The value of assessing the liquidity and solvency of the organization. Coursework: Liquidity and solvency of the enterprise, methods of evaluation and management. Methods for diagnosing the probability of bankruptcy

06.03.2023

Financial condition of the enterprise is a set of indicators reflecting the availability, placement and use of financial resources.
Assessment of the financial condition of the enterprise allows you to identify the financial capabilities of the enterprise, which are determined primarily by the presence of its own capital. It is necessary to assess how much equity the company has and what assets the equity is invested in. Determining the structural indicators of the sources of asset formation makes it possible to assess the degree of dependence of the enterprise on borrowed sources.
To assess the stability of the financial condition of the enterprise, a whole system of indicators characterizing the changes is used:
a) the capital structure of the enterprise according to its location and sources of education;
b) efficiency and intensity of its use;
c) solvency and creditworthiness of the enterprise;
d) the stock of its financial stability.
The analysis of the financial condition of the enterprise is based mainly on relative indicators, since the absolute indicators of the balance sheet in terms of inflation are almost impossible to bring into a comparable form. The relative indicators of the analyzed enterprise can be compared: with generally accepted “norms” for assessing the degree of risk and predicting the possibility of bankruptcy; with similar data from other enterprises, which allows you to identify the strengths and weaknesses of the enterprise and its capabilities; with similar data for previous years to study trends in the improvement or deterioration of the financial condition of the enterprise.
The analysis of the financial condition is carried out not only by the managers and relevant services of the enterprise, but also by its founders, investors in order to study the efficiency of the use of resources, banks to assess credit conditions and determine the degree of risk, suppliers to receive payments in a timely manner, tax inspectorates to fulfill the plan for receiving funds to the budget etc.
In the process of assessing the financial condition, it is necessary to assess the liquidity, solvency and financial stability of the enterprise.
The liquidity of the balance sheet is defined as the degree to which the company's liabilities are covered by its assets, the period of transformation of which into money corresponds to the maturity of the liabilities.
Under liquidity of any asset is understood as its ability to be transformed into cash in the course of the envisaged production and technological process, and the degree of liquidity is determined by the duration of the time period during which this transformation can be carried out. The shorter the period, the higher the liquidity of this type of assets.
Solvency means that the enterprise has cash and cash equivalents sufficient for settlements of accounts payable requiring immediate repayment.
A1 = most liquid assets- amounts for all items of funds that can be used to perform current settlements immediately. This group also includes short-term financial investments.
A2 = marketable assets- assets that require a certain amount of time to be converted into cash. This group can include accounts receivable (payments for which are expected within 12 months after the reporting date), other current assets.
A3 = slow-moving assets- the least liquid assets are inventories, receivables (payments for which are expected more than 12 months after the reporting date), value added tax on acquired valuables, while the item "Deferred expenses" is not included in this group.
P1 = most urgent obligations- accounts payable, dividend payments, other short-term liabilities, as well as loans not repaid on time (according to the appendices to the balance sheet).
P2 = short-term liabilities- short-term borrowings from banks and other loans repayable within 12 months after the reporting date. When determining the first and second groups of liabilities, in order to obtain reliable results, it is necessary to know the time for the fulfillment of all short-term obligations. In practice, this is only possible for internal analytics. With external analysis, due to limited information, this problem becomes much more complicated and is usually solved on the basis of the previous experience of the analyst performing the analysis.
P3 = long-term liabilities- long-term borrowings and other long-term liabilities - items in section IV of the balance sheet "Long-term liabilities".
230, 240 - long-term debt. 250 - short-term financial investments.
260 - cash. 190 – non-current assets (total). 290 – current assets (total).
490 – capital and reserves (total).
The main features of solvency are:
a) the availability of sufficient funds in the current account;
b) the absence of overdue accounts payable.
Liquidity solvency can be assessed using a number of absolute and relative indicators.
Relative indicators are used to assess the solvency of an enterprise.
Coefficients characterizing solvency:

Business activity (turnover) ratios - show how efficiently the company uses its assets:
1. Inventory turnover rate - Shows the rate of sale of stocks. It is calculated as the ratio of variable costs to the average cost of inventory (measured in number of times).
2. Accounts receivable turnover ratio - the number of days required to collect the debt. It is calculated as the average value of receivables for the year, divided by the amount of revenue for the year and * for 365 days.
3. Accounts payable turnover ratio how many days the company needs to pay its debts. It is calculated as the average value of accounts payable for the year, divided by the total amount of purchases and * for 365 days.
4. Turnover rate of fixed assets - is calculated in the number of times (to-t return on assets). It characterizes the effectiveness of the use of existing fixed assets by the enterprise. A low value indicates too much investment or not enough sales. It is calculated as the amount of revenue for the year divided by the average value of the amount of non-current assets (fixed assets).
5. Asset turnover rate - shows the effectiveness of the company's use of all assets at its disposal. It is calculated as the amount of revenue for the year divided by the amount of all assets. Shows how many times a year goes through production and delivery cycles.
Financial stability - this is a certain state of the company's settlements, guaranteeing its constant solvency.
The task of financial stability analysis is to assess the magnitude and structure of assets and liabilities. This is necessary to answer the questions: how independent is the organization from a financial point of view, is the level of this independence increasing or decreasing, and whether the state of assets and liabilities meets the objectives of its financial and economic activities.
Coefficients characterizing financial stability:

700 - balance (passive). 590 – long-term liabilities (total).
690 – short-term liabilities (total).
Profitability ratios - show how profitable the activity of the enterprise is:
1. Gross Profit Margin Kt - shows the share of gross profit (%) in sales volume: calculated as gross profit divided by sales volume.
2. Kt profitability of net profit (similarly).
3. Kt return on assets - net profit divided by the sum of all assets of the enterprise. Shows how much profit each unit of assets gives.
4. Return on equity - shows the effectiveness of the capital invested by shareholders. Calculated as net income divided by total share capital. Shows how many units of profit each invested unit of capital earned.

The financial condition of the enterprise can be assessed from the point of view of the short and long term. In the first case, liquidity and solvency act as criteria for assessing the financial condition.

Under liquidity The enterprise is understood as its ability to cover its short-term liabilities with assets, the period of transformation of which into cash corresponds to the maturity of liabilities.

Analysis and assessment of the liquidity of the enterprise is carried out on the basis of the analysis of the liquidity of the balance sheet. Balance liquidity expressed in the extent to which the company's liabilities are covered by its assets. Analysis of the liquidity of the balance sheet is carried out on the basis of a comparison of funds for an asset, grouped by the degree of their liquidity, with liabilities for liabilities, grouped by the degree of increase in their maturity.

The company's assets are grouped into the following groups:

the most liquid assets - cash and short-term financial investments (A1);
marketable assets - short-term accounts receivable and other current assets (A2);
slow-moving assets - inventories, long-term receivables, VAT on acquired valuables (AZ). Deferred expenses are not included in this group;
hard-to-sell assets - non-current assets (A4).

The assets included in the first three groups are current, They

are more liquid in comparison with the assets that make up the fourth group.

The liabilities of the enterprise are also combined into four groups:

the most urgent liabilities - accounts payable (P1);
short-term liabilities - short-term credits and loans (P2);
long-term liabilities - long-term loans and borrowings (LL);
permanent liabilities - capital and reserves (section III of the balance sheet) and articles of section V of the balance sheet that were not included in the previous groups (deferred income, reserves for future expenses and payments, etc.) (P4).

To determine the degree of liquidity of the balance sheet, it is necessary to compare the results of the above groups for assets and liabilities. The balance sheet of an enterprise is considered absolutely liquid if the following inequalities are satisfied:

If at least one of the listed inequalities is not fulfilled, the balance sheet of the enterprise is not absolutely liquid. At the same time, the lack of funds in one group can be covered by the surplus in another. The final comparison for the first two inequalities characterizes current liquidity, reflecting the solvency of the enterprise in the near future.

Prospective liquidity indicates the solvency of the enterprise in the longer term on the basis of accounting for future receipts and payments.

When the first three considered inequalities are satisfied, the fourth one is also satisfied. If this condition is met, we can say that the enterprise has its own working capital, which is the minimum condition for its financial stability.

To characterize the degree of liquidity, a number of coefficients are calculated: current, quick and absolute liquidity.

The most common is current ratio(K tl), which is calculated by the ratio of current assets to current liabilities:

where DS - cash; KFV - short-term financial investments; DZ - accounts receivable; 3 - reserves; KK - short-term credits and loans; KZ - accounts payable.

The current liquidity ratio shows the extent to which the current assets cover the current liabilities of the enterprise. The higher the value of this ratio, the greater the credibility of the enterprise among creditors. According to some experts, its recommended value is 1.5-2.5. if this ratio is less than 1, the company is considered insolvent.

Quick liquidity ratio(K bl) is calculated as the ratio of cash, short-term financial investments and short-term receivables to the amount of short-term liabilities of the enterprise:

where DZ kr - accounts receivable with a maturity of up to 12 months. The recommended value of this coefficient is 0.7-0.8.

Absolute liquidity ratio(K abl) shows what part of short-term debt can be covered by the most liquid current assets - cash and short-term financial investments:

Cash and short-term financial investments are the most mobile part of working capital, as they can be turned into cash much faster than other elements of current assets and used to pay off short-term liabilities. This indicator is most interesting for suppliers of inventory items, since it reflects the ability of the enterprise to ensure the timeliness of settlements. The recommended value of this coefficient is 0.2-0.25. At the same time, the absolute liquidity ratio should be considered in conjunction with the optimal level of cash. When determining the latter, it is assumed that the company maintains a certain level of free cash, which is supplemented for insurance by a certain amount of funds invested in liquid securities, i.e. into assets close to absolutely liquid. If additional needs arise, the securities are converted into cash. If a surplus of cash has accumulated, it can be invested in short-term securities or paid out in the form of dividends, etc. In Western practice, for example, the models for determining the optimal level of funds of Baumol, Miller-Orr, Stone, and others have become widespread.

Along with liquidity, an important indicator characterizing the financial condition of an enterprise is solvency - its ability to timely repay payments on its short-term obligations with the uninterrupted implementation of production activities.

Distinguish between current and prospective solvency. To determine the level current solvency compare the amount of means of payment and the amount of short-term liabilities. In this case, means of payment include: cash, short-term financial investments, receivables (with the exception of doubtful debts). The recommended value of the current solvency ratio is 1.

Another indicator of current solvency can be current payment readiness ratio, which characterizes the possibility of timely repayment of accounts payable of the enterprise. When calculating this indicator, it is assumed that accounts receivable and accounts payable must be balanced. In this regard, first of all, accounts payable should be covered by receivables, and in the missing part - cash on the current account and in the cash desk of the enterprise. This ratio is determined by the ratio of cash to the difference between accounts payable and receivable:

If the accounts receivable turn out to be higher than the payables, the company is not only able to pay off its short-term obligations, but also has free cash available.

To characterize prospective solvency, the net proceeds ratio, the coverage ratio of current liabilities by sales proceeds, and the cash adequacy ratio can be calculated.

Net revenue ratio(K mv) is calculated as follows:

where A is the amount of depreciation charges for the corresponding period; 411 - net profit; VR - proceeds from sales.

This indicator characterizes the share of free cash in the revenue that can be used to pay off the obligations of the enterprise or invested for other purposes. The higher the value of this ratio, the more opportunities the company has to strengthen its solvency.

Coverage ratio of current liabilities(To ptp) sales revenue also quite clearly characterizes the change in the solvency of the enterprise in the future:

The positive dynamics of this coefficient (growth) indicates the strengthening of the financial condition of the enterprise.

Along with those discussed, it is important for assessing the solvency of an enterprise cash adequacy ratio(Kd DS), which is calculated by the formula

where KV - funds allocated for capital investments; O - increase in working capital; D - funds for the payment of dividends.

This ratio shows the company's ability to finance capital construction, increase in working capital, as well as to pay dividends to shareholders. If the value of the coefficient is greater than one, this indicates the possibility of financing the activities of the enterprise without resorting to external borrowing.

Today, the issues of analysis and methodology for assessing the solvency of an enterprise are of particular relevance. This is due to the difficult economic situation in the country, difficult economic conditions, a large percentage of ruined enterprises and organizations. The values of these indicators are also relevant in the process of forecasting the future state of the company, since it is this analysis that allows us to draw conclusions about the company's prospects in the near future and the possibility of improving weaknesses.

In Russia, there are a large number of enterprises that are low-profit or unprofitable. As a result, companies need sources of financing, which is exacerbated by the depreciation of working capital due to inflationary processes.

The growth of the company's equity capital is not always positive for the enterprise. If the growth of current assets is accompanied by a simultaneous increase in the amount and magnitude of debts of debtors, then the balance of finished products increases, unused stocks increase. In this case, the company must finance its activities at the expense of profits. It turns out that the company's profit does not fulfill its main function - it is not used to increase the value of the company in the market.

Relevance

The study of company reporting is necessary for all subjects of economic relations. According to the reports, the founders and owners of the company draw conclusions about the options for withdrawing income from investments in the organization, suppliers and buyers - assess the stability of commercial relations, determine the ability of the partner to fulfill obligations in full and on time, creditors predict the solvency of the organization when assessing the likelihood of bankruptcy when providing them with loans funds.

Thus, according to the Russian Statistical Yearbook, the current liquidity ratio of Russian enterprises amounted to 88.9% in 2016, with a regulatory limit for this ratio of ≥ 200%. Last year, the average value of the studied coefficient in the country decreased to 87.1%. And this means that the bulk of Russian enterprises are insolvent and are experiencing an unstable situation (crisis). The coefficient of provision with own working capital demonstrates the same trends. Its value is: -17.4% and -16.5% in 2016 and 2017 respectively. That is, there is a shortage of current funds at enterprises from a number of their own channels. The coefficients for assessing the solvency of an enterprise today are very important indicators of the state of the company in financial terms.

In connection with the above, maintaining solvency at the proper level becomes one of the cornerstone issues in the process of analytical procedures. Analysis and assessment of the solvency of the enterprise is very relevant today.

Low liquidity of the company provokes the insolvency of the organization, lack of funds to support economic activities and, ultimately, financial instability and bankruptcy, and excessive liquidity will impede development, which will lead to the appearance of excessive reserves, an increase in capital turnover time, and a decrease in profits.

The accuracy of the financial diagnostics of the company entirely affects the effectiveness of the financial management of the company.

Liquidity and solvency: concept

One of the indicators that characterizes the financial condition of the company is the assessment of the company's solvency. It is understood as the company's ability to pay off its monetary obligations in time with cash resources. Analysis and assessment of the liquidity and solvency of the enterprise is possible in the study of liquidity ratios of current assets.

Liquidity on balance

The basis of the study of the liquidity of the balance sheet and the assessment of the solvency of the enterprise is the method of comparing the company's asset, grouped by the degree of liquidity reduction and liability, which is grouped by the degree of urgency of extinguishing obligations. These two blocks must be compared with each other. The table model shown below will help in this.

A 1, A 2, A 3, A 4< П 4 .

Asset groups			The procedure for determining the indicator	Excess funds or lack of funds
liquid	balance sheet line 1240 +	most urgent obligations	p. 1520 balance sheet	column 2 column 4
quick feasibility	balance sheet lines 1230 + 1260	company's short-term debt	line 1510 + line 1540 balance sheet	column 2 column 4
slow marketability	balance sheet line 1210	company's long-term debt	p. 1400 balance	column 2 column 4
difficult feasibility	balance sheet line 1100	standing obligations	p. 1300 balance sheet	column 2 column 4
	Total balance	Total balance

Liquidity ratios

There are many coefficients for assessing liquidity, their calculation in this study was determined on the basis of generally accepted methods of calculation.

Each of the coefficients has a recommended value or a development trend, a deviation from which indicates a violation of the company's solvency. Methods for assessing the solvency of an enterprise are varied. Let's consider the most popular of them.

The calculation of these indicators for assessing the solvency of an enterprise, according to the methodology proposed by A. D. Sheremet, is carried out using the following formulas:

Absolute liquidity ratio (K 1): K 1 \u003d (line 1250 + line 1240) / line. 1500. In the literature, this optimal value ranges from 0.2 to 0.5.
Current liquidity ratio (K 2): K 2 \u003d line 1200 / line 1600. Many authors recommend taking the value of this indicator equal to or greater than 2 as the optimal value. The permissible value ranges from 1.5 to 2.5.
Financial leverage ratio (K 3): K 3 = (line 1400 + line 1500)/line 1300.
Financial stability ratio (K 4): K 4 = (line 1300 + line 1400) / line 1600.
Return on assets (ROA): ROA = line 2400 of the income statement / line 1600. The growth of this coefficient is optimal.
Return on Equity: ROE = Net Income / Average Equity.

Main solvency factors

The solvency of any enterprise is subject to the influence of a huge number of different negative factors that can combine together and reach a certain negative limit. In which case, a real failure is possible, which will inevitably lead to the bankruptcy of the company. Solvency analysis is a study of a whole set of interrelated factors, both external and internal.

In any case, both external and internal factors can affect the liquidity of the enterprise.

External factors affect the organization from the outside. They are not subordinate to the company itself in any way. But the enterprise can mitigate the impact of external factors. For example, a company may conduct market research and marketing within the company in order to predict possible market situations. The main external factors are those that are directly related to the state of our economy and the world economy as well. This also includes the political situation in the country, the economic situation, social tensions in society, the state of the market.

Unification of markets, development of the technological and information environment, state of politics, competitive environment, innovation environment - all this provides many opportunities for business organizations, but on the other hand, they require more attention at all levels of financial management.

Internal factors are associated with the specific actions of this organization and are influenced by it. Among these factors, various production, investment and financial indicators of the company are separately distinguished.

Basic odds

Consider a group of coefficients for assessing the liquidity and solvency of an enterprise, presented below:

Solvency recovery ratio: Kvp = (K1tl + 6/T * (K1tl - K0tl)) / Knorm. Where Ktl is the current liquidity ratio in the initial (0) and current (1) periods; T reporting period; Knorm = 2.

The normative value of the indicator for assessing the solvency of an enterprise is Kvp > 1, which reflects the company's ability to restore the level of solvency. In addition, this ratio is based on a two-period trend analysis.

Solvency loss ratio: Kup = (K1tl + 3 / T * (K1tl - K0tl)) / Knorm. The standard value is Kup > 1.

Financial stability as a measure of solvency

Financial stability of the company is a guarantee of survival and the basis for the stability of the company's position in the market.

Rational financial management of an enterprise helps to see changes in various indicators and, if necessary, take appropriate measures.

In market conditions, the economic activity of the enterprise is carried out by self-financing with the absence of its own financial resources through borrowed sources of financing.

A subject of the economy that is financially stable is a company that is able to independently cover the funds invested in the assets of the enterprise, does not allow maximum receivables and payables, and pays off on existing obligations in a timely manner. The basis of financial activity is the good organization and use of the working capital of the company.

Assessment of the solvency and financial stability of the enterprise is the most important task of enterprise management. The state of the company is financially stable if, under adverse changes in external factors, it retains its ability to function normally, and also fully repays its obligations under an agreement with counterparties.

The state of the company's financial environment can be characterized by the possibility of financial independence from investors, the ability of the enterprise to rationally manage financial resources, and the availability of the necessary number of own sources to cover the company's costs. The financial stability of the enterprise characterizes the prevalence of income over the expenses of the organization, guarantees the free maneuvering of the company in the market through cash and through the system of effective use of these funds, which contributes to the continuous process of production and sales of products. Financial stability is an important element of the overall sustainability of the enterprise, the consistency of financial flows, the availability of financial resources.

The main objectives of the analysis of the financial stability of the enterprise are as follows:

conducting a real assessment of the state of the company's finances;
identification of possible reserves of the company;
offer the company a number of measures to strengthen the financial position and solve financial problems;
forecasting the financial results of the enterprise.

Performance management

Liquidity (solvency) management consists of successive stages.

The first stage is the analysis of the initial position of the enterprise:

cost recovery analysis;
research of indicators of liquidity and solvency of the company.

The second stage is the forecast, which consists of determining the gross margin and its shortfall. Includes:

finding profit for the previous period;
forecasting the impact of prices on materials, the impact of shifts in the range, the impact of prices on products. The forecast balance informs about what will happen if no action is taken;
profit forecasts;
the equity liquidity ratio is calculated;
there is a lack of profits.

The third stage - measures to strengthen liquidity:

fixed costs - the improvement of management functions at the enterprise is being considered, the management structure is being revised, as a last resort, if it is impossible to increase sales of products, then the issue of reducing the employment of the enterprise by changing production capacities is considered;
consideration of the issue of covering costs for products - include increasing prices (improving quality, advertising, searching for promising markets), reducing variable costs for products (new technologies, new labor organization, optimization of production and supply);
sales volume - price reduction, optimization of the production program and sales;
use of capital - optimization of the use of fixed capital, management of working capital.

The fourth stage is a predictive analysis, which shows how much the company's financial condition will improve when making management decisions at the 3rd stage.

Directions for improving indicators

This task is faced by all companies without exception, but, unfortunately, it is not always possible to fulfill it, that is, to minimize accounts receivable. A long production cycle, negotiated with deferred payment terms, contributes to the formation of debt, which is non-critical and often allows it to develop, rather than hinder the development of the firm. With regard to such debt, the company can increase internal control and prevent its unreasonable growth.

The assessment of liquidity, financial stability and solvency of the enterprise is aimed at identifying negative trends in order to develop measures to improve the identified shortcomings.

Increasing the efficiency of activities (which, in the case of competent financial management, contributes to the growth of solvency), the enterprise can achieve:

through cost reduction;
by expanding the market for products (services) by reducing prices;
by improving product quality, which will increase production and sales volumes and, over time, allow prices to rise;
by expanding the range of products and the range of services provided;
through the development of the most profitable types of business.

conclusions

Currently, firms do not pay enough attention to assessing the company's liquidity and solvency indicators, as well as competently planning their income and expenses, as a result of which they become insolvent and find themselves in a crisis situation. The control of solvency of the organization is called upon to carry out management accounting at the enterprise.

In modern conditions, the analysis of liquidity and efficiency of enterprises is aimed at ensuring the sustainable development of profitable, competitive production.

The solvency of an enterprise is its ability to timely and fully repay its financial obligations in cash to resource suppliers, creditors, investors, shareholders, the state, etc.

Solvency is an external manifestation of the financial condition of the enterprise.

The creditworthiness of an enterprise implies its ability to pay for its obligations only with creditors. Thus, the concept of "solvency" is much broader than the concept of "creditworthiness".

If you look at the problem a little more broadly, then the solvency and creditworthiness of an enterprise mean not only the ability to pay off its short-term obligations with the help of liquid working capital, but also the ability to simultaneously continue its uninterrupted activities.

The concept of "solvency" is closely related to the concept of "liquidity", which means the ability of certain types of property values (assets) of an enterprise to turn into cash without loss of its book value.

These concepts are closely interrelated in practice, because. a high level of liquidity of the company's assets, as a rule, implies its high solvency and vice versa. In turn, with a sufficiently high level of solvency, the financial condition of the enterprise is characterized as stable.

However, not everything is so simple and unambiguous. A high level of solvency does not always confirm the profitability of investing in current assets, in particular, an excess stock of inventory, overstocking of finished products, the presence of bad receivables reduce the level of liquidity of current assets.

These negative phenomena may not be reflected in the financial statements, therefore, the assessment of the level of solvency should be approached not formally, but creatively, taking into account the emerging realities, making adjustments for the real value of assets.

The level of solvency of the enterprise is inextricably linked with the policy of working capital management, which should be aimed at minimizing financial obligations, their optimization. In order for an enterprise to be solvent, it is not necessary to have a lot of money, but they must be in the right amount, in the right place and at the right time.

Methods for assessing the solvency of an enterprise:

1. Analysis of balance liquidity;
2. Calculation and evaluation of solvency ratios;
3. Study of cash flows.

These evaluation methods complement each other, but can be used for evaluation in isolation.

The essence of the liquidity analysis of the balance sheet is the comparison of assets, grouped by the degree of decrease in their liquidity, with liabilities for liabilities, grouped by the degree of urgency of their payment (repayment) and depending on the emerging ratio of asset and liability groups, formulating conclusions about the degree of solvency of the enterprise.

Liabilities are grouped according to the degree of decreasing urgency of their return. P 1 - the most short-term liabilities are accounts payable and other short-term liabilities.

To determine the degree of liquidity of the balance sheet, and hence the degree of solvency of the enterprise, it is necessary to compare the asset and liability groups of the balance in pairs with each other.

Comparison of liquid funds and liabilities makes it possible to calculate the following degrees of balance liquidity:

1. Absolute liquidity of the balance, indicating the unconditional solvency of the enterprise;
2. The current liquidity of the balance sheet, indicating the solvency or insolvency of the enterprise for the period closest to the moment under consideration:
3. Prospective balance sheet liquidity is a solvency forecast based on future receipts and payments.

The balance sheet is considered to be absolutely liquid, and the enterprise is unconditionally solvent, subject to the following system of inequalities:

At the same time, a necessary condition for the absolute liquidity of the balance sheet is the observance of the first three inequalities. The fourth inequality is of the so-called "balancing" nature and its observance indicates that the enterprise has its own working capital (Ec = Q - F), i.e. there is a minimum condition for ensuring financial stability.

If one or more inequalities of the system have a sign opposite to that fixed in the optimal variant, the liquidity of the balance to a greater or lesser extent differs from the absolute one. And to establish its degree, it is necessary to regroup the groups of assets and liabilities and compare the sums of indicators: A 1 + A 2 with P 1 + P 2.

If the inequality A 1 + A 2 > P 1 + P 2 is observed, then this indicates that the enterprise has a current (short-term) solvency, i.e. will save it soon.

If inequality A 3 > P 3 persists, then the enterprise, in addition, will retain its solvency and suffer in the long term, i.e. This inequality characterizes the prospective liquidity of the enterprise and is a long-term forecast of solvency.

The liquidity analysis of the balance sheet, performed according to the above scheme, is relatively simple, classical, but its results are inaccurate, due to the lack of initial information contained in the balance sheet, its approximation.

To refine the estimate, some economists recommend using the standard discount method, which is essentially a redistribution of balance sheet items between groups of assets and liabilities, based on average estimates of the liquidity of assets and the maturity of liabilities.

To compare when the balance sheet was more liquid at the beginning or at the end of the analyzed period, the balance sheets of different enterprises allows the use of a general liquidity indicator (PL).

For a more complete assessment of the solvency of the enterprise, the analysis of the liquidity of the balance sheet can be supplemented by the calculation and analysis of solvency ratios, which allow assessing the solvency of the enterprise only in the short term.

The essence of the analysis is to assess the ratio of existing assets, both intended for direct sale and those involved in the technological process with a view to their subsequent sale, and the obligations that the enterprise has in a given period.

The analysis is based on the fact that the types of working capital of an enterprise have varying degrees of liquidity, in particular, they distinguish: absolutely liquid funds - cash and short-term financial investments; quick liquid funds - accounts receivable; slow-moving funds - stocks.

Based on this, to assess the solvency of the enterprise, three indicators (coefficients) are used, which differ from each other in the order in which liquid funds are included in their calculation, considered as covering short-term obligations.

Coefficients (indicators) of solvency of the enterprise:

1. Absolute liquidity ratio (absolute solvency ratio, cash reserve ratio, etc.) is the ratio of absolutely liquid funds available at the enterprise (cash and short-term financial investments) to the entire amount of short-term (current) liabilities of the enterprise.

It shows what part of the company's short-term liabilities can be repaid at the expense of available cash.

The optimal value Cal > 0.2 - 0.7. The higher its value, the greater the guarantee of debt repayment. But even with its small value, an enterprise can be solvent if it manages to balance and synchronize the inflow and outflow of funds in terms of volume and timing.

2. Quick liquidity ratio (quick liquidity ratio, strict liquidity ratio, intermediate liquidity ratio, etc.) is the ratio of cash, short-term financial investments, the amount of mobile funds in settlements with debtors to current liabilities.

Shows what are the possibilities of the enterprise to repay short-term obligations using absolutely liquid funds and receivables.

Optimal values of K bl > 0.8 - 1.0. But if a large share of liquid funds is hard-to-collect receivables, the normal interval increases by 1.5 times, but if cash and cash equivalents (securities) occupy a significant share in current assets, then the optimal value may be lower.

3. Coverage ratio (current solvency ratio, total coverage ratio, etc.) is the ratio of the value of the company's working capital (without future expenses) to current liabilities.

It characterizes the extent to which all short-term liabilities of the enterprise are secured by its current assets.

Optimal value 1< Кп < 2

The lower limit indicates that working capital is sufficient to cover its short-term liabilities. If the value of the coefficient is below 1.0, then this means that the company is unconditionally insolvent. The excess of current assets over short-term liabilities by more than 2 times is undesirable and indicates an irrational investment of one's funds and their inefficient use.

The solvency ratios considered by us give a versatile characteristic of the solvency of an enterprise, consistently taking into account assets of different liquidity in the evaluation process in comparison with its short-term liabilities.

Each coefficient has its own interested users. Suppliers are more guided by the absolute liquidity ratio, creditors prefer the quick liquidity ratio, investors (holders of securities), appraisers rely on the coverage ratio. But for a more thorough assessment of the solvency of the enterprise, all three coefficients are important.

It should be borne in mind that these traditional solvency ratios calculated from the data of the balance sheet are reliable only on the condition that all current assets on the balance sheet are liquid. It means that:

balance reserves can be converted into cash equal in amount to the value of the reserves;

receivables are received in the form of cash and in terms corresponding to the terms of their repayment.

If the state of the balance sheet current assets does not meet the above requirements, then in order to calculate the intermediate and current liquidity ratios, it is necessary to adjust the balance sheet value of current assets:

inventories are revalued at a possible selling price;

uncollectible receivables are written off, long-term receivables are excluded from the calculations.

Therefore, when making decisions regarding the assessment of solvency using financial ratios, the traditional ratios of quick liquidity and coverage are only of a reference nature.

As mentioned above, under market conditions, the solvency of an enterprise means not only its ability to pay off short-term obligations with the help of liquid working capital, but also to continue its activities at the same time.

This assumes that current assets in the form of receivables and part of inventories can be converted into cash sufficient to pay off short-term debts on the company's balance sheet.

The positive difference between the value of liquid current assets and the amount of short-term debt should not be less than the value of the reserves necessary to continue uninterrupted activities, i.e. to ensure one cycle of circulation of funds, the formation of sales proceeds at the end of the cycle is accompanied by the formation of new current assets in the form of stocks, receivables and cash.

This should be kept in mind when evaluating the solvency of the enterprise in traditional ways.

The financial activity of the organization, unlike production, supply and other activities, is more difficult to directly assess due to the lack of generalizing indicators or the impossibility of quantitative measurement. But since financial activity is aimed at ensuring the uninterrupted implementation of commodity-money transactions, one of the criteria for assessing the financial condition of an organization is its solvency, i.e. the ability to timely and fully carry out settlements on wages, payments to the budget, with suppliers for received inventory items and services, with a bank for loans.

Non-payments are a fairly common phenomenon. They have become a condition for the survival of most unprofitable or low-profit agricultural organizations.

The liquidity ratio of the balance sheet expresses the ability of the organization to carry out settlements for all types of obligations - both for immediate and distant ones. This indicator does not give an idea of the organization's capabilities in terms of repayment of short-term liabilities.

Therefore, for a qualitative assessment of the financial position of the organization, in addition to absolute indicators of balance sheet liquidity, it is advisable to determine a number of financial ratios. The purpose of such a calculation is to evaluate the ratio of existing current assets (by their types) and short-term liabilities for their possible subsequent repayment. The calculation is based on the fact that certain types of current assets have different degrees of liquidity in the event of their possible sale: absolutely liquid funds, then short-term financial investments, receivables and stocks are located in descending order of liquidity. Consequently, to assess solvency, indicators are used that differ in the order in which they are included in the calculation of liquid funds considered as coverage for short-term liabilities.

The liquidity category is of a potential (prospective) nature, i.e. shows whether the organization can pay off its obligations with all its property. Solvency, on the other hand, is a more real (current) category, meaning that the organization has sufficient cash and cash equivalents to settle accounts payable and short-term liabilities requiring repayment within 12 months. Groups A * and P 4 do not participate in the assessment of current solvency.

Distinguish between the concepts of general and overdue debt. General debt is a normal phenomenon for the economy of any country. It is the arrears that form the crisis of payments. Non-payments, inflation and price disparity are characteristic features of the economy of agricultural organizations, they have become factors in their livelihoods. Non-payments are caused mainly by the lack of funds from commodity producers.

Solvency in international practice means the sufficiency of liquid assets to repay at any time all of its short-term obligations to creditors. The excess of liquid assets over liabilities of this type means financial stability.

Solvency is characterized by the availability of funds in the organization - the more significant they are, the more likely it can be argued that the organization currently has sufficient funds to carry out all settlements and payments. However, the presence of small cash balances or even their absence does not mean that the organization is insolvent. The organization may be insolvent throughout the year or in certain periods (weeks, months), completely or partially disrupt the repayment of its financial obligations. Insolvency can act as a temporary or even accidental phenomenon and as a chronic, intractable condition. Insolvency is associated with long-term financial difficulties, the causes of which may be:

incomplete provision of financial resources;
non-fulfillment of the plan for production and sale of products;
non-rhythmic output of products and its low quality;
the use of working capital not for its intended purpose for the creation of excess stocks of inventory items, their diversion into capital investments, receivables;
untimely receipt of payments from buyers of products;
violation of financial and settlement discipline.

Solvency ratios are the measure of what part of the debts the organization is able to repay at the expense of certain elements of current assets and to what extent the total value of current assets exceeds debts. They differ in the range of liquid funds considered as coverage for short-term liabilities. In general, the question is posed as follows: if all creditors simultaneously require the organization to repay its debts, will it be able to satisfy their requirements and at the same time maintain all the conditions for continuing its activities. It is clear that with such a formulation of the question, we can only talk about the organization's short-term debt, since long-term debt cannot be claimed before its maturity date.

The solvency of the organization is determined according to the balance sheet. The disadvantage of determining solvency indicators is that they are calculated on a certain date, while in the near future the situation in the organization may change. The solvency of an organization characterizes its ability to make payments under certain conditions.

To assess the organization's solvency in the current and prospective periods, three traditional relative solvency indicators are calculated, which reflect the organization's ability to repay short-term debt with marketable assets.

1. The absolute liquidity ratio (A^) is calculated as the ratio of the most liquid assets to the amount of the most urgent liabilities:

where DS - cash on hand and in bank accounts;

KFV - short-term financial investments;

KO - short-term liabilities (credits, loans and payables).

This indicator is of interest to suppliers of inventory and to a bank lending to an organization. Its value shows what part of the short-term debt the organization can cover at the expense of available funds and short-term financial investments, quickly realized if necessary. This indicator can also be calculated on the basis of balance sheet liquidity indicators:

2. The coefficient of critical evaluation (L^ts) (intermediate liquidity, intermediate coverage) is calculated by the ratio of the most liquid and quickly realizable assets to short-term liabilities:

where DZkr.av. - short-term accounts receivable.

Calculation of the indicator based on balance sheet liquidity indicators:

This ratio shows the possibility of repaying the organization's short-term obligations, subject to the use of all available funds and full settlement with debtors for short-term obligations. It should be borne in mind that the reliability of the conclusions based on the results of calculations of this indicator and its dynamics largely depends on the quality of receivables (terms of formation, financial position of the debtor, etc.), which can only be identified from internal accounting data. The recommended value of the indicator is 0.7-0.8.

When calculating the critical assessment coefficient, only quick-liquid assets are taken into account (excluding inventories and receivables with a maturity of more than 12 months). This is because inventories and receivables with maturities of more than 12 months are not converted to cash as quickly, so burning debts are more difficult to repay using the above source.

3. The current liquidity ratio (/G tl) is calculated as the ratio of all current assets to short-term liabilities. This indicator is determined based on the consideration that the liquidity of the organization should be sufficient to meet short-term obligations:

where TA - current (current) assets - the result of section II of the balance sheet;

M3 - inventories.

This indicator can also be determined on the basis of balance sheet liquidity indicators using the formula:

The current liquidity ratio shows the payment capabilities of the organization, subject not only to the repayment of receivables, but also when selling, if necessary, material working capital.

This indicator is adopted as the main analytical criterion for the solvency of the organization, since the current ratio provides the best simple indicator of the extent to which the claims of short-term creditors can be covered by current assets, the possibility of turning into cash capital is expected within a period approximately corresponding to the period payment of the principal amount of the debt.

The coefficient of current or general liquidity allows you to establish the multiplicity of current assets cover short-term liabilities. This is the main indicator of solvency. But the instability of the economy makes any regulation of this indicator impossible. It should be evaluated for each specific organization according to its credentials. If the ratio of current assets and current liabilities is lower than 1:1, then we can talk about high financial risk associated with the fact that the organization is not able to pay its bills.

Taking into account the varying degree of liquidity of assets, it can be assumed that not all assets can be sold urgently, and therefore, there is a threat to the financial stability of the organization. If the value of the current liquidity ratio exceeds one, then we can conclude that the organization has a certain amount of free resources (the higher the ratio, the greater this volume) generated from its own sources.

It would be wrong to consider that this or that separately taken indicator is good or bad. For example, a high current ratio may indicate a high level of liquidity, which is a good sign, or too much cash, which cannot be positively assessed, since excess cash is often an unproductive asset.

The economic meaning of the above indicators is that they characterize the organization's ability to satisfy all the requirements of creditors and maintain the conditions for continuing its activities.

The components of the coefficients of current and quick liquidity are among themselves in a certain, fairly close correlation.

As for the absolute liquidity ratio, its value is largely and primarily determined by the numerator of the fraction. The amount of short-term liabilities is a relatively stable value, at least it is much less volatile compared to the amount of cash, which depends on many factors. Experience with domestic reporting shows that the value of the absolute liquidity ratio, as a rule, varies from 0.2 to 0.25.

Calculation logic: the organization repays its short-term liabilities mainly at the expense of current assets, therefore, if current assets exceed short-term liabilities in size, the organization can be considered as successfully functioning (at least theoretically). The size of the excess in relative form and is set by the current liquidity ratio. The value of the indicator can vary significantly by industry and activity, and its reasonable growth in dynamics is usually regarded as a favorable trend. In Western accounting and analytical practice, a critical lower value of the current liquidity indicator is given equal to two. However, this is only an indicative value, indicating the order of the indicator, but not its exact normative value.

The insufficient level of the current liquidity ratio may be associated with the following factors.

1. The amount of working capital at the disposal of the organization is initially insufficient for normal production activities. In this case, failures in the course of production are possible - depletion of inventories, violation of contractual obligations for the supply of products and, accordingly, a decrease in income from its sale, lack of funds for wages, etc. To make up for the lack of working capital in the organization, they seek to increase the turnover of funds by strengthening intra-production discipline, reducing the cycle of product circulation. If such measures have been exhausted, and the profit available to agricultural organizations is either not available or its size is limited, then it is advisable to resort to the use of loans, but this leads to an increase in the amount of the organization's obligations.
2. The normal external conditions for the functioning of the organization are violated: consumers do not pay for agricultural products on time, suppliers do not fulfill their obligations, there is a surge in cost inflation, etc. In this case, additional funds in circulation are needed to maintain the life of the organization. The alternative again is an increase in borrowings, leading to a change in the denominator of the current ratio.

Based on the analysis of all of the above indicators, the organization may be recognized as solvent or insolvent.

Insolvency is the result of a difficult financial condition in which an organization goes from temporary financial difficulties to permanent insolvency.

Sustained insolvency (the inability to meet the requirements of creditors) is considered in the Russian bankruptcy mechanism as a condition for declaring an organization insolvent.

The persistent chronic insolvency of an organization, from a financial point of view, means that such an organization:

absorbs (with delay or hopelessly) the resources or funds of creditors: their goods, money and services. These are funds of banks, other organizations, own employees, shareholders, etc.;
forms arrears on taxes and other obligatory payments. All this creates a threat of liability for the management of the organization.

In other words, an insolvent organization causes financial damage to creditors by withdrawing their resources.

Table 4.3 shows the results of calculating the solvency ratios based on the balance sheet data of the analyzed organization.

Table 4.3

Organization solvency analysis

Index	values	Actually		Changes
Index	values	Start of the year	end of the year	Changes
Initial data, thousand rubles 1. Current assets, of which:
1.1. Stocks
1.2. Short-term accounts receivable
1.3. Cash and short-term financial investments
2. Short-term debt (short-term loans and accounts payable)
Solvency ratios 1. Absolute liquidity ratio (p. 1.3: p. 2)
2. Critical rating ratio: (p. 1.2 + p. 1.3): p. 2
3. Current liquidity ratio: line 1: line 2

It follows from the data in the table that two indicators of the organization's solvency - the absolute liquidity ratio and the critical assessment ratio as of the beginning of the year did not correspond to the recommended values due to a lack of funds and short-term receivables to cover short-term liabilities.

The growth of the values of these indicators should be positively assessed; as a result, by the end of the year, at the expense of cash and subject to full settlement of short-term receivables, the organization could repay 1.162 times more than existing short-term liabilities.

The main indicator of solvency - the current liquidity ratio, both at the beginning and at the end of the year, significantly exceeds its recommended value by 5.5 and 9.3 times, respectively.

However, for agricultural organizations in the composition of current assets, feed, seeds and animals for cultivation cannot be considered as a source of debt repayment. As a rule, it is difficult to sell work in progress. Value added tax can only be used for its intended purpose, etc. To pay off debts from the composition of working capital, it is really possible to use only finished products, receivables, excess inventories, cash, financial investments.

The practice of most agricultural organizations shows that the value of the current ratio of more than two is the exception rather than the rule.

Comparison of methods for analyzing solvency and liquidity with the methods described in Western and domestic literature leads to the conclusion that the above methods for assessing solvency are among the preliminary and rather rough algorithms intended only to form a general initial idea of the financial activity of an organization from the point of view terms of its solvency and liquidity. They do not take into account industry specifics, the composition of working capital, the turnover rate of current assets, and much more. Neither the composition of inventories nor the nature of receivables are taken into account when calculating the indicators, the boundaries between the liquidity of receivables and the liquidity of inventories are practically very relative and fuzzy. This approach can be considered justified for a preliminary assessment by the auditor of the situation in the organization and classifying it as insolvent.

The amount of long-term receivables is currently reflected in the explanatory notes to the statements - section V "Accounts receivable and accounts payable", clause 5.1 "Presence and movement of receivables".

Since the current liquidity ratio characterizes the organization's current solvency, we consider it necessary to take into account the share of long-term liabilities when calculating it.

Among long-term liabilities, a certain part must be repaid in the reporting year in connection with the maturity of the payment. Therefore, the amount of long-term liabilities that the organization must repay in the reporting period should be appropriately sourced and included in short-term liabilities. However, accounting for these liabilities when calculating the solvency ratio presents certain difficulties due to the lack of this information in the financial statements and can only be obtained from analytical accounting data.

To clarify the characteristics of the organization's solvency, we also propose to include in the amount of short-term liabilities the amounts of long-term loans and borrowings not repaid on time, since they are practically equal to current liabilities. Currently, these data are given in the explanatory notes to the statements (section 5, subsection 5.4 "Overdue accounts payable"). This item reflects both short-term and long-term overdue accounts payable. To calculate the current solvency indicator, it is recommended to take into account the long-term overdue long-term debt.

Thus, the current liquidity ratio, taking into account our proposals, will be calculated as the ratio of the total of section II of the balance sheet minus long-term receivables to current liabilities (short-term loans and borrowings, accounts payable and the amounts of long-term loans and loans not repaid on time).

Section V of the balance sheet contains an article that is not related to the obligations of the organization - “Deferred income”. Therefore, this article should not be included in the obligations of the organization when calculating solvency indicators.

Based on the foregoing, the formula for calculating the current liquidity ratio, in our opinion, should be as follows:

where O A - current assets;

DDZ - receivables with a maturity of more than 12 months;

KK - short-term credits and loans;

KZ - accounts payable;

PKO - other short-term liabilities;

DO - long-term liabilities payable in the reporting period.

The calculated indicator of current liquidity will give an objective assessment of the organization's payment capabilities in the reporting period.