What is it? Financial stability indicators demonstrate the amount of funds a company can spend on supporting or developing its activities. There are two types of metrics: absolute and relative.
What to do with them? After selecting financial stability indicators, they are analyzed. During this, the existing values are compared with the normative ones and control methods are determined.
The article explains:
The Importance of Financial Stability Indicators
Types of financial stability
Absolute indicators of financial stability
Relative indicators of financial stability
Standards for financial stability indicators
Methods of analysis of financial stability indicators
Monitoring financial stability
Frequently asked questions about financial stability indicators
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The Importance of Financial Stability Indicators
The indicators of the financial stability physician data package of the enterprise are used to assess the level of stability of its position. In other words, it becomes clear whether there are financial reserves that allow the company to operate stably, fully fulfill its credit obligations, and maintain a situation in which the level of income significantly exceeds expenses. Financial stability is a fundamental indicator that can be used to judge the reliability of the organization.
Financial stability indicators
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The purpose of this analysis is to assess the financial independence of the enterprise, namely, whether it has sufficient equity capital and whether it is able to operate without loans.
The analysis is carried out by the company independently in order to ensure a continuous incoming financial flow, which should subsequently be competently distributed. Third parties may also be involved in the analysis process, who will choose the most profitable option for investing their capital.
The analysis of financial stability indicators is divided into several stages:
definition of indicators;
identification of reserves that contribute to increased efficiency;
development of measures to improve financial stability.
The company is analyzed based on the information contained in the financial statements, the key document of which is the balance sheet. In the process of analysis, work is carried out with absolute and relative indicators.
After analyzing the company's financial statements, a general picture of its financial condition is formed. During the study of financial statements, special attention is paid to the sources of financing of the organization, the structure of its assets and their dynamics. Balance sheet data is available for analysis not only for internal but also for external users.
External users include :
creditors;
investors;
key clients;
tax authorities;
other interested parties.
Internal users are:
company owners;
Board of Directors;
top management;
heads of workshops and departments.
The main criteria by which the stability of the financial position of an organization is determined are stable growth of profits and equity capital.