The financing ratio, as an indicator, shows a certain economic stability of the sphere of the economic environment where the company carries out its main activities. Usually, the results of his active and effective response to various changing internal and external factors are taken into account.
The financial stability of a company must necessarily be based on the constant excess of income over expenses, on the efficient use of material resources and an uninterrupted production process. The financing ratio is calculated strictly from the economic and production activities of the organization. In other words, this is one of the main indicators of the company's sustainability.
How to assess the economic situation
To correctly assess the current economic situation, you need to obtain a financing ratio. It is calculated by the ratio of the company's own sources to funds that are classified as borrowed. This process is carried out based on the results of the balance sheet.
A similar indicator determines in which share the assets consist of personal capital. This factor directly characterizes the independence of a business entity from various external sources of material resources.
Acceptable coefficient indicators
If the economic situation is favorable, the financing ratio will be greater than one. If the indicator does not reach this parameter, there is a risk of insolvency, as a result, there will be some difficulties in obtaining a loan from financial institutions.
An equally important parameter for assessing the level of efficiency of an enterprise's prospects is the coefficient of sustainable financing. It can be determined by the ratio of the total amount of all existing long-term liabilities, as well as equity to the material assets recorded in the balance sheet. Such an indicator reflects exactly that part of the assets that is financed through permanent sources. In other words, this is a part of the methods of receiving material resources that have been used for a long time in one or another industrial or economic activity.
Any enterprise should strive to ensure the stability of its activities, and for the long term. Achievement of such a goal will be possible only with a sufficiently low dependence on creditors and investors. At the moment, there is a certain feature - own tangible assets are invested in the minimum amount, all the rest of the receipt of funds is carried out through various borrowings. This is the best method for developing activities, with minimal expenditure of material resources.
