Express assessment of financial condition according to the balance...

Express assessment of financial position according to balance sheet data

Analysis of the financial situation begins with an express assessment of the main items of the balance sheet. The most important condition for it is the ability to "read balance.

Reading the balance sheet - the process of quantitative characteristics of the main indicators, the structure of the balance sheet, the dynamics of the amounts by sections, individual articles. As a result, the general parameters of the financial state of the organization are established. Express analysis allows you to determine the undesirable ratios for certain groups of indicators, the emerging negative trend of development of certain aspects of financial and economic activity, identify bottlenecks.

Express analysis can be carried out directly on the balance sheet or with the adjustment of balance sheet items to the inflation index.

The general principle of the rapid analysis is to compare the sections and articles of the balance sheet, determine and assess the structure, the dynamics of capital and sources of funding.

The analysis begins with the characteristic of the trend of the total value of the organization's assets equal to the sum of sections 1 and II of the balance sheet. The decrease in the total value of property (capital) in absolute terms over the reporting period indicates a reduction in economic turnover, the consequences of which may be insolvency, lack of funds to finance current activities, a drop in production. But the increase in the currency of the balance sheet should not always be assessed positively: it is necessary to find out what the growth was due to. If the recovery is caused only by the revaluation of fixed assets or the rise in price of finished goods as a result of inflation, this indicates a decline in production activity. Minimization of the main economic activity may be due to internal and external reasons, such as, for example, reducing the sustainable solvent demand for goods, services, the work of this organization, breaking ties with raw material suppliers or restricting access to relevant commodity markets, marketing strategy errors, portfolio of orders, reduction of market share, change of activities, restructuring of production, etc.

The causes of negative changes are established by comparing the growth rates of sales revenue and profits with the growth rate of assets. If the rate of change in revenue, profit before tax and net profit is lower than the rate of change in non-current and current assets, this is a clear sign of a decline in overall performance and deterioration of the financial and economic situation, an increase in production costs caused by internal causes of inefficient use of the company's resource potential. Excess of growth rates of the cost price in relation to proceeds conducts to decrease in profit and finally to reception of the loss.

The cost of immobilized ( i.e. . non-current) funds ( assets) is equal to the result of Section I of the balance sheet. Before evaluating individual items, it is necessary to pay attention to the ratio of the growth rates of working capital and non-current capital. Exceeding growth of current assets testifies to the formation of a more mobile asset structure that facilitates the acceleration of the turnover of all capital, and hence, the strengthening of the financial situation in the short term.

In the structure of non-current assets, attention needs to be paid to changing the following articles.

Increase in the share of long-term financial investments in non-current assets , on the one hand, indicates investment activity, and on the other hand, diversion of funds from the main production activities. An objective assessment of this article can be given in comparison with other items of current assets. The availability of free funds from the enterprise allows us to characterize

increase the article in question as a positive moment.

The cost of mobile (negotiable) funds is equal to the result of section II of the balance sheet. The growth of current assets characterizes the organization as actively developing, which increases production opportunities. However, the increase in current assets may be due to a price rise on products, raw materials, materials. The growth of current assets may cause a slowdown in turnover, if their increase was due to an increase in less mobile tangible assets (raw materials, materials), long-term receivables.

The cost of tangible working capital in the row "Reserves." Depending on the ratio of changes in individual lines within material circulating assets (stocks), you can obtain information, for example, on reducing or increase in the production cycle for the change in the cost item in the work in progress, the possible sales volumes in the line "Finished goods and goods shipped" and so on

The evaluation of the structure of current assets is carried out from the position of a decrease or increase in liquidity as an indicator that characterizes the financial situation at the current time. The low liquidity of assets is indicated by a small share of current assets (15-20%) in the value of property, as well as the irrational ratio of low liquid and highly liquid items, for example, production stocks and cash, respectively. The increase in the share of production reserves has two appraisal sides: it can talk about increasing production, as well as about an ill-conceived economic strategy that leads to a significant redistribution of financial assets in insufficiently liquid assets, to an increase in inventory. However, such decisions may be dictated by the desire to protect money from the impact of inflation by investing in this article.

In the rapid analysis draw attention to the extremely low proportion of cash in current assets. This may be a consequence of their deficit, imbalance in the budget, which, in turn, creates a certain financial tension and testifies to the lack of available cash and the impossibility of immediate repayment of urgent obligations. At the same time, under inflation, a large share of cash indicates an ineffective financial policy that leads to depreciation of funds in the cash register and on settlement accounts.

When analyzing accounts receivable, it is necessary to avoid unambiguous estimates, since changes on this line can both be positive and indicate a whole range of negative consequences. With increasing debt, actual immobilization (diversion) of a part of working capital from the production process occurs when the enterprise sells its finished products on credit. The growth of accounts receivable may also indicate an active sales policy, an increase in sales volumes. The increase in the doubtful return of receivables will be unambiguously assessed as a negative fact directly affecting the solvency of the organization.

The initial data of the rapid analysis was the information base, compiled according to the balance sheet data of OOO "Home Appliances". (Annex 1). The results of the study are presented in Table. 11.1 and 11.2.

On the example of the company LLC "Home Appliances" The results of the express analysis of property for non-current and current assets are set out in Table. 11.2.

Express analysis of the passive part of the balance sheet is carried out using the same methods and approaches. First, the rates of growth of own and borrowed capital are compared: exceeding the growth of attracted sources in comparison with own funds indicates an increasing dependence of the organization on external borrowings, on deteriorating solvency.

As part of its own funds there is no undistributed profit, reserve capital, accumulation fund is evidence of a low level of self-financing of the enterprise, i.e. there are no sources that are formed due to the results of their own financial and economic activities.

In a situation where the sources of property financing are own funds (90-97%), which are replenished only by increasing the revaluation of the bases -

pysh funds, there is no reason to talk about a real increase in equity.

In the structure of borrowed capital, the increase in the share of long-term " liabilities testifies to the "improvement of the quality of the aggregate borrowed capital, since the duration of the attracted funds ensures a stable level of financial stability."

Growth of short-term liabilities of the organization, exceeding 100 000 rub. to one creditor and not repaid within three months from the date of payment, gives grounds for initiating the bankruptcy case of an organization in an arbitration court.

In express analysis of the passive part of the balance sheet, as well as in assessing the financial condition of the company, the amount of equity is recommended to be increased by the amount of the line "Deferred revenue" and to reduce the loan capital (short-term and long-term liabilities) by the same amount, respectively. Evaluation of the passive part of the balance of OOO "Home Appliances" according to the data of express analysis is considered in Table. 11.3.

Table 113

Express analysis of the composition, structure and dynamics of own and borrowed capital (liabilities)

Metrics

Amount but balance, thousand rubles.

The share of articles in the total value of own and borrowed capital,%

L

T 0

Changes

7 -,

7

Change

th

rubles

%

Own capital, total

29,530

28,912

618

2.1

20.5

26.2

-5.6

Authorized capital

10

10

-

-

0.03

0.03

-

Additional capital

680

680

-

-

2.3

2.4

-0.1

Backup

Capital

2868

2858

10

0.3

9.7

9.9

-0.2

Retained earnings

24,781

24,773

8

0.0

83.9

85.7

-1.8

Deferred revenue + + Reserves

1191

591

600

101.5

4.0

2.0

2.0

End of the table. 113

Metrics

Amount by balance, thousand rubles.

The share of articles in the total value of own and borrowed capital,%

r,

T 0

Changes

r,

7

Change

th

rubles

%

Borrowed capital, total

114 229

81,514

32,715

40.1

79.5

73.8

5.6

Long term

commitment

48 650

29,847

18,803

63.0

42.6

36.6

6.0

Current liabilities, including:

65,579

51 667

13,912

26.9

57.4

63.4

-6.0

Short term

Credits

40,991

25 596

15,395

60.1

35.9

31.4

4.5

Accounts payable

debt,

total

Including:

24,588

26,071

-1483

-5.7

21.5

32.0

-10.5

Suppliers and Contractors

16,920

23 344

-6424

-27.5

14.8

28.6

-13.8

Payroll

1100

1442

-342

-23.7

1.0

1.8

-0.8

Before the state's off-budget funds

1581

647

934

144.4

1.4

0.8

0.6

Before a budget

4987

591

4396

743.8

4.4

0.7

3.6

Other creditors

0

47

-47

-100.0

0.0

0.1

-0.1

Other short-term obligations

Total Balance

143,759

110 426

33 333

30.2

100

100

-

According to the indicators shown in the table, it is obvious that the increase in borrowed capital, whose rate of increase was 40.1%, is clear, while equity capital has overcome the mark only in 2.1%. In the period under study, profits of only 8,000 rubles were capitalized. Such a ratio in the dynamics of own and borrowed capital is fraught with loss of solvency and financial difficulties, as well as an unreasonably high risk of obtaining losses due to excessive interest payments on debt obligations. In the structure of borrowed capital, a positive trend has emerged: with the growth of long-term borrowed sources, the structure of borrowed capital improves. At the same time, the increase in short-term debt remains significant, in particular, bank loans grew by 60%, which indicates the dependence on attracted paid sources. To the positive aspects in the formation of the structure of borrowed capital, the right to reduce the accounts payable by 1483 thousand rubles, as well as a decrease in its share in the borrowed capital by 10.5%. The enterprise for the analyzed period was actively calculated with suppliers and contractors, having reduced their liabilities by 6424 thousand rubles, or 27.5%, on payroll debt fell by 23.7%, but at the same time there was an increase in debt to state off-budget funds and significant growth is noted in accordance with the requirements to the budget (by 4,996 thousand rubles). This ratio indicates serious problems associated with the inability of the enterprise to settle for obligations on time and in full, so it extinguishes some of the overdue debts from other creditors.

The contradictory nature of many conclusions requires a deeper comprehensive study with the identification of cause-effect relationships and quantitative assessments of their impact in order to determine the financial condition of the enterprise as accurately and objectively as possible and begin developing measures aimed at correcting the situation and developing more effective policies.

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