ANALYSIS OF THE FINANCIAL
CONDITION OF THE ENTERPRISE
1. Tasks, types and sources of information for the analysis of the financial
condition of the enterprise
2. General assessment of the financial condition of the enterprise
3. Analysis of the financial stability of the enterprise
4. Analysis of working capital and sources of their formation
5. Analysis of the creditworthiness of the enterprise
6. Analysis of working capital turnover
• During the analysis you need to solve the following main tasks:
• 1. Assess the implementation of the financial plan and financial
condition of the enterprise.
• 2. Determine the impact of factors on financial performance and
solvency of the enterprise.
• 3. Find, determine reserves and develop special measures for their
• Analysis of financial condition:
• Internal (internal analysis is carried out by the financial body of the
enterprise on the basis of the standards applied at the enterprise and
is a trade secret)
• External (external analysis is carried out according to the financial
statements of interested organizations - tax inspection, banks, etc.
• The main criterion for determining the financial condition is the
solvency of the enterprise. Solvency is the ability of an enterprise to
confidently repay all its debt obligations in accordance with the
established terms or in accordance with the contractual terms. It can
be studied for the past period, at a certain (reporting) date or as a
future opportunity to pay in due time for existing short-term
It is necessary to note the following main stages of deterioration of the
• precarious financial condition (temporary, insignificant financial
difficulties - late repayment of bank loans, delay in certain payments to
the budget and suppliers, etc.);
• difficult financial situation (regular and significant non-payment of
debts, constant insolvency and lack of free cash);
• critical deterioration of financial condition (bankruptcy). This is due to
the unprofitability of production or its cessation, the presence of large
debts that the company is unable to pay.
Most often, financial complications arise due to:
• accumulation of excess balances of inventory in the warehouses of the
• deterioration of production indicators (volumes, quality and range of products,
• delays in sales (overstocking, falling prices and demand, increasing overdue
receivables from customers);
• reduction of profitability of production, and hence the amount of profits and
• loss of working capital due to unwise management decisions;
• withdrawal of funds from enterprises by administrative, judicial, tax or
• The stock of sources of own funds is the stock of the enterprise on
condition that its own means exceed borrowed.
• Financial stability is assessed by the ratio of own and borrowed funds
in the assets of the enterprise shows how much borrowed funds per
hryvnia invested in the assets of own funds:
- coefficient of financial stability:
Кпозик, Квл - respectively loan and equity
• - long-term borrowing ratio. It shows the share of long-term loans
used to finance the company's assets along with its own funds;
• - the coefficient of maneuverability of own funds - is the share of the
division of working capital for the total amount of sources of own
• - depreciation accumulation ratio is the ratio of the amount of
accumulated depreciation to its original value;
• - the ratio of the real value of fixed assets in the property of the
enterprise is equal to the value of fixed assets (minus their operation)
to the net value of the property of the enterprise.
All funds according to the degree of their liquidity must be combined into
• quick liquidity (cash on hand and in bank accounts, high-demand securities
and promissory notes of reliable enterprises and financial institutions);
• high and medium liquidity (current receivables, stocks of finished products
in stock and purchased goods);
• illiquid (production stocks of production resources, balances of work in
progress, deferred costs, overdue receivables);
• illiquid (all fixed assets and long-term financial investments, other non-
• The level of solvency (liquidity) of the enterprise is characterized by
the following indicators:
- current solvency of the enterprise (ППс):
кред. заборг − дебітор. заборг
р/р - current account balance
The calculation of the amount (availability) of working capital is carried
out as follows:
• Own working capital =
= Summary of section I of the balance sheet liability +
+ Summary of section II of the balance sheet liability –
- Summary of section I of the balance sheet asset
• The purpose of the analysis of receivables is to make current
management decisions aimed at reducing it and to apply timely
measures to recover doubtful receivables.
• Accounts receivable - is a diversion from the economic activity of the
enterprise working capital, which causes financial difficulties.
The status and movement of receivables is characterized by the following
• 1. The turnover of receivables is determined by the formula
Od = B : Dz,
where Od is the turnover of receivables;
B - sales revenue;
D - the amount of receivables.
• 2. The period of repayment of receivables is determined by the formula
Pd = 360: Od,
where Pd - the period of repayment of receivables.
• 3. The share of receivables in total current assets is determined by the formula
Da = D3 : Pa ∙ 100,
where Da - the share of receivables in total current assets;
D3 - receivables;
Pa - current assets (II + III sections of the asset balance).
• 4. The ratio of receivables to revenue from the sale of Vdz is determined by the formula
Vdz = D3 : B,
where D3 is the amount of receivables;
B - revenue from sales.
• 5. The share of doubtful receivables Pvdzs in the total debt,%
Pvdzs = Dzs : Dz,
• where Dzs - doubtful amount of receivables;
• Dz - the total amount of receivables.
• Accounts payable - the result of a tense financial situation due to lack
of funds for various organizations and individuals.
• The turnover of accounts payable Okr is calculated by the same
formula as the receivables, the difference is that the numerator
reflects the amount of turnover from the purchase of raw materials,
materials, etc .:
Okr = B : Kr,
where B - costs of raw materials and other resources;
Kr - accounts payable.
• The rate of return on invested capital is determined by the formula
P = П : ∑(K),
where З is the rate of return;
П - the amount of profit for the reporting year;
(K) - the total amount of capital (liabilities of the balance sheet).
Kps = C: A,
where Kps - fundraising ratio;
C - debt;
A - current assets.
• The following indicators are used to measure the turnover of working
- duration of one turnover in days (Од):
С0 ⋅ Д
𝑂Д = С0:
P - the amount of sold products for the study period;
Д - the number of days in the period (for the year - 360; quarter - 90; month
Cо - the average balance of working capital.
- turnover ratio, which characterizes the number of revolutions carried
out by working capital (Коб):
- the coefficient of consolidation or loading of funds shows the amount
of working capital per 1 UAH of sold products (Kз):
• There are absolute and relative release (additional involvement) of
working capital. The calculation of the latter indicator is carried out
using the following formula:
- the duration of one turnover in days, respectively, in the
reporting and previous periods;
P1/Д - the amount of one-day sales in the reporting period.
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