Indicators of financial ratios with certain. The main financial ratios for analyzing the activities of the enterprise

Before proceeding directly to the topic of the article, you should understand the essence of the concept financial activities enterprises.

Financial activity in the enterprise- this is financial planning and budgeting, financial analysis, management of financial relations and monetary funds, determination and implementation of investment policy, organization of relations with budgets, banks, etc.

Financial activity solves such problems as:

• providing the enterprise with the necessary financial resources for funding its production and marketing activities, as well as for the implementation of investment policy;
• use of opportunities to improve efficiency enterprise activities;
• ensure timely repayment current and long-term liabilities;
• determination of optimal credit conditions to expand the volume of sales (deferment, installment plan, etc.), as well as the collection of formed receivables;
• motion control and redistribution financial resources within the boundaries of the enterprise.

Analysis Feature

Financial indicators make it possible to measure the effectiveness of work in the above areas. For example, liquidity ratios make it possible to determine the possibility of timely repayment of short-term obligations, while the coefficients financial stability, which are the ratio of equity to debt, allow you to understand the ability to meet obligations in the long term. The financial stability ratios of the second group, which show the adequacy of working capital, make it possible to understand the availability of financial resources to finance activities.

Profitability indicators and business activity(turnover) show how the company uses the available opportunities to improve work efficiency. Analysis of receivables and payables allows you to understand the credit policy. Considering that profit is formed under the influence of all factors, it can be argued that the analysis financial results and profitability analysis allows you to get a cumulative assessment of the quality of the financial activities of the enterprise.

The effectiveness of financial activity can be judged by two aspects:

1. results financial activities;
2. Financial condition enterprises.

The first is expressed by how efficiently the company can use its assets, and most importantly, whether it is able to generate profit and to what extent. The higher the financial result for each ruble of invested resources, the better the result of financial activity. However, profitability and turnover are not the only indicators of a company's financial performance. The opposite and related category is the level of financial risk.

The current financial condition of the enterprise just means how sustainable is the economic system. If a company is able to meet its obligations in the short and long term, ensure the continuity of the production and marketing process, and also reproduce the resources expended, then it can be assumed that while maintaining the current market conditions the business will continue to operate. In this case, the financial condition can be considered acceptable.

If the company is able to generate high profits in the short and long term, then we can talk about efficient financial performance.

In the process of analyzing the financial activities of an enterprise, both in the analysis of financial results and in the process of assessing the state, the following methods should be used:

• horizontal analysis - analysis speakers financial result, as well as assets and sources of their financing, will determine the general trends in the development of the enterprise. As a result, one can understand the medium and long term of his work;
• vertical analysis - assessment of the formed structures assets, liabilities and financial results will reveal imbalances or make sure the current performance of the company is stable;
• comparison method - comparison data with competitors and industry averages will allow you to determine the effectiveness of the company's financial activities. If the enterprise demonstrates higher profitability, then we can talk about high-quality work in this direction;
• coefficient method - in the case of studying the financial activities of an enterprise, this method is important, since its use will allow you to get a set indicators, which characterize both the ability to demonstrate high results and the ability to maintain stability.
• factor analysis - allows you to determine the main factors that influenced the current financial position and financial performance of the company.

Analysis of the financial results of the enterprise

Investors are interested in profitability, as it allows you to evaluate the effectiveness of management activities and the use of capital that was provided by the latter for the purpose of making a profit. Other participants in financial relationships, such as creditors, employees, suppliers and customers are also interested in understanding the profitability of the company, as this allows you to estimate how smoothly the company will operate in the market.

Therefore, the analysis of profitability allows you to understand how effectively the management implements the company's strategy for the formation of financial results. Given the large number of tools that are in the hands of an analyst when evaluating profitability, it is important to use a combination of different methods and approaches in the process.

Although firms report net income, the overall financial result is considered more important, as a measure that better shows the profitability of a company's shares. There are two main alternative approaches to assessing profitability.

First approach provides for consideration of various transformations of the financial result. Second approach– indicators of profitability and profitability. In the case of the first approach, such indicators as the profitability of the company's shares, horizontal and vertical analysis, assessment of the growth of indicators, consideration of various financial results ( gross profit, profit before tax, etc.). In the case of applying the second approach, indicators of return on assets and profitability are used equity, which provide for obtaining information from the balance sheet and income statement.

These two metrics can be broken down into profit margin, leverage, and turnover to better understand how a company generates wealth for its shareholders. In addition, margin, turnover and leverage indicators can be analyzed in more detail and broken down into different lines financial reporting.

Analysis of financial performance of the enterprise

It is worth noting that the most important method is the method of indicators, it is also the method of relative indicators. Table 1 shows the groups financial ratios which are best suited for performance analysis.

Table 1 - The main groups of indicators that are used in the process of assessing the financial result of the company

It is worth considering each of the groups in more detail.

Turnover indicators (indicators of business activity)

Table 2 presents the most commonly used business activity ratios. It shows the numerator and denominator of each coefficient.

Table 2 - Turnover indicators

Indicator of business activity (turnover)	Numerator	Denominator
	Cost price	Average inventory value
	Number of days in the period (for example, 365 days if using yearly data)	inventory turnover
		Average value of accounts receivable
	Number of days in the period	Accounts receivable turnover
	Cost price	Average value of accounts payable
	Number of days in the period	Accounts payable turnover
Working capital turnover		Average cost of working capital
		Average cost of fixed assets
		Average asset value

Interpretation of turnover indicators

Inventory turnover and one turnover period . Inventory turnover is the backbone of operations for many organizations. The indicator indicates resources (money) that are in the form of reserves. Therefore, such a ratio can be used to indicate the effectiveness of inventory management. The higher the inventory turnover ratio, the shorter the period of inventory in the warehouse and in production. In general, the inventory turnover and the period of one inventory turnover should be estimated according to industry standards.

Tall Inventory turnover ratio compared to industry norms may indicate high efficiency inventory management. However, it is also possible that this turnover ratio (and a low one-period turnover rate) could indicate that the company is not building up adequate inventory, which could hurt earnings.

To assess which explanation is more likely, an analyst can compare a company's earnings growth with industry growth. Slower growth combined with higher inventory turnover may indicate insufficient inventory levels. Revenue growth at or above industry growth supports the interpretation that high turnover reflects greater efficiency in inventory management.

Short an inventory turnover ratio (and therefore a high turnover period) relative to the industry as a whole can be an indicator of slow inventory movement in the operating process, perhaps due to technological obsolescence or a change in fashion. Again, by comparing a company's sales growth with the industry, one can get the gist of current trends.

The turnover of receivables and the period of one turnover of receivables . The receivables turnover period represents the time elapsed between sale and collection, which reflects how quickly the company collects cash from customers to whom it offers credit.

Although it is more correct to use credit sales as the numerator, information on credit sales is not always available to analysts. Therefore, revenue reported in the income statement is generally used as the numerator.

A relatively high receivables turnover ratio may indicate a high efficiency of commodity lending to clients and collection of money by them. On the other hand, a high receivables turnover ratio may indicate that credit or debt collection terms are too tight, indicating a possible loss of sales to competitors who offer softer terms.

Relatively low receivables turnover tends to raise questions about the effectiveness of credit and collection procedures. As with inventory management, comparing company and industry sales growth can help an analyst assess whether sales are lost due to a strict credit policy.

In addition, by comparing uncollectible receivables and actual loan losses with past experience and peers, it can be assessed whether low turnover reflects a problem in managing commercial lending to clients. Companies sometimes provide information about the line of receivables. This data can be used in conjunction with turnover rates to draw more accurate conclusions.

Accounts payable turnover and accounts payable turnover period . The accounts payable turnover period reflects the average number of days a company spends paying its suppliers. The accounts payable turnover ratio indicates how many times a year a company conditionally covers debts to its creditors.

For the purposes of calculating these indicators, it is assumed that the company makes all its purchases with the help of a commodity (commercial) loan. If the volume of goods purchased is not available to the analyst, then the cost of goods sold indicator can be used in the calculation process.

Tall The accounts payable turnover ratio (low period of one turnover) in relation to the industry may indicate that the company is not fully using the available credit funds. On the other hand, this may mean that the company uses a system of discounts for earlier payments.

Too low the turnover ratio may indicate problems with the timely payment of debts to suppliers or the active use of soft credit conditions for the supplier. This is another example of when other metrics should be looked at to form weighted conclusions.

If the liquidity indicators indicate that the company has sufficient cash and other short-term assets to pay liabilities, and yet the accounts payable turnover period is high, then this will indicate the supplier's lenient credit conditions.

Working capital turnover . Working capital is defined as current assets minus current liabilities. Working capital turnover indicates how efficiently a company generates income from working capital. For example, a working capital ratio of 4 indicates that the company generates $4 of revenue for every $1 of working capital.

A high value of the indicator indicates greater efficiency (i.e., the company generates a high level of income relative to a smaller amount of working capital raised). For some companies, the amount of working capital may be close to zero or negative, which makes this indicator difficult to interpret. The next two coefficients will be useful in these circumstances.

Turnover of fixed assets (capital productivity) . This metric measures how efficiently a company generates returns on its fixed investment. As a rule, more tall the turnover ratio of fixed assets shows a more efficient use of fixed assets in the process of generating income.

Low a value may indicate inefficiency, capital intensity of the business, or that the business is not operating at full capacity. In addition, the turnover of fixed assets may be formed under the influence of other factors not related to business efficiency.

The rate of return on assets will be lower for companies whose assets are newer (and therefore less depreciated, which is reflected in the financial statements by a higher carrying value) compared to companies with older assets (which are more depreciated and therefore are reflected at a lower book value (subject to the use of the revaluation mechanism).

The rate of return on assets can be unstable, since incomes can have steady growth rates, and the increase in fixed assets is jerky; therefore, each annual change in the indicator does not necessarily indicate important changes in the company's performance.

Asset turnover . The total asset turnover ratio measures the overall ability of a company to generate income with a given level of assets. A ratio of 1.20 would mean that the company generates 1.2 rubles of income for every 1 ruble of attracted assets. A higher ratio indicates a greater efficiency of the company.

Since this ratio includes both fixed assets and working capital, poor management of working capital can distort the overall interpretation. Therefore, it is useful to analyze working capital and return on assets separately.

Short the asset turnover ratio may indicate unsatisfactory performance or a relatively high level of capital intensity of the business. The indicator also reflects strategic management decisions: for example, the decision to take a more labor-intensive (and less capital-intensive) approach to your business (and vice versa).

The second important group of indicators are profitability and profitability ratios. These include the following ratios:

Table 3 - Indicators of profitability and profitability

Indicator of profitability and profitability	Numerator	Denominator
	Net profit	Average asset value
	Net profit
Gross margin	Gross profit
	Sales profit
	Net profit
	Average asset value	Net profit
	Average cost of equity	Net profit

Profitability indicator assets shows how much profit or loss the company receives for each ruble of invested assets. A high value of the indicator indicates the effective financial activity of the enterprise.

Return on equity is a more important indicator for the owners of the enterprise, since this ratio is used when evaluating investment alternatives. If the value of the indicator is higher than in alternative investment instruments, then we can talk about the quality of the financial activity of the enterprise.

Margin metrics provide insight into sales performance. Gross margin shows how much more resources the company has left for management and sales expenses, interest expenses, etc. Operating margin demonstrates the effectiveness of the organization's operational process. This indicator allows you to understand how much operating profit will increase with an increase in sales by one ruble. net margin takes into account the influence of all factors.

Return on assets and equity allows you to determine how much time it takes for the company to pay off the funds raised.

Analysis of the financial condition of the enterprise

The financial condition, as mentioned above, means the stability of the current financial and economic system of the enterprise. To study this aspect, the following groups of indicators can be used.

Table 4 - Groups of indicators that are used in the process of assessing the state

Liquidity ratios (liquidity ratios)

Liquidity analysis, which focuses on cash flow, measures a company's ability to meet its short-term obligations. The main indicators of this group are a measure of how quickly assets turn into cash. In day-to-day operations, liquidity management is usually achieved through effective use assets.

The level of liquidity must be considered depending on the industry in which the company operates. The liquidity position of a particular company may also vary depending on the anticipated need for funds at any given time.

The assessment of liquidity adequacy requires an analysis of the company's historical funding needs, current liquidity position, expected future funding needs, and options to reduce funding requirements or raise additional funds (including actual and potential sources of such funding).

Large companies tend to have better control over the level and composition of their liabilities than smaller companies. Thus, they may have more potential sources of funding, including owner equity and credit market funds. Access to capital markets also reduces the required liquidity buffer compared to companies without such access.

Contingent liabilities such as letters of credit or financial guarantees may also be relevant in assessing liquidity. The importance of contingent liabilities varies for the non-banking and banking sectors. In the non-banking sector, contingent liabilities (usually disclosed in a company's financial statements) represent a potential cash outflow and should be included in an assessment of a company's liquidity.

Calculation of liquidity ratios

The main liquidity ratios are presented in table 5. These liquidity ratios reflect the position of the company at a certain point in time and, therefore, use data at the end of the balance sheet date, and not average balance sheet values. Indicators of current, quick and absolute liquidity reflect the company's ability to pay current obligations. Each of them uses a progressively stricter definition of liquid assets.

Measures how long a company can pay its daily cash costs using only existing liquid assets, without additional cash flows. The numerator of this ratio includes the same liquid assets used in quick liquidity, and the denominator is an estimate of daily cash costs.

To obtain daily cash costs, the total cash costs for the period are divided by the number of days in the period. Therefore, in order to obtain cash expenses for the period, it is necessary to summarize all expenses in the income statement, including such as: cost; marketing and administrative expenses; other expenses. However, the amount of expenses should not include non-cash expenses, for example, the amount of depreciation.

Table 5 - Liquidity ratios

Liquidity indicators	Numerator	Denominator
	current assets	Current responsibility
	Current assets - stocks	Current responsibility
	Short-term investments and cash and cash equivalents	Current responsibility
Guard interval indicator	Current assets - stocks	Daily expenses
	Inventory turnover period + Accounts receivable turnover period – Accounts payable turnover period

The financial cycle is a metric that is not calculated in the form of a ratio. It measures the length of time it takes for an enterprise to go from investing money (invested in activities) to receiving cash (as a result of activities). During this time period, the company must fund its investment operations from other sources (ie, debt or equity).

Interpretation of liquidity ratios

Current liquidity . This measure reflects current assets (assets that are expected to be consumed or converted into cash within one year) per ruble of current liabilities (obligations due within one year).

More tall the ratio indicates a higher level of liquidity (i.e., a higher ability to meet short-term obligations). A current ratio of 1.0 would mean that the carrying amount of current assets is exactly equal to the carrying amount of all current liabilities.

More low the value of the indicator indicates less liquidity, which implies a greater dependence on operating cash flow and external financing to meet short-term liabilities. Liquidity affects a company's ability to borrow money. The current ratio is based on the assumption that inventories and receivables are liquid (if inventories and receivables are low, this is not the case).

Quick liquidity ratio . The quick ratio is more conservative than the current ratio as it only includes the most liquid current assets (sometimes called "quick assets"). Like the current ratio, a higher quick ratio indicates the ability to meet debts.

This indicator also reflects the fact that inventories cannot be easily and quickly converted into cash, and, in addition, the company will not be able to sell its entire inventory of raw materials, materials, goods, etc. for an amount equal to its book value, especially if that inventory needs to be sold quickly. In situations where inventories are illiquid (for example, if inventory turnover ratios are low), quick liquidity may be a better indicator of liquidity than current ratio.

Absolute liquidity . The ratio of cash to current liabilities is usually a reliable measure of the liquidity of an individual enterprise in a crisis. Only highly liquid short-term investments and cash are included in this indicator. However, it should be taken into account that in a crisis, the fair value of liquid valuable papers may decrease significantly as a result of market factors, in which case it is desirable to use only cash and cash equivalents in the process of calculating absolute liquidity.

Guard interval indicator . This ratio measures how long a company can continue to pay its expenses from its available liquid assets without receiving any additional cash inflows.

A guard margin of 50 would mean that the company could continue to pay its operating expenses for 50 days from fast assets without any additional cash inflows.

The higher the guard interval, the higher the liquidity. If a company's guard interval score is very low compared to peers or compared to the company's own history, the analyst needs to clarify whether there is sufficient cash inflow for the company to meet its obligations.

financial cycle . This indicator indicates the amount of time that elapses from the moment a company invests money in other forms of assets until the moment it collects money from customers. A typical operating process is to receive inventories on a deferred basis, which creates accounts payable. The company then also sells these inventories on credit, which results in an increase in receivables. After that, the company pays its bills for the delivered goods and services, and also receives payment from customers.

The time between spending money and collecting money is called the financial cycle. More short cycle indicates greater liquidity. It means that the company only has to fund its inventory and receivables for a short period of time.

More long cycle indicates lower liquidity; this means that the company must finance its inventory and receivables over a longer period of time, which may result in the need to raise additional funds to build working capital.

Indicators of financial stability and solvency

Solvency ratios are basically of two types. Debt ratios (the first type) focus on the balance sheet, and measure the amount of debt capital in relation to equity or the total amount of a company's funding sources.

Coverage ratios (the second type of metric) focus on the income statement and measure a company's ability to meet its debt payments. All of these indicators can be used in assessing a company's creditworthiness and therefore in assessing the quality of a company's bonds and other debt obligations.

Table 6 - Indicators of financial stability

Indicators	Numerator	Denominator
	Total liabilities (long-term + short-term liabilities)	Total liabilities
	Equity	Total liabilities
Debt to Equity	Total liabilities	Equity
financial leverage		Equity
Interest coverage ratio	Profit before taxes and interest	Percentage to be paid
Fixed payment coverage ratio	Profit before taxes and interest + lease payments + rent	Interest payable + lease payments + rent

In general, these indicators are most often calculated in the manner shown in Table 6.

Solvency Ratios Interpretation

Indicator of financial dependence . This ratio measures the percentage of total assets financed by debt. For example, a debt-to-asset ratio of 0.40 or 40 percent indicates that 40 percent of a company's assets are funded by debt. Generally, a higher share of debt means higher financial risk and thus weaker solvency.

Indicator of financial autonomy . The indicator measures the percentage of a company's equity (debt and equity) represented by equity. Unlike the previous ratio, a higher value usually means lower financial risk and thus indicates strong solvency.

Debt to equity ratio . The debt-to-equity ratio measures the amount of debt capital in relation to equity. The interpretation is similar to the first indicator (i.e., a higher ratio indicates poor solvency). A ratio of 1.0 would indicate equal amounts of debt and equity, which is equivalent to a debt-to-liability ratio of 50 percent. Alternative definitions of this ratio use the market value of shareholders' equity rather than its book value.

financial leverage . This ratio (often referred to simply as the leverage ratio) measures the amount of total assets supported by each currency unit of equity. For example, a value of 3 for this indicator means that every 1 ruble of capital supports 3 rubles of total assets.

The higher the ratio financial leverage the more leveraged a company has to use debt and other liabilities to fund assets. This ratio is often defined in terms of average total assets and average total equity and plays an important role in the decomposition of return on equity in the DuPont methodology.

Interest coverage ratio . This metric measures how many times a company can cover its interest payments from pre-tax earnings and interest payments. A higher interest coverage ratio indicates stronger solvency and solvency, providing creditors with high confidence that the company can service its debt (i.e., banking sector debt, bonds, bills, debt of other enterprises) from operating income.

Fixed payment coverage ratio . This metric takes into account fixed expenses or liabilities that result in a stable cash outflow for the company. It measures the number of times a company's earnings (before interest, taxes, rent, and leases) can cover interest and lease payments.

Like the interest coverage ratio, a higher fixed payment ratio implies strong solvency, meaning that the business can service its debt through core business. The indicator is sometimes used to determine the quality and probability of receiving dividends on preferred shares. If the value of the indicator is higher, then this indicates a high probability of receiving dividends.

Analysis of the financial activity of the enterprise on the example of PJSC "Aeroflot"

To demonstrate the process of analyzing financial activity, you can use the example famous company PJSC Aeroflot.

Table 6 – Dynamics of assets of PJSC Aeroflot in 2013-2015, million rubles

Indicators				Absolute deviation, +,-		Relative deviation, %
Intangible assets
Research and development results
fixed assets
Long-term financial investments
Deferred tax assets
Other noncurrent assets
NON-CURRENT ASSETS TOTAL
Value added tax on acquired valuables
Receivables
Short-term financial investments
Cash and cash equivalents
Other current assets
CURRENT ASSETS TOTAL

As can be judged from the data in Table 6, during 2013-2015 there is an increase in the value of assets - by 69.19% due to the growth of current and non-current assets (Table 6). In general, the company is able to effectively manage working resources, because in the conditions of sales growth by 77.58%, the amount of current assets increased by only 60.65%. The credit policy of the enterprise is of high quality: in the context of a significant increase in revenue, the amount of receivables, the basis of which was the debt of buyers and customers, increased only by 45.29%.

The amount of cash and cash equivalents is growing from year to year and amounted to about 29 billion rubles. Given the value of the absolute liquidity ratio, it can be argued that this indicator is too high - if the absolute liquidity of the largest competitor UTair is only 19.99, then in PJSC Aeroflot this indicator was 24.95%. Money is the least productive part of the assets, so if there are free funds, they should be directed, for example, to short-term investment instruments. This will provide additional financial income.

Due to the depreciation of the ruble, the cost of inventories increased significantly due to an increase in the cost of components, spare parts, materials, as well as due to an increase in the cost of jet fuel despite the decline in oil prices. Therefore, stocks grow faster than sales volume.

The main factor behind the growth of non-current assets is the increase in accounts receivable, payments on which are expected more than 12 months after the date of the report. The basis of this indicator is advance payments for the supply of A-320/321 aircraft, which will be received by the company in 2017-2018. In general, this trend is positive, as it allows the company to ensure the development and increase of competitiveness.

The enterprise financing policy is as follows:

Table 7 - Dynamics of the sources of financial resources of Aeroflot PJSC in 2013-2015, million rubles

Indicators				Absolute deviation, +,-		Relative deviation, %
Authorized capital (share capital, statutory fund, contributions of comrades)
Own shares repurchased into shareholders
Revaluation of non-current assets
Reserve capital
Retained earnings (uncovered loss)
OWN CAPITAL AND RESERVES
Long-term borrowings
Deferred tax liabilities
Provisions for contingent liabilities
LONG-TERM LIABILITIES TOTAL
Short-term borrowings
Accounts payable
revenue of the future periods
Reserves for future expenses and payments
SHORT-TERM LIABILITIES TOTAL

A clearly negative trend is the reduction in the amount of equity by 13.4 for the study period due to a significant net loss in 2015 (Table 7). This means that the wealth of investors has significantly decreased, and the level of financial risks has increased due to the need to raise additional funds to finance the growing volume of assets.

As a result, the amount of long-term liabilities increased by 46%, and the amount of current liabilities - by 199.31%, which led to a catastrophic decline in solvency and liquidity indicators. A significant increase in borrowed funds leads to an increase in financial costs for debt servicing.

Table 8 - Dynamics of PJSC Aeroflot's financial results in 2013-2015, million rubles

Indicators				Absolute deviation, +,-		Relative deviation, %
Cost of sales
Gross profit (loss)
Selling expenses
Management expenses
Profit (loss) from sales
Income from participation in other organizations
Interest receivable
Percentage to be paid
Other income
other expenses
Profit (loss) before tax
Current income tax
Change in deferred tax liabilities
Change in deferred tax assets
Net income (loss)

In general, the process of forming the financial result was inefficient due to an increase in interest payable and other expenses by 270.85%, as well as due to an increase in other expenses by 416.08% (Table 8). The write-off of PJSC Aeroflot's share in authorized capital LLC "Dobrolet" in connection with the termination of activities. Although this is a significant loss of funds, it is not a permanent expense, so it does not say anything bad about the ability to carry out uninterrupted operations. However, other reasons for the increase in other expenses may threaten stable activity companies. In addition to the write-off of part of the shares, other expenses also increased due to leasing expenses, expenses from hedging transactions, as well as due to the formation of significant reserves. All this indicates ineffective risk management in the framework of financial activities.

Indicators

Absolute deviation, +,-

Current liquidity ratio

Quick liquidity ratio

Absolute liquidity ratio

The ratio of short-term receivables and payables

Liquidity indicators speak of serious problems with solvency already in the short term (Table 9). As mentioned earlier, absolute liquidity is excessive, which leads to incomplete use of the financial potential of the enterprise.

On the other hand, the current ratio is significantly below the norm. If in UTair, the company's direct competitor, the indicator was 2.66, then in Aeroflot PJSC it was only 0.95. This means that the company may experience problems with the timely repayment of current liabilities.

Table 10 – Financial stability indicators of PJSC Aeroflot in 2013-2015

Indicators				Absolute deviation, +,-
Own working capital, million rubles
Coefficient of current assets provision with own funds
Maneuverability of your own working capital
Coefficient of provision with own working capital stocks
Financial autonomy ratio
Financial dependency ratio
Financial leverage ratio
Equity maneuverability ratio
Short-term debt ratio
Financial stability ratio (investment coverage)
Asset mobility ratio	Financial autonomy also dropped significantly to 26% in 2015 from 52% in 2013. This indicates more low level protection of creditors and a high level of financial risks. The indicators of liquidity and financial stability made it possible to understand that the state of the company is unsatisfactory. Consider also the company's ability to generate a positive financial result. Table 11 – Business activity indicators of Aeroflot PJSC (turnover indicators) in 2014-2015 Indicators Absolute deviation, +,- Equity turnover Asset turnover, transformation ratio return on assets Working capital turnover ratio (turnover) Period of one turnover of working capital (days) Inventory turnover ratio (turns) Period of one inventory turnover (days) Accounts receivable turnover ratio (turnover) Receivables repayment period (days) Accounts payable turnover ratio (turnover) Payables repayment period (days) Lead time (days) Operating cycle period (days) Financial cycle period (days) In general, the turnover of the main elements of assets, as well as equity, increased (Table 11). However, it is worth noting that the reason for this trend is the growth of the national currency, which led to a significant increase in ticket prices. It is also worth noting that the asset turnover is significantly higher than that of UTair's direct competitor. Therefore, it can be argued that, in general, the operating process of the company is effective. Table 12 - Profitability (loss ratio) of PJSC Aeroflot Indicators Absolute deviation, +,- Profitability (liabilities) of assets, % Return on equity, % Profitability of production assets, % Profitability products sold by profit from sales, % Profitability of sold products in terms of net profit, % Reinvestment ratio, % Coefficient of sustainability of economic growth, % Payback period of assets, year Payback period of equity, year The company was unable to generate profit in 2015 (Table 12), which led to a significant deterioration in the financial result. For each attracted ruble of assets, the company received 11.18 kopecks of net loss. In addition, the owners received 32.19 kopecks of net loss for each ruble of invested funds. Therefore, it is obvious that the financial performance of the company is unsatisfactory. 2. Thomas R. Robinson, International financial statement analysis / Wiley, 2008, 188 pp. 3. site - Online program for calculating financial indicators // URL: https://www.site/ru/

Financial ratios are relative indicators financial condition companies. They are calculated through the ratio of the absolute values ​​of the coefficients of the financial condition of the enterprise.
The analysis of financial ratios consists in comparing the values ​​of these ratios with normative or basic values, as well as the analysis and study of their dynamics over a certain period.

There are a large number of financial ratios, but a small number is enough to fully characterize the state of the enterprise. The main thing is that this ratio reflects one of the parties to the financial economic activity enterprises.

First group– a group of profitability ratios. Here is the coefficient overall profitability, net profitability, net profitability of own capital, profitability of production assets.
Co.r = gross profit / property value
Kch.r. = net income / property value
Kr.sk \u003d net profit / equity value
Kr.pf \u003d gross profit / value of fixed and current assets

Second group- a group of coefficients of enterprise management efficiency.
Net profit per 1 rub. = net profit / product turnover
Profit from the sale of 1 rub. = sales profit / product turnover
Profit from all sales per 1 rub. = profit of all sales / product turnover
Total profit per 1 rub. = gross profit / product turnover

Third group– a group of coefficients of business activity.
Total Return on Capital = Turnover / Average Property Value
Return of fixed assets and intangible assets = turnover / average cost of production assets and intangible assets
Turnover of all current assets = turnover / average value of current assets
Accounts receivable turnover = turnover / average value of receivables

Fourth group- coefficients of financial stability of the enterprise.
Autonomy coefficient \u003d sources of funds / total balance (> 0.5 standard)
Debt to Equity Ratio = Liabilities / Equity (>1 Ratio)
Ratio of mobile and immobilized funds = current assets / non-current assets
Agility coefficient = own working capital / total value of the enterprise's sources of funds
Equity ratio = own working capital / cost of inventories and costs (>0.6 standard)

Fifth group– liquidity ratios.
Absolute Liquidity Ratio = Most Liquid Assets / Most Term Liabilities and Short Term Liabilities
Critical Liquidity Ratio = Accounts Receivable and Other Assets / Most Term Liabilities and Current Liabilities
Current liquidity ratio = value of all current assets / short-term liabilities

The main indicators characterizing the financial condition of the enterprise are solvency and liquidity ratios. The concept of solvency is broader than the concept of liquidity. So, solvency is understood as the ability of the company to fully fulfill its payment obligations, as well as the availability of funds necessary and sufficient to fulfill these obligations. The term liquidity means the ease of implementation, sales, the transformation of material assets into cash.

The main way to determine the solvency and liquidity of a company is ratio analysis. First, let's define the concept of "financial ratio".

The financial ratio is a relative indicator, calculated as the ratio of individual balance sheet items and their combinations. Of course, for coefficient analysis information base serves as a balance sheet, i.e. it is carried out on the basis of data 1 and 2 of the balance sheet.

In the economic literature, ratio financial analysis, as a rule, refers to the study and analysis of financial statements using a set of financial indicators (ratios) that characterize the financial position of an organization. The purpose of the ratio analysis is to describe the company in terms of several basic indicators that allow one to judge its financial condition.

Coefficients characterizing the solvency of the enterprise

Table 1. Main financial ratios characterizing the solvency of an enterprise

	Recommended value	Calculation formula
		Numerator	Denominator
Financial Independence Ratio	>=0,5	Equity	Balance currency
Financial dependency ratio	<=2,0	Balance currency	Equity
Debt capital concentration ratio	<=0,5	Borrowed capital	Balance currency
Debt ratio	<=1,0	Borrowed capital	Equity
Total solvency ratio	>=1,0	Balance currency	Borrowed capital
Investment ratio (option 1)	>0,25 <1,0	Equity	Fixed assets
Investment ratio (option 2)	>1,0	Equity + Long-term liabilities	Fixed assets

Coefficients characterizing the liquidity of the enterprise

The main indicators characterizing the liquidity of a commercial organization are presented in the following table.

Table 2. Key financial ratios characterizing liquidity

Name of financial ratio	Recommended value	Calculation formula
		Numerator	Denominator
Instant liquidity ratio	> 0,8		Short-term liabilities
Absolute liquidity ratio	> 0,2	Cash and cash equivalents + Short-term financial investments (excluding cash equivalents)	Short-term liabilities
Quick liquidity ratio (simplified version)	=> 1,0	Cash and cash equivalents + Short-term financial investments (excluding cash equivalents) + Accounts receivable	Short-term liabilities
Average liquidity ratio	> 2,0	Cash and cash equivalents + Short-term investments (excluding cash equivalents) + Accounts receivable + Inventories	Short-term liabilities
Interim liquidity ratio	=> 1,0	Cash and cash equivalents + Short-term financial investments (excluding cash equivalents) + Accounts receivable + Inventories + Value added tax on acquired valuables	Short-term liabilities
Current liquidity ratio	1,5 - 2,0	current assets	Short-term liabilities

One of the main tasks of the analysis of liquidity and solvency indicators of the company is to assess the degree of closeness of the organization to bankruptcy. It should be noted that liquidity indicators are not related to the assessment of the company's growth potential and reflect mainly the momentary situation. If the company works for the future, the significance of liquidity indicators drops significantly. Accordingly, it is advisable to start assessing the financial condition of a company with an analysis of its solvency.

Coefficients characterizing the property status of the enterprise

Table 3. Main financial ratios characterizing property status enterprises

Name of financial ratio	Calculation formula
	Numerator	Denominator
Property dynamics	Balance currency at the end of the period	Balance currency at the beginning of the period
Share of non-current assets in property	Fixed assets	Balance currency
Share of current assets in property	current assets	Balance currency
Share of cash and cash equivalents in current assets	Cash and cash equivalents	current assets
Share of financial investments (excluding cash equivalents) in current assets	Financial investments (excluding cash equivalents)	current assets
Share of stocks in current assets	Stocks	current assets
Share of accounts receivable in current assets	Receivables	current assets
Share of fixed assets in non-current assets	fixed assets	Fixed assets
Share of intangible assets in non-current assets	Intangible assets	Fixed assets
Share of financial investments in non-current assets	Financial investments	Fixed assets
Share of research and development results in non-current assets	Research and development results	Fixed assets
Share of intangible exploration assets in non-current assets	Intangible search assets	Fixed assets
Share of tangible exploration assets in non-current assets	Tangible Exploration Assets	Fixed assets
The share of long-term investments in material assets in non-current assets	Long-term investments in material values	Fixed assets
Share of deferred tax assets in non-current assets	Deferred tax assets	Fixed assets

Indicators of the financial stability of the enterprise

The main financial ratios used in the process of assessing the financial stability of an enterprise are based on equity capital (SC), short-term liabilities (CO), borrowed capital (LC) and working capital (SOC) taken into account for the purposes of analysis, which can be determined with using formulas compiled on the basis of the codes of the balance sheet lines:

SK = Kiri + DBP = p. 1300 + p. 1530

KO = line 1500 - line 1530

ZK \u003d TO + KO \u003d line 1400 + line 1500 - line 1530

SOK \u003d SK - VA \u003d p. 1300 + p. 1530 - p. 1100

where KiR - capital and reserves (p. 1300); DBP - deferred income (line 1530); DO - long-term liabilities (line 1400); VA - non-current assets (line 1100).

When evaluating indicators of the financial condition of the enterprise it should be taken into account that normal or recommended values ​​have been determined on the basis of activity analysis Western companies and were not adapted to Russian conditions.

In addition, it is necessary to be careful about the method of comparing coefficients with industry standards. If in developed countries the main proportions were formed decades ago, there is constant monitoring of all changes, then in Russia market structure assets and liabilities of the enterprise is in its infancy, monitoring is not carried out in full. And if we take into account the distortions in reporting, constant adjustments to the rules for compiling it, then it is clear that it is difficult to develop sufficiently justified new standards for industries.

In the future, the values ​​of the coefficients are compared with their recommended standard, as a result of which they form an opinion about the solvency or insolvency of the organization, its financial stability or instability, profitability of activities, and the level of business activity.

FEDERAL AGENCY FOR EDUCATION

State educational institution

higher professional education

"Tver State University"

(GOUVPO TVGU)

department accounting

Course work

on a comprehensive economic analysis financial and economic activities

Analysis of financial ratios

Completed: student of group 38

"Accounting, analysis and audit"

Kozlova Oksana Andreevna

Supervisor:

Fedorova Tatyana Nikolaevna

Tver 2009

Introduction…………………………….……………………………………...3

Chapter 1. Components of the analysis of financial ratios and indicators…….…………................................................... ..........................………...4

1.1 Information for financial analysis………………………

1.2 Concepts behind financial performance analysis…

1.3 System of financial indicators and ratios

Chapter 2. Analysis of financial ratios as an important tool for financial analysis…………………………………………………………

2.1 The essence of the analysis of financial ratios

2.2 Analysis of coefficients for assessing the efficiency of resource use……………………………………………………………………..

2.3 Limitations of ratio analysis……………………………………

Conclusion……………………………………………………….……….29

List of used literature……………………………………30

Introduction

The main task of financial analysis is to help financial managers make sound management decisions.

In this course work, you will get acquainted with the system of coefficients that are actively used in the practice of financial analysis. The relevance of the topic "Analysis of financial ratios" is that it is not easy to penetrate the essence financial documents, "read" them without the help of financial ratios, which today are recognized as the main means of financial analysis, which is why the analysis of financial ratios is an integral part of financial analysis.

aim term paper is the substantiation of the integrality of the analysis of financial ratios for an objective assessment of the financial condition of the enterprise, the assessment of financial stability, the solvency of the enterprise, the turnover of funds and their effective use.

The main task is not to give a simple descriptive story on this topic, but to reveal the essence of the analysis using specific examples, calculations, to describe what exactly these or other coefficients should be for normal operation enterprises, delimit the scope of this or that indicator depending on the scale of the enterprise and the relevance of this coefficient.

The course work consists of an introduction, two chapters, a conclusion and a list of references. The introduction reveals the relevance of the topic, purpose, tasks. The first chapter reveals economic content analysis of financial ratios, disclosed the components on the basis of which the analysis is carried out. In the second chapter, the main financial ratios are considered on specific examples, a conclusion is drawn for each example. In conclusion, conclusions are drawn on the topic.

Chapter 1. Components of the analysis of financial ratios and indicators

Financial analysis is carried out by companies not only to assess the current financial condition of the company, it also allows you to predict its further development. At the same time, analysts need to carefully consider the list of indicators that will be used to strategic planning.

A company's sustainable growth analysis is a dynamic analytical framework that combines financial analysis with strategic management to explain the critical relationships between strategic planning variables and financial variables, and to test the alignment of corporate growth objectives with financial policy. This analysis allows you to determine the presence of the company's existing opportunities for financial growth, to establish how financial policy companies will influence the future and analyze the strengths and weaknesses competitive strategies companies.

Any measures for the implementation of strategic programs have their cost. A necessary part of the planning and implementation of the strategy is the calculation of the necessary and sufficient financial resources that the company must invest.

1.1 Information for financial analysis

Financial analysis - a set of methods for determining the property and financial position economic entity in the past period, as well as its capabilities in the short and long term 1 . The purpose of financial analysis is to determine the most effective ways to achieve the profitability of the company, the main tasks are to analyze the profitability and assess the risks of the enterprise.

Analysis of financial indicators and ratios allows you to understand the competitive position of the company at the current time. Published reports and company accounts contain a lot of numbers, the ability to read this information allows analysts to know how efficiently and effectively their company and competing companies are working.

The ratios allow you to see the relationship between sales profit and expenses, between the main assets and liabilities. There are many types of ratios, and they are usually used to analyze the five main aspects of a company's performance: liquidity, equity ratio, asset turnover, profitability, and market value.

__________________________________

1 "Financial and Credit Encyclopedic Dictionary" (under the editorship of A.G. Gryaznova, M.: "Finance and Statistics", 2004)

Rice. 1. The structure of the company's financial indicators

The analysis of financial ratios and indicators is an excellent tool that provides an idea of ​​the financial condition of the company and competitive advantages and prospects for its development.

1. Performance analysis. The ratios allow you to analyze the change in the company's performance in terms of net profit, capital use and control the level of costs. Financial ratios allow you to analyze the financial liquidity and stability of an enterprise through the effective use of a system of assets and liabilities.

2. Evaluation of market business trends. By analyzing the dynamics of financial indicators and ratios over a period of several years, it is possible to study the effectiveness of trends in the context of the existing business strategy.

3. Analysis of alternative business strategies. By changing the indicators of the coefficients in the business plan, it is possible to analyze alternative options for the development of the company.

4. Monitoring the progress of the company. Having chosen the optimal business strategy, the company's managers, continuing to study and analyze the main current ratios, can see a deviation from the planned indicators of the development strategy being implemented.

Ratio analysis is the art of relating two or more measures of a company's financial performance. Analysts can see a more complete picture of the performance results in dynamics over several years, and additionally by comparing the company's performance with industry averages.

It is worth noting that the system of financial indicators is not a crystal ball in which you can see everything that was and will be. It's just a convenient way to summarize a large amount of financial data and compare the performance of different companies. By themselves, financial ratios help the company's management focus on the strengths and weaknesses of the company's activities, correctly formulate questions that these ratios can rarely answer. It is important to understand that financial analysis does not end with the calculation of financial indicators and ratios, it only begins when the analyst has completed their calculation.

The real utility of the calculated coefficients is determined by the tasks set. First of all, ratios provide an opportunity to see changes in financial position or results. production activities, help to determine the trends and structure of the planned changes; which helps management to see the threats and opportunities inherent in this particular enterprise.

The company's financial reports are a source of information about the company not only for analysts, but also for the company's management and a wide range of stakeholders. It is important for users of information on financial ratios to know the main characteristics of the main financial statements and the concepts of indicator analysis for effective ratio analysis. However, when conducting financial analysis, it is important to understand: the main thing is not the calculation of indicators, but the ability to interpret the results.

Analyzing financial indicators, it should always be borne in mind that the assessment of performance is based on historical data, and on this basis it may not be correct to extrapolate the future development of the company. Financial analysis should be directed to the future.

1.2 Concepts behind financial performance analysis

Financial analysis is used in the construction of budgets, to identify the causes of deviations of actual indicators from planned and correction of plans, as well as in the calculation of individual projects. The main tools used are horizontal (dynamics of indicators) and vertical (structural analysis of articles) analysis of reporting documents management accounting, as well as the calculation of coefficients. Such an analysis is carried out for all major budgets: BDDS, BDR, balance sheet, sales, purchases, inventory budgets.

The main features of financial analysis are the following:

1. The vast majority of financial indicators are of the nature relative values, which makes it possible to compare enterprises of different scale of activity.

2. When conducting financial analysis, it is important to apply a comparison factor:

compare the performance of the company in a trend for different periods of time;

compare the performance of this company with the average performance of the industry or with similar performance of enterprises within the industry.

3. For financial analysis, it is important to have a complete financial description of the company for selected periods of time (usually years). If the analyst has data for only one period, then there should be data on the balance sheet of the enterprise at the beginning and end of the period, as well as a profit statement for the period under consideration. It is important to remember that the number of balances for analysis should be one more than the number of profit reports.

Accounting management is important element analysis of financial ratios and indicators. The basic accounting equation expressing the interdependence of assets, liabilities and property rights is called the balance sheet:

ASSETS = LIABILITIES + EQUITY

1. Current assets include cash and other assets that must be converted to cash within one year (for example, publicly traded securities; receivables; notes receivable; working capital and advances).

2. Land property, fixed assets and equipment (fixed capital) include assets that are characterized by a relatively long service life. These funds are usually not intended for resale and are used in the production or sale of other goods and services.

3. Long-term assets include the company's investments in securities, such as stocks and bonds, as well as intangible assets, including: patents, costs of monopoly rights and privileges, copyrights.

Liabilities are usually divided into two groups:

1. Short-term liabilities include amounts of accounts payable that should be paid within one year; for example, accrued liabilities and bills payable.

2. Long-term obligations are the rights of creditors, which do not have to be realized within one year. This category includes obligations under a bonded loan, long-term bank loans, and mortgages.

Own capital is the rights of the owners of the enterprise. From an accounting point of view, this is the balance of the amount after deducting liabilities from assets. This balance is increased by any profit and reduced by any losses of the company.

Measures commonly considered by analysts include the income statement, balance sheet, measures of changes in financial position, and measures of changes in equity.

A company's income statement, also referred to as a profit and loss statement or income statement, summarizes the results of a company's options activity for a given period of time. reporting period time. Net income is calculated using the periodic accounting method used to calculate profits and costs. It is usually considered the most important financial indicator. The report shows whether the percentage of earnings on the company's shares for the reporting period decreased or increased after the distribution of dividends or after the conclusion of other transactions with the owners. The income statement helps owners assess the amount, timing and uncertainty of future cash flows.

The balance sheet and the income statement are the main sources of indicators used by companies. A balance sheet is a statement showing what a company owns (assets) and owes (liabilities and equity) as of a specific date. Some analysts refer to the balance sheet as a "picture of a company's financial health" at a particular point in time.

1.3 System of financial indicators and ratios

The total number of financial ratios that can be applied to performance analysis companies, - order two hundred. Usually, only a small number of basic coefficients and indicators are used and, accordingly, the main conclusions that can be drawn from them. For the purpose of a more streamlined consideration and analysis, financial indicators are usually divided into groups, most often into groups that reflect the interests of certain stakeholders (stakeholders). The main groups of stakeholders include: owners, management of the enterprise, creditors. At the same time, it is important to understand that the division is conditional and indicators for each group can be used by different stakeholders.

As an option, it is possible to streamline and analyze financial indicators by groups that characterize the main properties of the company's activities: liquidity and solvency; the effectiveness of the company's management; profitability (profitability) of activity.

The division of financial indicators into groups characterizing the features of the enterprise's activities is shown in the following diagram.

Rice. 2. The structure of the company's financial indicators

Let's consider in more detail the groups of financial indicators.

Operating costs indicators:

Analysis of operating costs allows you to consider the relative dynamics of the shares various kinds costs in the structure of the total costs of the enterprise and is an addition to the operational analysis. These indicators allow you to find out the reason for the change in the profitability of the company.

Indicators effective management assets:

These indicators make it possible to determine how effectively the company's management manages the assets entrusted to it by the company's owners. The balance can be used to judge the nature of the assets used by the company. At the same time, it is important to remember that these indicators are very approximate, because. in the balance sheets of most companies, a variety of assets acquired in different time are listed at original cost. Consequently, the book value of such assets often has nothing to do with their market value, this condition is further exacerbated by inflation and an increase in the value of such assets.

Another distortion of the current position may be related to the diversification of the company's activities, when specific types activities require the attraction of a certain amount of assets to obtain a relatively equal amount of profit. Therefore, when analyzing, it is desirable to strive for the separation of financial indicators for certain types of company activities or products.

Liquidity indicators:

These indicators allow you to assess the degree of solvency of the company on short-term debts. The essence of these indicators is to compare the value of the current debt of the company and its current assets, which will ensure the repayment of these debts.

Indicators of profitability (profitability):

They allow to evaluate the effectiveness of the use by the company's management of its assets. The efficiency of work is determined by the ratio of net profit, determined by different ways, with the amount of assets used to generate that profit. This group of indicators is formed depending on the focus of the study of effectiveness. Following the goals of the analysis, the components of the indicator are formed: the amount of profit (net, operating, profit before tax) and the amount of the asset or capital that form this profit.

Capital structure indicators:

Using these indicators, it is possible to analyze the degree of risk of a company's bankruptcy due to the use of borrowed financial resources. With an increase in the share of borrowed capital, the risk of bankruptcy increases, because. the company's liabilities increase. This group of coefficients is primarily of interest to existing and potential creditors of the company. The management and owners evaluate the company as a continuously operating business entity, creditors have a twofold approach. On the one hand, creditors are interested in financing the activities of a successfully operating company, the development of which will meet expectations; on the other hand, lenders estimate how strong the claim for repayment of the debt will be if the company experiences significant difficulties in repaying a long-term loan.

A separate group is formed by financial indicators that characterize the company's ability to service debt with funds received from current operations.

The positive or negative impact of financial leverage increases in proportion to the amount of borrowed capital used by the company. The risk of the creditor increases together with the growth of the risk of the owners.

Debt service indicators:

Financial analysis is based on balance sheet data, which is an accounting form that reflects the financial condition of the company at a certain point in time. Whichever coefficient characterizing the capital structure is considered, the analysis of the share of debt capital, in fact, remains statistical and does not take into account the dynamics of the company's operating activities and changes in its economic value. Therefore, debt service indicators do not give a complete picture of the company's solvency, but only show the company's ability to pay interest and the amount of the principal debt within the agreed time frame.

Market indicators:

These indicators are among the most interesting for company owners and potential investors. In a joint-stock company, the owner - the shareholder - is interested in the profitability of the company. This refers to the profit received due to the efforts of the company's management, on the funds invested by the owners. Owners are interested in the impact of the results of the company's activities on the market value of their shares, especially those freely traded on the market. They are interested in the distribution of their profits: how much of it is reinvested in the company, and how much is paid to them as dividends.

The main analytical goal of analyzing financial ratios and indicators is to acquire the skills of making managerial decisions and understanding the effectiveness of its work.

Chapter 2. Analysis of financial ratios as an important tool for financial analysis

The financial statements of an enterprise are the most objective source of information about the enterprise and the effectiveness of its activities, which is available to managers, investors and competitors. Investors on the basis of financial statements make a conclusion about the feasibility of investing in the company's shares. Published financial reports help competitors assess the relative strength of an enterprise in an industry.

Internally, financial statements are used to assess the strengths and weaknesses financial activities of the enterprise, its readiness to use the opportunities provided and the ability to withstand the threatening risks arising from external environment business, as well as the compliance of the results achieved by the enterprise with the expectations of its investors. It is necessary to compare the results of the enterprise with the results of its closest competitors and with industry average standards.

Analyzing past data is the first step in defining a company's financial strategy and setting clear goals for the future. Such an analysis creates some control over the activities of the enterprise in the future.

Financial ratios are relative indicators of the financial condition of the enterprise. They are calculated as ratios of absolute indicators of financial condition or their linear combinations. The analysis of financial ratios consists in comparing their values ​​with base values, as well as in studying their dynamics for the reporting period and for a number of years. The values ​​of indicators averaged over the time series are used as basic values. this enterprise relating to past financially favorable periods. In addition, theoretically substantiated or expertly obtained values ​​can be used as a basis for comparison. Such values ​​actually serve as standards for financial ratios, although the methodology for calculating them depending on the industry has not been created, since at present the set of relative indicators used to assess the financial condition of an enterprise has not been established. For an accurate and complete characterization of the financial condition, it is necessary to a small amount of indicators. It is only important that each of these indicators reflect the most significant aspects of the financial condition.

The system of relative coefficients can be divided into a number of characteristic groups:

Indicators for assessing the profitability of the enterprise.

Indicators for assessing the effectiveness of management or profitability.

Indicators for assessing market stability.

Indicators for assessing the liquidity of balance sheet assets as the basis of solvency.

2.1 The essence of the analysis of financial ratios

You need a simple tool that allows you to focus on the most important areas of the enterprise and compare performance various enterprises. One such tool is financial ratio analysis, which uses the calculation of financial ratios as a starting point for interpreting financial statements.

A ratio is the ratio of one indicator to another. The analysis of financial ratios is used to control the economic activities of the enterprise and to identify the strengths and weaknesses of the enterprise relative to competitors, as well as when planning the activities of the enterprise for the future.

The calculation of financial ratios focuses mainly on three key business areas:

profitability (managing the process of buying and selling);

use of resources (asset management);

investor income.

How to determine those opportunities that ensure the efficiency of the economic activity of the enterprise (that is, the highest return with the lowest possible investment and a reasonable degree of risk)? The answer to this question is given by such financial indicators as resource efficiency and profitability.

2.2 Ratio analysis as resource efficiency

Let's try to answer the following question: what is the volume of sales for each ruble invested by the investor in the reporting period under consideration?

Asset turnover ratio. The asset turnover ratio is calculated using the following formula:

Asset Turnover Ratio = Sales Volume /Total net assets

where, total net assets \u003d non-current assets + current assets - short-term liabilities.

The asset turnover ratio shows how much sales fall on each ruble invested by the investor in the reporting period under review.

Example 1. At the end of the financial year, the non-current assets of the enterprise are 100,000 rubles, current assets - 40,000 rubles, and short-term liabilities - 30,000 rubles. During the reporting financial year, the sales volume is 300,000 rubles. Let's determine the asset turnover ratio.

Total net assets \u003d 100,000 + 40,000 - 30,000 \u003d 110,000 rubles.

Then the asset turnover ratio \u003d 300,000 / 110,000 \u003d 2.73, that is, for each ruble invested by the investor, there is a sales volume of 2.73 rubles. in the reporting period under review.

The retailer's asset turnover ratio is always higher than that of the manufacturer, because the manufacturer needs to invest heavily in machinery and equipment (i.e., production is more capital intensive). A retailer sells goods made by someone else.

The asset turnover ratio can be influenced by changing either the volume of sales (using marketing activities), or the amount of invested capital (by changing the structure of the company's short-term capital or by changing investments in non-current assets).

Liquidity. Liquidity is an indicator of the company's ability to repay short-term liabilities at the expense of current assets. An enterprise is considered liquid if it has enough current assets to cover all short-term debt obligations.

Liquidity is analyzed using two financial ratios: the current liquidity ratio and the quick liquidity ratio.

The current liquidity ratio is calculated using the following formula:

Current liquidity ratio \u003d Current assets / Short-term liabilities

The current liquidity ratio shows the ratio between the value of the enterprise's current assets, which are liquid in the sense that they can be turned into cash in the next financial year, and the debt, which is due in the same financial year.

The optimal amount of liquidity is determined by the economic activity of the enterprise. For most industrial enterprises, the current liquidity ratio is kept at a relatively high level (about 1.25-1.85), since the stocks mainly consist of raw materials, semi-finished products and finished products. Therefore, if necessary, they are difficult to quickly implement at full cost.

Example 2. At the end of the financial year, the company's inventory is 30,000 rubles, accounts receivable - 15,000 rubles, cash - 5,000 rubles, and short-term liabilities - 55,000 rubles. Let us determine the current liquidity ratio.

Current assets \u003d Inventory + Accounts receivable + Cash on hand \u003d 30,000 + 15,000 + 5,000 \u003d 50,000 rubles.

Then the current liquidity ratio = 50,000 / 55,000 = 0.91.

We see that the company is illiquid, since in the event of the immediate repayment of all short-term obligations, in addition to the sale of all its current assets, it must find additional funds from other sources.

To pay off each ruble of short-term obligations, the company will be able to immediately mobilize 0.91 rubles. by selling stocks, collecting receivables and using cash, and 1 - 0.91 \u003d 0.09 rubles. will have to be brought in from outside.

Highly great importance the current liquidity ratio indicates the non-dynamic management of the enterprise. This can happen by overstocking or by extending credit to consumers for too long.

The main disadvantage of the current ratio is the assessment of the enterprise as if it were on the verge of liquidation. The current liquidity ratio reflects a static state and does not take into account the constantly occurring dynamic changes in the enterprise. For a more reasonable assessment of the creditworthiness of the enterprise, it is necessary to analyze the cash flow of the enterprise.

Quick liquidity ratio is calculated using the following formula:

Quick liquidity ratio = (Current assets - Stocks) / Short-term liabilities

The quick liquidity ratio shows how much of the debt can be repaid in short term at the expense of current assets, if the inventory is not possible to convert into cash. For industrial enterprise such an assumption is quite reasonable.

Accounts receivable turn into cash in a relatively short period of time. Therefore, most likely, all receivables will be repaid. But the passage of inventory through the production process, sale and transformation into accounts receivable can take a lot of time. And enterprising buyers will not miss the opportunity to purchase goods at reduced prices, taking advantage of the desperate situation of the seller.

The acceptable value of the quick liquidity ratio is in the range from 0.8 to 1.2.

Example 3. Let's determine the quick liquidity ratio based on the data of the previous example.

Current assets - Inventory \u003d Accounts receivable + Cash on hand \u003d 15,000 + 5,000 \u003d 20,000 rubles.

Then the quick liquidity ratio = 20,000 / 55,000 = 0.36.

We see that in the event of immediate repayment of all short-term obligations, if for some reason the enterprise cannot sell its reserves, it will have to attract from outside 1 - 0.36 = 0.64 rubles. for each ruble of short-term liabilities.

Very often, in practice, there is a situation when an enterprise with a constant current liquidity ratio has a decrease in the quick liquidity ratio. This suggests that inventory businesses are growing relative to receivables and cash.

Financial institutions that provide lending services have difficulty assessing the liquidity of inventories and feel more confident when dealing only with receivables and cash. Therefore, the quick ratio is more popular than the current ratio.

We will try to find the answer to the question of how profitable each sale is.

The profitability of an enterprise is the ratio of actual profit to sales volume. Using the profit and loss account, calculate two indicators of the profitability of the enterprise: net margin and gross margin.

Net margin is calculated using the following formula:

Net Margin = (Net Profit/Sales) x 100%

The net margin shows what share of sales remains with the company in the form of net profit after covering the cost of goods sold and all expenses of the enterprise. This indicator can serve as an indicator of the acceptable level of profitability, at which the company does not yet suffer losses. Net margin can be influenced pricing policy enterprises (gross margin and markup) and cost control.

Gross margin is calculated using the following formula:

Gross Margin = (Gross Profit/Sales) x 100%.

There is an inverse relationship between gross margin and inventory turnover: the lower the inventory turnover, the higher the gross margin; the higher the inventory turnover, the lower the gross margin.

Manufacturers must secure a higher gross margin than retail because their product is in storage for more time. manufacturing process. The gross margin is determined by the pricing policy.

Gross margin should not be confused with another pricing tool - the markup, which is calculated using the following formula:

Markup = (Gross profit / Cost of goods sold) x 100%.

When setting the margin, one should proceed from the desired strategic position of the enterprise relative to competitors. At one end of the market spectrum are businesses that provide high quality and prescribe high prices(that is, having a low sales volume). At the other end of the market spectrum are businesses that sell large volumes of goods at low prices.

Example 4. In April, sales amounted to 200,000 rubles. The cost of goods sold is 90,000 rubles, other expenses - 30,000. Let's determine the net margin, gross margin and markup.

Net margin = (net profit) / (sales) x 100% = [(200,000 - 90,000 - 30,000) / 200,000] x 100% = 40%. Therefore, out of every 1 rub. sales volume, net profit after covering the cost of goods sold and all expenses of the enterprise is 0.4 rubles.

Gross margin = (gross profit) / (sales) x 100% = (200,000 - 90,000) / 200,000 x 100% = 55%.

Markup = (gross profit) / (cost of goods sold) x 100% = (200,000 - 90,000) / 90,000 x 100% ≈ 122%.

Price discount (markdown). It is extremely important for wholesalers and retailers to understand the essence of not only margins, but also discounts. The percentage of the discount made from the price is calculated using the following formula:

Discount Percentage = Monetary Discount / Total Sales

Example 5. In March, 500 units of products were purchased for sale at a price of 10 rubles. In April-July, 300 units of products were sold at a price of 20 rubles. In early August, unsold goods were discounted to 15 rubles. for a unit. 100 units sold at this price. Determine the discount percentage.

The monetary amount of the discount is 100 x (20 - 15) = 500 rubles, and the total sales amounted to 300 x 20 + 100 x 15 = 7,500 rubles.

Then discount percentage = 500 / 7500 x 100% ≈ 6.7%.

2.3 Limitations of ratio analysis

Differences accounting policy enterprises, the principle of accounting at cost, the lack of acceptable comparable data, differences in the operating conditions of enterprises, changes in the purchasing power of money, intra-annual fluctuations in accounting information - all this imposes restrictions on the ability to analyze coefficients. In the analysis of the coefficients are not taken into account quality characteristics goods and services, work force, labor relations.

It is impossible to evaluate the entire set of considered coefficients as "bad" or "good" until a detailed analysis or comparison of these indicators with the previous results of the enterprise and with standard indicators for the industry as a whole is carried out. Therefore, one should be careful in interpreting financial indicators and not jump to conclusions without full information about the enterprise and the industry as a whole.

It is important to be able not only to calculate the coefficients, but also to interpret them correctly. Interpretation of financial ratios - hard work which requires analysts to be highly qualified and experienced. For there is no right or wrong interpretation - this is a creative and subjective process.

Although financial ratios are subject to the influence of conventions arising from the application of accounting calculations or valuation methods, but taken together, these indicators can form the basis for further analysis of the enterprise.

Conclusion

The financial condition of the enterprise is most fully characterized by financial ratios and are the most important indicators for assessing the production and financial activities of enterprises. Based on the calculations and analysis of financial ratios, we can conclude that each group of ratios reflects a certain aspect of the financial condition of the enterprise. We must not forget that relative financial indicators are only indicative indicators of the financial position of the enterprise and its solvency.

The main source for the calculation and analysis of financial ratios is form No. 1 "Balance sheet", form No. 2 "Report on financial results" and other forms of financial statements, as well as additional primary accounting data.

Financial ratios reflect the relationship between various reporting items (revenue and total assets, cost and amount of accounts payable, etc.).

The analysis procedure using financial ratios involves two stages: the actual calculation of financial ratios and their comparison with the base values. The industry average values ​​of the coefficients, their values ​​for previous years, the values ​​of these coefficients for the main competitors, etc. can be chosen as the basic values ​​of the coefficients.

The advantage of this method lies in its high "standardization". All over the world, the main financial ratios are calculated using the same formulas, and if there are differences in the calculation, then such ratios can easily be brought to generally accepted values ​​using simple transformations. In addition, this method makes it possible to eliminate the effect of inflation, since almost all coefficients are the result of dividing one reporting item into another, i.e., they are not studied absolute values appearing in the reporting, and their ratios.

Despite the convenience and relative ease of use this method, financial ratios do not always make it possible to unambiguously determine the state of affairs of the company. As a rule, a strong difference of a certain coefficient from the industry average value or from the value of this coefficient for a competitor indicates that there is an issue that needs more detailed analysis, but does not indicate that the enterprise definitely has a problem. A more detailed analysis using other methods may reveal the presence of a problem, but may also explain the deviation of the coefficient by the features of the economic activity of the enterprise, which do not lead to financial difficulties.

Various financial ratios reflect certain aspects of the activity and financial condition of the enterprise. They are usually divided into groups:

• * liquidity ratios. Liquidity refers to the ability of a company to repay its obligations on time. These ratios operate on the ratio of the values ​​of the company's assets and the values ​​of short-term and long-term liabilities;
• * coefficients reflecting the effectiveness of asset management. These coefficients are used to assess the compliance of the size of certain assets of the company with the tasks performed. They operate with such values ​​as the size of inventories, current and non-current assets, receivables, etc.;
• * coefficients reflecting the company's capital structure. This group includes coefficients that operate on the ratio of own and borrowed funds. They show from what sources the company's assets are formed, and how much the company is financially dependent on creditors;
• * profitability ratios. These ratios show how much income a company derives from its assets. Profitability ratios allow for a comprehensive assessment of the company's activities as a whole, according to the final result;
• * coefficients of market activity. The coefficients of this group operate with the ratio of market prices for the company's shares, their nominal prices and earnings per share. They allow you to assess the position of the company in the securities market.

Let us consider these groups of coefficients in more detail. The main liquidity ratios are:

• * current (total) liquidity ratio (Current ratio). It is defined as the quotient of the size of the company's working capital divided by the size of current liabilities. Current assets include cash, accounts receivable (net of doubtful debts), inventories and other quickly realizable assets. Current liabilities consist of accounts payable, short-term accounts payable, accruals on wages and taxes and other short-term liabilities. This ratio shows whether the company has enough funds to pay off current liabilities. If the value of this ratio is less than 2, then the company may have problems with the repayment of short-term obligations, expressed in delayed payments;
• * Quick ratio. At its core, it is similar to the current ratio, but instead of the full amount of working capital, it uses only the amount of working capital that can be quickly turned into money. The least liquid part of working capital is inventory. Therefore, when calculating the quick liquidity ratio, they are excluded from working capital. The ratio shows the company's ability to pay off its short-term obligations in a relatively short time. It is believed that for a normally functioning company, its value should be in the range from 0.7 to 1;
• * absolute liquidity ratio. This ratio shows how much of a company's short-term liabilities can be repaid almost instantly. It is calculated as the quotient of dividing the amount of cash in the company's accounts by the amount of short-term liabilities. Its value is considered normal in the range from 0.05 to 0.025. If the value is below 0.025, then the company may have problems paying off current liabilities. If it is more than 0.05, then, perhaps, the company is irrationally using free cash.

The following coefficients are used to assess the effectiveness of asset management:

• * Inventory turnover ratio. It is defined as the quotient of dividing the proceeds from sales for the reporting period (year, quarter, month) by the average value of stocks for the period. It shows how many times during the reporting period the reserves were transformed into finished products, which, in turn, was sold, and stocks were again acquired with the proceeds from the sale (how many “turns” of stocks were made during the period). This is the standard approach to calculating the inventory turnover ratio. There is also an alternative approach based on the fact that the sale of products occurs at market prices, which leads to an overestimation of the inventory turnover ratio when using sales proceeds in its numerator. To eliminate this distortion, instead of revenue, you can take the cost of goods sold for the period or, which will give an even more accurate result, the total cost of the enterprise for the period for the purchase of inventory. The inventory turnover ratio is highly dependent on the industry in which the company operates. For Internet companies, it is usually higher than for ordinary enterprises, since most Internet companies operate in the field of network trading or in the service sector, where turnover is usually higher than in manufacturing;
• * Total asset turnover ratio. It is calculated as the quotient of the division of the sales proceeds for the period by the total assets of the enterprise (average for the period). This ratio shows the turnover of all assets of the company;
• * turnover of receivables. It is calculated as the quotient of dividing the proceeds from sales for the reporting period by the average value of accounts receivable for the period. The coefficient shows how many times during the period the receivables were formed and repaid by buyers (how many "turns" of receivables were made). A more illustrative version of this ratio is the average receivables repayment period for buyers (in days) or the average collection period (ACP). To calculate it, the average receivables for the period are divided by average revenue from sales for one day of the period (calculated as revenue for the period divided by the length of the period in days). The ACP shows how many days, on average, it takes from the date of shipment of products to the date of receipt of payment. The practice of Internet companies that has developed in Russia, as a rule, does not provide for a deferred payment to customers. For the most part, Internet companies operate on a pre-paid or pay-at-delivery basis. Thus, for the majority of Russian network enterprises, the ACP indicator is close to zero. As the Internet business develops, this figure will increase;
• * Accounts payable turnover ratio. It is calculated as the quotient of the cost of goods sold for the period divided by the average value of accounts payable for the period. The coefficient shows how many times during the period accounts payable arose and was repaid;
• * Capital productivity ratio or fixed assets turnover (Fixed asset turnover ratio). It is calculated as the ratio of sales revenue for the period to the cost of fixed assets. The coefficient shows how much revenue for the reporting period was brought by each ruble invested in the company's fixed assets;
• * equity turnover ratio. Equity refers to the total assets of a company less liabilities to third parties. Equity capital consists of the capital invested by the owners and all profits earned by the company, less taxes paid out of profits and dividends. The coefficient is calculated as the quotient of the division of the proceeds from sales for the analyzed period by the average value of equity capital for the period. It shows how much revenue each ruble of the company's equity brought in for the period.

The capital structure of the company is analyzed using the following ratios:

• * the share of borrowed funds in the structure of assets. The ratio is calculated as the quotient of the amount of borrowed funds divided by the total assets of the company. Borrowed funds include short-term and long-term liabilities of the company to third parties. The ratio shows how dependent on creditors the company is. The normal value of this coefficient is about 0.5. In addition to this ratio, the financial dependence ratio is sometimes calculated, which is defined as the quotient of dividing the amount of borrowed funds by the amount of own funds. A level of this coefficient exceeding one is considered dangerous;
• * security interest payable, TIE (Time-Interest-Earned). The coefficient is calculated as the quotient of profit before interest and taxes divided by the amount of interest payable for the analyzed period. The ratio shows the company's ability to pay interest on borrowed funds.

Profitability ratios are very informative. Of these, the most important are the following:

• * Profit margin of sales. Calculated as a quotient of net income divided by sales revenue. The coefficient shows how many rubles of net profit each ruble of revenue brought;
• * return on assets, ROA (Return of Assets). Calculated as a quotient of net profit divided by the amount of assets of the enterprise. This is the most overall coefficient, which characterizes the effectiveness of the company's use of assets at its disposal;
• * return on equity, ROE (Return of Equity). Calculated as the quotient of net income divided by the amount of ordinary share capital. Shows profit for each ruble invested by investors;
• * coefficient of income generation, BEP (Basic Earning Power). It is calculated as the quotient of earnings before interest and taxes divided by the company's total assets. This coefficient shows how much profit per ruble of assets an enterprise would earn in a hypothetical tax-free and interest-free situation. The coefficient is convenient for comparing the performance of enterprises that are under different tax conditions and have a different capital structure (the ratio of own and borrowed funds).

The coefficients of the market activity of the enterprise allow assessing the position of the company in the securities market and the attitude of shareholders to the company's activities:

• * stock quote ratio, М/В (Market/Book). It is calculated as the ratio of the market price of a share to its book value;
• *Earnings per ordinary share. It is calculated as the ratio of the dividend per ordinary share to the market price of the share.