The indicator "sales volume / assets" is called the transformation ratio, in essence, this ratio is nothing more than the asset turnover ratio. Thus, the regulation of the return on assets is reduced to the regulation of the commercial margin (sales profitability) and the transformation ratio (asset turnover).

But back to financial leverage. Let us substitute the formulas for net profit per ordinary share in circulation and the net result of the operation of investments into the formula for the force of financial leverage:

The strength of the impact of financial leverage - percentage change in net income per ordinary share in circulation / percentage change in the net result of the operation of investments = (net profit - the amount of dividends on preferred shares / the number of ordinary shares in circulation) / (net result of the operation of investments / assets) 100%.

This formula makes it possible to estimate by what percentage the net profit per one ordinary share in circulation will change if the net result of investment operation changes by one percent.

Based on data tables 11 calculate the effect of financial leverage.

The effect of financial leverage (E fr) is an indicator that determines how much the percentage increases the return on equity (R sk) by attracting borrowed funds (LC) into the turnover of the enterprise. The effect of financial leverage occurs when the economic return on capital is higher than the interest on the loan.

E fk - the effect of financial leverage

R ik - return on invested capital before taxes (SP: SIK)

K n - taxation coefficient (Staxes:SP)

C pc - the interest rate on the loan provided for by the agreement

ZK - borrowed capital

SK - equity

Thus, the effect of financial leverage includes two components:

The difference between the return on invested capital after tax and the rate for loans:

R ik (1 - K n) - S pk

Financial Leverage:

Positive Efr occurs if R ik (1 - K n) - C pc > 0

If R IK (1 - K N) - C pc< 0, то создается отрицательный Э ФР (эффект «дубинки»), в результате чего происходит «проедание» собственного капитала и последствия могут быть резко негативными для предприятия. В этом случае рискованно увеличивать плечо финансового рычага, т.е. долю заемного капитала.

The effect of financial leverage depends on three factors:

a) the difference between the total return on invested capital after tax and the contractual interest rate:

R IK (1-K N) - C pk \u003d +, - ...%

b) reduction in the interest rate adjusted for tax benefits (tax savings):

C pc \u003d C pc (1 - K N) \u003d + ...%

c) financial leverage:

ZK: SK = ... %

Based on the results of factor analysis, draw a conclusion about the degree of influence of each factor; whether it is profitable for the enterprise in the current conditions to use borrowed funds in the turnover of the enterprise, whether as a result of this the return on equity increases. It should be borne in mind that by attracting borrowed funds, the enterprise can achieve its goals faster and on a larger scale, it takes an economically justified risk.

Liquidity analysis and solvency assessment.

The liquidity of an economic entity is its ability to quickly repay its debt. You can quickly determine the liquidity of an economic entity using the absolute liquidity ratio.

Solvency of the enterprise - the ability to cash resources in a timely manner to repay their payment obligations. Solvency analysis is necessary both for the enterprise (assessment and forecast of financial activity) and for external investors (banks), which, before issuing a loan, must verify the creditworthiness of the borrower. This also applies to those enterprises that want to enter into economic relations with each other.

Solvency assessment is carried out on the basis of the characteristics of the liquidity of current assets, which is determined by the time required to convert them into cash. The less time it takes to collect a given asset, the higher its liquidity.

Balance sheet liquidity is the ability of an enterprise to turn assets into cash and pay off its payment obligations (the degree to which the enterprise's debt obligations are covered by its assets, the period of conversion of which into cash corresponds to the maturity of payment obligations). The liquidity of the balance sheet depends on the extent to which the value of available means of payment corresponds to the value of short-term debt obligations. The solvency of the enterprise depends on the degree of liquidity of the balance sheet, while it may be solvent at the reporting date, but have unfavorable opportunities in the future.

Analysis of the liquidity of the balance sheet consists in comparing the assets of the asset (grouped by the degree of decreasing liquidity) with short-term liabilities of the liability (grouped by the degree of increasing maturity). Carry out the appropriate grouping in table 12.

Depending on the degree of liquidity, the assets of an economic entity are divided into the following groups:

A 1 - the most liquid assets

(cash and short-term financial investments);

A 2 - fast-selling assets

(accounts receivable, VAT, other current assets);

A 3 - slow-moving assets

(stocks, excluding future expenses; long-term financial investments);

A 4 - hard-to-sell assets

(intangible assets, fixed assets, construction in progress, other non-current assets, deferred expenses).

Liabilities of the balance are grouped according to the degree of urgency of their payment:

P 1 - the most urgent liabilities

(accounts payable);

P 2 - short-term liabilities

(without accounts payable, i.e. borrowed funds, dividend payments, deferred income, reserves for future expenses, other short-term liabilities);

P 3 - long-term liabilities

(long-term borrowings and other long-term liabilities);

P 4 - permanent liabilities

(capital and reserves)

The balance is considered absolutely liquid if the following conditions are met:

A 1 ³P 1 A 3³P 3

A 2 ³P 2 A 4 £ P 4

The liquidity of an economic entity can be quickly determined using the absolute liquidity ratio, which is the ratio of funds ready for payments and settlements to short-term liabilities. This coefficient characterizes the ability of an economic entity to mobilize funds to cover short-term debt. The higher this ratio, the more reliable the borrower.

Assessment of the balance sheet structure

and diagnostics of the risk of bankruptcy of the enterprise

As criteria for diagnosing the risk of bankruptcy, indicators of assessing the structure of the balance sheet are used. For the purpose of recognizing agricultural organizations as insolvent, the structure of the balance sheet for the last reporting period is analyzed ( table 13):

Current liquidity ratio (K TL);

The coefficient of security with own working capital (K OSS);

The coefficient of restoration (loss) of solvency (K V (U) P).

The balance sheet structure is recognized as unsatisfactory, and the organization is insolvent, if one of the following conditions is present:

To TL at the end of the reporting period has a value of less than 2.

To OSOS at the end of the reporting period is less than 0.1.

According to the organization's balance sheet, the current liquidity ratio (K TL) is determined as the ratio of the actual value of those available to the enterprise (organization) working capital in the form of inventories, finished products, cash, receivables and other current assets (section II of the balance sheet asset) (TA) to the most urgent liabilities of the enterprise in the form of short-term bank loans, short-term loans and payables (TP):

K 1 \u003d Current Assets (without deferred expenses): Current Liabilities (without deferred income and reserves for future expenses and payments), where

TA - total for section II "Current assets";

TP - total for section V "Current liabilities"

The coefficient of provision with own working capital (K OSS) is determined by:

K 2 \u003d Availability of own sources (III P - I A): The amount of working capital (II A), where

III P p. 490 - total for section III "Capital and reserves";

I A p. 190 - total for section I "Non-current assets";

II A p. 290 - total for section II "Current assets";

In the event that the current liquidity ratio and the ratio of own working capital (at least one) are below the standard values, then the balance sheet structure is assessed as unsatisfactory and then the solvency recovery ratio is calculated for a period equal to 6 months.

In the event that both ratios meet or exceed the standard level: the current liquidity ratio ≥ 2 and the working capital ratio ≥ 0.1, then the balance sheet structure is assessed as satisfactory and then the solvency loss ratio is calculated for a period equal to 3 months.

The coefficient of recovery (loss) of solvency (K V (U) P) is determined taking into account the current liquidity ratios calculated according to the data at the beginning and at the end of the year:

KZ \u003d [K tl. end of the year + (U: T) (K tl. end of the year - K tl beginning of the year)] : K standard. , Where

To tl.end of the year - the actual value of the current liquidity ratio, calculated according to the balance sheet at the end of the year;

To tl the beginning of the year - the value of the current liquidity ratio, calculated according to the balance sheet at the beginning of the year;

To the standard. – normative value equal to 2;

T - reporting period equal to 12 months;

At – solvency recovery period equal to 6 months. (loss of solvency - 3 months).

The coefficient of loss of solvency, which takes a value of less than 1, indicates that the organization will lose its solvency in the near future. If the solvency loss ratio is greater than 1, then there is no threat of bankruptcy in the next 3 months.

Conclusions about the recognition of the balance sheet structure as unsatisfactory, and the enterprise as insolvent, are made with a negative balance sheet structure and the absence of a real opportunity for it to restore its solvency.

In the process of subsequent analysis, ways to improve the structure of the balance sheet of the enterprise and its solvency should be studied.

First of all, you should study the dynamics of the balance sheet currency. The absolute decrease in the balance sheet indicates a reduction in the economic turnover of the enterprise, which is one of the reasons for its insolvency.

Establishing the fact of curtailment of economic activity requires a thorough analysis of its causes. Such reasons may be a reduction in effective demand for the products and services of this enterprise, limited access to raw materials markets, the gradual inclusion of subsidiaries in the active economic turnover at the expense of the parent company, etc.

Depending on the circumstances that caused the reduction in the economic turnover of the enterprise, various ways can be recommended to bring it out of a state of insolvency.

With an increase in the balance sheet for the reporting period, one should take into account the impact of the revaluation of funds, the rise in the cost of inventories, finished products. Without this, it is difficult to conclude whether the increase in the balance sheet is a consequence of the expansion of the economic activity of the enterprise or a consequence of inflationary processes.

If an enterprise expands its activities, then the reasons for its insolvency should be sought in the irrational use of profits, the diversion of funds into accounts receivable, the freezing of funds in excess production reserves, errors in determining pricing policy, etc.

Study of the structure of the balance sheet liability allows you to establish one of the possible reasons for the insolvency of the enterprise - too high a share of borrowed funds in the sources of financing of economic activity. The trend of increasing the share of borrowed funds, on the one hand, indicates an increase in the financial stability of the enterprise and an increase in the degree of its financial risk, and on the other hand, an active redistribution of income in the context of inflation in favor of the borrowing enterprise.

The assets of the enterprise and their structure are studied both in terms of their participation in production and in terms of their liquidity. A change in the structure of assets in favor of an increase in working capital indicates:

on the formation of a more mobile structure of assets, contributing to the acceleration of the turnover of the company's funds;

on the diversion of a part of current assets for lending to buyers, subsidiaries and other debtors, which indicates the actual immobilization of working capital from the production process;

on the curtailment of the production base;

on the delayed adjustment of the value of fixed assets in the face of inflation.

If there are long- and short-term financial investments, it is necessary to assess their effectiveness and liquidity of securities in the company's portfolio.

The absolute and relative growth of current assets may indicate not only the expansion of production or the impact of the inflation factor, but also a slowdown in capital turnover, which causes the need to increase its mass. Therefore, it is necessary to study the indicators of turnover of working capital in general and at individual stages of the cycle.

When studying the structure of inventories and costs, it is necessary to identify trends in changes in inventories, work in progress, finished products and goods.

An increase in the share of inventories may be the result of:

increasing the production capacity of the enterprise;

the desire to protect funds from depreciation in conditions of inflation;

irrationally chosen economic strategy, as a result of which a significant part of working capital is frozen in stocks, the liquidity of which may be low.

When studying the structure of current assets, much attention is paid to the state of settlements with debtors. The high growth rates of receivables indicate that this company is actively using the strategy of commodity loans for consumers of its products. By lending to them, the company actually shares with them part of its income. At the same time, if payments for products are delayed, the company is forced to take out loans to support its activities, increasing its own financial obligations to creditors. Therefore, the main task of a retrospective analysis of accounts receivable is to assess its liquidity, i.e. repayment of debts to the enterprise, for which it is necessary to decipher it with information about each debtor, the amount of debt, the prescription of formation and the expected repayment periods. It is also necessary to estimate the rate of capital turnover in receivables and cash, comparing it with the rate of inflation.

A necessary element of the analysis of the financial condition of insolvent enterprises is the study of financial performance and the use of profits. If the enterprise is unprofitable, then this indicates the absence of a source of replenishment of own funds and the “eating away” of capital. The ratio of the amount of own capital to the amount of losses of the enterprise shows the speed of its "eating up".

In the event that the company makes a profit and is at the same time insolvent, it is necessary to analyze the use of profits. It is also necessary to study the possibilities of the enterprise to increase the amount of profit by increasing the volume of production and sales of products, reducing its cost, improving quality and competitiveness. Great help in identifying these reserves and can provide an analysis of the performance of enterprises - competitors.

One of the reasons for the insolvency of economic objects is the high level of taxation, therefore, in the analysis, it is advisable to calculate the tax burden of the enterprise.

A decrease in the amount of equity capital can also occur due to the negative effect of financial leverage, when the profit received from the use of borrowed funds is less than the amount of financial costs of debt servicing.

Based on the results of the analysis, specific measures should be taken to improve the structure of the balance sheet and the financial condition of insolvent business entities.

When comparing 2 enterprises with the same level of economic profitability (Profit from sales / all Assets), the difference in m / d between them may be that one of them does not have loans, while the other actively attracts borrowed funds (NP / SK). That. the difference lies in the different level of return on equity, obtained through a different structure of financial sources. The difference m / d two levels of profitability is the level of the effect of financial leverage. EGF there is an increment to the net profitability of own funds, obtained as a result of the use of the loan, despite its payment.

EFR \u003d (1-T) * (ER - St%) * ZK / SK, where T is the income tax rate (in shares), ER-ek. profitability (%), St% - the average interest rate on the loan,

ER = Sales Profit/All Assets. ER characterizes the investment attractiveness of the enterprise. Har-et efficient use of all capital, despite the fact that you still need to pay% for the loan.

The first component of the EGF is called differential and characterizes the difference between the economic return on assets and the average calculated interest rate on borrowed funds (ER - SIRT).

The second component - the leverage of the financial leverage (financial activity ratio) - reflects the ratio between borrowed and own funds (LC / SK). The larger it is, the greater the financial risks.

The effect of financial leverage allows:

Justify financial risks and evaluate financial risks.

Rules arising from the EGF formula:

If the new borrowing brings an increase in the level of EGF, then it is beneficial for the organization. It is recommended to carefully monitor the state of the differential: when increasing the leverage of financial leverage, the bank tends to compensate for the increase in its own risk by increasing the price of the loan

The larger the differential (d), the lower the risk (respectively, the smaller d, the greater the risk). In this case, the creditor's risk is expressed by the value of the differential. If d>0, you can borrow if d<0, то высокие риск - не рекомендуется занимать, эффект от использования ЗК меньше суммы % за кредит; если d=0, то весь эффект от использования ЗК пойдет на уплату % за кредит.

EGF is an important concept that, under certain conditions, allows you to assess the impact of debt on the profitability of the organization. Financial leverage is typical for situations where the structure of sources of capital formation contains obligations with a fixed interest rate. In this case, an effect similar to the use of operating leverage is created, that is, profit after interest rises / falls at a faster rate than changes in output.

Finnish advantage. lever: capital borrowed by an organization at a fixed interest rate can be used in the course of business in such a way that it will bring a higher profit than the interest paid. The difference accumulates as the profit of the organization.

The effect of operating leverage affects the result before finance costs and taxes. An EGF occurs when an organization is indebted or has a source of funding that entails the payment of fixed amounts. It affects net income and thus the return on equity. EGF increases the impact of annual turnover on the return on equity.

Total leverage effect = Operating leverage effect * Financial leverage effect.

With a high value of both levers, any small increase in the annual turnover of an organization will significantly affect the value of its return on equity.

The effect of operating leverage is the presence of a relationship between the change in sales proceeds and the change in profit. The strength of operating leverage is calculated as the quotient of sales revenue after recovering variable costs to earnings. Operating leverage generates entrepreneurial risk.

Economic analysis Litvinyuk Anna Sergeevna

30. Leverage (financial leverage). The effect of financial leverage

Financial leverage (“financial leverage”) is a financial mechanism for managing the return on equity by optimizing the ratio of used own and borrowed funds. Thus, financial leverage allows you to influence profit through optimization of the capital structure.

The effect of financial leverage is an indicator that reflects the increase in the return on equity obtained through the use of a loan, despite the payment of the latter. It is calculated using the following formula:

EFL \u003d (1? NP)? (R A?% Av.) ZK / SK,

where EFL is the effect of financial leverage, which consists in the increase in the return on equity ratio,%; PN - income tax rate, expressed as a decimal fraction; R A - gross profit margin of assets (the ratio of gross profit to the average value of assets),%; % cf.- the average amount of interest on a loan paid by the enterprise for the use of borrowed capital,%; 3K - the average amount of borrowed capital used by the enterprise; SC - the average amount of equity capital of the enterprise.

The above formula for calculating the effect of financial leverage allows us to distinguish three main components in it:

1. Financial leverage tax corrector (1-TP), which shows the extent to which the effect of financial leverage is manifested due to different levels of taxation of profits.

2. Financial leverage differential (РА?%av.) which reflects the difference between the gross return on assets and the average interest rate for a loan.

3. Leverage of the financial leverage of SC/SC, which characterizes the amount of borrowed capital used by the enterprise, per unit of equity.

The tax corrector of financial leverage practically does not depend on the activity of the enterprise, since the income tax rate is established by law. In the process of managing financial leverage, the differential tax corrector can be used in the following cases:

Differentiation of the profit tax rate or the availability of tax incentives for various types of enterprise activities;

Carrying out activities of subsidiaries of the enterprise in offshore zones or countries with a different tax climate. Financial leverage differential is the main

a condition that generates a positive effect of financial leverage, if the level of gross profit generated by the assets of the enterprise exceeds the average interest rate for the loan used. The higher the positive value of the financial leverage differential, the higher, other things being equal, its effect will be.

The financial leverage leverage is the leverage that causes the positive or negative effect obtained through the differential. With a positive value of the differential, any increase in the financial leverage ratio will cause an even greater increase in the return on equity ratio, and with a negative value of the differential, an increase in the financial leverage ratio will lead to an even greater rate of decline in the return on equity ratio. Thus, with the differential unchanged, the financial leverage leverage is the main generator of both the increase in the amount and level of return on equity, and the financial risk of losing this profit. Similarly, with the leverage of financial leverage unchanged, the positive or negative dynamics of its differential generates both an increase in the amount and level of return on equity, and the financial risk of its loss.

Knowledge of the mechanism of the impact of financial capital on the level of profitability of equity and the level of financial risk allows you to purposefully manage both the value and the capital structure of the enterprise.

The quantitative value of the influence of factors on the change in the resulting indicator is found by applying one of the special methods of economic analysis.