risk of bankruptcy has always been an integral part of any business activity in the market, spreading not only to the person or company who has suffered damages as a result of the conduct of its business activities, as well as to those who have cooperated with this company or entrepreneur, providing them with fundsany form.
legislation of the Russian Federation bankruptcy is seen as a failure of the economic entity to make payments of mandatory payments of debt owed to creditors, as well as deal with the financing of the current detail, since it does not have sufficient funds.The earlier the diagnosis is carried out of bankruptcy, the more the company has a chance to avoid it.Diagnosis of bankruptcy can be carried out one of the many methods, but you can carry it using a few different methods that give a more accurate result.Each method allows you to identify trends in bankruptcy and implement assessment of the likelihood of each.
bankruptcy Diagnostics: general assessment factors
There are a number of factors that suggest about the plight of the company, if they detect and take note, it will not only prevent possible risks, but also to carry out forecasting of bankruptcy.Among these factors can be identified:
- unstable income;
- low levels of liquidity ratios;
- low profitability of products or services;
- a sharp drop in the value of assets and securities of the company;
- a significant percentage of leverage, which causes important effect of financial leverage that exceeds the level of economic return on assets;
- low levels of liquidity ratios;
- high common factors of commercial risk;
- reduced investment returns.
If these indicators are found, or some of them, it is already talking about a substantial probability of bankruptcy, which is an accurate assessment can be carried out by comparing the commercial activities of the organization with those of other companies, individual entrepreneurs or organizations.
Diagnostics of bankruptcy: the main approaches
In the process of diagnosis and assessment of the probability of bankruptcy apply approaches based on analysis rather extensive system of attributes and criteria or the use of a limited range of indicators, among which may be integrated.There is a conventional division of a common set of symptoms that can indicate the likelihood of bankruptcy.
The first group decided to attribute the signs that indicate the likelihood of a deterioration of the company or the company's future:
- the low level of capital investment;
- inefficient use of technical equipment and resources of the enterprise;
- spasmodic work and downtime;
- the absolute dependence on a particular market, the type of equipment or assets and other.
The second group includes indicators that allow us to determine the probability of bankruptcy in the near future:
- availability of stocks of raw materials or products, significantly higher than the norm;
- shortage of working capital of the company and increase the duration of the period of its turnover;
- the existence of outstanding financial obligations to the founders of the company;
- chronic arrears to creditors or debtors and other indicators.
If the subject is not able to repay the resulting debts within three months, it acts as a significant indicator determining the probability of bankruptcy.
Statement bankruptcy courts may submit a management of the enterprise, or the competent authorities or the creditors of the enterprise.
