1 ratio of the ratio of borrowed and own funds. The ratio of own and borrowed funds. Impact on the profitability of the enterprise

Refers to the coefficients of financial stability of the enterprise.

Debt to Equity Ratio - What Shows

The ratio of borrowed and own funds - shows how much borrowed funds are per 1 ruble. own funds.

Debt to equity ratio - formula

General formula for calculating the coefficient:

Calculation formula according to the old balance sheet

Debt to equity ratio - value

The economic meaning of the ratio of borrowed and own funds is to determine how many units of borrowed funds financial resources accounts for a unit of sources of own funds.

The level of this coefficient above 1 indicates the potential danger of a shortage of own Money, which may cause difficulties in obtaining new loans.

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2. Ratio of equity and borrowed funds. Normal value- no more than 1.

K s / s = Total borrowed funds / Total own sources

K s / s is calculated as:

(Total for section IV + Total for section V - Provisions for future expenses - Deferred income) / (Total for section III Capital and reserves + Deferred income + Provisions for future expenses).

To s / s n.g. = (16 + 3113-89) / (5603 + 89) = 0.53

K s / s k.g. = (16 + 3848-72) / (5186 + 72) = 0.72

∆ K s / s = K s / s k.g - K s / s n.g = 0.72-0.53 = 0.19

The ratio for the reporting period increased by 0.19, this is due to an increase in borrowed funds, and due to a decrease in equity funds, but by the end of the year the ratio is still in line with the normal value.

3. Coefficient of maneuverability. The optimal value is more than 0.5.

K m = Own working capital of the enterprise / Equity capital

K m n.g. = SOS n.y. / SK n.g. = 1114/5603 = 0.20

K m k.g. = SOS c.g. / SK k.g. = -463 / 5186 = - 0.09

∆ K m = K m k.g. - K m n.g. = -0.09 - 0.20 = -0.11

The value of the coefficient at the beginning of the year does not reach the normal value, and at the end of the reporting period is negative, which indicates the inability of the enterprise to maintain the level of its own working capital.

4. Coefficient of mobility of all funds of the enterprise.

K m.s. = Working capital value / Total property value

K m.s. n.g. = OA n.y. / WB n.g. = 4243/8732 = 0.49

K m.s. since. = ОА к.г. / VB k.g. = 3428/9050 = 0.38

∆K ms = K ms since. - K m.s. n.g. = 0.38-0.49 = -0.11

The mobility coefficient at the beginning of the year corresponds to the optimal value (0.5), by the end of the year it decreases by 0.11.

5. Coefficient of mobility of working capital of the enterprise.

To m.s. = The amount of cash and short-term financial investments/ Cost of working capital

To m.s. = DS + KFV / OA

K m.s. n.g. = (DS n.y. + KFV n.y.) / OA n.y. = (767 + 0) / 4243 = 0.18

K m.s. since. = (DS k.y. + KFV k.y.) / OA k.y. = (555 + 0) / 3428 = 0.16

∆K m.s. = K m.s. since. - K m.s. n.g. = 0.16-0.18 = -0.02

A decrease in the mobility coefficients of all property and circulating assets confirms the tendency of a slowdown in the turnover of the organization's assets.

6. Coefficient of supply of stocks and costs with own sources of funds for their formation. The normal value is more than 0.6 ÷ 0.8.

K z.z = The amount of own and long-term borrowed funds / Cost of inventories and costs

To z.z n.y. = 1114/1165 = 0.96

K z.z k.g. = -463 / 1269 = -0.36

∆K z.z = K z.z c.g. - K z.z. = -0.36-0.96 = -1.32

At the beginning of the reporting period, the ratio exceeds the normal value. A decrease in this indicator at the end of the reporting period to a negative value indicates that the company cannot cover inventories with its own funds and needs to attract borrowed funds.

7. Property Ratio for industrial purposes... Normal value is more than 0.5.

K i.p. = The amount of fixed assets, capital investments, work in progress, inventories, equipment / The value of all property of the enterprise

To I.p.p. n.g. = 4489 + 1113/8732 = 0.64

To I.p.p. K.G. = 5622 + 1269/9050 = 0.76

∆K i.p.p = K i.p.c.p. - K I.p.p. = 0.76-0.64 = 0.12

This coefficient essentially determines the production potential of the enterprise and for OJSC Tambovpassazhiroavtoservice, both at the beginning and at the end of the year, corresponds to the normative.

8. Coefficient of working capital.

K m.s. = Cost of inventories and costs / Total balance

K m.o.s n.g. = 1165/8732 = 0.13

K m.o. with k.g. = 1269/9050 = 0.14

∆ K m.o.s = K m.o.s c.g. - To m.o.s n.g. = 0.14-0.13 = 0.01

Material working capital is respectively 13 and 14% at the beginning and end of the analyzed period. This value is considered valid for a service business.

9. Ratio of long-term borrowing.

K d.p. = The amount of long-term loans and borrowed funds / The amount of long-term loans and equity

To d.p.z n.y. = DP n.y. / (DP n.y. + SK n.y.) = 16 / (16 + 5603) = 0.0028

To d.p.z k.y. = DP c.g. / (DP k.y. + SK k.y.) = 16 / (16 + 5186) = 0.0030

∆ K d.p.z = K d.p.c.g. - K d.p.z n.g. = 0.0030-0.0028 = 0.0002

The long-term borrowing ratio of OJSC Tambovpassazhiroavtoservice indicates that the share of long-term liabilities (deferred tax liabilities) raised to finance the company's activities along with equity funds is 0.28% at the beginning of the period and 0.30% at the end of the period.

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Articles, comments, answers to questions

Determining the correct discount rate is one of the most discussed and most controversial issues, since even a small change in the rate will significantly affect the amount of assets and liabilities recognized by the lessee. In addition, the selected rate will have a significant impact on many of the leasing company's financial ratios. For example, the ratio of borrowed and own funds, current liquidity and others. Table 1 shows the effect of a higher discount rate on existing ratios used to analyze the company's financial condition.

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An alternative approach to the concept of an economic entity is the concept of a parent company. The main idea of ​​this concept is that consolidated reporting is a continuation of the parent company's reporting. Followers of this concept consider equity and borrowed capital separately from each other. They view the Modigliani-Miller theory as untenable because the size of debt and the level of leverage affects the risk and expected return of shareholders. They argue that a higher level of borrowed capital compared to equity leads to greater risks for shareholders. And the ratio of debt to equity can be an indicator for investors about the size of the expected cash flows and, therefore, for assessing the value of the company. Therefore, within the framework of this concept, it is inappropriate to generalize in the balance sheet information about own and borrowed funds, since this can affect the adoption of rational decisions by investors.

Normative acts: Ratio of debt to equity

The permissible value for such indicators as "the ratio of own and borrowed funds", "current liquidity ratio (total coverage ratio)" and "net assets" is set equal to 40% (previously - 75%).

Based on the results of calculations, the ratio of borrowed and own funds is assessed from the standpoint of its financial stability and creditworthiness; solvency; liquidity trends.

The debt-to-equity ratio is one of the indicators that determine the composition of sources of activity and assess the financial stability of a firm. Its calculation is extremely important in conducting express analysis, since it allows the user to quickly obtain information about the situation in the company in financial plan, having calculated in proportion the volume of attracted from outside and their sources. The value and calculation of this coefficient is the topic of this publication.

What does the ratio of debt and equity capital mean?

The capital ratio in a company is an indicator that determines the degree of risk, profitability and stability of the company. The need for its calculation arises in companies that do not have a sufficient basis for carrying out activities and attract capital from outside. Loans can meet production needs and increase profitability, but the amount of external capital is important. The financial stability of the company depends on the value of the indicator, since a significant excess of the volume of external capital over its own entails significant risks of losing the business. At the same time, the risk-based strategy is considered to be the most profitable.

The essence of the coefficient is to establish the number of units of attracted assets per unit of assets at the disposal of the firm. The higher it is, the more loans the company has, and, therefore, the more risky the situation for it, since market instability can lead the company to bankruptcy. Those. the debt-to-equity ratio shows the degree of the firm's dependence on the creditors' capital: its predominance reflects this dependence from the outside, while the presence of equity as the dominant component in the structure of sources indicates the reliability and stability of the company.

Debt to equity ratio: formula

It is not difficult to calculate the ratio, the ratio of equity and borrowed funds is determined by the ratio of the value of all the company's liabilities for borrowed funds to the value of the company's equity capital according to the formula:

K szs = ZK / SK,

where ZK is the capital attracted to the company, SK are the firm's own sources.

In turn, the LC consists of the sum of liabilities on loans with different maturities, i.e. long-term and short-term.

The calculation is carried out on the basis of the balance sheet data: the presence of long-term loan liabilities is accumulated on page 1410, debt with short maturities - on page 1510, the amount of equity - on page 1300. Substituting the values ​​of the liability lines into the formula, we get the formula:

K szs = (p. 1410 + p. 1510) / p. 1300 .

Guideline values

The optimal size of the coefficient is considered to be 0.5 - 0.7. A company with a similar indicator is financially stable and independent of creditors' funds.

Indicators below 0.5 indicate stable firm resilience, but some stagnation in business development, leading to a loss of profits due to inefficient use of funds.

The coefficient in the range of 0.7 - 1 indicates the unstable state of the enterprise and the appearance of the first signs of its insolvency, and the calculated value of more than 1 indicates an excessively high concentration of borrowed funds and the potential emergence of bankruptcy risks.

In a word, the larger the ratio, the more unstable the position of the firm, the higher the risk of bankruptcy. An indicator exceeding 1, as a rule, is allowed only in situations where the rate of circulation of receivables prevails over the rate of turnover of goods and materials and monetary assets. The acceptable standard is usually determined within the industry and for specific enterprises, taking into account their specifics, features and financial characteristics.

An example of calculating the ratio of equity and borrowed funds

Let us compare information on the structure of the company's capital based on the data (in thousand rubles):

Conclusions based on the calculation results:

In 2015 - the state of the company is stable, the capital ratio is optimal (for 1 ruble of own funds, 0.61 rubles of borrowed funds);

In 2016 - an increase in the concentration of borrowed funds can provoke the risk of insolvency of the company in the event of an emergency;

In 2017 - the financial position of the company is stabilizing;

In 2018, the company is financially stable, but a competent strategy aimed at further business development is required.

Note that in order to compile a complete picture of the company's activities, it is important not only the ratio of borrowed and own funds, but also a number of other ratios calculated by analysts to determine the financial stability of the company.

Equity / Balance = s.1300 / s.1700

End 2013 1930008/3293652 = 0.586

Beginning 2013 1634816/2809673 = 0.582

It characterizes the independence of the enterprise from borrowed funds and shows the share of own funds in total cost all funds of the enterprise. The standard value is> 0.5, which means the level of independence of the VOMZ OJSC enterprise from creditors is included in the norm, and in the event of a requirement to pay off all debts, the enterprise will be able to satisfy them by selling 42% of its equity capital formed from its own sources.

Financial stability ratio

(Equity + Long-term liabilities) / Balance = (c.1300 + c.1400) / c.1700.

End 2013 (1930008 + 91159) / 3293652 = 0.61

Beginning 2013 (1634816 + 3912) / 2809673 = 0.58

The share of funding sources that the company can use for a long time amounted to 61%. The standard value is 80%, i.e. this suggests that the OJSC "VOMZ" enterprise is dependent on external sources financing and an unstable situation is possible in the future.

Debt to equity ratio (leverage)

Borrowed and attracted sources / Equity = (p. 1400 + p. 1510) / p. 1300.

End 2013 (91159 + 152431) / 1930008 = 0.13

Beginning 2013 (3912 + 0) / (1634816) = 0.002

Shows how many units of borrowed funds fall on each unit of own funds. The dynamics by the end of the year is positive, which indicates a greater dependence of the enterprise on investors and creditors. Recommended value for the enterprise< 0,7. На ОАО «ВОМЗ» данный показатель равен 0,13, что говорит о высокой финансовой устойчивости предприятия.

Permanent asset index

Non-current assets / Equity = s.1100 / s.1300.

End 2013 1191181/1930008 = 0.62

Beginning 2013 937563/1634816 = 0.57

The index of permanent assets shows what share of the sources of funds provides financing of non-current assets of the enterprise, i.e. the main is often the production capacity.

Maneuverability coefficient

Own working capital / Equity = (p. 1300 - p. 1100) / p. 1300.

End 2013 (1930008-1191181) / 1930008 = 0.38

Beginning 2013 (1634816-937563) / 1634816 = 0.43

Shows how much of your own working capital is in circulation, i.e. in the form that allows you to freely maneuver these means, and which is capitalized. The ratio should be high enough to provide flexibility in the use of the company's own funds.

A decrease in the indicator indicates a possible slowdown in the repayment of accounts receivable or a tightening of the conditions for granting a commodity credit on the part of suppliers and contractors. The increase indicates a growing ability to pay off current liabilities.

The organization does not use long-term credits and loans, since the sum of the flexibility coefficient and the constant asset index is equal to one. Own sources cover either fixed assets or circulating assets, therefore, the amount of fixed assets and non-current assets and own circulating assets in the absence of long-term borrowed funds is equal to the amount of own funds:

Coefficient of provision of current assets with own circulating assets

Own current assets / current assets = (p. 1300 - p. 1100) / p. 1200.

End 2013 (1930008-1191181) / 2102471 = 0.35

Beginning 2013 (1634816-937563) / 1872110 = 0.37

It characterizes the availability of the company's own circulating assets, which are necessary for its financial stability. Standard value = 0.1, which indicates the ability of the company to pursue an independent financial policy.

Coefficient of provision of inventories with own circulating assets

Own working capital / Stock = (p. 1300 - p. 1100) / p. 1210.

End 2013 (1930008-1191181) / 929 206 = 0.79

Beginning 2013 (1634816-937563) / 768646 = 0.91

Shows what part of inventory and costs is financed from own sources. It is believed that the ratio of the provision of inventories with own funds should change in the range of 0.6 - 0.8, i.e. 60-80% of the company's reserves should be formed from its own sources. At OJSC VOMZ, 79% of the company's reserves are formed from its own sources, which indicates its financial stability.

The coefficient of the real value of fixed assets and material circulating assets in the property of the enterprise

(Fixed assets + Inventories) / Balance = (p. 1150 + p. 1210) / p. 1600.

End 2013 (1099172 + 929206) / 3293652 = 0.62

Beginning 2013 (871401 + 768646) / 2809673 = 0.58

Determines what share in the value of the property is the means of production. Shows what potential the enterprise has in the event of the appearance of new partners and the provision of the production process with the means of production. Based on the data of economic practice, a limitation is considered normal when the real value of the property is more than 0.5 of the total value of assets. Making a conclusion, we can say that the enterprise has production potential, and it is advisable for suppliers or buyers to conclude an agreement with them.

Drawing a conclusion after analyzing the financial stability of the OJSC "VOMZ" enterprise, we can say that it is dependent on external sources of financing, has sufficient autonomy and is able to satisfy the requirements of the creditor to repay debts from its own sources. Also about the financial stability of the enterprise is indicated by 79% of the formed reserves at the expense of its own sources and production potential, which is also included in the standard indicators: 0.62.