Another absolute indicator of financial stability assessment is own working capital. You can also find such names as "own working capital" or "net working capital".
Own working capital demonstrates what part of the turnover is financed by the legal entity's own funds. They are calculated using the following formulas:
COC1 = OA – O
SOS2 = SC – VA
Where:
ОА – current assets (line 1200 of the balance sheet);
SC – equity capital (line 1300 of the balance sheet);
BA – non-current assets (line 1100 of the balance sheet).
Regardless of the formula used ireland email list to calculate the result will be the same. The reason for this is the balance equality, the extended version of which looks like this:
VA + OA = SK + O.
Own working capital may have a negative value. In this case, the formation of current assets of the organization is carried out only at the expense of liabilities. Based on this indicator, the type of financial stability is assessed and a number of coefficients are calculated.
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Relative indicators of financial stability
With their help, it becomes possible to determine how various factors influence changes in the financial condition of a company and to assess the dynamics of these changes.
For clarity, we will conduct an analysis of the financial stability of the organization based on financial statements data.
Consolidated balance sheet
Assets Passive
Line on 31.12.
2016 on 31.12.
2015 on 31.12.
2014 Line on 31.12.
2016 on 31.12.
2015 on 31.12.
2014
Non-current
assets 17,400 3000 3200 Equity
capital 12,500 12,500 12,500
Long-term
loans and credits 14,000 - -
Current
assets 28 750 16 340 14,000 Current
liabilities
, total; including loans and credits
19 720
16,500
6840
4700
4200
2600
Balance currency 46 220 19 340 17 200 Balance currency 46 220 19 340 17 200
Consolidated Statement of Financial Performance
Line For 2016 For 2015
Sales revenue 126 600 98 400
Cost of sales (116,400) (85 800)
Gross profit 10 200 12 600
Commercial expenses (2100) (1500)
Management expenses (6800) (6300)
Profit from sales 1300 4800
Other income 17 25
Other expenses (2800) (270)
Profit for the reporting period -1483 4555
Using information from financial statements, the following indicators of the organization’s financial stability are calculated:
Autonomy coefficient or AK
It demonstrates the company's independence from creditors and reflects the share of equity in all sources of financing. The higher the AC, the higher the probability of paying off the organization's debts with its own funds. The normal value of the coefficient is considered to be 0.5 or more, and the optimal is 0.6 or 0.7.
The autonomy ratio is calculated by dividing equity by assets.