home › Acquisition of apartments › The overall capital structure ratio is the formula for the balance sheet. Scientific electronic library. Non-current assets coverage ratio

The overall capital structure ratio is the formula for the balance sheet. Scientific electronic library. Non-current assets coverage ratio

There are three main indicators of the capital structure. The first is the ratio of borrowed and own funds (K3 / s):

where Пш, Піѵ, Пѵ are the corresponding sections of the balance sheet liabilities.

The maximum value of this coefficient should not exceed one.

The autonomy coefficient (KA) - the second main indicator - determines the independence of the enterprise from borrowed sources, i.e. degree of autonomy:

where VB is the balance currency.

Its minimum value is 0.5, i.e. own funds in the turnover of the enterprise should not be less than half.

The third coefficient of the capital structure is called the coefficient financial leverage(Kfr). It is calculated in reverse order with respect to the autonomy coefficient:

This ratio shows the impact of the capital structure as one of the factors on the return on equity. The return on equity can be represented using the substitution method as follows:

where Rcc - return on equity;

PE - net profit;

B - sales revenue;

Psh - the third section of the liability of the balance sheet "Capital and reserves", i.e. own funds.

This formula shows the three factors that affect the return on equity: return on sales - PE: B;

turnover of funds invested in the enterprise - B: WB; capital structure - WB: Psh.

The capital structure of an enterprise, as well as the cost of own and borrowed funds, determine the price of all capital. This is what primarily determines the optimization of the capital structure. Consider this in the following example (Table 7).

Table 7

STRUCTURE OF THE CAPITAL OF THE ENTERPRISE (in %)

Indicators

Options

bgcolor=white>3. Own funds price

	1	2	3	4	5	6	7	8
1. Share of own and borrowed funds	100	70	70	70	50	50	50	40
2. Share of borrowed funds	0	30	30	30	50	50	50	60
Total: all capital	100	100	100	100	100	100	100	100
10	10	10	10	10	10	10	10
4. Price of borrowed funds	7-12	7	10	12	7	10	12	15
5. Weighted average cost of capital (p1 x p3 + p2 x p4): 100	10	9,1	10	10,6	8,5	10	11	13
6. The effect of financial leverage (pZ - p4)x(p2: p1)	0	1,3	0	-0,9	3	0	-2	-7,5

From the table we can conclude that the optimal capital structure of the enterprise is option 5, in which the cost of capital is the lowest - 8.5%. Characteristic features: the maximum possible amount of borrowed funds; the price of borrowed funds is lower than the price of own funds.

2.3 Evaluation of indicators characterizing the capital structure of the enterprise

Further, to assess the feasibility of the capital structure, the indicators of the capital structure presented in Table 2.3.1 were analyzed. The indicators of the capital structure of Almetyevskoye UTT-1 LLC reflect the ratio of own and borrowed funds in the company's sources of financing.

Table 2.3.1.

Analysis of indicators of the capital structure of Almetyevskoye UTT-1 LLC for 2008-2010.

Index	Absolute value	Growth rate, %


Financial Independence Ratio
The ratio of total liabilities to total assets
The ratio of long-term liabilities to assets
The ratio of total liabilities to equity
The ratio of long-term liabilities to non-current assets

From table 2.3.2. it can be seen that the financial independence ratio shows a slight upward trend of 11.05% for 2008-2010, which indicates a decrease in the degree of dependence of Almetyevskoye UTT-1 LLC on external loans. The absolute value of this indicator is relatively significant, which indicates the presence of the risk of insolvency.

The indicator of the ratio of total liabilities to total assets shows a decrease of 6.43%, which indicates a decrease in the share of the company's assets, which is financed by loans. However, during the study period, the value of this indicator does not correspond to the recommended one (0.2 - 0.5), that is, Almetyevskoye UTT-1 LLC fully uses the opportunity to use borrowed funds and even exposes its activities to risk.

The ratio of long-term liabilities to assets shows a decrease of 92.05%, which indicates a decrease in the share of assets financed by long-term loans. However, the absolute value of this indicator is negligible: assets are practically not financed by long-term loans.

The ratio of total liabilities to equity shows a decrease of 15.74%. The absolute value of this indicator does not correspond to the recommended one (0.25 - 1), which again indicates an excessive use of the potential of loans in the capital structure.

Consider the return on equity of Almetyevskoye UTT-1 LLC for 2008-2010 using table 2.3.2.

Table 2.3.2.

Analysis of the return on equity of Almetyevskoye UTT-1 LLC for 2008-2010.

Index	Absolute value	Growth rate, %


Balance sheet profit, thousand rubles
Profit taxes, thousand rubles

Profit after taxes, thousand rubles
The share of net profit in the total balance sheet profit
Revenue, thousand rubles
Amount of capital, thousand rubles
including equity, thousand rubles.
Return on sales before taxes, %
Capital turnover ratio, about
Capital multiplier, units
Return on equity after taxes, %

The data in Table 2.3.2 allow us to conclude that the return on equity after taxes is declining, which indicates a poor-quality composition of capital in terms of profitability. The dynamics of the return on equity occurs at an uneven pace throughout the entire period: in 2009 it decreases by 7.4%, and in 2010 it increases by 7.4%. The decrease in 2008-2010 is due to the fact that the growth rate of equity capital is higher than the growth rate of net profit. The poor-quality composition of capital in terms of profitability is confirmed by the fact that the decrease in the return on equity after taxes is observed against the backdrop of an increase in net profit by 4.8%

Let's consider the qualitative level of borrowed capital of Almetyevskoye UTT-1 LLC for 2008-2010 using the effect of financial leverage and table 2.3.3.

Table 2.3.3.

Analysis of the efficiency of borrowed capital of Almetyevskoye UTT-1 LLC for 2008-2010.

Index	Absolute value	Growth rate, %


Balance sheet profit, thousand rubles
Taxes from profit, thousand rubles
Level of taxation, coefficient
Average annual amount of assets, thousand rubles
Equity
Borrowed capital
Leverage (debt to equity ratio)
Return on total capital, %
Weighted average price of borrowed resources, %
Effect of financial leverage, %

Table 2.3.3 shows that the effect of financial leverage shows an upward trend from 81.90% to 93.64%. The growth rate thus amounted to 14.3%. This positive dynamics indicates that the use of borrowed capital in 2009-2010 has a positive effect.

The reason for the positive value of the differential financial leverage is the introduction of new resource-saving transportation technologies, as a result of which the return on total capital increased by 3.9%. Under these conditions, the positive value of the financial leverage differential was also formed with a decrease in rates on borrowed capital due to the transition to accounts payable as the main source of borrowed funds.

As a result, the financial leverage ratio shows an increase, as noted above, which is a favorable trend and will lead to an even greater rate of increase in the return on equity ratio.

In conclusion, we will evaluate to what extent the capital structure allows us to comply with the conditions of solvency and liquidity of the activities of Almetyevskoye UTT-1 LLC.

When comparing groups of assets and liabilities, certain ratios must be observed, indicating the liquidity of the balance sheet of Almetyevskoye UTT-1 LLC and, accordingly, its activities.

Table 2.2.4.

Liquidity analysis of the balance sheet of OOO Almetyevskoye UTT-1 for 2008-2010, units

Index	Values of indicators, units

The most liquid assets A 1
Marketable Assets A 2
Slowly realizable assets A 3
Difficult to sell assets A 4
Most urgent obligations P 1
Short-term liabilities P 2
Long-term liabilities P 3
Permanent liabilities or stable P 4
Compliance with the ratio A1 ? P1
Compliance with the ratio A2? P2
Compliance with the ratio A3? P3
Compliance with the A4 ratio? P4

Table 2.2.4. shows a trend of good liquidity of the balance sheet of Almetyevskoye UTT-1 LLC for 2008-2010, except for the end of the study period. In 2010, there is a shortage of funds only to cover the debt for up to 3 months as a result of a significant share of accounts payable.

Thus, the capital structure of Almetyevskoye UTT-1 LLC is such that there is a decrease in dependence on external loans. However, during the study period, Almetyevskoye UTT-1 LLC excessively uses the opportunity to use borrowed funds. The assets are mostly financed by loans. The assessment of the quality of the capital structure of the enterprise LLC "Almetyevskoye UTT-1" allows us to draw the following conclusion. The low-quality composition of capital in terms of profitability is confirmed by the fact that the decrease in the return on equity after taxes is observed against the background of an increase in the net profit of the enterprise. The effect of financial leverage shows an upward trend, which indicates a positive effect of the use of borrowed funds. However reverse side This efficiency is a decrease in the liquidity of the activities of LLC Almetyevskoye UTT-1.

Analysis of the technical level of production and development of proposals for its improvement (on the example of OJSC "Shcherbinsky Elevator Plant")

Analysis financial condition Gomel distance of civil structures RUE "Gomel branch of the Belarusian railway"and promising solutions to problems in the financial activities of the enterprise under study

Regardless of the chosen method of financial analysis, there is always an analysis of financial ratios, which involves the calculation of the ratio of various absolute indicators to each other ...

Analysis of the financial condition of ZAO Gornozavodsktransport

The main purpose of financial analysis is to obtain a small number of key (most informative) parameters that give an objective and accurate picture of the financial condition of the enterprise, its profits and losses ...

Analysis of the financial condition and its importance for management

The amount of economic assets at the disposal of enterprises is an indicator of the generalized value of the valuation of assets on the balance sheet of the enterprise. The share of the active part of fixed assets ...

In an effort to resolve specific issues and obtain a qualified assessment of the financial situation, business leaders are increasingly beginning to resort to the help of financial analysis ...

Analysis of the financial condition of the enterprise

Table 5. Calculation of indicators characterizing the financial stability of an enterprise Indicators Calculation Value Maximum permissible value At the beginning At the end 1. Net working capital Str.290-str.690- -str...

Analysis of the financial condition of the enterprise

The property turnover ratio of the enterprise: KAKT \u003d BP / SAKTSP, where BP is the sales proceeds (line 010, f. 2), SAKTSP is the average annual value of property (assets), SAKTSP \u003d (SAKTNG + SAKTKG) / 2. Here is SACTNG...

Analysis of the financial condition of the enterprise

Financial activities is the working language of business, and it is practically impossible to analyze the operations or results of an enterprise other than through financial indicators ...

Analysis of the financial condition of the enterprise on the example of JSC "Penzadieselmash"

According to the annual financial statements (Appendix 2), the total amount of proceeds from the sale of products of JSC "Penzadieselmash" for 2010 amounted to 1,332,014 billion rubles. The volume of sales of the main types of railway equipment in 2010 amounted to 928,870 billion rubles...

Analysis of the financial stability of the enterprise

Analysis of the financial stability of the enterprise is based on the consideration of its absolute indicators. Data on such indicators for 2013-2014. are presented in table 2. Table 2. Absolute indicators of the financial stability of the production association "Krasnoborskoye" ...

Key areas for improvement financial results"KnAAPO"

Financial activity is the working language of business, and it is almost impossible to analyze the operations or results of an enterprise other than through financial indicators ...

Assessment of the financial position and development prospects of the enterprise (on the example of JSC "Neftekamskshina")

Assessment of the financial condition of the enterprise is the most important condition for the successful management of its finances. The financial condition of the enterprise is characterized by a set of indicators ...

Essence of financial results commercial organizations

Financial indicators characterize the proportions between different reporting items. The advantages of financial ratios are the simplicity of calculations and the elimination of the influence of inflation...

The financial analysis enterprises

One of the most important characteristics of the financial condition of an enterprise is the stability of its activities from a long-term perspective. It is primarily related to the general financial structure enterprises...

The price of the capital of an economic entity largely depends on its structure.
The capital structure of an enterprise (Fig. 55) is the ratio between various sources of capital (own and borrowed capital) used to finance its activities. Sometimes short-term borrowings are excluded from capital, that is, they define the capital structure as a set of sources used for long-term financing investment activity enterprises. At the same time, if short-term borrowings are carried out on an ongoing basis (which in most cases happens), they, in our opinion, should be included in capital when analyzing the financing structure.

Rice. 55. Basic definition of the capital structure of an enterprise
The optimal capital structure is the combination of debt and equity that maximizes the total value of the firm.
If we approach the issue of determining the optimal capital structure in terms of the relative cost of funding sources, then it must be taken into account that debt obligations are cheaper than shares. This means that the price of borrowed capital is on average lower than the price of equity capital. It follows that the replacement of shares with cheaper borrowed capital reduces the weighted average cost of capital, which leads to an increase in efficiency. entrepreneurial activity and, consequently, to maximize the price of the enterprise. Therefore, a number of theories financial management is based on the conclusion that the optimal capital structure involves the use of borrowed capital to the maximum extent possible.
But in practice it should be assumed that the replacement of shares with cheaper debt reduces the value of the firm, which is determined by the market value of the equity of this firm.
In addition, the increase in debt increases the risk of bankruptcy, which can significantly affect the price that potential investors are willing to pay for the company's common stock.
There are also important non-financial costs associated with the use of debt capital as a result of the limited discretion of managers in loan agreements. These may be obligations to create additional reserve funds to pay off debt or restrictive conditions in declaring dividends, which undoubtedly reduce the value of the business.
Therefore, it is impossible to develop a formula for determining the optimal capital structure for a particular enterprise. The manager, determining how close the capital structure of the company is to the optimal one, must rely to a certain extent on intuition, which in turn is based on information that takes into account both intra-company and macroeconomic factors.
In addition, attraction financial resources from various sources has organizational, legal, macroeconomic and investment restrictions.
Restrictions of an organizational and legal nature include statutory requirements for the amount and procedure for the formation of individual elements of equity and borrowed capital, as well as control over the management of the company by the owners.
Macroeconomic constraints include the investment climate in the country, country risk, government emission and credit policy, operating system taxation, the value of the refinancing rate of the Central Bank, the level of inflation.
The amount of financial resources that a company can attract from various sources, and the period for which they can be involved in business turnover, depends both on the development of the financial and credit markets, and on the availability of these funds for a particular enterprise. One of the important restrictions on the formation of the financial structure of capital is the compliance of the scope and nature of the enterprise's activities with the investment preferences of shareholders and / or the degree of trust in the enterprise on the part of creditors.
Thus no theory can provide integrated approach solution of the problem of the optimal capital structure of the enterprise. Therefore, in practice, the formation of an economically rational capital structure is based on one of the following principles:
1. The principle of maximizing the level of projected return on capital.
2. The principle of minimizing the cost of capital.
3. The principle of minimizing the level of financial risks.
At the same time, there are a number of financial instruments that can be used to improve the efficiency of managing the financial structure of an enterprise's capital. Among them is the use of financial ratios, which can be used to assess the impact of the process of changing the financial structure of capital on the financial position of the enterprise and the degree of protection of the interests of creditors and investors. We are talking about indicators characterizing the financial stability of the enterprise and the efficiency of investments in it (Fig. 56).

Rice. 56. The concept of financial stability of an economic entity
and the formula for calculating the financial stability ratio
Achieving the financial stability of an enterprise, along with increasing profits and limiting risk, requires the enterprise to maintain both solvency, or liquidity (the financial meaning of this concept was discussed in detail in topic 6), and creditworthiness, which is by no means synonymous with the concept of "solvency".
The creditworthiness of an enterprise is understood as the presence of prerequisites for obtaining a loan and repaying it on time. The creditworthiness of the borrower is characterized by his diligence when making payments on previously received loans, the current financial condition and the ability, if necessary, to mobilize cash from various sources.
The financial stability ratio characterizes the ratio of own and borrowed sources of financing. If this indicator is higher than one (there is an excess of own funds over borrowed funds), this means that the enterprise has a sufficient margin of financial stability.
The coefficient of financial dependence (Fig. 57) characterizes the dependence of the enterprise on external loans and shows what share of the company's property was acquired at the expense of borrowed funds. The higher this ratio, the more risky the situation in financial stability and the greater the likelihood of a shortage of funds.

Rice. 57. Formulas for calculating the coefficients of financial dependence, provision with own funds and self-financing
The equity ratio characterizes the ability of an enterprise to meet the need for financing working capital only from their own sources. The financial condition of the enterprise is considered satisfactory if this indicator is equal to or greater than 0.1.
The self-financing ratio shows how much of the investment can be covered by internal sources enterprises - retained earnings and accrued depreciation. A number of authors consider the amount of retained earnings and depreciation as a net cash flow, or cash flow from the economic activity of the enterprise. Then the coefficient of self-financing has the name "indicator of monetary return on investment". The higher this indicator, the higher the level of self-financing of the enterprise, therefore, the higher the financial stability.
The coefficient of autonomy (concentration of own capital) characterizes the share of own capital in the financial structure of capital (Fig. 58). For greater financial stability, it is desirable that it be at the level of 0.5-0.6.

Rice. 58. The formula for calculating the coefficient of autonomy (concentration of equity)
A number of authors attribute the autonomy coefficient to indicators of liquidity, which seems to us quite logical, since an enterprise should first of all pay for its obligations from its own sources. At the same time, this indicator is also an important coefficient in assessing the financial structure of an enterprise.
To ensure full financial stability, the management of the enterprise, along with ensuring sufficient solvency and creditworthiness, is obliged to maintain high liquidity of the balance sheet, and for this, the financial structure of the capital should be formed taking into account the following requirements:

Accounts payable should not exceed the value of the most liquid assets of the enterprise (these include primarily cash and short-term securities);

Short-term loans and borrowings and that part of long-term loans, the maturity of which falls within a given period, should not exceed the value of marketable assets (accounts receivable, funds on deposits);

Long-term loans and borrowings should not exceed the value of slow-moving current assets (stocks finished products, raw materials and materials);

Own funds must be higher than the value of non-current assets of the enterprise.

Considering the financial structure of the enterprise's capital, it is necessary to analyze its ability to service fixed payments - interest on borrowed capital and dividends to owners. share capital. For such an assessment, indicators of market activity, or the effectiveness of investments, are used.
The interest coverage ratio (Fig. 59) characterizes the degree of protection of creditors from non-payment of interest for a loan. Although there is no hard and fast rule of thumb regarding the optimal value of interest and dividend coverage ratios, most analysts agree that the minimum value of this ratio should be 3. A decrease in this ratio indicates an increase in financial risk.

Rice. 59. Formula for calculating interest coverage ratio
Using the dividend coverage ratio for preferred shares (Fig. 60), one can assess the company's ability to service dividend debt to holders of preferred shares. In this case, the numerator of the formula is the amount of net profit, because Dividends are paid out of profit after tax only. Obviously, the closer this indicator is to one, the worse the financial position of the company.

Rice. 60. Formula for calculating the dividend coverage ratio for preferred shares
Income per ordinary share (Fig. 61) is the main indicator of the enterprise's market activity. It characterizes the ability of the stock to generate income. It is determined by the ratio of net profit, reduced by the amount of dividends on preferred shares, to the number of ordinary shares of the company.
Dividend coverage ratio (Figure 62) estimates the amount of profit that can be used to pay declared dividends on ordinary shares. The reciprocal of this ratio is the dividend payout ratio, which is equal to the ratio of the amount of accrued dividend to income per ordinary share and shows what proportion of the company's net profit is directed to pay dividends.
The income capitalization interest rate (Figure 63) reflects the return on invested capital and the cost of equity capital on ordinary shares. The financial essence of this indicator is that it can be viewed as the rate at which the market capitalizes the amount of current income.

Rice. 61. Formula for calculating earnings per ordinary share

Rice. 62. The formula for calculating the dividend coverage ratio for ordinary shares circumstances.
So, above we considered that for the financial stability of an enterprise, a high share of equity capital is necessary. At the same time, if a company uses borrowed funds to an insufficient extent and is limited to using its own capital, this is fraught with a slowdown in development, a drop in competitiveness, physical and moral obsolescence of equipment, and a discrepancy between the characteristics of finished products and market requirements. All this leads to a decrease in gross profit, and therefore, earnings per share, a decrease in the market value of shares and, as a result, a decrease in market value companies. At the same time, an extremely high proportion of borrowed funds in liabilities indicates an increased risk of bankruptcy. In addition, loan holders may take control of a firm with limited self-financing capability.

Rice. 63. Formula for calculating the interest rate of income capitalization
Most often, financial ratios are just a hint of what is happening in the enterprise, what changes and trends, how they affect business development. Financial indicators help to answer the most important questions related to the current and strategic activities businesses such as:
- What is more important at this stage of the enterprise's activity - high profitability or high liquidity?
-What is the optimal value of a short-term loan required by an enterprise?
-What part of the profit to distribute as dividends?
- Conduct a new issue of shares or attract borrowed capital? etc.
Ultimately, when making any decision, connected with management financial structure of capital, one of the main goals of financial management should be remembered - maximizing the company's profits.
It is possible to influence the profitability of an enterprise by changing the volume and structure of liabilities.
Consider, for example, the performance of four firms that are the same in everything except the size and cost of borrowed capital.
So, firm Ane uses borrowed capital, firm B has a loan at 8%, firm C - at 12%, firm D - at 16%. The return on investment (ROI) of each firm is 12%. The nominal value of shares is 10 rubles, income tax is 20%.

Despite the fact that all firms have the same volume and return on investment, firm B will provide its shareholders with a higher return on shares than firm A, which does not use debt capital at all. Earnings per share AI firms C, despite the different capital structure, is the same. Lowest Income the shares will be received by the shareholders of the company D. The result obtained is due to two reasons:
1) since interest on the loan is deducted from income, usually before taxes, debt financing reduces taxable profits and leaves a large amount of income at the disposal of the shareholders of the company;
2) the company can efficient use borrowed capital to have additional income, which, after paying interest to investors, can be distributed among shareholders.
To do this, the amount of return on invested capital (DAYS) must be higher than the interest that the company pays for the use of borrowed capital.
So, firm B, paying a loan at 8%, ensures the profitability of its use at 12%, which increases the profitability of its shares compared to firm A. In this case, we are talking about a positive effect of financial leverage (Fig. 64). Firm A's DAYs coincide with the debt scene, so its earnings per share are equal to Firm A's earnings per share. The effect of financial leverage is zero. Firm D, paying a loan at 16% and having DAYS equal to 12%, is exposed to the negative effect of financial leverage.

Rice. 64. The concept of financial leverage
From the formula for calculating the level of the effect of financial leverage (Fig. 65), it can be seen that the positive, negative or zero value of the effect of financial leverage depends on the difference between the economic profitability of assets (ER) and the average calculated interest rate (AMIR) (the so-called financial leverage differential). If ER>SRSP, then both the differential and the effect of financial leverage are positive; if ER< СРСП - отрицательный; если ЭР = СРСП - нулевой.
The level of the effect of financial leverage also depends on the ratio of borrowed and own funds of the enterprise (the so-called shoulder of financial leverage). If the amount of borrowed funds is higher than the amount of equity capital, the force of the impact of financial leverage increases, if it is lower, it falls.
It affects the level of the effect of financial leverage and the rate of taxation of profits, and the lower it is, the greater the impact of the effect of financial leverage.
When determining the optimal amount of borrowed capital that can be attracted by an enterprise to finance its economic activities, it must be taken into account that not only profitability, but also financial risk depends on the capital structure.
In this case, financial risk is considered as a deviation of the actual result from the planned one.

Rice. 65. Formula for calculating the level of effect of financial leverage
An illustration of the influence of borrowed capital on the risk and profitability of entrepreneurial activity can be the following example. Firms A and V have the same assets (100 thousand rubles), sales volume (100 thousand rubles) and operating expenses (70 thousand rubles). Only the capital structure is different - firm A is financed only at the expense of its own capital (100 thousand rubles), firm B - at the expense of its own (50 thousand rubles) and borrowed (50 thousand rubles at 15%) capital.

Thus, under normal conditions, firm B will provide its shareholders with a return on shares of one and a half times the return on the shares of firm A. However, under unfavorable conditions, where sales are lower and costs are higher than expected, the return on equity of the firm , exposed to financial leverage, will fall especially sharply, there will be losses. Firm A, due to a more stable balance sheet, will be able to more easily endure the decline in production.
It follows that firms with a low share of debt are less risky, but they are deprived of the opportunity to use the positive effect of financial leverage to increase the return on equity. Firms that are relatively leveraged may have a higher return on equity if economic conditions are favorable, but they are at risk of loss if they find themselves in a downturn or if the financial calculations of the firm's managers do not pan out. At the same time, it should be taken into account that if only a small part of the investments is made by the owners, then the risks of the enterprise are mainly borne by creditors.
Summarizing the above, we note that the capital structure of an enterprise should provide the most effective ratio between indicators of profitability and financial stability. To solve this one of the most difficult tasks of financial management, the process of optimizing the capital structure of an economic entity should include several stages:
1. Analysis of capital in order to identify trends in the dynamics of the volume and composition of capital and their impact on the efficiency of the use of funds and the financial stability of the company.
2.Evaluation of the main factors influencing the capital structure.
3. Optimization of the capital structure according to the criterion of maximizing the return on equity with a simultaneous assessment of the amount of financial risk and the effect of financial leverage.
4. Optimization of the capital structure according to the criterion of minimizing its cost, for which the price of each element of capital is determined and its weighted average cost is calculated based on multivariate calculations.
5. Differentiation of sources of financing according to the criterion of minimizing the level of financial risks.
6.Formation of the target capital structure, which is the most profitable and least risky.
After that, work can begin to attract financial resources and relevant sources.
EXERCISES
10.1. Based on the data of the company's financial statements given in task 6.1, determine the indicators of financial stability and market activity of this company.
10.2. Determine the level of effect of financial leverage, if given:
Sales proceeds - 1 million 500 thousand rubles.
Variable costs - 1 million 050 thousand rubles.
Fixed costs - 300 thousand rubles.
Long-term loans - 150 thousand rubles.
Short-term loans - 60 thousand rubles.
Average calculated interest rate - 25%
Own funds - 600 thousand rubles.
Conditional income tax rate - 1/5
10.3. Find the level of effect of financial leverage, if given:
Sales - 230,000 units at a selling price per unit of 17 rubles,
Fixed costs - 310,000 rubles,
Variable costs per unit - 12 rubles,
Debt - 420,000 rubles at 11% per annum on average,
Share capital - 25,000 ordinary shares at a price of 60 rubles per share.

Is financial leverage favorable and why? Suppose another firm has the same stock value, DAYS, total assets as this firm, and has no borrowings. Which firm has the highest earnings per share?
10.4. Determine the level of effect of financial leverage, if given:
Sales volume - 9.25 million rubles.
Operating expenses - 8.5 million rubles.
Debt - 6 million rubles. at 15% per annum.
Share capital - 7.2 million rubles.
The income tax rate is 24%.
Is financial leverage favorable? At what price of borrowed capital will the impact of the effect of financial leverage be equal to zero?
10.5. Mini-case "Financial alternatives"
Friday, 15.00. Vladislav Mamleev is finishing the weekly report in the office of the IVNV investment firm. Stanislav Burobin, partner of the firm, has been on a business trip for a week now. He traveled around the area, visiting potential clients of the firm and offering to invest their free funds with the help of "IVNV". On Wednesday, he called and told Vladislav's secretary that he would fax his recommendations on Friday. The secretary just brought this fax. It should include recommendations on investments in securities for three of the firm's clients. Vladislav should call these clients and offer it for consideration.
Fax text: “To Vladislav Mamleev. IVNV. I was offered to go skiing for the weekend. I'll be back Wednesday.
My recommendations: (1) common stock; (2) preferred shares; (3)Swarrant bonds; (4) convertible bonds; (5) revocable debentures. Stas.
Vladislav picks up the phone to call clients. Suddenly the thought occurs to him that the proposals do not meet the investment needs of the client. He finds files in the closet for each of the three clients. They contain brief references compiled by Stanislav. He reads these references:
MTV company. Needs 8 million rubles now and 4 million for the next four years annually. Fast growing packaging company in three regions. Ordinary shares are sold through brokerage houses. The firm's shares are undervalued but should rise in the next 18 months. Ready to issue securities of any type. Good management. Moderate growth is expected. New machines should significantly increase profitability. Recently paid off a debt of 7 million rubles. Has no debts, except for short-term ones.
Firm "Stroganov Plants". Needs 15 million rubles. Outdated management. Stocks are low but growth is expected. Excellent forecast for growth and profitability next year. Low leverage-to-equity ratio, the firm tries to buy back debt before maturity. Holds most of the profits by paying small dividends. Management does not want to allow outsiders to control and vote. Money is needed to purchase equipment for the production of sanitary equipment.
Firm "Brothers Demidov". Needs 25 million rubles to expand furniture production. The firm started as a family business, now has 1300 employees, 45 million in sales and sells its shares through brokerage houses. Looking for new shareholders, but does not want to sell his shares on the cheap. Direct borrowed capacity is not more than 10 million rubles. Kind management. Good growth prospects. Very good income. Should ignite the interest of investors. The bank willingly lends to the company in the short term.
After reading these certificates, Vladislav asked Stanislav's secretary if he had left any other materials on these firms. Answer: “I didn’t leave it, but this morning I called and asked to confirm that the information in the clients’ files is reliable and personally verified by them.”
Vladislav considered the situation. You can, of course, postpone the decision until next week. But there are still two hours today, and if you think about it, that's enough time to make the offer more precise: which securities to recommend to each of the clients specifically in particular. Decided: I will make more reasoned proposals and call the clients, as promised, today.
Question (for small group work): What is the best funding profile for each client?
CONTROL TESTS
1. Capital structure is:
1) the ratio between different sources of capital
2) the ratio of debt obligations to the total assets
3) the ratio of the cost of ordinary and preferred shares of the enterprise
2. The level of effect of financial leverage:
1) always positive
2) always negative
3) can be both positive and negative
4) is always zero
3. Indicate the standard of the equity ratio:
1) ≥ 1,0
2) ≥ 0,1
3) ≥ 0,5
4. If the amount of borrowed funds becomes higher than the amount of the company's own capital, the strength of the financial leverage:
1) is increasing
2) falls
3) remains unchanged
5. Financial leverage differential is:
1) the difference between the cost of own and borrowed capital of the enterprise
2) the difference between the economic return on assets and the average calculated interest rate
3) the difference between income received and expenses incurred for the reporting period
6.Financial stability of the enterprise:
1) depends on the ratio of own and borrowed sources of financing
2) depends on the price of borrowed sources of financing
3) depends on the ratio of working and non-working capital
7. To determine the share of equity capital in the financial structure of capital, the indicator is used:
1) Funding ratio
2) financial stability ratio
3) agility factor
4) autonomy coefficient
8. To assess the ability to service interest on borrowed capital, the following are used:
1) indicators of market activity
2) indicators of business activity
3) indicators of financial activity

The second group combines indicators characterizing all ratios of own and borrowed funds. This group includes the following coefficients:

Equity concentration ratio=Equity capital of the enterprise/

Total amount of capital

The indicator characterizes the share of the owners of the enterprise in the total amount of funds invested in the enterprise. The higher the value of the coefficient, the more the enterprise is financially stable, stable and independent of external sources.

Financial dependency ratio = Total capital /

Own capital of the enterprise

This indicator is the opposite of the concentration of equity capital. The growth of this indicator in dynamics means an increase in the share of borrowed funds in the financing of the enterprise.

Equity maneuverability ratio=Amount of equity working capital/Amount of own funds

By the value of this indicator, one can judge which part of own funds is used to finance current activities (that is, invested in working capital), and which part is capitalized (that is, invested in fixed assets and non-current assets). The value of this indicator depends on the sectoral affiliation of the enterprise, however, its value of 0.5 is considered optimal.

Permanent asset index=Amount of equity/Amount of equity

This indicator characterizes the share of fixed capital in equity capital.

The share of fixed capital in the company's own funds increased.

Accumulated depreciation ratio = Amount of accumulated depreciation (the sum of depreciation of fixed assets and intangible assets) / Initial cost of depreciable property (initial value of fixed assets and intangible assets)

This coefficient reflects the intensity of accumulation of funds for the renewal of fixed capital. The level of the coefficient depends on the period of operation of fixed assets, the technical condition of fixed assets. The value of the coefficient can be high with accelerated depreciation.

The ratio of the real value of fixed assets and property =

Residual value of fixed assets / Value of property of the enterprise

This ratio shows how efficiently funds are used for business activities.

Coefficient of real value of industrial property =

Residual value of fixed assets, production stock, WIP /

The value of the company's property

It characterizes the level of the production potential of the enterprise, the availability of the production process with the means of production. This coefficient is very important for concluding contracts with suppliers and buyers, since high values of the coefficient are the key to the success of the production and financial activities of the enterprise.

5. Analysis of the solvency of the enterprise.

One of the indicators characterizing the financial condition of the enterprise is solvency. Solvency is understood as the ability of the enterprise to repay payments on its short-term obligations in a timely manner with the uninterrupted implementation of the main economic activity.

Solvency analysis is required:

For the enterprise itself in order to assess and forecast financial activities;

For banks in order to meet the creditworthiness of the borrower;

For partners in order to find out financial possibilities when providing a commercial loan or deferred payment.

Determination of the current solvency is carried out according to the balance sheet. At the same time, the amount of means of payment (i.e. cash, financial investments, settlements) and term obligations (i.e. short-term) are compared. The excess of means of payment over external liabilities (short-term) indicates the solvency of the enterprise.

To assess the level of solvency, it is necessary to compare the amount of means of payment with short-term liabilities.

The main indicators that characterize the solvency of the enterprise are the following:

Current solvency ratio=å means of payment/å short-term liabilities

Theoretically, a coefficient value of 1 is considered sufficient.

To the current payment readiness=å funds in the current account/

(Accounts payable- Accounts receivable)

This indicator is used to assess the current solvency. It shows the possibility of timely repayment of accounts payable and proceeds from the fact that accounts payable should be covered first of all by receivables, and in the missing part - cash on the current account.

Current solvency is a narrower concept. It cannot be extended to the future. Therefore, along with the current solvency, prospective solvency is also being studied. To characterize it, the net revenue ratio is used.

To net proceeds = (Depreciation + Net profit) / Sales proceeds without VAT

This ratio characterizes the share of free cash in the proceeds received. The company can use these free cash to pay off external liabilities or in circulation. The sum of depreciation and net profit is called net revenue.

6. Analysis of balance sheet liquidity

The liquidity of an enterprise in the short term is determined by its ability to cover its short-term obligations. An enterprise is considered illiquid if there is a risk of non-payment of current financial obligations. This may be temporary or signal serious and permanent problems in the activities of the enterprise.

The state of liquidity has an impact on partners. Insufficient liquidity leads to the impossibility of fulfilling the contract, and at worst, to breaking partnerships.

Depending on the degree of liquidity, that is, the ability and speed of conversion into cash, the assets of the enterprise are divided into the following groups:

-the most liquid- cash and short-term financial investments; they can be used to pay current liabilities immediately.

-fast-acting short-term receivables and other assets; it takes time for these assets to turn into cash.

-slow-moving- stocks, long-term receivables, VAT on acquired valuables, long-term financial investments. Future expenses are not included in this group.

-difficult to implement- non-current assets minus long-term financial investments; they are intended for use in the economic activity of the enterprise for an extended period. Their conversion into cash meets serious difficulties.

The first three groups of assets are current assets, as they can constantly change during the current business period. They are more liquid than the fourth group.

Depending on the increase in the maturity of obligations, liabilities are grouped as follows:

-most urgent obligations- accounts payable, dividend payments, other short-term liabilities, loans not repaid on time.

-short-term liabilities- short-term bank loans and other loans repayable within 12 months.

-long-term liabilities- long-term loans and other long-term liabilities.

-permanent liabilities- own funds and articles VI of section, not included in the previous groups: deferred income, consumption funds and reserves for future expenses and payments.

In order to maintain equality between the amounts of assets and liabilities, grouped by degree of liquidity and maturity, the amount of permanent liabilities must be reduced by the amount of deferred expenses and by the amount of losses.

To determine the degree of liquidity of the balance sheet, the parts of the balance sheet asset sold by a certain date are compared with the parts of the liability that must be paid by this date. If, when comparing these amounts, it is enough to repay obligations, then in this part the balance will be liquid, and the enterprise will be solvent and vice versa.

The balance is considered to be absolutely liquid if the following inequalities are satisfied:

A I > P I; A II > PII; A III > P III; A IV < P IV

If these inequalities are met, then the minimum condition for financial stability is met. If at least one condition does not match, the balance sheet is not absolutely liquid. The lack of funds in one group can be compensated by the surplus in another group, if it has a higher level of liquidity.

Grouping of assets and liabilities according to the degree of liquidity and urgency:

To assess the liquidity of an enterprise, the following are used: liquidity ratios:

Current liquidity ratio (coverage) \u003d (Cash + Kr / average financial investments -

Accounts receivable + Inventory)/(Cr/average loans + Accounts payable)

The indicator characterizes the extent to which current assets cover current liabilities, that is, the amount of guarantee provided by current assets. The excess of assets over liabilities also provides a buffer to compensate for losses arising from the liquidation of assets. Thus, the coefficient determines the margin of safety for a possible decrease in the market value of assets.

Coefficient quick liquidity(intermediate cover)=(cash+

Cr/average financial investments + Accounts receivable) / Cr/average liabilities

Theoretically justified value of the coefficient is considered to be a value equal to 1.

Absolute liquidity ratio \u003d (Cash + Kr / average financial investments) /

Kr/average liabilities

The ratio shows the possibility of immediate or rapid repayment of obligations to creditors.

7. Analysis of working capital turnover

To assess the financial condition of the enterprise, it is necessary to conduct an analysis that allows you to identify how efficiently the enterprise uses its funds. The indicators characterizing the efficiency of production include turnover ratios.

The financial position of the enterprise, its liquidity and solvency largely depend on the speed of turnover of working capital. Turnover indicators show how many times a year (or for the analyzed period) certain assets of the enterprise “turn around”. The reciprocal value, multiplied by 360 days, indicates the duration of one turnover of these assets.

To characterize the efficiency of the use of working capital, the following indicators are used:

To working capital turnover = Net sales /

(Average annual cost of working capital)

This coefficient characterizes the efficiency of the use of working capital of the enterprise, shows the number of turnovers that make working capital for the reporting period.

Duration of 1 turnover in days = (Average annual cost of working capital /

Net sales)*360 days

Shows the duration of one revolution in days.

To fix working capital \u003d Average annual cost of working capital /

Net sales

This coefficient is the reciprocal of the turnover ratio and shows what amount of working capital is assigned to 1 ruble of useful turnover.

Let's carry out a factorial analysis of turnover.

To turnover \u003d average balances * number of days in the period / sales volume

K= (S*D)

At the same time, average.residues = (remaining at the beginning + remaining at the end) / 2

The formula characterizes for what period (number of days) working capital is turned over.

Calculations can be made in the following table:

Indicators	Average annual balances	Turnover in days	Change of equipment
Last year	Reporting year	Last year	Reporting year
1. Normalized working capital:
including 1.1. inventories 1.2. finished products 1.3. work in progress
2. Non-standardized working capital
including 2.1. funds in settlements (debit.task, not counting overdue, cash.avg., kr / avg.fin.investment) 2.2.immobilization-av.
3.Total working capital
4. Sales revenue			X	X	X

At the same time, it must be remembered that if the change in turnover is obtained with a “+” sign, then we are talking about turnover slowdown and it is necessary to find the amount relative to the additional funds involved in the turnover; if the change in turnover is obtained with a “-” sign, then we are talking about turnover acceleration and it is necessary to find the amount relative to the released funds from circulation.

Let's find the amount relative to the released or additionally involved funds in circulation:

1) calculate the actual one-day turnover = sales volume for the reporting year / 360;

2) å released funds (or additional funds involved) = the product of the actual one-day turnover and the change in turnover;

On the To turnover two factors influence:

Factor of average annual balances

Sales Volume Factor

Cob-sti= S*D

DCob(C)= S 1 D –S 0 D

DKob(P)= S 1 D–S 1 D

DCob \u003d S 1 D 1–S 0 D 0

8. Analysis of receivables and payables

Accounts receivable and accounts payable reflect the state of the organization's settlements.

Accounts receivable arises in settlements with buyers for products, works and services, in the issuance of advances to suppliers and contractors (prepayment), in settlements with personnel and the budget (overpayment of tax payments). The diversion of funds to accounts receivable slows down the total turnover of capital advanced into production.

Accounts payable acts as a source of capital advanced into production. Excessive involvement of temporary sources to advance production can adversely affect the financial stability of the enterprise.

The appendix to the balance sheet (Form No. 5) shows the grouping of receivables and payables according to the terms of formation (within the established period and in excess of the established repayment period). Inadmissible debt (overdue) is the immobilization of capital advanced into production.

Composition and movement, structure and dynamics of receivables and payables.

Composition of Accounts Receivable/Payable	Balance at the beginning of the year	Obligations arose	Liabilities extinguished	Balance at the end of the year	Change per year
1. Accounts receivable: -short-term
including overdue
-long-term
including overdue
2. Accounts payable:
-short-term
including overdue
-long-term
including overdue

Indicators	For the beginning of the year	At the end of the year	Change	Growth rate
abs.	specific weight	abs.	specific weight	abs.	specific weight
1. Accounts receivable
including buyers and customers
tasks of subsidiaries and heads of companies
other debtors
2. Accounts payable
including suppliers and contractors
payroll
on social insurance and obes.
before the budget
advances received
other creditors

To receivables turnover = Sales proceeds /

Average balances of receivables

This ratio characterizes the number of turnovers that accounts receivable makes for the reporting year. The increase in the number of turnovers indicates an acceleration in the turnover of receivables.

To the turnover of credit debt = cost of sales /

Average balances of accounts payable

An increase in the turnover of accounts payable indicates an acceleration in the repayment of the organization's current obligations to creditors.

9. General assessment of the financial condition of the enterprise

When using in the process of analysis of various indicators and coefficients characterizing solvency, liquidity and financial stability, conflicting data are sometimes obtained. This situation requires a general assessment of the financial condition.

Depending on the values of liquidity ratios, coverage and autonomy, all enterprises are divided into 3 classes:

In accordance with the above scale, the enterprise can be attributed to different class groups.

A generalized assessment of the financial condition is given using the rating values of individual coefficients. To calculate the class rating of each indicator is multiplied by the rating value of this indicator. The rating of indicators in points is determined by the scale:

1.liquidity ratio-40 points

2. coverage ratio -35 points

3. autonomy coefficient -25 points

According to the banking methodology, the class rating of enterprises by the sum of points is determined on a scale:

I class from 100 to 150 points

II class from 151 to 220 points

III class from 221 to 275 points

IV class over 275 points

Class I includes enterprises with sustainable financial position, one hundred is confirmed by the best values, both of individual indicators and the rating as a whole.

Class II includes enterprises whose financial condition is stable in general, but there are minor deviations from the best values for individual indicators.

To III class include high-risk enterprises that have signs of financial stress, for which enterprises have the potential to overcome.

Class IV includes enterprises with an unsatisfactory financial situation and no prospects for its stabilization.

The results of the analysis can be presented in the following table:

This version of the generalized assessment of the financial condition is not the only or the best one. There are other methods for rating an enterprise.

Popular in category: