Using solvency ratios (financial stability), an analysis of liabilities is made, which consists of funds invested in production by investors (equity capital) and received on credit (borrowed capital).
Assessment of solvency
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The autonomy ratio shows what share equity capital makes up of the total amount of financial sources. It is necessary to strive to ensure that this indicator accounts for at papua new guinea email list least half. Then the enterprise has the opportunity to fully repay loans at the expense of its own capital, which is a sign of sufficient solvency. This ratio allows us to characterize the independence of the enterprise from borrowed funds and compare the interests of owners, shareholders and creditors. Its optimal value is 0.6 (0.5).
The debt ratio shows what share of borrowed capital is in the total amount of financial sources, and allows us to assess the scale of its use at the enterprise. The indicator should not exceed 0.4 - 0.5.
The maneuverability coefficient determines what share of own working capital is in equity. It allows to estimate the amount of equity capital that does not relate to real estate and can be moved, as a result of which it is possible to carry out certain manipulations with this property.
Own working capital includes the same-name capital that was not used in the process of creating non-current assets and is intended to form working capital. Their value is equal to own capital minus non-current assets. Thanks to own working capital in the composition of financial sources, conditions are created for achieving financial stability in the work of the enterprise.
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Liquidity assessment
The liquidity of an enterprise (current solvency) shows whether the enterprise has sufficient working capital to pay off short-term liabilities in full and on time.
The total coverage ratio (current liquidity) is the ratio of current assets to the same liabilities. It allows us to generally characterize the solvency of the enterprise at the moment, that is, the ability to cover current short-term liabilities at the expense of current assets.
The quick liquidity ratio is the ratio of the sum of current assets (including cash and accounts receivable) to current liabilities, excluding inventories, which have the lowest liquidity. For normal operation of the enterprise, it is recommended to maintain the value of this indicator at least 1.
The absolute liquidity ratio is the ratio of cash to current liabilities. This indicator allows for the most reliable assessment of solvency, since it characterizes the ability to repay certain short-term loan obligations at the current moment. The minimum acceptable value of the ratio is 0.2 or 20%.