ABOUT THE METHOD OF ANALYSIS OF OWN AND LOAN CAPITAL ENTERPRISE

Abstract

Equity represents the financial assets of an individual economic entity, owned by it and used by them to form a certain part of its assets. In modern conditions, the development of activities is impossible without significant financial resources, hence the attraction of long-term debt capital expands the capabilities of enterprises. The purpose of the article is to study current practice of analysis of own and borrowed capital of the enterprise and substantiation of proposals for improvement of this direction of analytical work at the enterprise. The article determines the need to improve the methodology of analysis of own and borrowed capital, presents existing indicators of the analysis of the adequacy and efficiency assessment of the use of equity capital, it is determined that a large number of indicators in some cases prevents making correct conclusions. In this connection, an ordered number of indicators, their optimal values, as well as a formula for calculating the coefficient of financial dependence of the enterprise is proposed. The coefficient of financial dependence reflects the riskiness of a business: the higher its value, the more risky a shareholder, investor and creditor is a commercial organization. The factors influencing the profitability of equity capital are presented. It is determined that the return on equity is a three factor model, where the first factor summarizes the financial results, the other – combines an asset with this report, the third one is based on the data of the liability balance. In the case of long-term obligations attracted, there is the effect of a financial leverage that characterizes the effectiveness of using the borrowed funds. Financial leverage is an objective factor that arises with the emergence of borrowed funds in the amount used by the organization of capital, which allows it to obtain additional return on equity. To improve the methodology for analyzing long-term liabilities, it is proposed to carry out an analysis of financial leverage that will help to clearly determine the effectiveness of using long-term loans, their impact on equity, and therefore on performance.