types of financial stability in sufficient detail in the specialized literature, since this indicator describes the ability of the economic entity to survive in the market.It was in a stable, strong and sustainable enterprises there are more advantages in the fight for the lead to weak.You can determine the type of financial stability, examined individual factors that influence the resulting performance of a business entity.These include:
- organization in the market place;
- production and sale of low-cost high-demand products;
- potential business entity in the market;
- enterprise's dependence on external investors and creditors;
- presence debtors risk categories in terms of their insolvency;
- level of efficiency of financial and business transactions.
types of financial stability are a reflection of stability, when there is an excess of income over expenses, allowing sufficient free to use their own funds.But their effective use will contribute to the smooth production process with subsequent marketing.In other words, the assessment of the type of enterprise financial stability will determine the state of its financial resources, namely their use and distribution that will ensure the development of a business entity to obtain a good result in the future in the form of profits.This should be kept in the creditworthiness or solvency margins of risk.Therefore, the types of financial stability are closely connected with the process of its economic and financial activities, and are a key element of the analysis of the general state of the company.
analysis of this index at a certain date helps determine the correct management decisions subject to its financial resources during the period which preceded that date.Therefore, determining the level of economic indicator is essential for understanding the compliance of its financial resources to market requirements and the needs of the firm.Also, it should be noted that the lack of research in this indicator, the company may become insolvent and lose the funds necessary for the development of production.If this figure more than the standard value, then we can talk about the risks that lead to the inhibition of the development, while increasing the enterprise unnecessary costs and reserves.
Thus, the types of financial stability:
- Absolute stability.To cover the costs used only as a source of own resources.In this state of a business entity is characterized by high solvency and independence from creditors.
- Normal resistance.Sources of financing, in addition to its own funds, is a long-term lending.Main characteristics of the company: the production of a good performance and high efficiency of the use of borrowed resources.
- unstable situation from a financial point of view.In addition to these sources of repayment costs are also used short-term loans.The company has been unstable solvency and the need for additional funds.However, this subject is not lost.
- crisis.Such a position of the company can be characterized by two words: insolvency and bankruptcy.
Thus, the essence of sustainability determined by calculation of efficiency of formation, distribution and use of financial resources.This solvency in this case can serve its external manifestation.
Financial sustainability of a business entity is directly dependent on its structure and degree of dependence on debtors and creditors.
