Advice 1: How to calculate capital ratio

Equity is the value of the enterprise. The structure of capital of the company is considered in the analysis of the level of solvency of the firm. Thus, among other indicators is calculated the coefficient of private capital.
How to calculate capital ratio
You will need
  • - the balance sheet of the company for the period;
  • - the formula for calculation of the capital ratio:
  • KSK=KS/K, where:
  • - KS - own capital of the enterprise,ths.
  • To the assets of the company, thousand RUB.
Determine the amount of own capital of the enterprise (COP). This can be done by taking the total amount on the line of section III "Capital and reserves" accounting balanceas at end of the reporting period. As can be seen from the structure of the balance sheet to equity of the company is one authorized and additional paid-in capital, reserves and retained earnings.
Determine the amount of assets of the company (K). The value of the assets of the company is the total amount (currency) balance as at the end of the analyzed period. Calculate the coefficient of own capital of KSK specified formula by dividing the amount of own capital of the enterprise (COP) to the value of its assets (K) at the end of the reporting period.
Analyze the results by calculating the coefficients own capital of the enterprise over the same period last year, for the previous accounting periods. Examine the dynamics of changes in the coefficientand make necessary conclusions.If required, calculate other indicators, characterizing the structure of capital and level solvency (the ratio of the ratio of borrowed and own capital, the ratio of the coating, the restoration of solvency, etc.).
The higher the capital ratio, the higher the level of solvency of the company. The high level of this ratio shows the stability of the financial structure of the enterprise, which is a good guarantee of obtaining credits on favorable terms.

Advice 2 : How to calculate the flexibility ratio

On financial stability, we can conclude, knowing about the extent of its dependence on borrowed funds, the ability to maneuver their own capital. This information is important for the owners of the company, its investors, and counterparties (buyers of finished products and raw material suppliers).
How to calculate the flexibility ratio
In the analysis of financial stability, you can calculate the coefficient of maneuverability on equity. He characterizes the share of sources of own funds located in a mobile form. The flexibility ratio shows what portion of working capital engaged in circulation, and what is capitalized. Thus working capital in a mobile form, the company is free to maneuver.
To calculate the flexibility ratio use the following formula:
Km = SOS/SK, where
SOS working capital;
SK – equity.
In other words, the flexibility ratio is the ratio of own circulating capital of the enterprise to private sources of funding. The recommended value for this indicator is 0.5 or higher. Its value depends on the type of activity of the enterprise. In asset-intensive industries to its normal level, usually below, than material-intensive.
The amount of equity capital you can see in the third section of the liabilities side of the balance sheet. With regard to the level of working capital, it is a calculated value. You can find one of clubusacasino:
1) SOS = SK ISLANDS, where
SK – equity enterprises;
VA – non-current assets.
2) COC = OA – KO, where
OA – floating assets;
CO – current liabilities of the company.
The indicator defines the share of capital which goes to funding its current operations (the formation of current assets).
You have to consider that the dynamics of the flexibility ratio needs to increase. However, its rapid growth is testimony to the normal development of the enterprise. This is due to the fact that the increase in this ratio is possible with the growth of its own working capital or by reducing their own sources of the enterprise. So, the sharp increase of this indicator will automatically trigger a decrease in others, for example, the coefficient of autonomy, indicating an increasing dependence of the enterprise from creditors.
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