The coefficient of provision of material reserves with own funds is negative. Security ratio

— a financial indicator characterizing the sustainability of an enterprise’s business model in many aspects. What is its significance and how is the corresponding indicator calculated?

What does the inventory coverage ratio show?

The coefficient under consideration refers to the key indicators of the financial stability of the company: it allows you to assess whether the enterprise has enough working capital from the point of view of ensuring the optimal level of material reserves.

In general, the coefficient reflects the ratio of the own working capital firm to its material reserves in the analyzed period. In turn, own working capital can consist of equity capital and long-term liabilities, reduced by non-current assets. In some cases, deferred income is also added to the amount of equity capital and long-term liabilities.

It is also possible that the ratio will be considered as the ratio of the difference between current assets and short-term liabilities to inventories.

There are quite a few approaches and criteria according to which the amount of reserves in an organization is determined. Russian accountants in many cases use international experience and determine the structure of inventories, thus, in accordance with IFRS criteria.

Inventory coverage ratio: formula

In general, the formula for calculating the corresponding indicator will look like this:

KO = OS / Z,

KO - security ratio;

OS - the company's own working capital;

Z - reserves.

In turn, the OS indicator is determined by the formula

OS = (SC + DO) - VO,

SK - equity capital;

DO - long-term liabilities;

VO - non-current assets.

As we noted above, an indicator reflecting the amount of income for future periods can be added to the sum of IC and DO in the specified formula - let’s call it DBP.

Second version of the formula inventory coverage ratio own funds involves, as we noted above, considering the corresponding coefficient as the ratio of the difference between current assets and short-term debt to inventories. In this case, the formula for calculating it will look like this:

KO = (OA - KO) / Z,

OA - non-current assets of the company as a whole;

KO - short-term liabilities.

Specific values for the above indicators are taken from the company’s balance sheet, taking into account the following correspondences:

indicator 3 corresponds to line 1210 of form No. 1, approved by order of the Ministry of Finance of the Russian Federation dated July 2, 2010 No. 66n;
for the SC indicator - line 1300;
for the DO indicator - line 1400;
DBP indicator - line 1530;
VO indicator - line 1100;
OA indicator - line 1200;
KO indicator - line 1500.

It can be noted that the inventory on the balance sheet (on line 1210) also includes the cost of raw materials and materials that entered production, but were not written off in the cost of production. In this case we're talking about about the balances of work in progress.

You can familiarize yourself with the features of including work in progress balances in inventories in the article .

Inventory coverage ratio: interpretation

The optimal value of the coefficient under consideration is 0.6-0.8. This means that about 60-80% of a firm's inventory is produced or purchased using its own capital. If this indicator is lower, this may indicate an excessive credit burden on the business.

If it is higher, then perhaps the company’s own capital is not invested very effectively (but this, of course, is a very controversial interpretation; it is only valid in cases where loan rates are significantly lower than the profitability of the business).

Actually, the fact that the company has a sufficient amount of capital to ensure the required volumes of inventories reduces its need for loans. In general, the higher the coefficient under consideration, the more investment attractive the enterprise can be.

In some cases, the coefficient can also take negative value. As a rule, this means that the company’s working capital indicator is also negative. Most often, this situation arises if the company has a high credit load, but the company’s business model may provide for the prompt conversion of inventories into revenue - if their turnover is characterized by good dynamics. If this is so, then a negative equity ratio in the company will be considered the norm.

Thus, the standard for this coefficient can be determined taking into account the specifics of the company’s business model.

The coefficient, the calculation of which we have considered, is best compared in dynamics. For example, using data on balance sheets V different years. A drawdown recorded in one period can be compensated by a sharp increase in the value of the corresponding indicator in other time periods, so its average value may well be considered appropriate optimal level. Investors, studying indicators of financial stability, such as the inventory coverage ratio, usually make decisions based on their consideration in the context of comparison with the results of the enterprise's activities in different periods.

Results

Inventory coverage ratio with own funds- an indicator related to those that can assess the current state of affairs in the company: the higher it is, the more stable the business model of the enterprise is usually. But successful business development is quite possible even with negative values - for example, if the enterprise produces products with a high turnover ratio.

You can learn more about the use of various indicators for inventories when organizing business management in the articles:

Enterprise sustainability indicators

These indicators are based on the fact that almost any enterprise operates not only on the basis of its own funds, but also borrowed funds or simply temporarily located at the company. A typical case is accounts payable - debts to the budget or to suppliers for goods already received but not paid for.

Debt to equity ratio

To calculate this indicator, the formula is used:

SK: ZK, where

The value of this coefficient must be at least 0.7, that is, it is considered normal that there are more borrowed funds than own funds. But exceeding this ratio is very dangerous - this situation means that the owners themselves own little in the company. In the event that creditors demand immediate repayment of debts, there will be nothing to repay the debts with except the property of the company, and then there will be nothing left of the company.

In the example, the indicators are as follows:

At the beginning of the year - 29,705: (3000 + 11,195) = 2.09;

At the end of the year - 30,655: (3000 + 13,460) = 1.86.

This means that the vast majority of a firm's production is controlled by its own owners.

1.3.2 Autonomy coefficient. This ratio is also called the financial independence ratio. To calculate it, the entire equity capital (line 490 of the Balance Sheet) is divided by the amount of the total capital of the company (line 700 of the Balance Sheet, the total, sometimes called the “Balance Sheet currency”). Autonomy must be greater than 0.5.

In the example:

At the beginning of the year - 29,705: 43,900 = 0.68;

At the end of the year - 30,655: 47,115 = 0.65.

The indicators are very good, the enterprise is completely independent.

The inverse indicator is the coefficient of financial dependence. What is considered here is not how independent the company is, but rather how dependent it is on others.

Financial dependency ratio

The formula used for calculation is:

ZK: OK, where

ZK - the sum of long-term and short-term liabilities (the sum of lines 590 and 690 of the Balance Sheet - lines 640 and 650).

OK - the entire capital of the company as a whole (line 700 of the Balance Sheet).

Since this indicator is the inverse of the autonomy coefficient, it should not exceed 0.5, otherwise the amount of debts will exceed the amount of the enterprise’s own property.

At the beginning of the year - (3000 + 11,195): 43,900 = 0.32;

At the end of the year - (3000 + 13,460): 47,115 = 0.35.

Quite acceptable indicators. By the end of the year, the company's debts increased, but this is not critical.

Inventory coverage ratio with own working capital

This indicator is interesting because it allows you to determine whether the company buys raw materials for production at its own expense or not. In other words, will the firm be able to continue production if it is not given credit?

Formula for calculation:

(SK - VNO): Salary, where

SK - equity capital (line 490 of the Balance Sheet);

Salary - inventories (line 210 of the Balance Sheet).

In the given example:

At the beginning of the year - (29,705 - 13,490): 19,200 = 0.84;

At the end of the year - (30,655 - 14,995): 20,100 = 0.78.

Here the company is doing somewhat worse than in general. The supply of raw materials and materials is not completely closed; some of them are purchased through credits and loans. And this figure has worsened over the year. In itself it is not critical, and the rest of the indicators are good. Therefore, you just need to pay attention to this fact and remember it.

Financial stability ratio

The financial stability ratio is the ratio of the amounts of a company’s equity capital and its long-term loans to the total Balance Sheet (“Balance Sheet Currency”).

(line 490 Balance + line 590 Balance): line 700 Balance.

It is believed that it is very beneficial for an enterprise to have long-term obligations, since they will not have to be repaid soon, and therefore, in the short term, long-term obligations can be conditionally considered as their own funds. Thus, the presence large quantity long-term loans at the current time only strengthens the financial stability of the company.

At the beginning of the year - (29,705 + 3000): 43,900 = 0.74;

At the end of the year - (30,655 + 3000): 47,115 = 0.71.

The financial stability ratio for this balance sheet is very high.

Permanent asset index

The essence of this indicator is that we find out what part of our equity capital consists of our non-current assets. The formula used for this is:

VNO: SK, where

VNO - non-current assets (line 190 of the Balance Sheet);

At the beginning of the year - 13,490: 29,705 = 0.45;

At the end of the year - 14,995: 30,655 = 0.49.

These are quite good indicators. They mean that a company, using its own capital, can purchase raw materials, pay employees, that is, fully organize work without resorting to borrowings and loans.

The opposite indicator is the percentage of working capital.

Maneuverability coefficient

They consider it like this:

(SK - VNO): SK, where

VNO - non-current assets (line 190 of the Balance Sheet);

SK - equity capital (line 490 of the Balance Sheet).

When non-current assets are subtracted from equity, current assets remain.

At the beginning of the year - (29,705 - 13,490): 29,705 = 0.55;

At the end of the year - (30,655 - 14,955): 30,655 = 0.51.

The higher this ratio, the easier it is for a company to maneuver its resources.

Non-current assets are primarily fixed assets and intangible assets. This property is durable, long-term, acquired once and for many years. And current assets are inventories, accounts receivable, cash, securities, that is, something that comes quickly and goes away no less quickly. You can turn money into raw materials, raw materials into accounts receivable, and then back into raw materials very quickly. This is the effect of maneuverability. The more means for maneuver an enterprise has, the more stable it is.

In order to find out specific gravity one or another current assets, and also find out the percentage ratio to the final result, it is necessary to consider their structural composition. By studying and analyzing these parameters, you can get necessary information about material reserves and find ways to use them most effectively.

For example, excessive inventories of finished products or the size of accounts receivable indicate problems with sales. A lack of raw materials entails a disruption in production, a slowdown and, in the case of an acute shortage, even a stop of the process itself.

The consequences may include such phenomena as an increase in debt wages employees of the enterprise, non-payment of bills for taxes and supplies.

The structure depends on areas of activity, which involves working capital:

On CHP stations the largest part is occupied by fuel reserves and consumer receivables.
IN shipbuilding field – heaviest weight has production that is in an unfinished state.
IN mining sector– reserves predominate finished products.
Construction has a large share of unfinished construction projects.
On livestock enterprises– these are young animals that are in the fattening stage.

Monitoring indicators financial condition organization is a mandatory attribute of its management. Several analysis and evaluation techniques have been developed.

To assess the state of own working capital (SOS), they are most often used security ratio. Based on the results of the procedure, it becomes clear whether the enterprise has sufficient funds from its own sources.

SOS size is magnitude of an absolute nature. Based on their volume, one can judge how much material from a free source was put into circulation by the organization. The financial attractiveness of the company depends on the percentage ratio of SOS and borrowed funds.

If the credit share is greater, this means that the company is unable to pay off its obligations in a given period. This leads to a decrease in parameters and financial stability. The company operates at a loss, and the net profit goes to pay off debts, if there is enough of it.

For the normal and successful functioning of an enterprise, the SOS indicator must be in positive dynamics. If it has negative values, then the company has a deficit of its own funds, and its activities become unprofitable.

The SOS coefficient is an indicator that is considered as the ratio between the volume of SOS used to cover costs and inventories to the cost of these expenses. Here, inventories and production costs, financed by the company from general purpose funds, can be considered as own working capital.

It can be paid by any person who is interested in carrying out the operation. This can be done using a special formula or computer program.

In addition to the fact that the ratio helps in assessing the financial stability of an enterprise, it also is an indicator of the state of the SOS.

If during calculations it turns out that at the end of the reporting period, Ksos has a value below 10%, then it will be declared unsatisfactory and the organization insolvent. This is stated in the regulatory act of the Federal Bankruptcy Administration - Order of the Government of the Russian Federation No. 56-r.

However, there is several ways to resolve this problem. For example, you can carry out an additional procedure for assessing the SOS, but it should be noted that the results obtained will be taken into account only in the next period.

Ksos can be obtained by dividing the volumetric indicators of working capital owned by the company by the amount of available inventories and costs.

The first indicator is called working capital. He can provide full information about the state of current assets and their relationship to non-long-term liabilities. SOS indicates the ability of an enterprise to pay certain debts and payments after the sale of certain assets.

Working capital– this is a specific parameter assessing the solvency of a company. Its calculation is carried out in strict accordance with the data taken from the balance sheet documentation.

How to calculate

The formula used to calculate the equity turnover ratio (Kcos) is as follows:

Xos = (Skap + Zd – Adkh) / Akh

Semantic meaning:

Xos– SOS coefficient.

Scap– indicates the volume of the enterprise’s equity capital and the valuation of all objects to which the organization has property rights.

rear – total number a firm's debt on debt obligations for a period of more than a year or until the end of the established operating cycle.

Adh– assets that have long-term characteristics and consist of fixed assets. They may include buildings and structures various types, equipment used in the enterprise. All of them must be in use for several years and participate in profit-generating activities.

Akh– volume and price assessment of finished products that can be sold, as well as financial resources, available for quick use.

It should be noted that depending on the nature of the organization’s activities and the area in which it operates, Ksos indicators may differ. The minimum acceptable coefficient should not be lower than 0.1, but a normal level is usually considered to be a result of 0.3, i.e. 30%.

The function of Xos is to show the percentage of current assets of its own nature in percentage terms. The norm is the result - from 10% to 30%.

If Xos grows:

The volume of equity capital increases.
The level of loan obligations decreases.
The level of financial stability and attractiveness of the company rises.
The number of solvent counterparties is increasing.

If Xos falls:

The amount of equity capital is reduced.
The risk of accounts payable increases.
The level of investment attractiveness and sustainability of the enterprise is decreasing.

Firms foreign origin This coefficient is not calculated, since the right to property and the sphere of production in other countries has a clear separation, so the presence of an organization’s accounts payable does not have a significant impact on the efficiency of its activities.

Value Analysis

The value of the indicator shows the share of the enterprise’s own funds, the financing of which comes from sources belonging to the organization. A result with a value of 0.1 is considered normal. It can go up and down.

With growth is decreasing level of debt on loan obligations and increases the amount of capital, and also increases financial attractiveness due to an increase in the level of sustainability. When the ratio decreases, a decrease in SOS is observed, the level of instability increases and the risk of default on debt obligations appears.

If the parameter grows over several periods, this indicates a strengthening of the company’s position in its market sector; in such cases, a change in structure will not be required. To ensure stable trends, the enterprise needs to maintain a certain part own funds in the company's capital.

The legislation of the Russian Federation states that the Kcos indicator should not be less than 10% (0.1). If it is lower, then this serves as an indicator to determine the state of the company as unsatisfactory.

In cases where it is below 0, this means that the company uses only funds from credit obligations, which characterizes it as unreliable and unstable.

The meaning of negative coefficients:

The organization does not have its own funds.
Working capital consists entirely of funds obtained through transactions with creditors, which indicates the company's large debt obligations.
It is possible to expand the number of debt categories.
Reduced attractiveness for investors and loss of operational stability.

The calculation of liquidity and Ksos is carried out to analyze the activities of the organization and to further forecast its development. When the indicator is below 0, this indicates that the company’s balance sheet structure is not effective.

It should be taken into account that in order to ensure the normal functioning of the company, it is necessary that sources of own funds be able to cover non-current assets in full. Therefore, if the value is detected negative character, it is necessary to make every effort to eliminate it and raise it to a normal level.

A very important criterion for the stability of an enterprise is the degree of its dependence on external sources of finance.

In such cases, it is used loan coverage ratio:

Kpdss = Skap / Zkap

It helps in displaying the real state of the company, shows the degree to which the organization is provided with its own funds to create its own reserves.

To get a complete picture, it is necessary to calculate both the liquidity indicator for a given period of time and the security ratio Xos.

According to regulations regulating the bankruptcy process (provisions of a special resolution of the Federal Bankruptcy Administration), the acceptable value of the coefficient should be within from 0.1 to 0.3. In cases where, during the dawn procedure, results below the minimum parameter were obtained, the enterprise is declared insolvent for a given period of time.

Stable position decreases depending on the number of debt obligations taken.

To get a complete and correct picture of the financial affairs of the company, it is necessary to consider Xos and liquidity in a dynamic turn, i.e. Calculations must be carried out at the beginning and end of a given time period.

If the value increases at the end of the period, provided that it has not reached the minimum threshold of 10%, the dynamics will still indicate an improvement in the financial position of the enterprise.

In arbitration practice, Xos is not usually used, but it helps the arbitration manager evaluate.

The Xos size is a very strict indicator for Russian entrepreneurs. It is very difficult for many organizations to achieve the minimum value.

Example 1. The equity ratio Ksos is calculated at the beginning and end of the reporting period.

The following data is available:

The size of the cost of capital and reserves of the company: value 1 (at the beginning) - 150,000 rubles, value 2 (end) - 170,000 rubles.
: beginning - 30,000 rubles, and at the end - 55,000 rubles.
Current assets: at the beginning of the period in the amount of 140,000 rubles, at the end - 185,000 rubles.

Ksos at the beginning of the period = (150 – 30) / 140 = 0.86 (within normal limits).
Xos final = (170 – 55) / 185 = 0.62 (norm).

Example 2. LLC "Lutik"

Background information:

The total value of the reserve fund and capital: beginning (1) – 320 million rubles, end (2) – 380 million rubles.
Size of non-current assets: 1 - 170 million rubles; 2 - 190 million rubles.
Volume of working capital: 1 – 300 million rubles; 2 – 340 million rubles.

Calculation process:

Kcos1 = (320 – 170) / 300 = 0.5 – normal.
K sos2 = (380 – 190) / 340 = 0.56 – normal.

Example 3. It is necessary to consider Xos in dynamics.

Initial data:

The amount of equity capital and reserve fund funds: 2nd quarter 2014 - 324 million rubles, 1st quarter 2015 - 300 million rubles, 4th quarter 2016 - 275 million rubles.
Non-current assets: 2014 – 800 million rubles, 2015 – 776 million rubles, 812 million rubles, 2016 – 807 million rubles.
Working capital: 2014 – 170 million rubles, 2015 – 133 million rubles, 2016 – 166 million rubles.

Calculation part:

Xos (2014) = (324 – 800) / 170 = – 2.8.
Xos (2015) = (300 – 776) / 133 = – 3.58.
Xos (2016) = (275 – 807) / 166 = – 3.2.

The company's coefficient is below 0, therefore, based on the calculation, we can say that the company is doing business unsatisfactorily, the structure is ineffective, and the company is operating at a loss and has many debt obligations to creditors.

It is also noticeable that financial situation the organization is unstable, investment attractiveness is low and due to the absence or small share of its own property, the company may become insolvent.

Additional information on this coefficient is presented in this video.

Provision ratio of own working capital(SOS) shows the sufficiency of the organization's own funds to finance current activities.

Calculation (formula)

According to Order of the FSFO of the Russian Federation dated January 23, 2001 N 16 “On approval” Guidelines for conducting an analysis of the financial condition of organizations" the coefficient is calculated as follows (in the Order he calls the equity ratio):

Security ratio SOS = (Equity - Non-current assets) / Current assets

The meaning of this coefficient is as follows. First, in the numerator of the formula, non-current assets are subtracted from equity. It is believed that the most low-liquidity (non-current) assets should be financed from the most stable sources - equity capital. Moreover, there should still be some equity capital left to finance current activities.

Normal value

This coefficient is not widespread in Western practice. financial analysis. In Russian practice, the coefficient was introduced normatively by the Order of the Federal Department of Insolvency (Bankruptcy) dated 08/12/1994 N 31-r and the now inactive Resolution of the Government of the Russian Federation of 05/20/1994 N 498 “On some measures to implement the legislation on insolvency (bankruptcy) of enterprises." According to specified documents, this coefficient is used as a sign of insolvency (bankruptcy) of the organization. According to these documents, the normal value of the equity ratio should be at least 0.1. It should be noted that this is a fairly strict criterion, characteristic only of the Russian practice of financial analysis; Most enterprises find it difficult to achieve the specified coefficient value.

The level of the ratio of provision of material reserves with own working capital is assessed, first of all, depending on the state of material reserves. If their value is significantly higher than the justified need, then own working capital can cover only part of the material reserves, i.e. the indicator will be less than one. On the contrary, if the enterprise does not have enough material reserves for the uninterrupted operation of its activities, the indicator may be higher than one, but this will not be a sign of the good financial condition of the enterprise. In our case, the ratio of the provision of material inventories with own working capital at the beginning of the period takes a negative value, which indicates the absence of SOS capable of covering material inventories and indicates the unsatisfactory state of working capital, but by the end of the period it becomes positive, so we can say that in the future the state of working capital funds are good.

The equity capital agility ratio shows what part of it is used to finance current activities, i.e., invested in working capital, and what part is capitalized. The value of this indicator can vary significantly depending on the industry of the enterprise. In capital-intensive industries, its normal level should be lower than in material-intensive industries, since in capital-intensive industries a significant part of own funds is a source of covering fixed assets production assets. From a financial point of view, the higher the agility ratio, the better the financial condition of the enterprise. In our case, this coefficient takes positive value at the end of the year, which also indicates a satisfactory condition of working capital.

Net mobile funds show what will remain in the company’s turnover if all of its short-term debt is paid off at once. The corresponding coefficient characterizes the stability of the structure of working capital, that is, the stability of that part of the balance sheet asset that is subject to the most frequent changes in the course of the current activities of the enterprise.

The coefficient of net mobile funds at the end of the period takes a positive value, which indicates an unstable structure of working capital.

The next group of indicators characterizes the financial stability of the enterprise in terms of the state of fixed assets. When assessing the permanent asset index, which reflects the share of equity capital diverted into fixed assets and non-current assets, it should be borne in mind that the higher it is, the more necessary it is to attract long-term loans and borrowings, or to resolve the issue of reducing fixed assets, but first turn to reduce other non-current assets (construction in progress, long-term financial investments, etc.). In all cases, to improve the financial condition of the enterprise, it is desirable that the sources of own funds increase in to a greater extent than the cost of fixed assets and other non-current assets. The stand-alone value of a permanent asset index is quite limited. It must be considered only together with indicators characterizing the results of production and economic activities.

In our case, there is an increase in the permanent asset index with a decrease in profitability (see Table 3), which negatively characterizes the analyzed enterprise from a financial point of view.

The intensity of using various sources of funds to update and expand production is assessed by the coefficient of long-term borrowing, as well as the coefficient of depreciation accumulation. Analyzing the obtained values of the long-term borrowing ratio, it should be noted that during the analyzed period the company practically does not use this type sources of funds. As for the coefficient of wear accumulation and the intensity of wear accumulation, their values were not calculated due to the lack of relevant information on the wear and tear of fixed assets of the analyzed enterprise.

The level of production potential of the enterprise, security production process means of production determines the coefficient of real value of property. Based on business practice data, it is considered normal when the real value of property is about 0.5 of the total value of assets. In our case, this coefficient at the end of the reporting period takes a value equal to 0.49, which indicates normal level production potential of the enterprise and the provision of the production process with means of production.

A generalized description of the financial stability of an enterprise's liabilities can be given using the autonomy coefficient and the debt-to-equity ratio. The semantic meaning of both indicators is very close. In practice, you can use one of them to assess financial stability. But the degree of dependence of an enterprise on borrowed funds is expressed more clearly in the ratio of borrowed and equity funds. The higher this ratio, the greater the dependence of the enterprise on borrowed funds, i.e. in this case it gradually loses its financial stability. It is usually considered that if its value exceeds one, then the financial stability and autonomy of the enterprise reaches a critical point. However, this is not always so clear cut. Acceptable level depending on borrowed funds is determined by the operating conditions of each enterprise and, first of all, the speed of turnover of working capital. Therefore, in addition to the calculation of this coefficient, it is necessary to involve the results of calculations of the rate of turnover of material working capital and accounts receivable for the analyzed period. If receivables turn over faster than tangible current assets, this means a fairly high rate of receipt cash to the accounts of the enterprise, i.e., as a result, an increase in own funds. Therefore, with a high turnover of material working capital and an even higher turnover of accounts receivable, the ratio of debt to equity can significantly exceed one, without loss of financial stability.

Analyzing the obtained values of the ratio of borrowed and equity funds, it should be noted that in 2008 this indicator exceeds one. However, if we analyze the results of calculations of the turnover rate of tangible working capital and receivables (see tables 9 and 10), we can see that receivables turn over faster than tangible working capital, and this means a fairly high intensity of cash receipts into the accounts of the enterprise. Therefore, the financial stability of the analyzed enterprise can be considered satisfactory, despite the fact that the ratio of borrowed and equity funds significantly exceeds one.

Analysis of the state of fixed assets showed that the analyzed enterprise has good production potential and is provided with the necessary means of production. The financial stability of the analyzed enterprise can be considered satisfactory, despite the fact that borrowed funds significantly exceed equity.