Introduction 3
1. Financial stability is the basis for the stability of an enterprise, the key to its survival. 5
1.1 The concept of financial stability, factors determining its level 5
1.2 Methods for assessing financial stability. 9
2. Current state of financial stability. 17
2.1. Organizational and economic characteristics of the enterprise. 17
2.2. Assessing the degree of independence from debt sources of financing 23
2.3 Analysis of the sufficiency of funding sources for the formation of reserves 28
3. Ways to strengthen financial stability. 32
3.1. Improving the use of resource potential is the main condition for strengthening financial sustainability. 32
3.2. Increasing profits and areas for improving its use 35
3.3. Improving calculation discipline.. 38
3.4 Justification of directions for strengthening financial stability. 40
Conclusions and suggestions. 46
List of used literature. 48
Applications……………………………………………………………………………….. 50
Introduction
The relevance of the topic of this work is due to the fact that financial stability serves as the basis for the strong position of a commercial organization. The higher the stability of the organization, the more independent it is from unexpected changes in market conditions and, therefore, the more less risk be on the verge of bankruptcy.
The financial stability of business entities is an integral component of economic stability, which, according to a widely held point of view, is understood as a certain ratio of own and borrowed financial resources accumulated for the needs of economic activity.
Definition of sustainability commercial relations necessary not only for the organizations themselves, but also for their partners who rightly want to have information about stability, financial well-being and the reliability of your customer or client. Therefore, an increasing number of counterparties are beginning to get involved in research and assessment of the financial stability of a particular organization.
The financial stability of an organization is characterized by the constant availability of funds in bank accounts in the required amounts, the absence of overdue loans, loans, receivables and payables, the optimal volume and structure of current assets, the acceleration of their turnover, a sufficient size equity and its effective use, rhythmic development of product output, turnover, profit growth, increased profitability, etc. Market business conditions force organizations to ensure the ability to urgently repay debts at any time. In this regard, the assessment of the financial stability of an organization is carried out primarily based on its solvency.
In trade more than in other industries national economy, commercial risk is possible, and therefore the importance of analyzing the financial stability of the organization increases.
The purpose of this work was the financial stability of the organization and ways to strengthen it.
To achieve the goal, the following tasks were formulated and solved:
The concept of financial stability and the factors that determine it are defined;
Methods for assessing financial stability are considered;
Estimated current state financial stability of the organization;
Ways to strengthen the financial stability of the organization are proposed and a justification for their effectiveness is made.
The object of the study is the trading organization Unitoys-Sibir LLC.
The subject of the study is the financial stability of the organization.
Financial stability is the basis for the stability of an enterprise, the key to its survival
The concept of financial stability, factors determining its level
Assessing financial stability is considered one of the priority areas financial analysis due to the fact that its task is to predict the stability of the enterprise’s activities, and, therefore, will be a prerequisite for the absence of financial problems in future periods.
For effective management financial stability, it is necessary to define its most accurate and complete concept. Since the definition of financial stability is an ambiguous characteristic of an organization’s activities, there are many definitions of financial stability in the domestic economic literature.
“Financial stability is one of the most important characteristics of assessing the financial condition of an organization,” consider V.G. Artemenko. and Ostapova V.V. .
Academician G.B. Polyak believes that “the financial stability of an organization is externally manifested through its solvency.”
A similar point of view is shared by a group of authors (V.G. Kogdenko, A.D. Sheremet, R.S. Saifulin and E.V. Negashev), in whose definition the essence of financial stability lies in the provision of current assets with long-term sources of formation, and solvency and liquidity is its external manifestation.
In particular, the opinion of Sheremet A.D. sounds like this: “the financial condition of an organization is characterized by the placement and use of funds (assets) and the sources of their formation (liabilities)”
Gilyarovskaya A. and Vekhoreva A. adhere to the same definition. “Financial stability is the guaranteed solvency and creditworthiness of an enterprise as a result of its activities based on the effective formation, distribution and use of financial resources. At the same time, this is the provision of reserves with its own sources of their formation, as well as the ratio of own and borrowed funds - sources of covering the assets of the enterprise."
Abryutina M.S. states that “financial stability characterizes the structure of the property (capital) of the enterprise as a whole and comprehensively expresses both the production and financial potential of a given economic entity.”
Lieberman K. believes that “financial stability is an integral part of the overall stability of the enterprise, the balance of financial flows, the availability of funds that allow the organization to maintain its activities for a certain period of time, including servicing received loans and producing products. It largely determines the financial independence of the organization. Financial stability is an indicator of solvency over a long period of time."
Summarizing the above-voiced opinions of economists, the author of this work believes that the following definition most fully, comprehensively and accurately reveals the essence of financial stability: financial stability is such a state of its financial resources, their formation, distribution and use, in which the enterprise remains solvent and creditworthy , has the opportunity, with a balanced attraction of own and borrowed funds, to actively invest and increase working capital, create financial reserves, thereby ensuring its development and profit.
One of the main tasks of analyzing the financial and economic condition of an enterprise is to study indicators characterizing its financial stability. It is determined by the degree of provision of inventories and costs by own and borrowed sources of their formation, the ratio of the volumes of own and borrowed funds and is characterized by a system of absolute and relative indicators. Sustainability serves as a guarantee of survival and the basis for the stability of an enterprise’s position, but can also contribute to the deterioration of its financial condition under the influence of external and internal factors. Financial stability is a reflection of a stable excess of income over expenses, ensures free maneuvering of the enterprise’s funds and, through their effective use, contributes to the uninterrupted process of production and sales of products.
Thus, financial stability is the result of the presence of a certain safety margin that protects the enterprise from accidents and sudden changes in external factors.
Practice shows that the stability of enterprises is associated with the availability of financial resources and their structure, the degree of their dependence on creditors and investors. If the structure “equity - borrowed funds” is skewed towards debt, then such an enterprise may go bankrupt and cease to exist.
The financial stability of an organization is influenced by a number of factors that can be divided:
By place of origin - external and internal;
According to the importance of the result - into major and minor;
By structure - simple and complex;
According to the time of action - permanent and temporary.
The analysis focuses on internal factors that depend on the activities of an economic entity, which it has the ability to influence, adjust their impact and, to a certain extent, manage them.
Internal factors include:
Industry affiliation of the organization;
Structure of products (services), range of goods, their share in total effective demand;
Amount paid authorized capital;
The amount of costs, their dynamics compared to cash income;
The state of property and financial resources, including stocks and reserves, their composition and structure.
TO external factors include the influence of economic conditions of business, the prevailing technology and technology in society, effective demand and the level of income of consumers, the government's tax credit policy, legislative acts to control the activities of the organization, foreign economic relations, the value system in society, etc. The economic entity does not influence these factors able, he can only adapt to their influence.
Sheremet A.D. believes that “the main factors determining the financial condition are: firstly, the implementation of the financial plan and replenishment as the need arises for one’s own working capital due to profit and, secondly, the turnover rate of current assets. The signal indicator in which the financial condition is manifested is the solvency of the organization, which means its ability to timely satisfy the payment requirements of suppliers in accordance with business contracts, repay loans, pay staff, make payments to budgets and extra-budgetary funds.”
Loss of financial stability means that this enterprise in the future, bankruptcy awaits with all the ensuing consequences, including its liquidation, if prompt and effective measures are not taken to restore financial stability.
The problem of financial sustainability of enterprises operating in a market economy is one of the most important not only financial, but also general economic problems. Indeed, the importance of the financial stability of individual economic entities for the economy as a whole is very great. The effective uninterrupted functioning of economic entities, as individual elements of a single, aggregated economic mechanism, ensures its normal, smooth operation. The deterioration of the financial condition of an individual enterprise will inevitably lead to disruptions in the functioning of the economic mechanism. Insolvency has a negative impact on the dynamics of production and manifests itself in the form of a reduction in effective demand for production resources, an increase in overdue debts to suppliers, budgets of various levels, off-budget funds, employees of enterprises for wages, banks, dividend payments to owners, etc.
The above allows us to conclude that the financial stability of an enterprise plays an extremely important role in ensuring sustainable development of both individual enterprises and society as a whole.
The essence of financial stability is determined by the effective formation, distribution and use of financial resources, which ensures the development of the enterprise based on the growth of profits and capital while maintaining solvency and creditworthiness under acceptable risk conditions.
Financial stability is one of the characteristics of the financial condition of an organization and is determined by many factors. Among them are factors external environment, the level of diversification of the organization’s activities, the quality of management, the balance of financial flows, the presence of a well-thought-out development strategy.
In general, the financial stability of an organization is characterized by its independence from external sources of financing and means such a state of financial resources, their distribution and use, which ensures the development of the organization based on the growth of profits and capital while maintaining solvency.
Financial sustainability means:
1) balance of financial flows due to a stable excess of income over expenses;
2) free maneuvering in cash and them efficient use;
3) uninterrupted process of production and sales of goods, works, services.
As noted above, financial stability is influenced by internal and external factors.
External factors include:
– economic conditions of business, which are determined by the level of development of institutions – legislative, financial, economic, social, etc.;
- dominant technology in society (technological structure);
– level of effective demand. Keynes also noted that during periods of economic instability, the population holds back their savings. Keynes called this phenomenon a “liquidity trap.”
– tax and monetary policy of the state. Excessive tax burden may undermine the financial stability of the organization. However, the increase in tax rates cannot be unlimited. At one time, Laffer introduced such a concept as the “prohibitive area of tax rates,” which is characterized by a decrease in tax revenues to the centralized monetary funds of the state. Excessive tax burden is holding back positive development economic entities, leads to a shortage of financial resources, reduces the level of return on capital, prevents intensively expanded reproduction on an intensive basis and generally has a negative impact on the level of competitiveness. In turn, high interest rates on commercial loans make their attraction for the organization excessively expensive, which complicates the implementation investment projects oriented towards business development;
– the level of development of foreign economic relations, which largely contributes not only to the expansion of sales markets, but also determines the possibility of an organization acquiring equipment and technologies that have no analogues on the domestic market;
– industry affiliation of the organization. For organizations whose activities are mono-oriented (for example, the extraction of raw materials or their processing) high risks development. The well-being of an organization largely depends on demand and prices in domestic and foreign markets for raw materials.
– the level of consumer income, which is largely determined by well-being at the micro level and is closely related to the above factors.
Internal factors affecting financial stability include:
– competitiveness and structure of products, its share in total effective demand;
– the size and structure of the organization’s income and expenses, their ratio;
– condition and structure of property;
– structure of the organization’s capital (own and borrowed) and the efficiency of its use;
– the competence and professionalism of managers, the flexibility of their economic and financial policies, focused on a strategic perspective and the ability to respond to changing factors in the internal and external environment, etc.;
The role and significance of the financial stability of an enterprise
Demchuk Oleg Vladimirovich,
Doctor of Economic Sciences, Associate Professor,
Guminsky Vladimir Valentinovich ,
master's student
Kerch State Marine Technological University.
Financial stability can be considered one of the most important indicators of the stability of an organization. We can talk about financial sustainability if the level of income of an organization exceeds the level of its expenses. If an organization is able to freely manage its money and use it effectively, if it has an established mechanism for the constant production and sale of services or goods, then such an organization can be considered financially stable.
The financial stability of an enterprise, first of all, reflects its internal content, all its financial and commodity flows, income and expenditure parts and sources of formation of its own financial resources.
A stable financial position of a business entity is achieved through such values as equity capital, level of profitability, and investment flows. At the same time, the enterprise must have a flexible capital structure, and the movement of capital must occur in such a way that the income of a business entity is always higher than its expenses, since only in this case can the enterprise be solvent and have all the conditions for the process of self-reproduction.
The financial stability of an enterprise is directly related to the placement of its assets and the sources of their formation. This is due to the fact that a business entity must have funds for self-financing. This indicator reflects his autonomy and independence. But it should be noted that it is not always advisable to carry out your financial and economic activities with your own funds, since in some periods there will be reserves of assets, and in others they will not be enough. It should also be borne in mind that if the costs of attracting assets are small, and a business entity can provide a higher level of profitability in the use of assets than the payment for them, then using the attracted assets significantly increases the return on equity.
A sufficient share of equity capital means that borrowed sources of financing are used by the enterprise only to the extent that it can ensure their full and timely repayment. From this point of view, short-term liabilities should not exceed the value of liquid assets. IN in this case liquid assets are not all current assets that can be quickly converted into money without significant loss of value compared to the balance sheet, but only a part of them. Liquid assets include inventories and work in progress. Their conversion into money is possible, but it will disrupt the smooth operation of the enterprise. We are talking only about those liquid assets, the transformation of which into money is a natural stage of their movement. In addition to cash and financial investments themselves, this includes accounts receivable and inventories finished products intended for sale.
Under the influence of internal and external factors, the financial condition of an enterprise is constantly changing, therefore neither the enterprise itself nor market participants are satisfied with discrete reporting data on the financial condition of the enterprise. They also need to know the qualitative characteristics of the financial state, that is, how stable it is over time, how long it can persist under the influence of internal and external factors, and what proactive measures need to be taken to maintain this normal state or to exit the pre-crisis or crisis state.
The financial condition of an organization can be assessed both in the long term and in the short term. For the short term, the priority characteristics for assessment will be the organization’s mobility and its solvency. For the long term, the financial stability of the organization is more important.
Financial stability is the ability of an organization to maintain its existence and uninterrupted operation, thanks to the availability of certain available funds and balanced financial flows. In addition to producing certain products or providing services, the organization’s activities should also include servicing received loans. Financial sustainability means that an organization will be solvent for a long time.
Financial stability is assessed based on absolute and relative indicators.
Absolute indicators – the state of financial reserves, as well as the sources covering them.
During the operation of the enterprise, its reserves are constantly replenished through the use of working capital and borrowed funds (various loans and borrowings). In order to find out the sources that form reserves, you need to have information about the availability of the enterprise’s own money, about the availability of sources from which the enterprise borrows funds. The size of the main sources from which reserves are formed (own sources of financing, deficiencies or surpluses of working capital, the size of these sources of coverage) should be taken into account.
Relative indicators provide analysts with a basis for research. Working with relative indicators of financial stability - an analytical method. This also includes analytics of expenses, budget and balance.
In this case, the main indicators that provide material for analysis are: financial leverage and financial independence ratios. Also, this includes the coefficient of own funds and the coefficient of maneuverability, the coefficient of mobility of property, the coefficient of investment coverage. Inventory coverage ratio and short-term debt ratio are also considered important indicators.
There are three types of financial stability:
Normal financial stability is characterized by the absence of non-payments and the reasons for their occurrence, that is, the operation of the enterprise is highly or normally profitable;
An unstable financial condition is characterized by delays in wages, interruptions in the flow of money to current accounts and payments, unstable profitability, and failure to meet the profit plan;
The financial crisis is characterized by the presence of regular non-payments, overdue loans to banks, overdue debts from suppliers for goods, and arrears to budgets. A crisis financial condition can lead to the economic insolvency of an enterprise, which is understood as its inability to finance current operating activities and pay off urgent obligations. This condition may result in the bankruptcy of the enterprise.
Literature
1. Sheremet A. Methodology of financial analysis of activities commercial organizations. M.: Infra-M. – 2005.– 237 p.
2. Demchuk O. V. Sushko N. A. Economics of fisheries: Textbook - Simferopol: DIAIP 2013. - 311 p.
3. Grachev A.V. Financial stability of the enterprise: Analysis, assessment and management. Study guide. M.: Economics. 2004. – 192 p.
Financial stability
Financial stability- an integral part of the overall sustainability of the enterprise, the balance of financial flows, the availability of funds that allow the organization to maintain its activities for a certain period of time, including servicing received loans and producing products. It largely determines the financial independence of the organization. Financial stability is a forecast of the solvency indicator over a long period of time. In contrast, creditworthiness is an indicator that is important not to external, but to internal financial services. Financial stability and its assessment are part of financial analysis in an organization. In order to analyze the financial stability of an enterprise, certain indicators are used.
Types of financial stability
Depending on the industries, structures within enterprises, their market position, financial policies and other aspects, organizations have different financial stability. However, there are main types of stability:
- Absolute financial stability
shows that inventories and costs are fully covered by own working capital.
- Normal financial stability
the enterprise makes optimal use of credit resources, current assets exceed accounts payable.
- An unstable state is characterized by a violation of the ability to pay: the enterprise is forced to attract additional sources to cover inventories and costs, and there is a decrease in production profitability
- Crisis financial condition on the verge of bankruptcy
This classification is explained by the level of coverage of borrowed funds by own funds, the ratio of own and borrowed capital to cover inventories.
Financial stability ratios
Financial stability coefficients characterize the state and dynamics of financial resources of enterprises from the point of view of their provision of the production process and other aspects of their activities.
Liquidity and Solvency
Ratios characterizing the solvency of the debtor 2. Absolute liquidity ratio. The absolute liquidity ratio shows what part of short-term liabilities can be repaid immediately, and is calculated as the ratio of the most liquid current assets to the debtor's current liabilities. 3. Current ratio. The current liquidity ratio characterizes the organization's provision of working capital to conduct business activities and timely repay obligations and is defined as the ratio of liquid assets to the debtor's current liabilities. 4. An indicator of the security of the debtor's obligations with its assets. The indicator of the security of the debtor's obligations with its assets characterizes the amount of the debtor's assets per unit of debt and is defined as the ratio of the amount of liquid and adjusted non-current assets to the debtor's liabilities. 5. Degree of solvency for current obligations. The degree of solvency for current obligations determines the current solvency of the organization, the volume of its short-term borrowed funds and the period of possible repayment by the organization of current debts to creditors from proceeds. The degree of solvency is determined as the ratio of the debtor's current obligations to the average monthly revenue. Coefficients characterizing the financial stability of the debtor 6. Coefficient of autonomy (financial independence). The autonomy (financial independence) coefficient shows the share of the debtor’s assets that are provided with its own funds, and is defined as the ratio own funds to total assets. 7. Provision ratio of own working capital (share of own working capital in current assets). The coefficient of provision with own working capital determines the degree of provision of the organization with its own working capital, necessary for its financial stability, and is calculated as the ratio of the difference between own funds and adjusted non-current assets to the value of current assets. 8. Share of overdue accounts payable in liabilities. The share of overdue accounts payable in liabilities characterizes the presence of overdue accounts payable and its share in the total liabilities of the organization and is determined as a percentage as the ratio of overdue accounts payable to total liabilities. 9. The ratio of accounts receivable to total assets. The ratio of receivables to total assets is defined as the ratio of the sum of long-term receivables, short-term receivables and potential current assets subject to return to the total assets of the organization. Coefficients characterizing the debtor's business activity 10. Return on assets. Return on assets characterizes the degree of efficiency in the use of the organization's property, the professional qualifications of the enterprise's management and is determined as a percentage as the ratio of net profit (loss) to the total assets of the organization. 11. Net profit rate. The net profit rate characterizes the level of profitability of the organization's economic activities. The net profit margin is measured as a percentage and is defined as the ratio of net profit to revenue (net).
Notes
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- Financial innovation
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See what “Financial stability” is in other dictionaries:
financial stability- sustainable financing - [English-Russian glossary of basic terms on vaccinology and immunization. World Health Organization, 2009] Topics vaccinology, immunization Synonyms sustainable financing EN financial... ...
Characteristics of the level of risk of the enterprise’s activities in terms of balance or excess of income over expenses. In English: Financial stability See also: Solvency Financial Dictionary Finam... Financial Dictionary
Financial stability of the enterprise- characterization of the level of risk of the enterprise’s activities in terms of balance or excess of income over expenses. Dictionary of business terms. Akademik.ru. 2001 ... Dictionary of business terms
financial stability of the company- Characteristics of the level of risk of the company’s activities in terms of balance or excess of income over expenses. Topics: economics EN financial stability… Technical Translator's Guide
FINANCIAL STABILITY OF INSURANCE OPERATIONS- the insurer’s ability to maintain a balance between income from insurance activities and costs of fulfilling obligations to policyholders. At the same time, income from investments. activities are taken into account only in that part of them, to paradise in advance... Financial and credit encyclopedic dictionary
FINANCIAL STABILITY OF THE ISSUER- the ability of the issuer of shares (bonds) to ensure growth in profits and capital while maintaining solvency and creditworthiness under an acceptable level of risk... Foreign economic explanatory dictionary
Absolute financial stability of the company- (enterprises)(Absolute financial stability) - a situation in which own working capital enterprises fully ensure the formation of reserves and the implementation of any necessary types of costs (for the near future) ... Economic-mathematical dictionary
absolute financial stability- A situation in which the enterprise’s own working capital fully ensures the formation of reserves and the implementation of any necessary types of expenses. [OAO RAO "UES of Russia" STO 17330282.27.010.001 2008] Topics economics EN... ... Technical Translator's Guide
absolute financial stability of the company (enterprise)- A situation in which the enterprise’s own working capital fully ensures the formation of reserves and the implementation of any necessary types of expenses (for the near future). Topics: economics EN absolute… … Technical Translator's Guide
Enterprise sustainability- - ability to function effectively in the changing conditions of a competitive market environment (production and technical, supply and sales, financial stability, etc.) ... Commercial power generation. Dictionary-reference book
Books
- Financial stability of the enterprise. Criteria and methods of assessment in a market economy, Alexey Grachev. In the present textbook factors are substantiated, criteria and methods for assessing the financial stability of an enterprise are developed. A special place is given to modeling financial stability...
- Ibragimov Rashad Nazim Ogly, master's degree, graduate student
- Altai State University
- TASKS
- RESOURCES
- PROFIT
- SOLVENCY
- FINANCIAL STABILITY
- ENTERPRISE
- SUSTAINABILITY FACTORS
This article discusses the problems of the essence of financial stability and its main factors. The author analyzed characteristic features concepts of financial sustainability. The opinions of various authors on the essence and content of financial sustainability are also considered. The main tasks of financial stability analysis are identified and justified. Internal and external factors of financial stability are disclosed and systematized. Based on the analysis, the author proposes to highlight the influence of internal and external factors, as a result of which they can weaken the financial stability of the enterprise and reduce its solvency, especially if the influence of internal factors is complemented by interaction with external ones and vice versa.
- Analysis of the fiscal policy of the Russian Federation in 2018 and the main issues of its improvement
- Comprehensive assessment of indicators for energy efficiency management of the fuel and energy complex
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- Organization of children's recreation and recreation services in the Ryazan region
Financial stability- this is the main component of the overall sustainability of the organization, since it is a characteristic indicator of a stable excess of income over expenses. Solvency and financial stability are two interrelated categories. An insolvent enterprise cannot be financially stable, but a financially stable enterprise must be solvent. A study of economic literature has shown that in domestic theory and practice a unified approach has not yet been established either to the definition of the concept of “financial stability” or to methods of analysis.
The financial stability of an enterprise is the ability of a business entity to function and develop, to maintain a balance of its assets and liabilities in a changing internal and external environment. A stable financial position is achieved with sufficient equity capital, good quality assets, sufficient level of profitability, stable income. To ensure financial stability, an enterprise must have a flexible capital structure and be able to organize its movement in such a way as to ensure a constant excess of income over expenses in order to maintain solvency and create conditions for self-financing. The financial condition of an enterprise, its sustainability and stability depend on the results of its production, commercial and financial activities.
Table 1. Systematization of definitions of financial stability
Definition |
|
|
HELL. Sheremet, R.S. Saifulin |
Financial stability of an enterprise as a certain state of the enterprise’s accounts, guaranteeing its constant solvency |
Gilyarovskaya L.T. |
Financial stability is a goal-setting property of financial analysis, and the search for goal-setting opportunities, means and ways to strengthen it has a deep economic meaning and determines the nature of its implementation and content |
Savitskaya G.V. |
The financial stability of an enterprise is the ability of a business entity to function and develop, maintain a balance of its assets and liabilities in a changing internal and external environment, guaranteeing its constant solvency and investment attractiveness within the acceptable level of risk |
The main objectives of analyzing the financial stability of an enterprise are:
- timely and objective diagnosis of the financial condition of the enterprise;
- searching for reserves for improving the financial condition of the enterprise, its solvency and financial stability;
- development of specific recommendations aimed at more efficient use of financial resources;
- forecasting possible financial results.
In conditions market economy The financial independence of the enterprise from external borrowed sources becomes very important. The stock of sources of own funds is the stock of financial stability of the enterprise, provided that its own funds exceed borrowed funds. Financial stability is formed in the process of all economic activities of the organization and is a reflection of a stable increase in income over expenses. It ensures free maneuvering of the company’s funds and contributes to the smooth process of selling goods.
Consequently, the financial stability of an economic entity is a state of its monetary resources that ensures the development of the enterprise primarily at the expense of its own funds while maintaining solvency and creditworthiness with a minimum level of business risk. It is important that the state of financial resources meets the requirements of the market and meets the development needs of the enterprise, since insufficient financial stability can lead to the insolvency of the enterprise and a lack of funds for the development of production, and excess financial stability can hinder development, burdening the enterprise’s costs with excess inventories and reserves.
Another manifestation of dynamic stability is creditworthiness. So, highest form The sustainability of an enterprise is its ability to develop in the conditions of the internal and external environment. To do this, it must have a flexible structure of financial resources and the ability, if necessary, to attract borrowed funds, that is, be creditworthy. An organization is creditworthy if it has the prerequisites for obtaining a loan and the ability to promptly repay the loan taken with the payment of interest due from profits or other financial resources. At the expense of profits, the enterprise not only fulfills its obligations to the budget, banks, and other enterprises, but also invests funds in capital costs.
Using profits, the company not only repays loan debt to banks and income tax obligations to the budget, but also invests funds in capital costs. To maintain financial stability, it is necessary to increase not only the absolute amount of profit, but also its level relative to invested capital or operating costs, i.e. profitability. It should be kept in mind that high returns come with a significant level of risk. In practice, this means that instead of profit, the company may suffer significant losses and even become insolvent (insolvent).
The financial stability of an enterprise is influenced by many factors:
- the position of the enterprise in the commodity and financial markets;
- production and sale of competitive and in-demand products;
- his rating in business cooperation with partners;
- degree of dependence on external creditors and investors;
- availability of solvent debtors;
- the magnitude and structure of production costs, their relationship with cash income;
- the amount of paid authorized capital;
- efficiency of commercial and financial transactions;
- the state of property potential, including the ratio between non-current and current assets;
- level of professional training of production and financial managers, their ability to constantly take into account changes in the internal and external environment.
Other factors also influence:
- Inflation. Rising inflation in the country has a negative impact on the financial stability of the organization.
- Creditor requirements. When creditors simultaneously demand repayment of debts, an organization, even the most financially stable, can have the most unexpected consequences for itself, including bankruptcy.
- Debtors' bankruptcy. In this case, the organization will not be able to collect its debts.
- Changes tax system. If a country experiences an increase tax payments, and enterprises are unable to pay them, this can ultimately reduce the financial stability of the enterprise.
- Economic policy of the state. Depending on what economic policy The state leads: whether it reduces taxes, whether it encourages domestic producers, what measures it takes to improve the quality of products - financial stability depends.
- Quality of products. If the product is produced high quality, therefore, its purchasing power will increase, which will have a positive impact on financial condition organizations.
- Fluctuations in exchange rates. It mainly concerns enterprises that have foreign currency in stock, carry out foreign exchange transactions, etc.
- Seasonality of cash flows. At some enterprises, the main cash flows occur at some time of the year.
Thus, you can create a table of internal and external factors of financial stability.
Table 2. Factors of financial stability of an enterprise
Factors |
|
Domestic |
External |
|
|
External factors do not depend on the enterprise, due to which it is not able to influence them and must adapt to them. Internal factors are considered dependent, therefore the enterprise, by influencing them, is able to adjust its financial stability. The group of external factors affecting the solvency of an enterprise includes the focus on demand for imports, the weakness of the legal regime, cost inflation, contradictory government financial policies, excessive tax burden, budget underfunding, state or municipal participation in the capital of the enterprise.
Internal factors that have a destabilizing effect on the finances of an enterprise include an imbalance in the functional and managerial configuration, uncompetitiveness of products, low-intensity marketing, unprofitable business, depreciation of fixed assets, suboptimal debts and inventories, fragmentation of the authorized capital.
Thus, the influence of the listed factors can weaken the financial stability of the enterprise and reduce its solvency, especially if the influence of internal factors is complemented by interaction with external ones and vice versa.
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