Evaluation of financial parameters and performance indicators of an enterprise, among the problems of analysis, is one of the key, since they are the ones that indicate the economic health of the company and signal problems that can lead to significant complications and even insolvency or bankruptcy.
The main indicators of the effectiveness of an enterprise is a fairly extensive list of parameters that, to one degree or another, reflect the results and effectiveness of economic activity. One of the important indicators is financial stability.
Generalized performance indicators of the enterprise, as a rule, are formed on the basis of the understanding that in order to make decisions on managing financial stability, constant business awareness is required, which is the result of analysis and evaluation of information. The choice of a particular assessment technology is determined by the goals and objectives of the study, as well as in some cases, and by the degree of availability of reliable source information. Among other things, each technique or procedure has weaknesses and strengths and in its own way affects the performance indicators of the enterprise.
The widely used horizontal, vertical, and trending methods make it possible to give only a preliminary assessment of the level of stability, stating only absolute changes in one or another indicator of financial stability, without revealing information about the internal nature of changes and without affecting, in fact, other performance indicators. In addition, such methodologies very weakly reflect the current dynamics of changes in the quality of the company.
The comparative method in its content provides more information than the above, but today in some cases it is qualitatively impossible to apply, since reliable industry statistics are not available.
An analysis of existing technologies and procedures for valuation activities allows us to state that the method of valuation by factors and factors are most informative, therefore, they are widely used in the practice of evaluating the effectiveness of an enterprise as a whole and financial stability in particular.
However, the coefficient estimation method has quite a few of its own significant shortcomings. The most significant are:
- coefficient: calculations only reveal, but do not explain the dynamics of changes in financial condition. This situation reflects the state of the enterprise only at the beginning and end of the reporting period. Everything that happens between these dates is not taken into account.
- the calculated coefficients do not carry economic sense, therefore, their comparison with the indicators of “external” sources is necessary, which in modern conditions is quite difficult for technical and material reasons.
The most common of the existing analytical techniques is factor analysis. A strong feature of the factor approach is that in the process of calculating the initial data, they pass standardization and standardization and lose dimensionality. This allows you to use the model for the analysis of various periods without additional correction for inflation. This analysis of methodological tools is determined by the fact that the main thing in the analysis of performance indicators is:
- improvement of information support;
- the development of integrated techniques to analyze the state of the enterprise by the optimal combination of production and financial indicators and ratios.