Assessment of the financial condition of the enterprise according to the Selezneva-Ionova model

Consider the assessment of the financial condition of the enterprise using various models, both domestic and Western. To a greater extent, we present models for the Russian economy.

The key difference between the rating model for assessing the financial condition of an enterprise and other integral models is that the weight coefficients in the model are obtained by expert means or by normalizing the value of the coefficient. For example, for comparison in integral evaluation models, weight coefficients are obtained using mathematical tools (multiple discriminant analysis, logistic regression).

Let’s start with the first rating model for assessing the financial condition of an enterprise N.N. Selezneva and A.F. Ionic .

Model calculation formula:

R = 25*N 1 + 25*N 2 + 20*N 3 + 20*N 4 + 10*N 5

Table 18 – Model Selezneva – Ionova. Calculation

Coefficient Calculation formula Calculation according to RAS
K 1 K 1 = Revenue / Average Inventory p.2110 / [(p.1210cp.+p.1210cp.)*0.5]
K 2 K 2 = Current assets / Current liabilities p.1200 / (p.1520 + p. 1510 + p. 1550)
K 3 K 3 u003d Equity / (Short-term + Long-term liabilities) p.1300 / (p.1400+p.1500)
K 4 K 4 = Net profit / Assets p.2400 / p.1600
K 5 K 5 u003d Net profit / Revenue p.2400 / p.2110

Note:

K 1 – inventory turnover ratio (n.p. – data at the beginning of the period, k.p. – data at the end of the period),

K 2 – current liquidity ratio,

K 3 – coefficient of the capital structure,

K 4 – return on assets (ROA),

K 5 is the efficiency ratio or return on sales (ROS).

The model is similar to another rating model for assessing the financial condition of an enterprise: the Saifullin and Kadykov model. We will consider it next. In order to calculate the values of N 1 -N 5 to calculate the rating number R, it is necessary to divide the value of the coefficient by its standard. Standard values for each coefficient are given in the table below.

Table 18 – Model Selezneva – Ionova. Normative values of indicators

Coefficient Name Standard
K 1 Inventory turnover ratio
K 2 Current liquidity ratio
K 3 The coefficient of the ratio of own and borrowed funds
K 4 Return on assets for profit 0.3
K 5 Ratio of profitability of proceeds by profit from sales (efficiency of enterprise management) 0.2

Assessment of the financial condition of the enterprise according to the model :

If R>100, then we can conclude that the company is financially stable. In the opposite situation, it is necessary to conduct a more detailed study of the company’s finances to identify bottlenecks.

Assessment of the financial condition of an enterprise according to the Saifullin-Kadykov model

The next rating model for assessing the financial condition of an enterprise is the model of R.S. Saifullin, and G.G. Kadykov.

Model calculation formula:

R = 2*K 1 + 0.1*K 2 + 0.08*K 3 + 0.45*K 4 + K 5

Table 19 – Saifullin-Kadykov model

Coefficient Calculation formula Calculation according to RAS
K 1 K 1 u003d (Equity – Non-current assets) / Current assets (p.1300-p.1100) / p.1200
K 2 K 2 = Current assets / Current liabilities p.1200 / (p.1520 + p. 1510 + p. 1550)
K 3 K 3 = Sales proceeds / Average annual value of liability assets) p.2110 / [(p.1600c.p. + p.1600cp.)*0.5]
K 4 K 4 u003d Net profit / Revenue p.2400 / p.2110
K 5 K 5 u003d Net profit / Equity capital p.2400 / p.1300

Note:

K 1 – coefficient of provision with own working capital,

K 2 – current liquidity ratio,

K 3 – inventory turnover ratio (n.p. – data at the beginning of the period, k.p. – data at the end of the period),

K 4 – return on sales (ROS)

K 5 – return on equity (ROE).

The assessment model, according to the developers, can be used for express assessment of enterprises in various fields of activity and industries, as well as various scales.

According to the used financial ratios, the model is close to the rating model of Postyushkov A.V. Only the coefficient K 3 differs. And also most of the coefficients are used in the Selezneva-Ionova model. We will consider the Postyushkov model next in the list.

Assessment of the financial condition of the enterprise according to the model:

If the value of the rating indicator R<1, then the financial condition of the enterprise is low, if R>1, then the financial condition of the enterprise can be assessed as high.

Assessment of the financial condition of the enterprise according to the Postyushkov model

Assessment of the financial condition of the enterprise according to the model of A.V. Postyushkov is produced according to two models: four- and five-factor.

The formula for calculating the four-factor model:

R= 0.125*K 1 + 2.5*K 2 + 0.4*K 3 + 1.25*K 4

The formula for calculating the five-factor model:

R= 0.1*K 1 + 2*K 2 + 0.08*K 3 + 1*K 4 + 0.45*K 5

Table 20 – Model A.V. Postyushkov

Coefficient Calculation formula Calculation according to RAS
K 1 K 1 = Current assets / Current liabilities p.1200 / (p.1520 + p. 1510 + p. 1550)
K 2 K 2 u003d (Equity – Non-current assets) / Current assets (p.1300-p.1100) / p.1200
K 3 K 3 = Sales proceeds / Average annual value of liability assets) p.2110 / [(p.1600n.p.+p.1600kp.)*0.5]
K 4 K 4 u003d Net profit / Equity capital p.2400 / p.1300
K 5 K 5 = Net profit / Revenue p.2400 / p.2110

Note:

The assessment of the financial condition according to the Postyushkov model has a bankruptcy forecasting horizon of 6 months. It can be used for enterprises of any industry, as well as the scale of activity. The model in terms of financial ratios is close to the Saifullin-Kadykov model.

K 1 – current liquidity ratio,

K 2 – coefficient of provision with own working capital,

K 3 – equity turnover ratio (n.p. – data at the beginning of the period, k.p. – data at the end of the period),

K 4 – return on equity ratio (ROE),

K 5 – return on sales (ROS).

Assessment of the financial condition of the enterprise according to the model

If R>1, then the financial condition of the enterprise is low and there is a high risk of bankruptcy in 6 months. If R<1 then the financial condition is stable. For the five-factor model, the assessment intervals for the rating number are exactly the same.

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