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Analysis of the level of financial stability of the enterprise using relative indicators

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To determine the level of financial stability of the organization, a set of relative indicators is used. The values of these indicators depend on the influence of many factors: the industry affiliation of the company, crediting conditions, the existing structure of the sources to cover property, etc. With their help assess the dynamics of financial structure, financial stability of the enterprise. When conducting the analysis, it is advisable to consider the dynamics of two groups of qualitative indicators:The 1st group – characterizes the structure of sources of funds. The indicators of this group are formed by comparing certain groups of property and sources of its coverage. Conditionally, this group of indicators can be considered capitalization indicators.The 2nd group – characterizes the quality of expenses, connected with servicing external sources. Conventionally, this group of indicators can be regarded as coverage indicators. With the help of the indices of this group the evaluation of whether the enterprise can maintain

the existing structure of sources of funds. Borrowing is associated with financial expenses (payment for the use of credit resources, expenses on financial leasing), which should at least be covered by current income.The main coefficients of financial stability of the 1st group (capitalization) areThe equity concentration coefficient Кf1 is defined as the ratio of enterprise’s equity capital (APC) to the total amount of funds advanced into its operations (IS):Kf1 = SOBC : IS,where IS – the total amount of sources.Its value shows the share of ownership of the owners of the enterprise in the total amount of funds advanced into its activities. The growth of the indicator in the dynamics is a positive factor, indicating an increase in the level of financial stability, reducing the level of dependence on outside investors. The normal minimum value of Кf1 is estimated at the level of 0.5. If the value of Кf1 is more than 0,5, then the enterprise can cover all its liabilities with its funds. In most countries, an enterprise is considered to be financially independent if the share of equity in its total value is between 30% (critical point) and 70%.The coefficient of autonomy Kf2 is defined as the ratio of the amount of the enterprise’s funds (SOBK) to the value of the enterprise’s assets (AC):Kf2 = SOBK : AK.

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