of work in the above areas. For example, liquidity indicators allow us to determine the ability to timely repay short-term obligations, while financial stability ratios, which represent the ratio of equity and debt capital, allow us to understand the ability to meet obligations in the long term. Financial stability coefficients of the second group, which show the adequacy of working capital, allow us to understand the availability of financial resources to finance activities.

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

The effectiveness of financial activities can be judged from two aspects:

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

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

The current financial condition of the enterprise just means how sustainable is an economic system. If a company is able to meet its obligations in the short and long term, ensure uninterrupted production and sales processes, and also reproduce expended resources, then we can assume that, if current market conditions remain, the enterprise will continue to operate. In this case, the financial condition can be considered acceptable.

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

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

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

Analysis of the financial results of the enterprise

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

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

Although firms report net income, total financial results are considered more important as a measure that better measures the performance of a company's stock. There are two main alternative approaches to assessing profitability.

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

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

Analysis of financial performance indicators of the enterprise

It is worth noting that the most important method is the method of indicators, also known as the method of relative indicators. Table 1 presents groups of financial ratios that are best suited for analyzing performance.

Table 1 – Main groups of indicators that are used in the process of assessing the company’s financial results

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

Turnover indicators (indicators of business activity)

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

Table 2 - Turnover indicators

Interpretation of turnover indicators

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

High An inventory turnover ratio compared to industry norms may indicate high efficiency in inventory management. However, it is also possible that this turnover ratio (and a low one-period turnover ratio) could indicate that the company is not maintaining adequate inventory, which could cause a shortage to hurt revenue.

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

Short An inventory turnover ratio (and therefore a high turnover period) relative to the industry as a whole may be an indicator of the slow movement of inventory in the operational process, perhaps due to technological obsolescence or changes in fashion. Again, comparing a company's sales growth to the industry can provide insight into current trends.

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

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

A relatively high accounts receivable turnover ratio may indicate the high efficiency of commodity lending to customers and collection of money by them. On the other hand, a high accounts receivable turnover ratio may indicate that lending or debt collection conditions are too strict, indicating possible loss part of sales to competitors who offer more lenient conditions.

Relatively low Accounts receivable turnover typically raises questions about the effectiveness of credit and collection procedures. As with inventory management, comparing a company's sales growth to its industry can help the analyst evaluate whether sales are being lost due to strict credit policies.

In addition, by comparing uncollectible accounts receivable and actual loan losses with past experience and with similar companies, it is possible to assess whether low turnover reflects problems in managing commercial lending to customers. Companies sometimes provide information about accounts receivable stitching. This data can be used in conjunction with turnover rates to draw more accurate conclusions.

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

For the purposes of calculating these figures, it is assumed that the company makes all of its purchases using trade credit. If the volume of goods purchased is not available to the analyst, then the cost of goods sold indicator can be used in the calculation process.

High The accounts payable turnover ratio (low turnaround time) relative to the industry may indicate that the company is not making full use of available credit funds. On the other hand, this may mean that the company uses a system of discounts for earlier payments.

Excessively low the turnover ratio may indicate problems with timely payment of debts to suppliers or the active use of soft supplier credit conditions. This is another example of when you should look at other indicators to form informed conclusions.

If liquidity ratios indicate that the company has sufficient cash and other short-term assets to pay obligations, and yet the payables turnover period is high, then this will indicate lenient credit terms of the supplier.

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

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

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

Low the value may indicate that the business is inefficient, capital-intensive, or that the business is not operating at full capacity. In addition, fixed asset turnover may be influenced by other factors not related to business performance.

The capital productivity ratio will be lower for companies whose assets are newer (and therefore less worn out, reflected in the financial statements by a higher book value) compared to companies with older assets (which are more worn out and thus recorded at a lower value). book value (subject to the use of a revaluation mechanism).

The capital productivity indicator may be unstable, since income may have a steady growth rate, and the increase in fixed assets occurs in spurts; therefore, each annual change in the indicator does not necessarily indicate important changes in the company's efficiency.

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

Since this ratio includes both fixed and working capital, poor working capital management can skew the overall interpretation. Therefore, it is useful to analyze working capital and capital productivity ratios separately.

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

Second important group indicators are profitability and profitability ratios. These include the following coefficients:

Table 3 – Profitability and Profitability Indicators

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

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

Margin indicators provide insight into sales performance. Gross Margin shows how many more resources the company has left to carry out management and sales expenses, interest costs, etc. Operating margin demonstrates the effectiveness of the organization's operational process. This indicator allows you to understand how much operating profit will increase if sales increase by one ruble. Net Margin takes into account the influence of all factors.

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

Analysis of the financial condition of the enterprise

Financial condition, as stated above, means the stability of the current financial and economic system of the enterprise. To study this aspect, you can use the following groups of indicators.

Table 4 – Groups of indicators that are used in the state assessment process

Liquidity ratios (liquidity ratios)

Liquidity analysis, which focuses on cash flow, measures a company's ability to meet its short-term obligations. The fundamentals of this group are a measure of how quickly assets are converted into cash. During daily operations, liquidity management is usually achieved through the efficient use of assets.

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

Assessing the adequacy of liquidity requires an analysis of a company's historical funding needs, current liquidity position, expected future funding needs, and options for reducing funding requirements or raising additional funds (including actual and potential sources of such funding).

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

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

Calculation of liquidity ratios

Key liquidity ratios are presented in Table 5. These liquidity ratios reflect the position of a company at a particular point in time and, therefore, use data at the end of the balance sheet date rather than average balance sheet values. Indicators of current, quick and absolute liquidity reflect the company's ability to pay current obligations. Each uses a progressively stricter definition of liquid assets.

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

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

Table 5 – Liquidity indicators

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

Interpretation of liquidity ratios

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

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

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

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

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

Absolute liquidity . The ratio of cash to current liabilities usually provides a reliable measure of the liquidity of an individual enterprise in crisis situation. Only highly liquid short-term investments and cash are included in this indicator. However, it is worth considering that in a crisis, the fair value of marketable securities may decline significantly as a result of market factors, in which case it is advisable to use only cash and equivalents in the process of calculating absolute liquidity.

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

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

The higher the protective interval indicator, the higher the liquidity. If a company's safety margin is very low relative to its peers or relative to the company's own history, the analyst needs to determine whether there is sufficient cash flow to enable the company to meet its obligations.

Financial cycle . This indicator indicates the amount of time that passes from the moment an enterprise invests money in other forms of assets until the moment it collects funds from clients. A typical operating process involves receiving inventory on a deferred basis, which creates accounts payable. The company then also sells this inventory on credit, resulting in an increase in accounts receivable. After this, the company pays its invoices for the goods and services supplied, and also receives payment from customers.

The time between spending cash and collecting cash is called the financial cycle. More short cycle indicates greater liquidity. It means that a company must finance its inventory and accounts receivable only for a short period of time.

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

Indicators of financial stability and solvency

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

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

Table 6 – Financial stability indicators

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

Interpretation of solvency ratios

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

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

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

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

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

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

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

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

Analysis of the financial activities of an enterprise using the example of PJSC Aeroflot

The process of analyzing financial activities can be demonstrated using the example of the well-known company PJSC Aeroflot.

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

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

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

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

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

The company's financing policy is as follows:

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

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

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

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

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

Indicators

Absolute deviation, +,-

Current ratio

Quick ratio

Absolute liquidity ratio

Ratio of short-term receivables and payables

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

On the other hand, the current ratio is significantly below normal. If in UTair, the company’s direct competitor, the figure was 2.66, then in PJSC Aeroflot it was only 0.95. This means that the company may have problems paying current obligations on time.

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

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