Overall financial independence ratio, Financial independence - Wikipedia

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The results of the analysis showed that the company in the reporting period did not have significant changes in the aspect of the considered indicator, which indicates the structure of its financial condition and harmonious management of the capital structure by the enterprise management.

Minor changes in the amount of own liabilities are the result of normal operating activities of the organization. The balance sheet currency did not increase by attracting innovative capital.

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Having become acquainted with such an indicator as the coefficient of autonomy, we can analyze the capital structure of the enterprise and draw conclusions about the financial stability of the investigated object. The financial stability of the organization is the basis of long-term prospects in the development of its financial and economic condition.

A constant, systematic analysis of the enterprise, building a tactical structure of behavior in the market is carried out by analysts, based on accounting data. In this case, a number of financial instruments are used that clearly reflect the current position of the company and its immediate prospects. One of the most important tools for analyzing the financial condition of an enterprise is the coefficient of autonomy.

The ratio is included in the group of instruments for assessing financial stability and was put into effect by government decree Overall financial independence ratio Federation No.

It is used by employees of analytical departments and centers for self-diagnosis of the criteria of financial stability of an enterprise.

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To a greater extent, the financial position overall financial independence ratio affected by long-term loans loansbut short-term liabilities are also taken into account, the maturity of which overall financial independence ratio quite short. The autonomy coefficient of an organization is the mathematical ratio of funds that are the property of the organization not burdened by encumbrance to the entire amount of funds, including borrowed funds, long-term short-term liabilities and other financial assets of the enterprise.

In a broader sense, the coefficient of autonomy can be represented as a financial indicator of the enterprise, characterizing the degree of dependence of the economic situation of the organization on credit funds. Based on the definition of the term, it becomes clear that the financial stability of an enterprise is the more stable the more important is the coefficient of autonomy financial independence.

The generally accepted nominal value of the coefficient is 0. This overall financial independence ratio shows that most of the assets of the enterprise are provided with own funds.

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First of all, credit organizations and investment project partners pay attention to the coefficient of autonomy. It is important for them to minimize the risks associated with a possible loss of investment as a result of bankruptcy of the company. For the Russian Federation, a critical indicator of the alleged inability to pay debt obligations in the short term is considered to be a coefficient indicating the share of financing of production activities with own funds of 35 percent or lower with the exception of rare cases when a low autonomy ratio is the norm for the organization due to features of overall financial independence ratio manufacturing industry.

In the financial practice of Western enterprises, the dependence of organizations on borrowed funds is estimated by the results of the financial leverage instrument, which is an analog of the autonomy coefficient and has a similar nominal value.

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As a rule, for calculating the coefficient, the necessary and sufficient information is the data of accounting reports on profits and the balance sheet. It is generally accepted that if the company provides 50 percent of its own production autonomy ratio is 0.

However, given that different assets overall financial independence ratio varying degrees of liquidity in the market, they are all taken overall financial independence ratio account when calculating the autonomy coefficient completely. The calculation formula for the balance of the coefficient of autonomy of form No.

When analyzing the financial effectiveness of production management, the value indicator for turbo options autonomy is calculated for the reporting period in comparison with the average value of the coefficient for this industry in the region. Further strategic planning is based on the calculation results, taking into account data on the autonomy coefficients of the past tense.

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A graphical representation of the dynamics of the coefficient changes clearly shows the system of financial and economic management of the enterprise and its future prospects: The increase in the efficient trading robots coefficient in comparison with the results of the previous reporting period testifies to overall financial independence ratio management strategy in ensuring the assets of production activity with the largest possible amount of own funds, to strengthen overall financial independence ratio organization's position in the market of goods and services.

The risk of overall financial independence ratio of the company is reduced and the likelihood of successful mutual settlements with the sudden onset of the deadlines for all debt obligations increases. The aspiration of the autonomy coefficient to unity in some cases indicates the opportunities missed by the management apparatus to increase the average annual income by increasing the volume of borrowed funds and then investing them in the production process for example, increasing the volume of purchased raw materials if the raw material factor is constraining.

The fall in the coefficient of autonomy - even against the background of a general increase in profits - is an alarming sign of an impending unfavorable situation.

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The risk of insolvency in payment of debt obligations increases, dependence on changes in lending interest rates increases, and the amount of interest expenses increases. In order to avoid deterioration of the financial situation when withdrawing credit funds and reducing the degree of trust on the part of sponsors, it requires a revision of the production management strategy for example, by finding additional reserves, reducing the share of short-term debt obligations, carrying out personnel reform, technical re-equipment, etc.

Example of calculating and analyzing the autonomy coefficient The efficiency of using the toolkit of the autonomy coefficient is considered on the example of one of the largest Russian enterprises of ferrous metallurgy conditionally, Chermetstal OJSC.

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The source data for the calculations are the financial indicators of the production activity of the enterprise, taken from open sources of information. Based on the initial data, the autonomy coefficients of Chermetstal OJSC are: As the visual diagram shows, the autonomy coefficient of Chermetstal OJSC has not decreased throughout the year and has a pronounced upward trend. Overall financial independence ratio into account the industry specifics of ferrous metallurgy enterprises, the average coefficient 0.

The share of borrowed funds is not more than 40 percent, the financial condition of the company is stable, the risks of critical situations are extremely small.

The company has prospects for further development, the feasibility of investment is justified. In contact with The autonomy ratio is one of the analytical coefficients used in the framework of financial analysis to obtain information about the financial stability of the enterprise.

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Let's talk about it in our article. The autonomy coefficient is calculated as the ratio of balance sheet indicators What does the coefficient of financial autonomy show?

Equity is the part of the capital that remains with the organization after deducting all liabilities. By balance, this is the sum of lines — Assets - a set of property of the organization. In balance, this is line Subscribe to our account channel Yandex. The autonomy ratio shows how much of the assets is generated from equity, for example, share capital, retained earnings.

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A high CFA value indicates the stable operation of the enterprise. Take the case where the autonomy coefficient is 0. CFA must be considered in dynamics.

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We can talk about strengthening financial autonomy if the coefficient has a positive trend. A decrease in value over time reflects a decrease in financial stability and the emergence of financial risks.

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