The main types of financial stability of an enterprise

Types of financial stability of the enterprise are described in sufficient detail in specialized literature, since this indicator characterizes the ability of an economic entity to survive in the market. It is at stable, strong and sustainable enterprises that there are more advantages in the struggle for leadership over the weak. You can determine the type of financial stability of an enterprise by considering individual factors that affect the resultant indicators of the business entity. To them it is possible to carry:

• Place of organization in the market;
• Production and sale of low-cost, high-demand products;
• The potential of the business entity in the market;
• The dependence of the enterprise on investors and external creditors;
• Presence of debtors of risk category in the part of their insolvency;
• The level of efficiency of financial and business operations.

Types of financial stability of the enterprise serve as a reflection of stability, when there is an excess of income over expenditure, which allows you to freely use your own funds. And their effective use will contribute to an uninterrupted production process with the subsequent sale of products. In other words, an assessment of the type of financial stability of an enterprise will allow us to determine the state of its financial resources, namely, their use and distribution, which will ensure the development of the business entity with a further high profit result. At the same time, solvency or creditworthiness must be maintained within the acceptable risk limits. Therefore, the types of financial stability of an enterprise are closely related to the process of its economic and financial activity and are the main element of the analysis of the general state of the firm.

An analysis of this indicator at a certain date helps to determine the correctness of making decisions on the management of an entity with its financial resources during the period that preceded this date. Therefore, determining the level of this economic indicator is simply necessary to understand the compliance of its financial resources with market requirements and the development needs of the firm itself. It should also be noted that if the research of this indicator is insufficient, the enterprise may become insolvent and lose the funds necessary for production development. If this indicator is more than the normative value, then we can talk about the risks that will lead to the inhibition of development, while increasing the company's excess costs and reserves.

So, types of financial stability of the enterprise:

1. Absolute stability. To cover costs as a source, only own means are used. In this condition, the subject of management is characterized by high solvency and independence from creditors.
2. Normal stability. The source of coverage of costs, in addition to own funds, is long-term lending. The main characteristics of such an enterprise: good production efficiency and high efficiency of using borrowed resources.
3. Unstable situation from the financial point of view. In addition to the above sources of cost recovery, short-term loans are also used . The enterprise is experiencing unstable solvency and the need to use additional funds. However, for the given subject all is not lost yet.
4. Crisis state. This position of the enterprise can be characterized by two words: insolvency and bankruptcy.

Thus, the essence of sustainability is determined by calculating the effectiveness of the formation, distribution and use of monetary resources. In this case, solvency in this case can act as its external manifestation.

The financial stability of the business entity is directly dependent on its structure and the degree of dependence on debtors and creditors.