In large companies, a lot of attention is paid to coefficient financial analysis, which can be used to assess the financial condition and financial stability of the company.
What is the financial sustainability of an enterprise?
Financial stability is a state in which a company does not experience serious dependence on creditors and can freely and competently manage its own capital.
To analyze financial stability, the following coefficients are calculated:
- autonomy;
- the ratio of debt and equity capital;
- concentration of equity capital;
- concentration of borrowed capital;
- the structure of debt capital;
- maneuverability of own working capital.
To calculate the indicators, you need a balance sheet of the enterprise for at least two years. To assess the dynamics of indicators and make a forecast, it is necessary to know the indicators for at least two consecutive periods.
An example of calculating the concentration ratio of debt capital
The debt capital concentration ratio is calculated as follows:
Кзк = ЗК / ВБ, where ЗК - borrowed capital, ВБ - balance sheet currenc
Balance currency is the total amount for the active or passive part of the balance.
When calculating this indicator, the long-term and short-term liabilities of the firm are included in the borrowed capital. The value of the indicator should not be more than 0.5, that is, the share of borrowed capital in the total mass of funding sources should not exceed 50%.
Banks, when providing a loan, necessarily assess the share of borrowed funds in order to understand whether the company can pay off its debts.
Usually, the higher the leverage, the higher the cost of capital, as banks try to hedge and compensate for possible risk by increasing interest rates.
Let's assume that the company has two years of data. As of December 31, 2012, the value of the borrowed capital is 540 million rubles, and the total capital of the company is 1256 million rubles. In 2013, the company took out a long-term loan, as of December 31, 2013 the value of the borrowed capital is 890 million rubles, and the total capital of the company is 1,424 million rubles. Using the debt capital concentration ratio, it is required to determine how the capital structure has changed.
The debt capital concentration ratio at the end of 2012 will be: 540/1256 = 0.43, the value of this indicator in 2013 will be: 890/1424 = 0.63
Analyzing the dynamics of indicators, we can conclude that in 2013 the financial dependence of the enterprise increased, at the end of 2013 the borrowed capital is 63% in the structure of the sources of funds of the enterprise.
