Assessment of the financial condition of the enterprise is based on the following actions:
- collection of information and its analytical processing for a specific period of time to be evaluated;
- the rationale and classification of indicators used for such an assessment;
- calculation of the resulting evaluation indicator;
- ranking of business entities by rating.
As a result of the qualitative implementation of the third stage of the analysis of financial performance, the rating obtained takes into account the full range of basic parameters of the financial and operating activities of the entity. In other words, a complete analysis of economic activity.
Indicators of the financial condition of the enterprise include the following data: production potential of the business entity, profitability of its products, efficiency of use of available financial resources. This may also include sources of formation, condition and placement of other means of organization.
The rationale and selection of the initial indicators of the enterprise are carried out based on the main provisions of the theory of finance, as well as the needs of the company's management in the assessment. Indeed, a qualitative assessment of the financial condition of an enterprise cannot be based on an arbitrary choice of indicators.
So, let's try to systematize generally accepted indicators and disaggregate them into four groups.
The first group includes such important indicators as the profitability of business entities. Based on the theory, profitability is calculated as the ratio of net profit to the value of the property of the enterprise (or its own funds).
The second group of indicators is responsible for assessing the effectiveness of company management. At the same time, it is advisable to consider four generally accepted indicators of profit: balance sheet or gross, net, from sales of products and, finally, a general indicator - from all sales. The effectiveness of the organization’s management is determined by the ratio of these profit indicators to the subject’s revenue.
Assessment of the financial condition of the enterprise on the basis of indicators of the third group provides for the assessment of business activity of the subject. This category of coefficients is calculated in several ways:
- the return of all types of assets - as a private revenue to the balance sheet currency;
- capital productivity - the ratio of revenue to the value of fixed assets in combination with intangible assets;
- asset turnover (the number of their turns) - the ratio of all the same revenue, but now to the value of current assets.
The turnover of stocks, bank assets, and receivables is calculated similarly; only in the formula are the denominators used for the values of reserves, cash value, and total receivables, respectively.
Analysis of the financial condition of the organization using the fourth group of indicators is carried out by:
- assessment of current liquidity as a calculation of the ratio of all current assets to the amount of liabilities requiring repayment urgently;
- calculation of the critical liquidity ratio by the ratio of the aggregate of current assets, including cash, and receivables to term liabilities.
Also, indicators of market stability of the organization can be attributed to this group: permanent asset index; security with working capital available to the enterprise to pay off stock arrears and other expenses.
A full assessment of the financial condition of the enterprise cannot be carried out without the use of such initial data as the volume of production and profit in the reporting period.