Financial analysis as a tool for diagnosing the financial condition of a company. Financial analysis of an enterprise: methods

Finance and credit relations

The essence of the content of financial analysis and its place in the system of economic knowledge 1. Subject, method, objects and subjects of financial analysis 1. Classification of methods and procedures of financial analysis Financial analysis as a tool for managing the financial and economic activities of an enterprise Financial analysis, being an integral component of a comprehensive economic analysis of an economic entity, is an identification process collection processing and use of a variety of official and unofficial internal and external...

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Fundamentals of Financial Analysis

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1.1. Financial analysis as a tool for managing the financial and economic activities of an enterprise

1.4. Classification of methods and procedures of financial analysis

1. Financial analysis as a tool for managing the financial and economic activities of an enterprise

The financial analysis, being an integral component of a comprehensiveeconomic analysis of a business entity, is the process of identifying, collecting, processing and using a variety of (official and unofficial, internal and external, financial and non-financial) information necessary for making decisions regarding all aspects of the enterprise. The main goal of financial analysis is to obtain the most informative parameters that give an objective and accurate picture of the financial condition of the enterprise. As a rule, the results of the analysis make it possible to determine not only the current financial state of the enterprise, but also the immediate or more distant prospects for its development, as an element of a constantly changing market environment.

Let's highlight the mainfinancial analysis tasks:

1. Justification for choosing optimal business solutions from available alternatives. Competition, commercial risk and the uncertainty of obtaining expected economic benefits, the likelihood of expected damage or obtaining a result below the required value highlight the problem of choosing the optimal direction of development in a given situation.

1. A developed system of financial analysis and assessment of the activities of business entities allows us to find solutions to the most complex and frequently occurring business situations and develop the most effective recommendations for eliminating them and getting out of the current situation.

3. Develop a wide range of tools and tools to achieve the desired results

1. Economic practice requiresuse in the analysis of multidimensional assessments of the efficiency of economic activitytaking into account the solution of social, environmental and humanitarian problems.
2. The current task isimprovement of methods for conducting financial analysis.
3. Improving methods for studying the market and counterpartiescan be considered as an important independent task of analysis.
4. Implementation of traditional tasks of economic analysis, such as mobilizing identified reserves for increasing production efficiency and increasing its intensification, in the current economic situation is complicated by the need to take into account uncertainty and commercial risks, the probabilistic nature of events and their assessments, inflationary processes, etc. All this requires improving the theory of financial analysis, without which it is not possible to strengthen its role in business management.
5. Task increasing the active role of financial analysis as an information base for making optimal decisionsalong with the traditional task of improving all sources of information, including improving the quality of management, financial, accounting and other information.

Changing the content of analysis tasks, expanding the scope of their implementation, the new role of previously set tasks depending on the goals of economic development all this indicates the demand for innovation in the theory of financial analysis, the need to prepare new methods and mobilize all the potential capabilities of economic analysis. Moreover, this process, of course, will be permanent. It should be noted the possibilities of economic analysis as a means of assisting enterprise management.Any control consists of two stages. At the first stage, on the basis of relevant information and its analytical processing, the state and dynamics of a particular process are assessed; at the second, if the analysis determines the need for intervention in order to change some parameters in the process, an appropriate management decision is made. Moreover, the analyst can even prepare a draft of this decision for the manager.

In conditions of market relations, the planning system within the enterprise is preserved, but its volume and some approaches change. Financial analysis provides the necessary justification for planned indicators, since its assessment of the achieved level of production and resource consumption, on the one hand, and demand, market prices and operational efficiency, on the other, serves as the basis for planning the activities of the enterprise.

All production and financial processes, as well as the overall results of the enterprise's activities, must be properlycontrolled.This is ensuredcurrent controlon the part of the enterprise administration for the status of implementation of planned tasks, organizational measures, instructions, etc. using analytical processing of everyday information that characterizes the production and financial activities of the enterprise. There is anotherform of control retrospective. It can exist in the form of an audit of the financial and economic activities of the enterprise, a thematic audit by the tax administration, or an independent audit. The need to develop analysis methods was predetermined by the need to obtain an effective result from assessing its economic activities. The development of analysis methods was carried out for a long time by specialists in the field of accounting; the first, and sometimes the only practitioners who analyzed the work of enterprises, were the most experienced accountants. Work on debugging accounting and control inevitably raises the need to develop special techniques for studying and analyzing the activities of an enterprise, in particular based on data from final reports, while standard forms of accounting documents, registers and reports can and should be improved and optimized in accordance with the tasks solved in the process of conducting analysis, which has a positive impact on the quality of the final decisions that result from the entire range of actions to carry out financial analysis.

1.2. The essence, content of financial analysis and its place in the system of economic knowledge

In a market economy, the problem of assessing the economic development of an enterprise breaks down into a number of separate issues, of which financial analysis is the key one.

Analysis (Greek: “dismemberment”)decomposition of the object or process being studied into separate component parts, elements internal to this object.In the traditional senseanalysis is a method of research through dissectioncomplex phenomena into their component parts.In a broad scientific senseanalysis is a method of scientific research (cognition) and assessment of phenomena and processes, which is based on the study of the components and elements of the system being studied. In economics, of which finance is an integral element, analysis is used toidentifying the essence, patterns, trends and assessment of economic and social processes, studying financial and economic activities at all levels (at the level of an enterprise, organization, association, industry on a national scale) and in various spheres of reproduction (material production, distribution, exchange and consumption) .

In a centrally planned economy, the emphasis was on accounting, control and analysis of finances according to the “plan fact” scheme. The main goal of that period was to evaluate and search for ways to make the most effective use of material, labor and financial resources. cypco c, ensuring the most complete satisfaction of the material needs of man and society.

With the transition to a market economic system, the operating conditions of economic entities of all forms of ownership have changed significantly. In market conditions, fierce competition among organizations and enterprises for survival in the market for goods and services has intensified. In the conditions of market relations, those business entities that have a stable financial condition, do not allow losses, and skillfully use financial reserves can survive.

Financial analysis is a way of accumulating, transforming and using financial information that is necessary to:

Assess the current and future financial condition of the enterprise;

Assess the possible and appropriate pace of development of the enterprise from the standpoint of their financial support;

Identify available sources of funds and assess the possibility and feasibility of their mobilization;

Predict the position of the enterprise in the capital market.

Financial analysis can be performed either by the management personnel of a given enterprise or by any external analyst, since it is mainly based on publicly available information about the financial and economic activities of the enterprise.

The goals and objectives presented above determine those areas that should be key for any analyst operating in any sector of the economy, carrying out research at any enterprise. Of course, there will be some features that should be taken into account in order to obtain the most reliable picture of the financial condition of a business entity.

Financial analysis allows you to determineefficiency of financial and economic activities of enterprises(organizations), assess their financial condition, solvency and creditworthiness.

Financial analysis for management personnel of enterprises, organizations, financial and accounting workers and analysts is the most important tool for determining the financial condition of an enterprise, identifying reserves for increasing profitability, improving all financial and economic activities and increasing their efficiency.

Analysis serves as the starting point for forecasting, planning, and management of economic objects.

Financial analysis is divided into separate types depending on the following characteristics (Fig. 1.1.):

1. According to organizational formsdistinguish internal and external financial analysis of the enterprise:

External financial analysiscarried out by analysts who are outsiders to the enterprise and therefore do not have access to the internal information base of the enterprise.

Rice. 1.1. Classification of the main types of financial analysis.

Features of external financial analysis are:

Multiplicity of subjects of analysis, users of information about the activities of the enterprise;

Diversity of goals and interests of the subjects of analysis;

Availability of standard methods, accounting and reporting standards;

The analysis is focused only on public, external reporting of the enterprise;

Limitation of the analyst’s tasks as a consequence of the previous factor;

Maximum openness of the analysis results for users of information about the enterprise’s activities.

Basics content (tasks) of external financial analysiscarried out by the partners of the enterprise according to public financial statements are:

Analysis of absolute profit indicators;

Analysis of relative profitability indicators;

Analysis of the financial condition and market stability of the enterprise;

Analysis of the solvency of the enterprise and the liquidity of its balance sheet - analysis of the effectiveness of the use of borrowed capital;

Analysis of the turnover of working capital of the enterprise;

Economic diagnostics of the financial condition of the enterprise and rating assessment of issuers.

Internal analysisproduced by the company's employees. The information base of such analysis is much wider and includes any information circulating within the enterprise. The main content (tasks) of internal financial analysis can be supplemented by other aspects that are also important for optimizing management, for example, such as analysis of the efficiency of capital advances, analysis of the relationship between turnover costs and profits.

2. By volume of researchhighlight a complete and thematic financial analysis of the enterprise.

Full financial analysisis carried out with the aim of studying all aspects of the financial activities of an enterprise in a comprehensive manner.

Thematic financial analysislimited to the study of individual aspects of the financial activities of the enterprise. The subject of thematic financial analysis may be the efficiency of using the assets of the enterprise; optimal financing of various assets from separate sources; the state of financial stability and solvency of the enterprise; optimality of the investment portfolio; optimality of the financial structure of capital and a number of other aspects of the financial activity of the enterprise.

3. By object of analysisThe following types are distinguished:

Analysis of the financial activities of business entities as a whole.In the process of such analysis, the object of study is the financial activity of the enterprise (association) as a whole, without identifying its individual structural units and divisions.

Analysis of the financial activities of individual structural units and divisions (centers of economic responsibility).This analysis is based mainly on the results of management accounting of the enterprise.

Analysis of individual financial transactions.The subject of such analysis may be individual transactions related to short-term or long-term financial investments; with financing of individual real projects and others.

4. By perioddistinguish between preliminary, current and sequential financial analysis.

Preliminary financial analysisis associated with the study of the conditions of financial activity in general or the implementation of individual financial transactions of an enterprise (for example, assessing one’s own solvency if it is necessary to obtain a large bank loan).

Current (or operational) financial analysiscarried out in the process of implementing individual financial plans or carrying out individual financial transactions with the aim of promptly influencing the results of financial activities. As a rule, it is limited to a short period of time.

Follow-up (or retrospective) financial analysiscarried out by the enterprise for the reporting period (month, quarter, year). It allows you to deeply and more fully analyze the financial condition and results of the financial activities of the enterprise in comparison with preliminary and current analysis, since it is based on completed statistical and accounting reporting materials. In general, the analytical tasks of all types of analysis represent a specification of the goals of the analysis, taking into account the organizational, informational, technical and methodological capabilities of carrying out this analysis, which contributes to increasing the awareness of the enterprise administration and other users of economic information (subjects of analysis) about the state of the objects of interest.

The theoretical basis of financial analysis is political economy, and the general method of knowledge, as for all other sciences, is dialectics.

Financial analysis is closely related to industrial economics, organization and management, marketing, economic disciplines, banking and lending.

Accounting and statistics play a special role in financial analysis. They not only provide him with the necessary information, but also provide some methods for studying it. The relationship between financial analysis and statistics has developed especially fruitfully in this aspect, as a result of which the analysis methodology has been supplemented by many statistical methods and research techniques. Financial analysis widely uses modern information processing tools, economic-mathematical and sociological methods, as well as data from the latest information systems.

1.3. Subject, method, objects and subjects of financial analysis

Financial statement analysis consists of applyinganalytical tools and methodsto indicators of financial documents in order to identify significant connections and characteristics necessary for making any decision. It serves to transform data, so numerous and varied in our computer age, into necessary and always scarce information.

Subject of financial analysis, that is, what is studied within the framework of this science - financial resources and their flows.Contents and main goal of financial analysisassessment of the financial condition and identification of opportunities to improve the efficiency of the functioning of an economic entity using rational financial policies. This goal is achieved using the method inherent in this science.

Financial analysis methodthis is a system of theoretical-cognitive categories, scientific tools and regular principles for studying the financial activities of business entities. The first two elements give a statistical characteristic of the method, and the last one gives its dynamics.

Objects of study of financial analysisare the financial condition of an economic entity, as well as financial and economic processes and their elements. Breaking down financial and economic processes into their component parts allows us to more accurately and in detail identify the nature of their occurrence, the peculiarities of their course and the possibility of influencing the development of a particular phenomenon.

The process of conducting financial analysis is described differently depending on the task at hand. It can be used as a screening tool when choosing an investment direction or possible merger options. It can also act as a forecasting tool for future financial conditions and performance. Financial analysis is also applicable to identify problems in managing production activities. It can serve to evaluate the performance of the company's management. And most importantly,financial analysis allows you to rely less on guesswork, premonitions and intuition, and reduce the inevitable uncertainty and information risks that are present in any management decision-making process. Financial analysis does not eliminate the need for business sense, but it does provide a solid foundation for its rational application..

1.4. Classification of methods and procedures

financial analysis

There are various classifications of methods of economic analysis. The first level of classification identifiesinformal and formalized methods of analysis. The first are based on the description of analytical procedures at a logical level, rather than on strict analytical dependencies. These include methods: expert assessments, scenarios, psychological, morphological, comparisons, constructing systems of indicators, constructing systems of analytical tables, etc. The use of these methods is characterized by a certain subjectivity, since the intuition, experience and knowledge of the analyst are of great importance.

The second group includes methods that are based on sufficientstrict formalized analytical dependencies. They constitute the second level of classification and are divided into statistical, accounting and economic-mathematical.

Statistical methods of economic analysis:

• statistical observation - recording information according to certain principles and for certain purposes;
• absolute and relative indicators (coefficients, percentages);
• calculations of averages: simple arithmetic, weighted, geometric averages;
• dynamics series: absolute growth, relative growth, growth rate, growth rate;
• summary and grouping of economic indicators according to certain characteristics;
• comparison: with competitors, with standards, in dynamics;
• indices - the influence of factors on the compared indicators;
• detail, for example, annual labor productivity depends, firstly, on hourly productivity, and secondly, on the time used during the year;
• graphic methods (for publication).

Accounting methods:

• double entry method;
• balance sheet;
• other accounting methods.

Economic and mathematical methods:

• methods of elementary mathematics;
• classical methods of mathematical analysis: differentiation, integration, calculus of variations;
• methods of mathematical statistics: study of one-dimensional multidimensional statistical populations;
• economic methods: production functions; intersectoral balance of the national economy; national accounting;
• mathematical programming methods: optimization, linear, quadratic and nonlinear programming; block and dynamic programming;
• methods of calculating operations: inventory management; methods of technical wear and replacement of equipment; game theory; scheduling theory; methods of economic cybernetics;

At the moment, the practice of financial analysis has already developed the basic rules for reading (analysis methods) of financial reports. There are six main methods among them (Figure 1.2.):

• horizontal (trend) analysis;
• vertical analysis;
• method of financial ratios;
• comparative analysis;
• factor analysis.

Horizontal (trend) analysis is based on the study of the dynamics of individual financial indicators over time. In the process of carrying out this analysis, the growth rates (gain) of individual indicators are calculated and the general trends in their change (or trend) are determined. In financial analysis, the following forms of horizontal (trend) analysis are most widespread:

1) Comparison of financial indicators of the reporting period with indicators of the previous period (for example, with indicators of the previous decade, month, quarter).

2) Comparison of financial reporting indicators with indicators for the same period last year (for example, indicators for the second quarter of the reporting year with similar indicators for the second quarter of the previous year). This form is used in enterprises with pronounced seasonal characteristics of economic activity.

3) Comparison of financial indicators for a number of previous periods. The purpose of this analysis is to identify trends in changes in individual indicators characterizing the results of the financial activities of the enterprise.

Vertical (structural) analysisdetermination of the structure of the final indicators, identifying the impact of each reporting item on the result as a whole. In the process of carrying out this analysis, the specific weights of individual structural components of financial indicators are calculated. In financial analysis, the following forms of vertical (structural) analysis are most widespread:

1) Structural analysis of assets.In the process of this analysis, the ratio (shares) of current and non-current assets is determined; composition of current assets used; composition of non-current assets used; composition of the enterprise's assets according to the degree of their liquidity; composition of the investment portfolio and others.

Rice. 1.2. Financial analysis systems based on various methods of its implementation.

2) Structural analysis of capital.In the process of this analysis, the proportion of equity and debt capital is determined; composition of equity capital used; composition of borrowed capital used by type; composition of borrowed capital used by maturity of obligations (repayment) and others.

3) Structural analysis of revenue from product sales.The financial results report is presented in a form convenient for analysis, since each item is correlated with a central number - sales volume. With some exceptions, turnover affects each cost item to one degree or another, and therefore information about the ratio of costs and expenses of an enterprise to sales volume can be useful.

3) Structural analysis of cash flows. In the process of this analysis, cash flows for operational (production), financial and investment activities are distinguished as part of the total cash flow. Each of these cash flows, in turn, can be more deeply structured into individual constituent elements.

Comparative (spatial) analysis is based on comparing the values ​​of individual groups of similar financial indicators with each other. In the process of carrying out this analysis, the sizes of absolute and relative deviations of the compared indicators are calculated. In financial analysis, the following forms of comparative analysis are most widespread:

1) Comparative analysis of the financial indicators of the enterprise and industry average indicators. In the process of this analysis, the degree of deviation of the main results of the financial activities of a given enterprise from the industry average is revealed in order to further improve its efficiency.

2) Comparative analysis of the financial indicators of this enterprise and competing enterprises.During this analysis, the weaknesses of the enterprise's activities are identified in order to develop measures to improve its competitive position.

3) Comparative analysis of financial indicators of individual structural units and divisions of a given enterprise.Such an analysis is carried out in the context of the economic responsibility centers formed at the enterprise in order to comparatively assess the effectiveness of their financial activities.

4) Comparative analysis of reported and planned (normative) financial indicators.In the process of this analysis, the degree of deviation of the reporting indicators from the planned (standard) ones is revealed, the reasons for these deviations are determined and appropriate adjustments are made to subsequent financial activities.

Analysis of relative indicators(coefficients) is based on calculating the ratio of various absolute indicators to each other. In the process of carrying out such an analysis, various relative indicators are determined that characterize individual aspects of financial activity. In financial analysis, the following aspects of such analysis are most widespread:

1) Liquidity analysis.The indicators of this group allow you to describe and analyze the ability of the enterprise to meet its current obligations. The algorithm for calculating these indicators is based on the idea of ​​comparing current assets (working capital) with short-term accounts payable. As a result of the calculation, it is established whether the enterprise is sufficiently provided with working capital necessary for settlements with creditors for current operations. Since different types of working capital have varying degrees of liquidity (conversion into absolutely liquid assets), severalliquidity ratios.

2) Analysis of current activities.From the perspective of the circulation of funds, the activity of any enterprise is a process of continuous transformation of one type of asset into another:

where - cash;

Raw materials in warehouse;

Unfinished production;

Finished products;

Funds in settlements.

Efficiency of current financial and economic activitiescan be assessed by the length of the operating cycle, depending on the turnover of funds in various types of assets. Other things being equal, faster turnover indicates increased efficiency. Therefore, the main indicator of this group are indicators of the efficiency of use of material, labor and financial resources: production, capital productivity, turnover ratios in inventories and accounts.

3) Analysis of financial stability.Using these indicators, the composition of funding sources and the dynamics of the relationship between them are assessed. The analysis is based on the fact that sources of funds differ in the level of cost, degree of availability, level of reliability, degree of risk, etc.

4) Cost-benefit analysis.Indicators in this group are intended to assess the overall effectiveness of investing in a given enterprise. Unlike the indicators of the second group, they do not abstract from specific types of assets, but analyze the return on capital as a whole. The main indicators are therefore return on advanced capital and return on equity.

5 ) Analysis of the situation and activities in the capital market.As part of this analysis, spatiotemporal comparisons are made of indicators characterizing the position of the enterprise on the securities market: dividend yield, earnings per share, share value, etc. This fragment of the analysis is performed mainly in companies registered on securities exchanges selling their shares there. Any enterprise that has temporarily available funds and wants to invest them in securities also focuses on the indicators of this group

Factor analysisis based on determining the influence of individual factors (reasons) on the performance indicator using deterministic or stochastic research techniques. Moreover, factor analysis can be either direct (analysis itself), that is, breaking up an effective indicator into its component parts, or reverse (synthesis), when its individual elements are combined into a common effective indicator. The following types of factorial financial analysis are used:

1) Differentiation.

, (1.1.)

Moreover, the values ​​of the derivatives are taken at the point with the basic values ​​of the factor characteristics.

The properties of this method are as follows: there is no complete decomposition; there is no need to establish the order of changes in factors; is quite artificial in nature, since it requires continuity of function and an infinitesimal change in characteristics, which cannot happen in economic research, since many indicators change discretely.

2) Chain substitution method.

(1.2.)

It is a universal, very simple and visual method used for all types of models. When using it, complete decomposition is achieved; it is necessary to establish the order of change in factors; there is no reasonable method for establishing such a order, and it is not additive in time.

3) Arithmetic difference method. Factor decompositions are found by multiplying the increase in the factor under study by a combination of basic and actual values ​​of the remaining factors. This method is a consequence of the chain substitution method and has all its advantages and disadvantages.

4) Integral method. Factor decompositions are found using special calculation formulas.When using it, complete decomposition is achieved, there is no need to establish the order of changes in factors, it is additive in time, but is characterized by significant complexity of calculations and certain conventions of application.

The relationships between the main indicators of financial analysis are illustrated using various types of models. Three main types of models can be distinguished: descriptive, predicative and normative.

Descriptive modelsknown as descriptive models, they are fundamental for assessing the financial condition of an enterprise. These include: building a system of reporting balances, presenting reports in various analytical sections, a system of analytical coefficients, analytical notes for reporting.

As an example of a descriptive model, you can use the system of analytical coefficients (Fig. 1.2.).

Predicative modelsthese are models of a predictive, predictive nature. They are used to forecast a company's income and its future financial condition. The most common of them are: calculating the point of critical sales volume, constructing predictive financial reports, dynamic analysis models (strictly determined factor and regression models), situation analysis models.

Normative models. Models of this type allow you to compare the actual results of enterprises with the expected results calculated according to the budget. These models are used primarily in internal financial analysis. Their essence comes down to establishing standards for each cost item for technological processes, types of products, responsibility centers, etc. and to the analysis of deviations of actual data from these standards.

Financial analysis, based on the use of strictly determined factor models, has a number of features.

Firstly, with a deterministic approach, the factor model is completely closed to the system of factors that can be combined into a given model. The limit for compiling such a model is the length of the continuous chain of direct connections.

Secondly, this approach does not allow us to separate the results of the influence of simultaneously acting factors that cannot be combined in one model. Thus, the researcher conditionally abstracts from the action of other factors, and all changes in the performance indicator are completely attributed to the influence of the factors included in the model.

Third, deterministic analysis can be performed for a single object in the absence of a set of observations.

There are the following types of deterministic analysis models:

additive model, those. a model in which factors are included in the form of an algebraic sum; As an example, we can cite the well-known commodity balance model:

, (1.3.)

where is implementation;

Inventory at the beginning of the period;

Receipt of goods;

Ending inventory;

Other disposal of goods;

multiplicative model,those. a model in which factors are included in the form of a product; As an example, we can take the simplest two-factor model:

(1.4.)

where is implementation;

Number;

Labor productivity;

multiple model, those. model representing the ratio of factors:

(1.5.)

where is the capital-labor ratio;

Number;

mixed model, i.e. a model in which factors are included in various combinations:

(1.6.)

where is the volume of sales;

Profitability;

Cost of fixed assets;

Cost of working capital;

Factor analysis using a system of strictly determined models is used to determine changes in working capital, their turnover, and the profitability of the enterprise; identifying the amount of funds released or additionally involved in turnover due to changes in turnover, etc.

It should be said that the procedural part of the methodology for diagnosing financial and economic activity is regulated using a number of principles.

1. Systematicity.

2. Complexity.

3. Unity of information coming from various sources.

4. Unified system for processing and storing information.

5. Unity and consistency of analytical procedure schemes.

6. Comparability of results.

7. Targeted results.

Systematic principle is determined by the general methodology of financial and economic diagnostics, which involves considering the object of research as a system. This is reflected in the fact that at the initial stage of analysis the overall assessment of the enterprise is divided into separate components: analytical assessment of the potential of operating activities; analysis of controlled parameters of the efficiency of financial and economic activities; analysis of investment attractiveness; comprehensive diagnostics of financial and economic activities. At the next stage, the results of diagnostics of individual aspects of financial and economic components are interconnected and generalized in order to form a conclusion about the current state and possible changes related to the management decision being made.

Note that, principle of complexityis generally accepted when building any information system and provides for the development of a general diagnostic model of the enterprise. The presence of a model allows us to establish the relationship between diagnostic tasks, methods and operational control of financial and economic activities. Such a model can be presented using methods that reflect the initial and resulting data obtained as a result of an analytical assessment of financial and economic activity.

The principle of a single systemassumes the presence of a unified information base serving various tasks: one-time input and repeated use of data for decision-making.

Concept principle of materialityis expressed as a quantitative characteristic of the limiting value of factors, operations, events, starting from which management decisions should be made. Based on this, the user of the information has the right to determine the level of materiality of the information independently.

The principle of unity and consistency of analytical procedure schemescomplements the principle of complexity in the part that concerns individual tasks. This principle focuses on eliminating contradictions between general and specific models of problems. A single scheme will allow you to create several alternative financial solutions based on analytical estimates.

Comparability of resultsrequires the use of such methods of financial and economic calculations and analytical assessment that could be comparable with the results of calculations for different periods.

The principle of purposefulnessinvolves focusing the diagnosis of financial and economic activity on a specific user.

This set of principles is typical for all areas of financial analysis.

Carrying out an effective financial analysis of the activities of a business entity involves developing a system of sequentially implemented measures, based on uniform principles, subordinating all elements of the system and making it possible to provide a strictly defined circle of users with the most relevant information at the moment. The fundamental characteristics of the process of carrying out financial analysis are given in Table 1.1.

Table 1.1.

Fundamental characteristics of the components of financial analysis

The characteristics of the components of financial analysis given in the table have a generalized form, which makes it possible to modify it for the needs of certain types of analysis (liquidity analysis, business activity analysis, financial stability analysis, analysis of profitability (effectiveness) of the enterprise, analysis of market activity, etc.) .

The internal and external business environment is changeable, so a firm's ability to maintain its solvency and financial stability can say a lot about its prospects. Economics and business require precision in numerical terms and do not tolerate subjective and artistic descriptions. Financial analysis was created to reveal the true state of affairs. It is impartial and clear because it deals with numbers and indicators. A financially literate person must distinguish between a profitable company and an unprofitable one if he intends to make money in business and investment.

The financial analysis is an assessment of the economic health of any company. Financial indicators, ratios, ratings and multipliers are studied and on their basis a conclusion is drawn about the financial condition of the organization.

Who might need financial analysis? For example, the top management of the company. Or investors who want to explore whether it is worth investing in it. Even banks that decide whether to provide a loan to this organization. The company can also list its shares on the stock exchange and for this you will also need to understand its financial condition.

Many people are interested in financial analysis of a particular company, because sometimes even the managers themselves do not understand that things are very bad. Everything may look great at this stage, but in many cases a simple analysis can show that the company will go bankrupt within a year or two. This is why analysis is so important, because it helps to see what the eyes are not capable of.

In this lesson, we will look at situations in which a person has access to all possible company information. But not every person has access to the true state of affairs in the organization in which he wants to invest money or cooperate with it. To do this, you can use indirect sources of information. Of course, this will not always be enough, but you can draw some conclusions. We offer you tools such as:

• Exchange rates.
• State of the economy, financial sector, political and economic state.
• Securities rates, yield on securities.
• Indicators of the financial condition of other companies.

This is the so-called external data and it can become your tool for assessing the prospects of your investments. For example, if you wanted to buy shares of a company, but you do not have access to financial statements, then the above indicators can partially help you.

Let's proceed directly to the financial analysis. It has its own goals and objectives, which reveal all existing tools. Let's consider what tasks are facing financial analysis and what tools are required for this.

Financial Analysis Tools

Cost-benefit analysis

In economic language, “profitability” is understood as “profitability”, so in the future we will use this term. The profitability ratio is calculated as the ratio of profit to assets, resources and flows. Profitability ratios are often expressed as percentages.

Understand the difference between income and profit. Income is all the money you receive from your activities. Profit is a financial result. That is, if you earned $500 from the sale of goods, then this is your income. You bought these goods somewhere or made them and they cost you $300. So your profit is $200.

There can be quite a lot of profitability indicators. Let's look at the most important of them:

• Profitability of products sold. This is the ratio of profit from sales to the cost of goods sold. If your profit is $1000, and the cost of the products you sold is $800, then this indicator is calculated as follows: (1000/800)*100% 125%. We hope you perform such calculations without a calculator.
• Return on assets. Reflects the efficiency of using the company's assets to generate profit. That is, you can find out how effectively you are using your company’s assets. If you received a profit of $1000 in a month, and the average value of your assets is $2000, then this indicator is calculated as follows: (1000/2000)*100% 50%.
• Return on equity. This is the ratio of profit to the average amount of equity capital for the period. Let's say you earn $5,000 in a month and invest an average of $1,000 of home equity per month. Then you will calculate this indicator as follows: (5000/1000)*100% 500%. A very good indicator. True, it may not be very objective and will not say anything about the state of affairs of your company if you do not calculate other indicators.

Financial stability analysis

Financial stability ratios of an enterprise are indicators that clearly demonstrate the level of stability of an enterprise in financial terms.

Financial Independence Ratio is a financial ratio equal to the ratio of equity capital and reserves to the total assets of the enterprise. For this purpose, the balance sheet of this organization is used. This indicator reflects the share of the organization's assets that are covered by equity capital. This ratio is needed by banks that issue loans. The higher it is, the more likely the bank will give a loan to your company, because you will be able to pay off the debt with your assets. Remember we already said that the bank considers your liabilities as its assets? In this case, the difference is that the company's assets are simply necessary, because without most of them it simply cannot function.

Financial dependency ratio is an indicator that is the opposite of the financial independence ratio. It shows the extent to which a company depends on external sources of financing. This indicator is also necessary for banks to make decisions on issuing a loan.

Solvency and liquidity analysis

Solvency- this is the company’s ability to timely fulfill monetary obligations stipulated by law or contract. Insolvency on the contrary, it shows the company’s inability to pay obligations to the creditor. May cause bankruptcy.

Analysis of liquidity of assets (property) calculates a ratio that indicates how quickly an organization's assets can be sold if it is unable to repay its loan debts.

Investment Analysis

This is a set of techniques and methods for developing and assessing the feasibility of investments in order for the investor to make an effective decision.

Based on this analysis, management decides whether the company will invest in short-term and long-term investments. Some investments are more profitable than others, so the challenge is also to find the most effective ones. Several tools are used for this: discounted payback period, net present value, internal form of return and return on investment index. .

Discounted payback period (DPP) characterizes the change in the purchasing power of money, the value of which, as we remember, decreases over time. You, as an investor, need to know how long it will take to start receiving income from your investments and bring this amount into line with the present moment. Sometimes it doesn’t even make sense to invest, because it either won’t pay off or will pay off minimally.

On the Internet you can find a calculator for calculating the discounted payback period, so we will not provide the formula here. Moreover, it is quite complex. To put it simply, for example, you or your company makes an investment of 50 thousand dollars. Every year, let's say, you will receive 15 thousand dollars in income. Enter this data into the calculator along with other indicators and you get, for example, 3 and a half years. That is, after 3 and a half years, your investments will begin to bring you real net profit, taking into account inflation.

There is a tool called net present value (NPV). This is the current value of an investment project, determined by taking into account all current and future income at the appropriate interest rate. If this indicator is positive, then funds can be invested in the project.

Net present value can be used not only in investments, but also in business. Using this tool, a company can calculate the feasibility of expanding its products. Everything is exactly the same here: if this indicator is positive, then it is worth expanding products.

The third tool is called internal rate of return (IRR) and it is also used both in business and in assessing the feasibility of investment projects. You can also calculate this indicator online. If you get a zero value, then you will only return your additions, but nothing more. The higher the internal rate of return, the better.

Return on Investment Index (PI)— an indicator of investment efficiency, which is the ratio of discounted income to the amount of investment capital. It is also sometimes called the profitability index or profitability index.

Bankruptcy probability analysis

As history shows, very often, several months before bankruptcy, no one in the company even suspects that the company will collapse. Everything seems to be going well and there is no reason to think that anything will go wrong.

What criteria are used to assess the likelihood of bankruptcy? We have already become acquainted with some indicators:

1. Current ratio.
2. Financial dependency ratio.
3. Solvency restoration coefficient.
4. Autonomy coefficient.
5. Covering fixed financial expenses.

This analysis is important for banks issuing loans. They often analyze the probability of bankruptcy and issue or not issue a loan depending on the results. Also, such indicators are important for shareholders, investors and partners of this company, because they must understand that they are investing money in a promising enterprise. Of course, they must look for this information themselves, because the company itself will hide it or block access to it.

Business market value analysis

This may be useful for those who want to buy an existing business. A businessman hires a financial analyst who makes all the calculations - the recommended value of the business and the potential income of the enterprise after a certain period of time. If an investor hires a financial analyst, then it is first of all important for him to understand one simple thing - whether the indicated value corresponds to his investment interests.

This is a very difficult job. The average business market value analysis report is approximately 300 pages.

Exists three approaches to business valuation: income, expenditure and comparative. By the way, it is also used before purchasing real estate.

The more income that the company brings, the greater the value of its market value. But important factors are the duration of the period of income generation, as well as the degree and type of risks involved. The subsequent resale of the business is also taken into account - if it turns out that this is quite likely, then this is another plus when purchasing it.

The essence expendable The approach is that all assets of the enterprise (buildings, machinery, equipment) are first assessed and summed up, and then liabilities are subtracted from this amount. The resulting figure shows the value of the enterprise's equity capital.

Comparative (market) The approach is based on the principle of substitution. Competing organizations are selected for comparison. Usually, with this approach, it is difficult to compare two companies due to some differences, so it is necessary to adjust the data. All possible information about the company that can be purchased is collected and compared with a similar organization.

The comparative approach uses methods of the capital market, transactions, and industry coefficients (market multiplier).

Capital market method is focused on assessing the enterprise as an operating one, which expects to continue to function. It is based on stock market prices.

Transaction method used when the investor intends to close the enterprise or significantly reduce production volumes. Therefore, this method is based on precedent - cases of sale of similar enterprises.

Market multiplier method focused on assessing the enterprise as an operating one that will continue to function. The most commonly used valuation multiples are price/gross earnings, price/net earnings, and price/cash flow.

All three approaches are interconnected because none of them separately can serve as an objective factor. Therefore, it is recommended to use all approaches. Some companies provide business valuation services, but these services are quite expensive.

Analysis of enterprise financing sources

Company management must determine which sources are more profitable and accessible to them. It is also important to determine how long to take out a loan and whether it is worth it at all. Should there be more equity or debt? When should you list your shares on the stock exchange?

In the fourth lesson, we studied several sources of income for the average person. In this case we are talking about the same thing. There are many ways, but they are all quite risky. Therefore, banks first look at what assets the company has, so that if necessary, the debt will be repaid from them.

Break even

Break even (BEP)- the volume of production and sales of products at which costs will be offset by income, and with the production and sale of each subsequent unit of product the enterprise begins to make a profit. It is also sometimes called the critical point or CVP point.

The break-even point is calculated in units of production, in monetary terms or taking into account the expected profit margin.

Break-even point in monetary terms- this is the minimum amount of income at which costs are fully recouped.

BEP TFC/(C/P), where TFC is the value of fixed costs, P is the cost of a unit of production (sales), C is the profit per unit of production without taking into account fixed costs.

Break-even point in units of production- such a minimum quantity of products at which the income from the sale of these products completely covers all the costs of its production.

BEP TFC/C TFC/(P-AVC), where AVC is the value of variable costs per unit of production.

Stock exchanges

We simply cannot ignore the stock exchange and some indicators related to the global economy.

Stock Exchange is a financial institution that ensures the regular functioning of the securities market. Some stock exchanges are real places (the New York Stock Exchange), while others are purely virtual (NASDAQ).

Why would any company list its shares on the stock exchange? There are many reasons, but the main one is that this will allow the company to make a large profit from the shares sold. The downside is that such a company partially loses its independence. For example, Sergey Brin and Larry Page delayed the placement of shares on the stock exchange until the last minute and used various strategic tricks. By law, they were forced to do this, so Page and Brin found a way out: the shares had two classes - A and B. The first was privileged and intended only for company employees, while the second class was somewhat limited and was sold to anyone.

Why would any person buy shares? He can make a big profit and also participate in the management of this company. The downside is that he could lose a lot of his money if the company does not do well. History knows thousands of cases where people went broke playing on the stock exchange.

However, there are also those who became billionaires by playing on the stock exchange. It could be a genius like Buffett or just a random investor who got incredibly lucky. Some people use inside information. For example, when shares are listed on the stock exchange by a successful company, the prices per share are quite high. Let's assume that this company wants to change management soon - then the share price would go down. However, the head of the company does not talk about this publicly, and may also not talk about significant problems of the company. This alone is already a criminal offense, and if such information is transmitted to a large future shareholder (who wants to speculate on these shares), then punishment may await him too. Concealing information is one of the forms.

Ten largest financial exchanges in the world

1. NYSEEuronext. This is a group of companies formed as a result of the merger of the world's largest New York Stock Exchange (NYSE) and the European exchange Euronext.
2. NASDAQ. This exchange specializes in shares of high-tech companies. It lists shares of 3,200 companies.
3. Tokyo Stock Exchange. The exchange is a member of the Federation of Stock Exchanges of Asia and Oceania. The value of all securities traded on the Tokyo Stock Exchange exceeds $5 trillion.
4. London Stock Exchange. It was officially founded in 1801, but its history actually began in 1570, when the Royal Exchange was built. In order for a company to list its shares on this exchange, it must meet several conditions: have a market capitalization of at least £700,000 and disclose financial, commercial and management information.
5. Shanghai Stock Exchange. The stock market capitalization is $286 billion, and the number of companies that have placed their shares is 833.
6. Hong Kong Stock Exchange. Has a capitalization of 3 trillion US dollars.
7. Toronto Stock Exchange. Capitalization volume is 1.6 trillion dollars.
8. Bombay Stock Exchange. It has a capitalization of $1 trillion, and the number of companies that have placed their shares is about 5 thousand.
9. National Stock Exchange of India. The second stock exchange from this country.
10. Sao Paulo Stock Exchange. Largest stock exchange in Latin America.

As you can see, stock exchanges are usually developed in those countries that themselves have powerful economies. India's dual presence on this list may be a little surprising, but it's not news to people interested in economics.

Dow Jones Industrial Average

It's time to get acquainted with the Dow Jones Industrial Average. You will understand how simple it is, what it means and how to interpret it.

The Dow Jones Industrial Average covers the 30 largest companies in America. The prefix “industrial” is a nod to history because many of the companies included in the index are currently not in that industry. Now, when calculating the index, a scaled average is used - the sum of prices is divided by a certain divisor, which is constantly changing. With some adjustments, we can say that this index is the arithmetic average of the stock prices of 30 American companies.

You may ask, what does the Dow Jones Industrial Average have to do with financial analysis? The fact is that this index is unofficially called an indicator of the state of the economy of the United States and the whole world. Of course, this is an indirect indicator, but a very eloquent one. If the top 30 US companies are in crisis, then so is the entire economy. The higher the index, the better the state of the economy.

This index reached its historical minimum in percentage terms on Black Monday 1987. This entailed huge losses on other exchanges - Australian, Canadian, Hong Kong, and British. What is most curious is that there were no visible reasons for the collapse. This event challenged many of the important assumptions underlying modern economics. Also, strong failures were recorded during the Great Depression and the global crisis of 2008.

We will not give the names of all thirty companies; we will give only the ten most interesting and familiar to everyone.

Ten companies included in the Dow Jones Industrial Average:

1. Apple. The company entered the index only in 2015.
2. Coca-Cola. Entered the index in 1987.
3. Microsoft. Entered the index in 1999.
4. Visa. Entered the index in 2013.
5. Wal-Mart. Entered the index in 1997.
6. WaltDisney. Entered the index in 1991.
7. Procter&Gamble. Entered the index in 1932.
8. McDonald"s. Entered the index in 1985.
9. Nike. Entered the index in 2013.
10. Intel. Entered the index in 1999.

Companies are constantly pushing each other out of this list. For example, in 2015, Apple ousted the largest telecommunications corporation AT&T.

Some economists believe that the best indicator of the American economy is the S&P 500. This is a stock index whose basket includes 500 selected US publicly traded companies.

Both indices are popular and represent a barometer of the American economy. Now you are armed with this tool too.

In this lesson we looked at many financial analysis tools.

In the next lesson, we will understand how financial thinking is formed and what needs to be done to leave the old way of thinking and acquire a new one. Many people without financial education make millions simply because they were either taught financial thinking from childhood, or they themselves came to an understanding of finance. This is a skill and you can learn it too.

Test your knowledge

If you want to test your knowledge on the topic of this lesson, you can take a short test consisting of several questions. For each question, only 1 option can be correct. After you select one of the options, the system automatically moves on to the next question. The points you receive are affected by the correctness of your answers and the time spent on completion. Please note that the questions are different each time and the options are mixed.

Financial analysis as a tool for analytical management and assessment of the financial condition of organizations: normative and methodological aspects of the problem

L.V. Shekhovtsova

Ph.D. econ. Sciences, Associate Professor, Department of Accounting and Auditing, SIFBD

I.V. Baranova

Ph.D. econ. sciences, head Department of Finance and Credit SIFBD

IN. Fedorovich

Ph.D. econ. Sciences, Professor of the Department of Finance and Credit SIFBD

Modern problems of applied economics consist of timely and constructive answers to questions that constantly arise before the head of an organization of any size: how to adequately respond to constantly changing external conditions, maintaining a balance of interests (material benefits) of all participants in economic turnover; how to conduct business with maximum efficiency for owners, creditors and production management, taking into account the interests of the state and the entire society; in other words, how to properly manage in the national legal field.

It is known that the economic activity of any subject (socio-economic system) is initially focused on obtaining economic, commercial (social or other), that is, the final results predetermined by the founders of the organization.

Each organization has its own way to achieve them. Some confidently achieve their goals, others go to them for years, overcoming great difficulties. Such production successes are often associated with the correct choice of the organization’s field of activity, the sufficiency of all types of resources used, the professionalism of managers and the experience of personnel.

An economic entity as a legal entity of a specific organizational and legal form is today a basic link in the national economy. It is important that this link turns out to be the main one, that it becomes a key element in the system of market relations, so that the owners, management and personnel of organizations are focused on the implementation of meaningful and productive, rather than formal tasks, on achieving socially significant economic results.

The implementation of any entrepreneurial initiative is not always associated with the presence of the listed elements and conditions. A significant role is played by the ability of the corporation's management to make optimal management decisions in a timely manner. And the development of such management decisions should be preceded by a comprehensive analysis of the efficiency of economic activity and the use of the organization’s property complex, an assessment of its financial condition as a whole, as well as solvency, financial stability, business activity, profitability and investment attractiveness.

In enterprise management systems in a market economy, the importance of financial management methods and such important management functions as assessing resource potential, enterprise value, analysis and forecasting of financial condition is increasing. The development of these management functions requires clarification and development of appropriate financial instruments and indicators, and the creation of systems for analytical support of the management process.

Analysis of the financial condition of an enterprise is a tool for making management decisions; it is one of the stages of management, during which certain management decisions are substantiated and their economic efficiency is assessed.

In domestic and foreign scientific literature, there are many methodological approaches to assessing the financial condition of an organization. Of particular interest are the works of A.D. Sheremeta, V.V. Kovaleva, L.N. Gilyarovskaya, O.V. Efimova, M.V. Melnik and others. The entire range of methodological approaches to assessing the financial condition of an enterprise allows us to distinguish the following stages:

– calculation of the system of financial ratios;

– diagnostics of the probability of bankruptcy of an enterprise.

The results of an enterprise's activities and its financial condition are of interest to owners, managers, creditors, investors, partners, the state, that is, internal and external users of economic information. Each of them, depending on the goals and objectives of the analysis, develops its own methodological approaches to assessing the financial condition and places its own emphasis. For example, for credit institutions, analysis of the creditworthiness of an enterprise - a potential bank borrower - is of particular importance. To analyze solvency and assess creditworthiness, many banks use methods of comprehensive economic analysis of the borrower, which includes:

– analysis of the financial statements of the enterprise;

– analysis of enterprise cash flows;

– loan security analysis;

– analysis of the profitability of the upcoming transaction;

– analysis of the financial performance of the enterprise;

– assessment of the bank’s credit risk.

The Central Bank of the Russian Federation regulates the procedure and criteria for assessing the financial condition of legal entities with the following provisions:

– “On the procedure and criteria for assessing the financial position of legal entities - founders (participants) of credit organizations” dated March 19, 2003, No. 218-P;

– “On the procedure for credit institutions to form reserves for possible losses on loans, on loan and equivalent debt” dated March 26, 2004, No. 254-P.

The investor's main goal in analyzing the financial condition of an enterprise is to assess its profitability, profitability, and the level of use of production and economic potential.

If there are private analysis goals for individual entities, the main goal of analyzing the financial condition of an enterprise for all users (external and internal) is to assess the enterprise’s position in the market, its financial and economic activities and management efficiency, as well as to identify key problems of the enterprise and optimal ways to solve them. The Government of the Russian Federation, the Ministry of Economy and the Ministry of Finance of the Russian Federation have been developing and improving methodological approaches to analyzing the financial condition of enterprises for ten years.

Let's consider the regulations governing the procedures for analyzing financial condition.

In 1994, the main document regulating the methodology for assessing the solvency and financial stability of enterprises was the Decree of the Government of the Russian Federation of May 20, 1994 No. 498 “On some measures to implement legislation on the insolvency (bankruptcy) of enterprises” (currently no longer in force).

In order to ensure a unified methodological approach to analyzing the financial condition of enterprises and assessing the structure of their balance sheets, Methodological provisions for assessing the financial condition of enterprises and establishing an unsatisfactory balance sheet structure were developed, approved by order of the Federal Department of Insolvency (Bankruptcy) dated 08.12.94 No. 31 -R. These Methodological Provisions contained a methodology for calculating current liquidity ratios, the provision of own funds (the value of which assessed the satisfactoriness of the balance sheet structure), restoration (or loss) of the solvency of enterprises and the direction of analysis of insolvent enterprises. However, changes in the economic situation in the country and the adoption of legislative acts regulating the activities of commercial organizations, including legislation on insolvency (bankruptcy) of organizations, improvement of accounting and reporting determined the need to revise methodological approaches to assessing the financial condition of enterprises.

In 1997, Order No. 118 of the Ministry of Economy of the Russian Federation dated October 1, 1997 approved “Methodological recommendations for the reform of enterprises (organizations),” which were intended, among other things, to assess the effectiveness of the financial management of an organization and its financial and economic activities. According to this regulatory act, analysis of the financial condition of an enterprise is considered as the main tool for effective financial management, contributing to the formation of strategic goals of the enterprise, “adequate to market conditions.”

Order No. 118 emphasized the role of analysis of the financial and economic state of an enterprise in developing its financial policy and noted that qualitative analysis makes it possible to develop informed and effective management decisions. Which, in turn, depends on the financial analysis methodology used, on the reliability and accuracy of the economic information used. A feature of Order No. 118 is the definition of the main components of the financial and economic analysis of the enterprise’s activities:

– analysis of financial statements;

– horizontal analysis:

– vertical analysis;

– trend analysis;

– calculation of financial ratios.

The combination of the above components represents a set of standard techniques and methods of financial analysis that are still used today. Order No. 118, for the first time in the Russian Federation, defined a system of indicators for assessing the financial condition of an enterprise, recommended a methodology for their calculation, presented an economic characteristic and assessed the direction of the dynamics of the values ​​of these indicators.

It is important to note that this regulatory act defines the standard values ​​of financial ratios and distinguishes two classes of ratios: the first class includes indicators that have standard significance (liquidity and financial stability indicators); The second class includes indicators of profitability (intensity of resource use) and business activity. For the second group of indicators, it is recommended to take into account the dynamics of values, which can be characterized as improvement, stability or deterioration.

Methodological approaches to financial analysis, defined by Order No. 118, should be classified as operational analysis, the results of which cannot serve as an accurate assessment of the financial condition of the enterprise. Consequently, there was a need to expand the system of indicators that reflect all processes and phenomena of the economic and financial activities of enterprises.

Such an attempt was made in 2001 in the following regulations:

– Order of the Ministry of Finance of the Russian Federation dated November 6, 2001 No. 274 (as amended by Order of the Ministry of Finance of the Russian Federation dated February 15, 2002 No. 36) “The procedure for checking the current financial condition of an organization - a recipient of a budget loan for the implementation of investment projects in the coal industry, placed on on a competitive basis";

– Order of the Federal Service of Russia for Financial Recovery and Bankruptcy dated January 23, 2001 No. 16 “Guidelines for conducting an analysis of the financial condition of organizations.”

The above regulations defined the purpose of financial analysis as assessing the solvency, sustainability, efficiency and dynamism of the organization's development, as well as its investment attractiveness.

Order of the Ministry of Finance of the Russian Federation No. 274 identifies four groups of indicators characterizing the financial result of the enterprise, the structure of its balance sheet, efficiency and turnover of funds, the values ​​of which are assessed from the point of view of the positive dynamics of change in the last reporting period of the current year in relation to the base period. This regulatory act contains a methodology for scoring the financial condition of an enterprise.

FSFR Order No. 16 defined the information base for the analysis of financial condition: “Balance Sheet”, “Profit and Loss Statement”, “Cash Flow Statement”, “Appendix to the Balance Sheet”. The main advantage of the Methodological Guidelines defined by FSFR Order No. 16 is a wide range of recommended financial indicators for assessing the financial and economic activities of enterprises (26 indicators), methods for their calculation and economic interpretation of each indicator. However, the presented system of financial indicators does not fully allow us to assess the degree of liquidity and financial stability of the organization, determine the main financial result (profit), and the efficiency of using equity capital. In addition, the Guidelines do not establish recommended indicator values ​​and do not characterize the dynamics of indicator values.

Resolution of the Government of the Russian Federation dated June 25, 2003 No. 367 approved the Rules for conducting financial analysis by an arbitration manager. These Rules make it possible to analyze the property of enterprises and the sources of its formation, group assets by degree of liquidity, liabilities - by maturity, assess the structure of revenue and net profit of enterprises based on their public financial statements (“Balance Sheet”, “Profit and Loss Statement” ). Based on financial ratios and the methodology for their calculation presented in the Rules, it is possible to assess absolute and current liquidity, identify the degree of solvency of enterprises, determine financial stability and the presence of overdue payments, assess the return on assets and the level of profitability of economic activities of organizations based on the calculation of the net profit rate.

Resolution No. 367 determines the directions for analyzing the external and internal conditions of the activities of enterprises and the markets in which they operate, which, of course, increases its practical value. Its advantages also include the content of the requirements for the analysis of investment and financial activities of enterprises, and for the analysis of the possibility of break-even activities of enterprises. The main drawback of this document is the absence of profitability ratios in financial indicators that characterize the efficiency of using equity capital, production resources, and investments; asset turnover; capital structures characterizing the financial stability of enterprises. The rules, like other regulations, do not contain criterion values ​​of financial indicators used to analyze the financial condition of enterprises in various industries and types of activities.

The Decree of the Government of the Russian Federation on the implementation of the Federal Law “On the financial recovery of agricultural producers” dated January 30, 2003 No. 52 approved the Methodology for calculating indicators of the financial condition of agricultural producers, which established the procedure for calculating indicators of the financial condition of agricultural producers with debts, and the criteria for the values ​​of these indicators. The Methodology considers six indicators: coefficients of absolute, critical and current liquidity, equity security, financial independence, financial independence in relation to the formation of reserves and costs; Moreover, the value of each coefficient is assessed in points in accordance with established criteria and the type of financial stability of the enterprise (organization) is determined by the sum of points.

Based on this Resolution, the Ministry of Agriculture of the Russian Federation approves Order No. 792 dated 06.06.03 “On approval of Methodological Recommendations for accounting of production costs and calculating the cost of products (works, services) in agricultural organizations.”

In addition to general provisions containing basic definitions related to the types of product costs and costs of its production, definitions of costing objects, costing units, main and by-products are given here. Classification systems of production costs are presented in the calculation context of their accounting and formation, as well as the composition of production costs by economic elements.

In 2005, the Government of the Russian Federation decided to develop a methodology for accounting and analyzing the financial condition of strategic enterprises, which allows assessing all financial and economic information about the financial and economic activities of the enterprise (Resolution of the Government of the Russian Federation of December 21, 2005 No. 792 “On the organization of accounting and analysis of financial the state of strategic enterprises and organizations and their solvency").

In 2006, the Ministry of Economic Development and Trade of the Russian Federation, by order dated April 21, 2006 No. 104, approved the Methodology for the Federal Tax Service to carry out accounting and analysis of the financial condition and solvency of strategic enterprises and organizations. This Methodology establishes the procedure for accounting and analyzing the financial condition of strategic enterprises and defines a set of information for conducting an ongoing analysis of the financial condition of these enterprises. Such information includes financial indicators, methods of their calculation and grouping criteria in accordance with the degree of threat of bankruptcy of enterprises (organizations).

To streamline state control over the development of the national stock market, the Federal Service for Financial Markets issues order No. 06-117/pz-n dated October 10, 2006 “On approval of the Regulations on the disclosure of information by issuers of equity securities,” which presents the methodological basis for calculating the following financial ratios:

– the value of the issuer’s net assets;

– the ratio of the amount of attracted funds to capital and reserves;

– the ratio of the amount of short-term liabilities to capital and reserves;

– covering debt service payments;

– level of overdue debt;

– accounts receivable turnover;

– share of dividends in profit;

– labor productivity;

– the ratio of depreciation amounts to revenue.

The development of financial instruments to strengthen state control over the activities of developers related to attracting funds from participants in shared construction was timely received in the Federal Law “On participation in shared construction of apartment buildings and other real estate and amendments to certain legislative acts of the Russian Federation” dated December 30. 04

If the Government Decree No. 645 dated October 27, 2005 “On quarterly reporting of developers on the implementation of activities related to raising funds from participants in shared construction” contains three appendices related to additional financial information about the developer’s use of funds from participants in shared construction, then in the Decree dated April 21, 2006 No. 233 “On standards for assessing the financial stability of a developer’s activities” presents specific values ​​of financial indicators that allow a timely assessment of the financial condition of the developer.

Consideration of the methodological approaches contained in the normative and legislative acts showed that the analysis of the financial condition associated with the study of individual aspects of the enterprise’s activities allows us to diagnose the likelihood of bankruptcy, the possibility of providing a loan, and evaluate the effective directions for forming the financial policy of the enterprise. However, this type of analysis is local, thematic. Regulatory acts do not contain methodological approaches for conducting a comprehensive analysis of the financial condition of enterprises (organizations). In addition, the issue of developing criteria for assessing the financial condition of an enterprise in the context of types of activities and sectors of the national economy still remains relevant.

The effectiveness of enterprise management and its financial condition is currently determined not only by liquidity, profitability, profitability, but also by an increase in the “price” of the business, which is the object of primarily strategic financial management. All of the above actualizes the problem of further improving methodological approaches to the financial analysis of enterprises.

Article address: http://www.iteam.ru/publications/finances/section_30/article_2367/

Using financial analysis to manage a company

Igor Kubyshkin, consulting director

Management Consulting Department of IBS

Financial analysis allows not only to assess the financial condition of a company, but also to predict its further development. However, managers need to be very careful in determining the indicators that will be used to evaluate the company: their incorrect choice can lead to the fact that time-consuming financial analysis will not bring any benefit to the enterprise.

Objectives of financial analysis

Financial analysis is used both by the company itself and by external market participants when carrying out various transactions or to provide information about the financial condition of the company to third parties. As a rule, financial analysis is carried out during: - restructuring. In the process of separating structural divisions into separate business units, it is necessary to evaluate such indicators of their current activities as the size of receivables and payables, profitability, inventory turnover, labor productivity, etc. The favorable financial condition of a structural unit can serve as an additional factor in favor of leaving her as part of the company;

assessing the value of a business, including for its sale/purchase. A reasonable assessment of the financial condition allows you to set a fair price for the transaction and can serve as a tool for changing the transaction amount;

obtaining a loan/attracting an investor. The results of a financial analysis of a company’s activities are the main indicator for a bank or investor when making a decision to issue a loan;

entering the stock exchange (with bonds or shares). According to the requirements of Russian and Western exchanges, a company is obliged to calculate a certain set of ratios reflecting its financial condition and publish these ratios in reports on its activities. For example, according to Russian legislation, a company’s securities prospectus must indicate the degree of coverage of debt service payments, the level of overdue debt, net asset turnover, the share of income tax in profit before tax, etc.1

Financial analysis can be carried out to compare one's own company with another (benchmarking). To conduct one-time assessments of the financial condition of an enterprise, it makes sense to involve professional appraisers and auditors. This will increase the reliability of the assessment in the eyes of third parties.

In operational activities, financial analysis is used to:

assessment of the company's financial condition;

establishing restrictions in the formation of plans and budgets. For example, you can limit the company's liquidity (indicate that it must not be below a certain level), inventory turnover, debt ratio, cost of raising capital, etc. Many companies have the practice of setting limits for branches and subsidiaries based on indicators such as profitability, production costs, return on investment, etc.;

assessment of predicted and achieved performance results.

Terminology

Many sources define financial analysis as a method of assessing and forecasting the financial condition of an enterprise based on its financial statements. In V. Kovalev’s textbook “Financial Analysis: Methods and Procedures” (Moscow: Finance and Statistics, 2002), financial analysis is defined as “analytical procedures that allow making decisions of a financial nature.” A more complete definition of this term is given in the “Financial and Credit Encyclopedic Dictionary” (edited by A.G. Gryaznova, M.: Finance and Statistics, 2004): “Financial analysis is a set of methods for determining the property and financial position of an economic entity in the past period , as well as its capabilities for the short and long term.” The purpose of financial analysis is to determine the most effective ways to achieve profitability of the company; the main tasks are to analyze the profitability and risks of the enterprise.

Personal experience

Andrey Krivenko, financial director of Agama Group of Companies (Moscow)

Our company is engaged in the distribution of deep-frozen products. In this market, one of the main tools for managing sales volumes is managing the timing of accounts receivable and negotiating discounts with customers, so managing the financial condition of the company becomes an urgent need. Financial analysis is used when constructing budgets, to identify the reasons for deviations of actual indicators from planned indicators and to adjust plans, as well as when calculating individual projects. The main tools used are horizontal (dynamics of indicators) and vertical (structural analysis of articles) analysis of management accounting reporting documents, as well as calculation of coefficients. Such an analysis is carried out for all main budgets: BDDS, BDR, balance sheet, sales budgets, purchases, inventory.

Horizontal analysis is carried out by item by responsibility center (RC) on a monthly basis. At the first stage, the share of certain expense items in the total cost of the central heating center and the compliance of this share with established standards are determined. Costs that can be classified as variables are then compared to sales. After this, the values ​​of both indicators are compared with their values ​​for previous periods. The company is growing by about 40-50% per year, and it makes no sense to analyze indicators from two and three years ago, so information from a maximum of a year ago is usually assessed, taking into account business growth. At the same time, the compliance of the actual indicators of the monthly budget with the planned indicators of the annual budget is checked. Financial analysis is also used to determine the company's development guidelines. For example, liquidity and profitability of a business are given values ​​when drawing up operational budgets for income and expenses. When approving the annual budget, the main indicator is the efficiency of using working capital.

Financial analysis is a tool necessary to achieve a company's strategic goals and fulfill its mission. In addition to financial analysis, we evaluate the external environment, monitor the development of retail networks and build a sales policy in accordance with this.

The stricter the company's operating cycle (the time interval between the acquisition of resources used in the production process and the conversion of finished products into cash. - Editor's note), the more attention should be paid to financial analysis, since it is one of the main means of daily management and control of business solvency. Such companies include, for example, banks, insurance and trading companies with a high turnover of goods. For most manufacturing and trading companies, it is enough to monitor financial ratios from time to time, usually once a month or even once a quarter, depending on the frequency of reporting.

Selection of analyzed indicators

To determine which metrics need to be calculated, you must first analyze the company's strategy and the goals it wants to achieve. Then the coefficients that should be calculated are identified and their standard values ​​are established. This work is usually carried out as part of a management accounting, budgeting or balanced scorecard project. If a set of indicators is taken from a finance textbook, then such financial analysis will not bring any benefit to the enterprise.

The long-term development of any enterprise depends on the ability of management to promptly identify emerging problems and competently neutralize them. To achieve this goal, financial analytics is used, the purpose of which is to identify all problematic elements in the company’s management tools.

What is financial analysis of an enterprise

Financial analysis should be understood as the integrated use of certain procedures and methods for an objective assessment of the state of the enterprise and its economic activities. The basis for the assessment is quantitative and qualitative accounting information. It is after its analysis that specific management decisions are made.

Financial analysis is focused on studying the economic, technical and organizational level of the enterprise, as well as the divisions related to it. The purposes of financial analysis include assessing the financial and production economic activities of a company, including diagnosing bankruptcy.

Priorities of financial analysis

Financial and economic analysis of the state of the enterprise sets specific tasks, the implementation of which determines the accuracy of the analytical result. We are talking about revealing reserves and production capabilities that were not used, assessing quality, establishing the impact of specific types of activities on overall business results, and identifying factors that caused deviations from standards. In the process of analysis, a forecast of the expected results of the enterprise's activities and the preparation of information necessary for making management decisions are also carried out.

It can be argued that financial analysis of an enterprise plays the role of financial management both in the company itself and in the process of cooperation with partners, tax authorities, and the financial and credit system. At the same time, business activity, financial stability, profitability and profitability are taken into account. The analysis itself can also be defined as a tool for management, planning, as well as monitoring the company’s activities and its diagnostics.

It is worth noting that the analysis of specific aspects of the enterprise’s activity is based on the analysis of the system of indicators, and in a dynamic state. This is explained by the fact that the financial, production and economic activities of the company, as well as its divisions, have interrelated indicators. For this reason, changes in specific indicators can affect the final financial technical and economic indicators of the enterprise.

Financial and economic analysis of the enterprise: goals

Speaking about this form of analysis of a company’s activities, it is worth noting that it involves a combination of methods of deduction and induction. In other words, while studying individual indicators, analytics must also take into account general indicators.

Another important principle is that when analyzing an enterprise, all types of business processes are studied taking into account their interdependence, interdependence and interconnection. As for the analysis of factors and causes, in this case analytics is based on an understanding of the following principle: each factor and cause must receive an objective assessment. Therefore, both causes and factors are initially studied, after which they are classified into groups: secondary, main, insignificant, essential, minor and determining.

The next stage is to study the influence of determining, main and essential factors on economic processes. But low-determining and insignificant factors are studied only if necessary and only after the main part of the analysis has been completed. It is worth considering the fact that financial analysis does not always imply the study of all factors, since this is relevant only in some cases.

At the same time, if we talk about the exact goals of the financial analysis of an enterprise, it makes sense to determine the following components of the assessment process:

• analysis of loan repayment ability;
• tracking the state of the enterprise at the time of assessment;
• bankruptcy prevention;
• assessment of the company's value during its merger or sale;
• tracking the dynamics of financial condition;
• analysis of the enterprise’s ability to finance investment projects;
• drawing up a forecast of the financial activity of the enterprise.

It is worth noting that in the process of studying the financial condition of an enterprise, those economic entities that are focused on obtaining extremely accurate and objective information about the activities of the enterprise can use the help of a financial analyst.

Such subjects can be divided into two categories:

• External: creditors, auditors, government agencies, investors.
• Internal: shareholders, audit and liquidation commission, management and founders.

Another purpose for which financial analysis can be carried out, but not at the initiative of the enterprise, is to assess the investment potential and credit capacity of the company. Such analytics, as a rule, are of interest to banks, for which it is important to ensure the solvency and profitability of the enterprise. This is logical, since any potential investor is interested in obtaining information regarding the liquidity of the company and the degree of risks regarding loss of deposit.

Features of internal and external analysis

Internal financial accounting and analysis is necessary in order to meet the needs of the enterprise itself. It can be focused both on identifying the degree of liquidity of the company and on a thorough assessment of its results within the last reporting period. Such assessment methods are relevant in the case when a financial analyst or company management intends to determine how realistic and relevant the allocation of funds for the expansion of production that was planned is, and what impact additional costs can have on it.

As for external financial analysis, it is carried out by analysts who are not related to the enterprise. They also do not have access to the company's internal information.

If an internal analysis is carried out, then there will be no problems with attracting information of any category, including that which is not accessible. In the case of external analysis, some limitations of assessment methods are initially taken into account due to the lack of complete information.

Types of financial analysis

Analytics, with the help of which the state of the enterprise is assessed, can be divided into several key types according to the content of the management process:

• retrospective or current analysis;
• promising (preliminary, forecast);
• operational financial and economic analysis;
• analysis that takes into account the results of activities over a specific period of time.

Each type is used depending on the key task.

Financial analysis methods

Current methods of financial analytics include the following areas:

• Vertical analysis. This is one of the types of assessment of the financial statements of an enterprise, in which the share of balance sheet items and various types of liabilities and assets is analyzed. With this method, the distribution of resources is shown in shares.

• Horizontal analysis. We are talking about financial analytics of a company, which involves a dynamic assessment of balance sheet items. Both the nature and direction of the trend are assessed.
• Ratio analysis. With this type, financial, economic and production indicators are calculated on the basis of financial statements. Such financial and accounting analysis also studies statements of losses, profits and other regulatory documentation. The calculation of ratios makes it possible to evaluate the effectiveness and efficiency of various resources, activities and capital of the company, among other things.
• Trend analysis. With such an assessment, each reporting item is compared with specific previous periods, as a result of which the trend of the enterprise's movement is determined. With the help of an established trend, possible values ​​of future indicators are formed. In other words, a prospective analysis is carried out.
• Factor analysis. In this case, an assessment of the influence of specific factors on the final results of the company’s activities is used. Stochastic and deterministic techniques are used for research.
• Comparative analysis. We are talking about intra-farm analytics of summary indicators of workshops, divisions, subsidiaries, etc. Inter-farm financial analysis of the organization is also carried out in relation to the indicators of competing enterprises.

Ratio analysis as the main tool of financial analytics

Ratio can be defined as a key method of financial analysis. This is explained by the fact that a quantitative assessment of the company’s condition and the adoption of various management decisions aimed at changing specific indicators are made on the basis of financial and economic ratios. In this case, one can observe a direct connection between the company’s resources that have been taken into account and the efficiency of their operation, expressed through the values ​​of financial and economic ratios and data in balance sheet items.

This method of financial analysis involves the assessment of four relevant groups of economic indicators:

• Profitability (profitability) ratios. Such data serves to reflect the profitability of a company's capital in generating income through the use of various types of assets.
• Financial reliability (sustainability) coefficients. In this case, the level of equity and debt capital of the company is demonstrated, and the capital structure of the company is also displayed.
• Solvency (liquidity) ratios. Reflect the capabilities and ability of the organization to timely short-term and long-term debt obligations.

• Turnover ratios (business activity). Using this information, you can determine the number of company assets for a specific reporting period and the intensity of their turnover, among other things.

The method of financial analysis, in which the coefficients of the enterprise are taken as the basis for calculations, is considered important for the reason that it makes it possible to timely identify crisis phenomena in the company and take relevant measures to stabilize the situation.

This type of analysis is part of the strategic management of the organization.

Examples of financial analytics

In order to understand the essence of assessing the state of an organization, it is necessary to study an example of financial analysis. Let’s say that over the entire period under study, the markup was stable, but a certain decrease was observed.

During the study period, an increase in the rate of turnover of goods was revealed by 35 days. This indicates the presence of illiquid stock and an increase in the quantity of goods inventories. At the same time, the optimal turnover value for hardware stores is 80-90 days.

As for accounts receivable, the company does not have any - all retail trade of the company is carried out on a payment-on-delivery basis. Accounts receivable turn over within 4-7 days, which can be defined as a positive indicator.

At the same time, the operating cycle within the period covered by the analysis also increased by 35 days. Obviously, it (the cycle) corresponds to an increase in the duration of trade turnover. Due to the increase in the period of trade turnover, the period of the financial cycle has also increased.

Financial analysis of an enterprise defines an example of this kind as a fairly stable activity in which the warehouse can be overstocked. To optimize the process as much as possible, it is necessary to review the procurement policy in order to reduce the turnover period.

How to analyze a bank's activities

Financial analysis of the bank is focused on ensuring quality management through the development of key parameters of its activities. We are talking about such indicators as the profitability of operations, capital and payment turnover, the structure of assets and liabilities, the efficiency of the bank's divisions, the risks of the portfolio of financial resources and intra-bank pricing.

In order for the study of the state of the bank to be successful, certain conditions must be met: the information used for the analysis must be reliable, accurate, timely and complete. If the data provided does not correspond to reality, the applied financial analysis methods will not lead to objective conclusions. This means that the impact of some problems will be underestimated, which may result in a worsening situation.

The reliability of information is assessed during inspections and during documentary supervision.

Methods for studying the condition of a bank

Various aspects of the bank's activities are assessed through the use of scientific and methodological tools. It is with their help that it is possible to develop an optimal solution to specific management problems.

There are popular methods of financial analysis of a bank:

• Dynamic Balance Sheet Equation. This technique involves accounting for profits and losses. Through such management, a factorial financial assessment of the bank’s condition and the fact how profitable its activities are is carried out.
• Modified balance sheet management (liabilities equal to assets). In this case, financial analysis involves a quick assessment of the effectiveness of managing the bank's liabilities.
• Basic balance sheet management (assets equal to the sum of equity and paid liabilities). The key principle of this assessment methodology is the effective management and ownership of all bank assets.
• Capital equation of the balance sheet (the bank's capital is equal to assets minus paid liabilities). This type of equation is relevant when it is necessary to obtain a final assessment of how effective the management of available capital was within the framework of increasing equity capital. This technique is also used to determine and exploit reserves of increased profitability.

Thus, we can conclude that the financial analysis of an enterprise, the example of which was given above, is a necessary measure for determining the condition and profitability of the company. Without such analytics, the efficiency of an enterprise’s activities can significantly decrease, and at the same time, rehabilitation measures may turn out to be irrelevant if they are not assessed in a timely manner.

Analysis of the financial condition of the enterprise:

Financial analysis of an enterprise allows not only to assess its financial condition, but also to predict further development. However, you need to be very careful about the choice of indicators that will be used for evaluation: the wrong choice of tools can lead to the fact that labor-intensive analysis will not bring any benefit. We'll tell you how to conduct an analysis and which indicators to choose.

In the modern world, the head of a company has to make many management decisions every day. It is important for him to understand the current state of the organization, whether resources are being used efficiently, whether the company will be able to pay its debts, and whether there is a strong dependence on borrowed funds. Financial analysis helps him with this. It is important to understand that the value is not in the calculations themselves, but in the professional conclusions that follow from the figures obtained.

What results does financial diagnostics give? The information obtained allows us to determine the current state of affairs and the results of work for the past period, identify hidden reserves and problem areas, and also serves as the basis for further planning and decision-making.

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Sources of information for financial analysis of a company

To carry out diagnostics, use the company's financial statements. The most informative are Form No. 1 and Form No. 2 (balance sheet and income statement). However, don't limit yourself to just official sources. For reliable and complete information, use: data on customers, suppliers, industry data and other documents that may affect analytical indicators.

Stages of financial analysis of an organization

In the figure we show the stages of analyzing the financial condition of an organization.

Picture 1. Stages of company analysis

Financial analysis techniques

Analyze the state of the organization using different methods. To do this, identify key indicators (5–7) on the basis of which you can make informed decisions. A large number of indicators can distract attention and fail to identify trends; few indicators will not provide an overall picture of activity.

Using several techniques, it is possible to identify a set of key indicators for an organization, the so-called control points, which allow you to make the right management decisions.

So, let's look at the basic techniques.

Horizontal and vertical analysis

One of the simplest techniques, which is often not used due to its simplicity. But with proper analysis, it is very informative and shows the direction of the company’s development.

Take information for structural analysis from the organization’s financial statements: balance sheet and statement of financial position.

The results obtained allow us to evaluate:

• the state of the company – property and financial;
• ability to pay the company's debts;
• capital adequacy for operations;
• the need for additional sources of financing;
• operational efficiency.

For horizontal analysis, compare reporting items for different periods of time. Identify the main trends of change. Particular attention should be paid to those articles in which significant changes have occurred, both positive and negative, and the reasons for such changes should be analyzed.

Analysis by reporting items will show deviations of indicators for the current period from the indicators of the base period. Calculate such indicators in absolute and relative terms.

Vertical analysis allows you to determine the structural changes that have occurred in the assets, property, income and expenses of the organization. With this method, each item of the balance sheet (financial performance statement) is expressed as a percentage or share of the total result of the corresponding period.

Analysis of financial condition: accurately and on time

Experts from the Financial Director System have prepared a set of solutions that will help analyze the financial condition of the company: analyze the property position, profitability, liquidity and financial stability.

Factor analysis

With the help of this analysis, the influence of factors (elements) on the final indicator and results of the organization’s economic activities is revealed. In other words, the factor system model expresses the relationship between a general economic indicator and individual factors influencing this indicator. In this case, other economic indicators act as factors, representing the reasons for changes in the general indicator.

The essence of the factor method is to determine the influence of each factor separately on the result as a whole. This way you can analyze any complex indicator. For example, you can determine by what specific amount the net profit of an enterprise has changed under the influence of a particular factor.

Using factor analysis, you can deeply explore the reason for changes in a particular indicator. For example, sales volume depends on the quantity of products sold and the price. By analyzing the indicator using factor analysis, you can understand why the sales volume has changed, the organization has increased volumes or increased prices. See, for example, how to factor profit analysis.

Comparative analysis

It represents a comparison of the organization’s indicators with similar indicators for previous periods, corresponding indicators of competitors, with industry average data.

Trend analysis

This type of analysis consists in the fact that the company, based on previous periods, determines trends in indicators, that is, trends in the dynamics of the indicator. With the help of such trends, possible future indicators are formed and predictive analysis is carried out.

Financial ratios

In practice, the most common method of financial analysis is the method of financial ratios. Let's look at it in more detail.

To assess the company's position, use several key performance indicators, compare them with optimal indicators, and draw conclusions if such indicators are beyond the average.

All indicators can be divided into the following groups:

• turnover indicators;
• indicators of solvency and financial stability;
• profit and profitability indicators.

Liquidity indicators

These indicators measure how quickly a company can turn its assets into cash. It is this ability that speaks about the effectiveness of the enterprise. Simply put, if a company needs to close all current liabilities now, will it be able to do it?

In accounting, highly liquid, low liquid and illiquid assets are distinguished. The main parameter for determining the degree of liquidity of an asset is that the faster it can be converted into money, the more liquid it is.

In the practice of financial analysis, three liquidity ratios are used:

1) Current liquidity. This is the ratio of current (current) assets to short-term liabilities (current liabilities)

The indicator reflects the company's ability to meet its current obligations using liquid assets. The optimal value of this coefficient is considered to be a ratio of 1.5 or higher. A value less than 1 indicates an unstable position of the company. If the indicator is above 3, then this may indicate an irrational capital structure. It is important to understand that the higher the indicator, the better, not always.

2) Urgent (fast) liquidity. The indicator is equal to the ratio of highly liquid current assets to short-term liabilities.

Unlike the first coefficient, inventories are not taken into account here. The ratio reflects the company's ability to pay off its current obligations in the event of difficulties with the sale of products. The optimal value of the coefficient is considered to be 1.

3)Absolute liquidity. This is the ratio of cash to current liabilities.

The indicator reflects the company's ability to cover current liabilities using highly liquid assets (actually cash). The optimal value of the indicator is 0.1-0.3.

Turnover indicators

Indicators reflect how effectively the organization's resources are used. In fact, they reflect the rate at which an organization's assets are converted into cash.

The following ratios are used for financial analysis:

• turnover of current assets (the ratio of annual revenue to the average cost of goods for the year). The ratio determines how much revenue the company receives per unit of assets;
• receivables turnover (the ratio of annual revenue to the average receivables);
• accounts payable turnover (the ratio of annual revenue to the average amount of accounts payable);
• equity capital turnover (the ratio of annual revenue to the average annual value of the organization’s equity capital).

The higher the turnover indicators, the more efficiently the resources are used in the company’s activities, the higher the business activity.

Solvency and financial stability indicators

The solvency of a company means the ability to repay obligations in a timely manner and in full. Financial stability characterizes the level of financial risk of a company, as well as its dependence on borrowed capital.

The indicators of this group are especially interesting to creditors, since on their basis it can be assumed whether the organization will cover its obligations or not.

The main coefficients of this group:

• debt-to-equity ratio (the ratio of long-term liabilities to equity capital). This indicator allows you to understand how much borrowed capital comes to 1 ruble of equity. The optimal value of this ratio is 1:2. The growth of this indicator indicates the company’s dependence on borrowed funds.
• autonomy coefficient (ratio of equity capital to balance sheet currency). The essence of this indicator is to determine the share of own funds in the capital structure of the organization. If the ratio is high, it means that the company’s financial risks are minimal. The organization has the ability to attract additional funding. The optimal value of this coefficient is at least 0.5.
• coefficient of maneuverability of own funds (ratio of own working capital to equity capital). It will determine what part of the equity capital is invested in the company's working capital.

Profit and profitability indicators

In order to evaluate the company's bottom line, profitability indicators are used. They show the performance of the company as a whole, and not of a separate type of asset.

Key indicators that belong to this group:

• overall return on sales (the ratio of operating profit to revenue). The indicator determines the share of profit in each ruble earned. The higher the indicator, the more efficient the company’s activities;
• return on assets (the ratio of operating profit to assets). The indicator reflects the profit per ruble of the organization’s assets;
• return on equity (the ratio of net profit to equity). The indicator reflects the profit that a company receives per unit of equity capital.

Financial ratios used for financial analysis

The most typical indicators used in almost all sectors of the real sector of the economy are shown in the table.

Table. Financial indicators used for enterprise management (calculation frequency - quarter / year)

Example of financial analysis of an enterprise

The ABS company uses the method of horizontal and vertical analysis of reporting. Figure 2 shows an example of a horizontal analysis of the balance sheet of the ABS company with absolute and relative deviations for each item.

Figure 2. Horizontal analysis of the balance sheet of the ABS company (click to enlarge)

From this analysis the following conclusions can be drawn:

1. During the period, there was a significant increase in inventory, by 11.72%. This increase may indicate an increase in the company's production volumes, which indicates positive changes in the company. However, if, in the absence of growth, inventory balances increase, this indicates ineffective use of the organization's resources.
2. Accounts receivable increased significantly – by 55%. It is also important to determine the relationship between the growth rate of sales and the growth rate of accounts receivable. If the growth rate of accounts receivable is faster, it means that the company is not working effectively with this type of asset. By freezing money in inventory and accounts receivable, an organization may experience cash gaps and the risk of non-payment.
3. Highly liquid assets have decreased, that is, cash may indicate the above-mentioned situation.
4. The decrease in accounts payable by 9.74% means that the company pays its creditors more efficiently and quickly.

Let's analyze the financial results statement of the ABS company using the vertical method of financial analysis (Figure 3).

Figure 3. Vertical analysis of the ABS company's financial results report (click to enlarge)

Analysis of changes in the structure of the report showed:

• Regardless of the change in sales volume, the percentage of production costs remained at the same level. On the one hand, this means that production costs are not increasing (prices for raw materials are not increasing, payroll is not increasing, etc.), which means that the enterprise is operating efficiently. However, there may be resources to reduce costs;
• operating expenses and interest on the loan decreased in the structure, due to which the net profit of the organization increased. This indicates a positive development trend for the company.

In addition, the company uses the financial ratio method. For analysis we use:

• current ratio. At the beginning of the period, according to the data presented above, it is 2.73, at the end of the period – 3.11. With this indicator, there are no financial risks, since it can cover its current liabilities with current assets. However, one must understand that a skew towards the larger side (more than 3) may indicate an irrational capital structure.
• absolute liquidity ratio. At the beginning of the period it is 0.63, at the end of the period – 0.41. This indicator corresponds to the norm.
• The total return on sales for the current period of the ABS company is 13.16%. For the previous period, the return on sales was 8.5%. As you can see, the organization operates more efficiently, since each ruble of revenue this year brings 4.66% more profit.