Analysis of financial stability as the most important process in determining the company's position in the market

The key to the success of any company is its financial stability, which allows it not only to cope with possible economic and operational performance declines as a result of the deteriorating economic situation in the country, but also to further develop and expand by investing profits in the company's total capital. Analysis of financial stability in this regard allows you to reflect all the economic indicators of the company, as well as through the rational management of labor, financial and material resources, to create a balance in which revenues exceed expenditures several times. As a result of this, a steady flow of financial resources will be made, which will allow the company to both current and long-term solvency. In addition, this state of affairs will also allow to fully meet the investment expectations of the owners.

In the analysis it is important to determine the rationality of the existing ratio of debt and equity, since with each type of financing there are advantages and disadvantages that should be carefully considered. So, the analysis of financial stability considers two types of financing: at the expense of own funds, and also at the expense of borrowed capital.

1. Financing at the expense of own profit and the existing capital of the enterprise. Can be realized both through reinvestment of profit, and by increasing the company's own capital (issuance of securities, shares, bonds, etc.). Here it is important to determine what part of the profit an enterprise can invest in its development without worsening its economic situation.
2. Funding from outside sources, such as banks, investors, sponsors and so on. Here we should immediately determine the conditions under which the financial stability of the firm will be ensured, and also assess the existing structure of liabilities. The main thing to remember is that the borrowed funds assume not just a return, but the payment of certain interest, which increases the risk of insolvency of the owner. That is why before making a decision on financing, it is necessary to carefully analyze the financial stability of the organization, as well as to identify all possible risks.

Thus, in both types of financing there are advantages and disadvantages. It is noteworthy that investing a company's own assets out of the norm of its profit may not always be rational, since the owner expects not only a return of funds, but also a stable return on investment, that is, dividends from investing. In this respect, a third-party financial institution (banks, credit unions) may be more attractive, since it claims only to return the invested funds with interest. Thus, all future profits will go exclusively to the shareholders of the company.

In addition, the analysis of financial stability allows for more stable planning of cash flows, as well as shifting the break - even point of the company towards greater reliability. It should also be taken into account that a small enterprise that has a large share of debt obligations has a much smaller margin for maneuvering in the event of unforeseen difficulties (falling demand for goods, rising costs, seasonal decline in sales, etc.).

For the competent implementation of such an analysis, you should know the main indicators of this process, as a competent analysis of financial stability indicators allows you to adjust the overall strategy of the firm to achieve the most effective result. So, the main indicators that characterize the structure of capital include the following:

- coefficient of financial stability;

- coefficient of independence;

- coefficient of dependence on borrowed capital (in the long term);

- funding ratio.

Having carried out analysis of financial stability using the above factors, the firm will be able to qualitatively identify all existing risks, as well as increase profitability of production. At present, when determining the assets and liabilities of an enterprise, the analysis of economic stability plays a very important role, helping the management correctly determine the goals and objectives of both short-term and long-term planning.