Analysis of factors influencing the company's efficiency. Method of financial ratios The analysis of financial ratios is

Financial ratios are relative indicators of a company's financial health. They are calculated through the ratio of the absolute values of the coefficients of the financial condition of the enterprise.
The analysis of financial ratios consists in comparing the values of these ratios with normative or basic values, as well as the analysis and study of their dynamics over a certain period.

There are a large number of financial ratios, but a small number is enough to fully characterize the state of the enterprise. The main thing is that this coefficient reflects one of the parties of the financial and economic activity of the enterprise.

First group– a group of profitability ratios. Here allocate the coefficient of total profitability, net profitability, net profitability of equity capital, profitability of production assets.
Co.r = gross profit / property value
Kch.r. = net income / property value
Kr.sk \u003d net profit / equity value
Kr.pf \u003d gross profit / value of fixed and current assets

Second group- a group of coefficients of enterprise management efficiency.
Net profit per 1 rub. = net profit / product turnover
Profit from the sale of 1 rub. = sales profit / product turnover
Profit from all sales per 1 rub. = profit of all sales / product turnover
Total profit per 1 rub. = gross profit / product turnover

Third group– a group of coefficients of business activity.
Total Return on Capital = Turnover / Average Property Value
Return of fixed assets and intangible assets = turnover / average cost of production assets and intangible assets
Turnover of all current assets = turnover / average value of current assets
Accounts receivable turnover = turnover / average value of receivables

Fourth group- coefficients of financial stability of the enterprise.
Autonomy coefficient \u003d sources of funds / total balance (> 0.5 standard)
Debt to Equity Ratio = Liabilities / Equity (>1 Ratio)
Ratio of mobile and immobilized funds = current assets / non-current assets
Agility coefficient = own working capital / total value of the enterprise's sources of funds
Equity ratio = own working capital / cost of inventories and costs (>0.6 standard)

Fifth group– liquidity ratios.
Absolute Liquidity Ratio = Most Liquid Assets / Most Term Liabilities and Short Term Liabilities
Critical Liquidity Ratio = Accounts Receivable and Other Assets / Most Term Liabilities and Current Liabilities
Current liquidity ratio = value of all current assets / short-term liabilities

Financial analysis is carried out by companies not only to assess the current financial condition of the company, it also allows you to predict its further development. At the same time, analysts need to carefully consider the list of indicators that will be used for strategic planning.

A company's sustainable growth analysis is a dynamic analytical framework that combines financial analysis with strategic management to explain the critical relationships between strategic planning variables and financial variables, and to test the alignment of corporate growth objectives with financial policy. This analysis allows you to determine whether the company's existing opportunities for financial growth, determine how the company's financial policy will affect the future and analyze the strengths and weaknesses of the company's competitive strategies.

In this article, we will consider the components of the analysis of financial indicators.

Any measures for the implementation of strategic programs have their cost. A necessary part of the planning and implementation of the strategy is the calculation of the necessary and sufficient financial resources that the company must invest.

Information for financial analysis

The most complete definition of the concept of financial analysis is given in the “Financial and Credit Encyclopedic Dictionary” (edited by A.G. Gryaznova, M.: “Finance and Statistics”, 2004): “ Financial analysis is a set of methods for determining the property and financial position of an economic entity in the past period, as well as its capabilities in the short and long term". The purpose of financial analysis is to determine the most effective ways to achieve the profitability of the company, the main tasks are to analyze the profitability and assess the risks of the enterprise.

Analysis of financial indicators and ratios allows the manager to understand the competitive position of the company at the current time. Published reports and company accounts contain a lot of numbers, the ability to read this information allows analysts to know how efficiently and effectively their company and competing companies are working.

The ratios allow you to see the relationship between sales profit and expenses, between the main assets and liabilities. There are many types of ratios, and they are usually used to analyze the five main aspects of a company's performance: liquidity, equity ratio, asset turnover, profitability, and market value.

Rice. 1. The structure of the company's financial indicators

The analysis of financial ratios and indicators is an excellent tool that provides an idea of the company's financial condition and competitive advantages and prospects for its development.

1. Performance analysis. The ratios allow you to analyze the change in the company's performance in terms of net profit, capital use and control the level of costs. Financial ratios allow you to analyze the financial liquidity and stability of an enterprise through the effective use of a system of assets and liabilities.

2. Evaluation of market business trends. By analyzing the dynamics of financial indicators and ratios over a period of several years, it is possible to study the effectiveness of trends in the context of the existing business strategy.

3. Analysis of alternative business strategies. By changing the indicators of the coefficients in the business plan, it is possible to analyze alternative options for the development of the company.

4. Monitoring the progress of the company. Having chosen the optimal business strategy, the company's managers, continuing to study and analyze the main current ratios, can see a deviation from the planned indicators of the development strategy being implemented.

Ratio analysis is the art of relating two or more measures of a company's financial performance. Analysts can see a more complete picture of the performance results in dynamics over several years, and additionally by comparing the company's performance with industry averages.

It is worth noting that the system of financial indicators is not a crystal ball in which you can see everything that was and will be. It's just a convenient way to summarize a large amount of financial data and compare the performance of different companies. By themselves, financial ratios help the company's management focus on the strengths and weaknesses of the company's activities, correctly formulate questions that these ratios can rarely answer. It is important to understand that financial analysis does not end with the calculation of financial indicators and ratios, it only begins when the analyst has completed their calculation.

The real utility of the calculated coefficients is determined by the tasks set. First of all, the ratios provide an opportunity to see changes in the financial position or results of production activities, help to determine the trends and structure of the planned changes; which helps management to see the threats and opportunities inherent in this particular enterprise.

The company's financial reports are a source of information about the company not only for analysts, but also for the company's management and a wide range of stakeholders. It is important for users of information on financial ratios to know the main characteristics of the main financial statements and the concepts of indicator analysis for effective ratio analysis. However, when conducting financial analysis, it is important to understand that the main thing is not the calculation of indicators, but the ability to interpret the results.

When analyzing financial performance, it should always be borne in mind that the assessment of performance is based on data from past periods, and on this basis, extrapolation of the future development of the company may turn out to be incorrect. Financial analysis should be directed to the future.

Concepts behind financial performance analysis

Financial analysis is used in the construction of budgets, to identify the causes of deviations of actual indicators from planned and correction of plans, as well as in the calculation of individual projects. The main tools used are horizontal (dynamics of indicators) and vertical (structural analysis of items) analysis of accounting documents of management accounting, as well as calculation of coefficients. Such an analysis is carried out for all major budgets: BDDS, BDR, balance sheet, sales, purchases, inventory budgets.

The main features of financial analysis are the following:

1. The vast majority of financial indicators are in the nature of relative values, which makes it possible to compare enterprises of various scales of activity.

2. When conducting financial analysis, it is important to apply a comparison factor:

compare the performance of the company in a trend for different periods of time;
compare the performance of this company with the average performance of the industry or with similar performance of enterprises within the industry.

3. For financial analysis, it is important to have a complete financial description of the company for selected time periods (usually years). If the analyst has data for only one period, then there should be data on the balance sheet of the enterprise at the beginning and end of the period, as well as a profit statement for the period under consideration. It is important to remember that the number of balances for analysis should be one more than the number of profit reports.

Accounting management is an important element in the analysis of financial ratios and indicators. The basic accounting equation that expresses the interdependence of assets, liabilities and property rights is called the balance sheet:

ASSETS = LIABILITIES + EQUITY

Assets usually classified into three categories:

1. Current assets include cash and other assets that must be converted to cash within one year (for example, publicly traded securities; receivables; notes receivable; working capital and advances).

2. Land property, fixed assets and equipment (fixed capital) include assets that are characterized by a relatively long service life. These funds are usually not intended for resale and are used in the production or sale of other goods and services.

3. Long-term assets include the company's investments in securities, such as stocks and bonds, as well as intangible assets, including: patents, expenses on monopoly rights and privileges, copyrights.

Liabilities usually divided into two groups:

1. Short-term liabilities include amounts of accounts payable that should be paid within one year; for example, accrued liabilities and bills payable.

2. Long-term obligations are the rights of creditors, which do not have to be realized within one year. This category includes obligations under a bonded loan, long-term bank loans, and mortgages.

Equity These are the rights of the owners of the enterprise. From an accounting point of view, this is the balance of the amount after deducting liabilities from assets. This balance is increased by any profit and reduced by any losses of the company.

Measures commonly considered by analysts include the income statement, balance sheet, measures of changes in financial position, and measures of changes in equity.

A company's income statement, also referred to as a profit and loss statement or income statement, summarizes the results of a company's options activity for a specific reporting period. Net income is calculated using the periodic accounting method used to calculate profits and costs. It is usually considered the most important financial indicator. The report shows whether the percentage of earnings on the company's shares for the reporting period decreased or increased after the distribution of dividends or after the conclusion of other transactions with the owners. The income statement helps owners assess the amount, timing and uncertainty of future cash flows.

The balance sheet and the income statement are the main sources of indicators used by companies. A balance sheet is a statement showing what a company owns (assets) and owes (liabilities and equity) as of a specific date. Some analysts refer to the balance sheet as a "picture of a company's financial health" at a particular point in time.

System of financial indicators and ratios

The total number of financial ratios that can be used to analyze the company's activities is about two hundred. Usually, only a small number of basic coefficients and indicators are used and, accordingly, the main conclusions that can be drawn from them. For the purpose of a more streamlined consideration and analysis, financial indicators are usually divided into groups, most often into groups that reflect the interests of certain stakeholders (stakeholders). The main groups of stakeholders include: owners, management of the enterprise, creditors. At the same time, it is important to understand that the division is conditional and indicators for each group can be used by different stakeholders.

As an option, it is possible to streamline and analyze financial indicators by groups that characterize the main properties of the company's activities: liquidity and solvency; the effectiveness of the company's management; profitability (profitability) of activities.

The division of financial indicators into groups that characterize the features of the enterprise's activities is shown in the following diagram.

Rice. 2. The structure of the company's financial indicators

Let's consider in more detail the groups of financial indicators.

Operating costs indicators:

The analysis of operating costs allows us to consider the relative dynamics of the shares of various types of costs in the structure of the total costs of the enterprise and is an addition to the operational analysis. These indicators allow you to find out the reason for the change in the profitability of the company.

Indicators of effective asset management:

These indicators make it possible to determine how effectively the company's management manages the assets entrusted to it by the company's owners. The balance can be used to judge the nature of the assets used by the company. It is important to remember that these indicators are very approximate, because. In the balance sheets of most companies, a variety of assets acquired at different times are indicated at historical cost. Consequently, the book value of such assets often has nothing to do with their market value, this condition is further exacerbated by inflation and an increase in the value of such assets.

Another distortion of the current situation may be related to the diversification of the company's activities, when specific activities require the involvement of a certain amount of assets in order to obtain a relatively equal amount of profit. Therefore, when analyzing, it is desirable to strive for the separation of financial indicators for certain types of company activities or products.

Liquidity indicators:

These indicators allow you to assess the degree of solvency of the company on short-term debts. The essence of these indicators is to compare the value of the current debt of the company and its working capital, which will ensure the repayment of these debts.

Indicators of profitability (profitability):

They allow to evaluate the effectiveness of the use by the company's management of its assets. The efficiency of work is determined by the ratio of net profit, determined in various ways, with the amount of assets used to obtain this profit. This group of indicators is formed depending on the focus of the study of effectiveness. Following the goals of the analysis, the components of the indicator are formed: the amount of profit (net, operating, profit before tax) and the amount of the asset or capital that form this profit.

Capital structure indicators:

Using these indicators, it is possible to analyze the degree of risk of bankruptcy of the company in connection with the use of borrowed financial resources. With an increase in the share of borrowed capital, the risk of bankruptcy increases, because. the company's liabilities increase. This group of coefficients is primarily of interest to existing and potential creditors of the company. The management and owners evaluate the company as a continuously operating business entity, creditors have a twofold approach. On the one hand, creditors are interested in financing the activities of a successfully operating company, the development of which will meet expectations; on the other hand, lenders estimate how strong the claim for repayment of the debt will be if the company experiences significant difficulties in repaying a long-term loan.

A separate group is formed by financial indicators that characterize the company's ability to service debt using funds received from current operations.

The positive or negative impact of financial leverage increases in proportion to the amount of borrowed capital used by the company. The risk of the creditor increases together with the growth of the risk of the owners.

Debt service indicators:

Financial analysis is based on balance sheet data, which is an accounting form that reflects the financial condition of the company at a certain point in time. Whichever coefficient characterizing the capital structure is considered, the analysis of the share of debt capital, in fact, remains statistical and does not take into account the dynamics of the company's operating activities and changes in its economic value. Therefore, debt service indicators do not give a complete picture of the company's solvency, but only show the company's ability to pay interest and the amount of the principal debt within the agreed time frame.

Market indicators:

These indicators are among the most interesting for company owners and potential investors. In a joint-stock company, the owner - the shareholder - is interested in the profitability of the company. This refers to the profit received due to the efforts of the company's management, on the funds invested by the owners. Owners are interested in the impact of the company's performance on the market value of their shares, especially those freely traded on the market. They are interested in the distribution of their profits: how much of it is reinvested in the company, and how much is paid to them as dividends.

The main analytical goal of analyzing financial ratios and indicators is to acquire the skills of making managerial decisions and understanding the effectiveness of its work.

The method of financial ratios is the calculation of the ratios of financial statements data, the determination of the relationship of indicators. When conducting an analysis, the following factors should be taken into account: the effectiveness of the applied planning methods, the reliability of financial statements, the use of various accounting methods (accounting policies), the level of diversification of the activities of other enterprises, the static nature of the applied coefficients.

Expressing relative values, financial ratios make it possible to evaluate indicators in dynamics and compare the performance of an enterprise with the industry and parameters of competing organizations, as well as compare them with recommended values. The use of financial ratios makes it possible to quickly assess the financial condition of the enterprise.

Financial ratios can be systematized according to certain criteria:

- proceeding from the meters put in a basis: cost and natural;
- depending on which side of phenomena and operations they measure: quantitative and qualitative;
- based on the use of individual indicators or their ratios: volumetric and specific.

Specific indicators include financial ratios, which are widely used in analytical work.

The composition of the indicators of each group includes several main generally accepted parameters and many additional ones, determined based on the goals of the analysis.

The most widespread are four groups of financial indicators:

Indicators of financial stability.

Solvency and liquidity meters.

Indicators of profitability (profitability).

Parameters of business activity and production efficiency.

The condition for the financial stability of an enterprise is an acceptable value of solvency and liquidity indicators. They express its ability to repay short-term liabilities with quickly realizable assets. The financial balance of the organization is ensured by a sufficiently high level of its solvency. The low value of solvency and liquidity ratios characterizes the situation of cash shortage to maintain normal current (operational) activities. On the contrary, high values of these parameters indicate an irrational investment in current assets. Therefore, the study of the solvency and liquidity of the balance sheet of the enterprise is always given the closest attention.

Profitability indicators allow you to obtain a generalized assessment of the effectiveness of the use of assets (property) and equity capital of the enterprise.

The parameters of business activity are also designed to assess the effectiveness of the use of assets and equity, but from the standpoint of their turnover. The volume of assets should be optimal, but sufficient to fulfill the production program of the enterprise. If it experiences a shortage of resources, then it must take care of the sources of financing for their replenishment. Such sources can be both own and borrowed funds. When assets are redundant, the enterprise incurs additional costs for their maintenance, which reduces their profitability.

The group of indicators characterizing the business activity of an enterprise includes parameters expressing the value and profitability of its shares on the stock market. Market activity ratios relate the market price of a share to its par value and earnings per share. They allow the management and owners of the enterprise to evaluate the attitude of investors to its current and future activities.

Table 1.1. individual indicators recommended for analytical work are presented. These indicators can be used by external users of financial statements, such as investors, shareholders and creditors.

Name of indicator	What characterizes	Calculation method	Interpretation of the indicator
Coefficients characterizing the financial stability of the enterprise
1. Coefficient of financial independence (Kfn)	The share of equity capital in the balance sheet	To fn = SK / WB, where SK is equity; WB -- balance currency
2. Debt ratio (Kz) or financial dependence	The ratio between borrowed and own funds	K s = ZK / CK, where ZK -- borrowed capital; SC - equity
3. Funding ratio (Kfin)	The ratio between own and borrowed funds
4. The coefficient of provision with own working capital (Ko)	The share of own working capital (net working capital) in current assets	K o = SOS / OA, where SOS -- own working capital; About A - current assets
5. Agility factor	The share of own working capital in equity
6. Permanent asset ratio (Kpa)	The share of equity allocated to cover the non-mobile part of the property	K pa \u003d BOA / CK, where BOA -- non-current assets	The indicator is individual for each enterprise. It can be compared to a company that has absolute financial stability.
7. Coefficient of financial tension (Kf ex)	The share of borrowed funds in the borrower's balance sheet currency	K f ex = ZK / WB, where ZK is borrowed capital, WB is the balance sheet currency	Not more than 0.5 (50%). Exceeding the upper limit indicates a large dependence of the enterprise on external sources of financing.
8. Long-term borrowing ratio (Kdp zs)	The share of long-term borrowed sources in the total amount of equity and borrowed capital	K dp zs \u003d DZI / SK + ZK, where DZI -- long-term borrowed sources; SK equity; ZK-- borrowed capital
9. Ratio of mobile and immobilized assets (Kc)	How many current assets account for each ruble of non-current assets	K c \u003d OAIBOA where OA is current assets; BOA -- non-current (immobilized) assets	Individual for each enterprise. The higher the value of the indicator, the more funds are advanced into current (mobile) assets
10. Coefficient of industrial property (Kipn)	The share of industrial property in the assets of the enterprise	K ipn = BOA + 3/A, where BOA -- non-current assets; 3 - stocks; A - the total amount of assets (property)	Kipn > 0.5. If the indicator drops below 0.5, it is necessary to attract borrowed funds to replenish the property
Financial ratios used to assess liquidity and solvency of the enterprise
1. Absolute (quick) liquidity ratio (Kal,)	How much of the short-term debt the company can repay in the near future (as of the balance sheet date)	K al \u003d (DS + KFV / KO), where DS - cash; KFV -- short-term financial investments;
2. Current (adjusted) liquidity ratio (Ktl)	Predictable payment capabilities of the enterprise in the conditions of timely settlements with debtors	K tl \u003d DS + KFV + DZ / KO, where DZ is receivables
3. Liquidity ratio when raising funds (CLMS)	The degree of dependence of the solvency of the enterprise on inventories from the position of mobilizing funds to repay short-term obligations	K lms \u003d 3 / KO, where 3 -- inventories
4. Total liquidity ratio (Col)	Sufficiency of working capital of the enterprise to cover its short-term obligations. It also characterizes the margin of financial strength due to the excess of current assets over short-term liabilities	K ol \u003d (DS + KFV + + DZ + 3) / KO
5. Own solvency ratio (Ksp)	Characterizes the share of net working capital in short-term liabilities, i.e., the ability of the enterprise to compensate for its short-term liabilities at the expense of net current assets	Ksp \u003d CHOK / KO, where CHOK is net working capital; KO -- short-term liabilities	The indicator is individual for each enterprise and depends on the specifics of its production and commercial activities.

An enterprise is considered solvent if the following condition is met:

where OA -- current assets (section II of the balance sheet); TO -- short-term liabilities (section V of the balance sheet).

A more particular case of solvency: if own working capital covers the most urgent obligations (accounts payable):

where SOS - own working capital (OA - KO); SO - the most urgent obligations (items from section V of the balance sheet).

In practice, the solvency of the enterprise is expressed through the liquidity of the balance sheet.

Thus, in order to conduct a financial analysis and to identify the insolvency of Master Yug LLC, we can use the indicators given in this chapter and compare them with the normative value.

Let's analyze the 12 main coefficients of the financial analysis of the enterprise. Due to their great diversity, it is often impossible to understand which of them are the main ones and which are not. Therefore, I tried to highlight the main indicators that fully describe the financial and economic activities of the enterprise.

In activity, an enterprise always faces its two properties: its solvency and its efficiency. If the solvency of the enterprise increases, then the efficiency decreases. An inverse relationship can be observed between them. Both solvency and performance can be described by coefficients. You can dwell on these two groups of coefficients, however, it is better to split them in half. So the Solvency group is divided into Liquidity and Financial stability, and the Enterprise Efficiency group is divided into Profitability and Business activity.

We divide all coefficients of financial analysis into four large groups of indicators.

Liquidity ( short-term solvency),
Financial stability ( long-term solvency),
Profitability ( financial efficiency),
Business activity ( non-financial efficiency).

The table below shows the division into groups.

In each of the groups, we will select only the top 3 coefficients, as a result, we will have only 12 coefficients. These will be the most important and main coefficients, because, in my experience, they most fully describe the activities of the enterprise. The rest of the coefficients that are not included in the top, as a rule, are a consequence of these. Let's get down to business!

Top 3 Liquidity Ratios

Let's start with the golden trio of liquidity ratios. These three ratios give a complete understanding of the company's liquidity. This includes three ratios:

current liquidity ratio,
absolute liquidity ratio,
Quick liquidity ratio.

Who uses liquidity ratios?

The most popular among all coefficients - it is used mainly by investors in assessing the liquidity of an enterprise.

interesting for suppliers. It shows the ability of the enterprise to pay off contractors-suppliers.

Calculated by lenders to assess the quick solvency of the enterprise when issuing loans.

The table below shows the formula for calculating the three most important liquidity ratios and their normative values.

	Odds	Formula	Calculation	standard
1	Current liquidity ratio	Current liquidity ratio \u003d Current assets / Short-term liabilities	Ktl= p.1200/ (p.1510+p.1520)
2	Absolute liquidity ratio	Absolute liquidity ratio = (Cash + Short-term financial investments) / Short-term liabilities	Cable= p.1250/(str.1510+str.1520)
3	Quick liquidity ratio	Quick liquidity ratio = (Current assets-Stocks)/Current liabilities	Kbl \u003d (p. 1250 + p. 1240) / (p. 1510 + p. 1520)

Top 3 Financial Strength Ratios

Let's pass to consideration of three basic factors of financial stability. The key difference between liquidity ratios and financial stability ratios is that the first group (liquidity) reflects short-term solvency, and the last (financial stability) - long-term. But in fact, both liquidity ratios and financial stability ratios reflect the solvency of the enterprise and how it can pay off its debts.

autonomy coefficient,
Capitalization ratio,
The coefficient of security with own working capital.

Autonomy coefficient(financial independence) is used by financial analysts for their own diagnostics of their enterprise for financial stability, as well as arbitration managers (according to the Decree of the Government of the Russian Federation of June 25, 2003 No. 367 “On approval of the rules for financial analysis by arbitration managers”).

Capitalization ratio important for investors who analyze it to evaluate investments in a particular company. A company with a large capitalization ratio will be more preferable for investment. Too high values of the coefficient are not very good for the investor, as the profitability of the enterprise and thus the income of the investor decreases. In addition, the coefficient is calculated by lenders, the lower the value, the more preferable is the provision of a loan.

recommendatory(according to Decree of the Government of the Russian Federation of May 20, 1994 No. 498 “On certain measures to implement the legislation on insolvency (bankruptcy) of an enterprise”, which became invalid in accordance with Decree 218 of April 15, 2003) is used by arbitration managers. This ratio can also be attributed to the Liquidity group, but here we will attribute it to the Financial Stability group.

The table below shows the formula for calculating the three most important financial stability ratios and their standard values.

	Odds	Formula	Calculation	standard
1	Autonomy coefficient	Autonomy Ratio = Equity / Assets	Kavt = str.1300/p.1600
2	Capitalization ratio	Capitalization ratio = (Long-term liabilities + Short-term liabilities)/Equity	Kcap=(p.1400+p.1500)/p.1300
3	Working capital ratio	Equity ratio = (Equity - Non-current assets)/Current assets	Kosos=(p.1300-p.1100)/p.1200

Top 3 profitability ratios

Let's move on to the three most important profitability ratios. These ratios show the effectiveness of cash management in the enterprise.

This group of indicators includes three coefficients:

Return on assets (ROA),
Return on equity (ROE),
Return on sales (ROS).

Who uses financial stability ratios?

Return on assets ratio(ROA) is used by financial analysts to diagnose the performance of an enterprise in terms of profitability. The coefficient shows the financial return on the use of the company's assets.

Return on equity ratio(ROE) is of interest to business owners and investors. It shows how effectively the money invested (invested) in the enterprise was used.

Return on sales ratio(ROS) is used by the head of the sales department, investors and the owner of the enterprise. The coefficient shows the effectiveness of the sale of the main products of the enterprise, plus it allows you to determine the share of the cost in sales. It should be noted that what is important is not how many products the company sold, but how much net profit it earned net money from these sales.

The table below shows the formula for calculating the three most important profitability ratios and their standard values.

	Odds	Formula	Calculation	standard
1	Return on assets (ROA)	Return on Assets = Net Income / Assets	ROA = p.2400/p.1600
2	Return on equity (ROE)	Return on Equity Ratio = Net Income/Equity	ROE = str.2400/str.1300
3	Return on sales (ROS)	Return on Sales Ratio = Net Profit / Revenue	ROS = p.2400/p.2110

Top 3 business activity ratios

We turn to the consideration of the three most important coefficients of business activity (turnover). The difference between this group of coefficients and the group of profitability coefficients lies in the fact that they show the non-financial efficiency of the enterprise.

This group of indicators includes three coefficients:

Accounts receivable turnover ratio,
Accounts payable turnover ratio,
Inventory turnover ratio.

Who uses business activity ratios?

Used by the CEO, Commercial Director, Head of Sales, Sales Managers, CFO and Finance Managers. The coefficient shows how effectively the interaction between our company and our counterparties is built.

It is used primarily to determine ways to increase the liquidity of the enterprise and is of interest to the owners and creditors of the enterprise. It shows how many times in the reporting period (usually a year, but maybe a month, quarter) the company repaid its debts to creditors.

Can be used by commercial director, sales manager and sales managers. It determines the effectiveness of inventory management in the enterprise.

The table below shows the formula for calculating the three most important business activity ratios and their standard values. There is a small point in the calculation formula. The data in the denominator, as a rule, are taken as averages, i.e. the value of the indicator at the beginning of the reporting period is added to the end and divided by 2. Therefore, in the formulas, everywhere in the denominator is 0.5.

	Odds	Formula	Calculation	standard
1	Accounts receivable turnover ratio	Accounts Receivable Turnover Ratio = Sales Revenue/Average Accounts Receivable	Kodz \u003d str.2110 / (str.1230np. + str.1230kp.) 0.5*	dynamics
2	Accounts payable turnover ratio	Accounts payable turnover ratio= Sales revenue/Average accounts payable	Cockz=p.2110/(p.1520np.+p.1520kp.)0.5*	dynamics
3	Inventory turnover ratio	Inventory Turnover Ratio = Sales Revenue/Average Inventory	Koz = line 2110 / (line 1210np. + line 1210kp.) 0.5*	dynamics

Summary

Let's sum up the top 12 coefficients for the financial analysis of the enterprise. Conventionally, we have identified 4 groups of performance indicators of the enterprise: Liquidity, Financial stability, Profitability, Business activity. In each group, we have identified the top 3 most important financial ratios. The obtained 12 indicators fully reflect the entire financial and economic activity of the enterprise. It is with the calculation of them that it is worth starting a financial analysis. For each coefficient, a calculation formula is given, so it will not be difficult for you to calculate it for your enterprise.

It is a process of studying the financial condition and the main results of the financial activity of an enterprise in order to identify reserves to increase its market value and ensure further effective development.

The results of financial analysis are the basis for making managerial decisions, developing a strategy for the further development of the enterprise. Therefore, financial analysis is an integral part, its most important component.

Basic methods and types of financial analysis

There are six main methods of financial analysis:

horizontal(temporal) analysis— comparison of each reporting position with the previous period;
vertical(structural) analysis- identification of the specific weight of individual articles in the final indicator, taken as 100%;
trend analysis- comparing each reporting position with a number of previous periods and determining the trend, i.e. the main trend in the dynamics of the indicator, cleared of random influences and individual characteristics of individual periods. With the help of the trend, possible values of indicators are formed in the future, and therefore, a prospective predictive analysis is carried out;
analysis of relative indicators(coefficients) - calculation of ratios between individual reporting positions, determination of interrelations of indicators;
comparative(spatial) analysis- on the one hand, this is an analysis of the reporting indicators of subsidiaries, structural divisions, on the other hand, a comparative analysis with the indicators of competitors, industry averages, etc.;
factor analysis– analysis of the influence of individual factors (reasons) on the resulting indicator. Moreover, factor analysis can be both direct (analysis itself), when the resulting indicator is divided into its component parts, and reverse (synthesis), when its individual elements are combined into a common indicator.

The main methods of financial analysis carried out at the enterprise:

Vertical (structural) analysis- determination of the structure of the final financial indicators (the amounts for individual items are taken as a percentage of the balance sheet currency) and identifying the impact of each of them on the overall result of economic activity. The transition to relative indicators allows for inter-farm comparisons of the economic potential and performance of enterprises that differ in the amount of resources used, and also smoothes out the negative impact of inflationary processes that distort absolute indicators.

Horizontal (dynamic) analysis is based on the study of the dynamics of individual financial indicators over time.

Dynamic analysis is the next step after the analysis of financial indicators (vertical analysis). At this stage, it is determined which sections and items of the balance sheet have undergone changes.

The analysis of financial ratios is based on the calculation of the ratio of various absolute indicators of financial activity among themselves. The source of information is the financial statements of the enterprise.

The most important groups of financial indicators:

Turnover indicators (business activity).
Market Activity Indicators

When analyzing financial ratios, the following points should be kept in mind:

the value of financial ratios is greatly influenced by the accounting policy of the enterprise;
diversification of activities makes it difficult to compare coefficients by industry, since the standard values can vary significantly for different industries;
normative coefficients chosen as a basis for comparison may not be optimal and may not correspond to the short-term objectives of the period under review.

Comparative financial analysis is based on comparing the values of individual groups of similar indicators with each other:

indicators of this enterprise and average industry indicators;
financial indicators of the given enterprise and indicators of the enterprises-competitors;
financial indicators of individual structural units and divisions of the enterprise;
comparative analysis of reporting and planned indicators.

Integral () financial analysis allows you to get the most in-depth assessment of the financial condition of the enterprise.

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