An enterprise’s financial stability and its sustainable growth. A risk-based perspective

Pera, Jacek

doi:10.15678/pm.2017.0302.04

Cited by 6 publications

(5 citation statements)

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“…Usually, the articles concentrate on the role or importance of liquidity in asset pricing (Keene & Peterson, 2007), liquidity monitoring (Ruozi & Ferrari, 2013), the liquidity-profitability tradeoff (Eljelly, 2004), and, recently, the uniqueness of liquidity management during the covid-19 pandemic (Almeida, 2021). Liquidity is perceived a one of the factors ensuring sustainable growth (Pera, 2017). On the other hand, I received almost 1 million links to answer the question about the proper value for a Current Ratio asked on google.com.…”

Section: Literature Reviewmentioning

confidence: 99%

Questing benchmarks for the current ratio: An analysis of the Warsaw Stock Exchange firms

Wójtowicz

2022

IER

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The first objective of the article is to assess the benchmarks for the current ratio commonly provided in the accounting and financial analysis literature. The minor objective is to arrange a research methodology permitting the accomplishment of the first objective. Research Design & Methods:The paper, apart from the literature review and its critique, presents the results of descriptive, quantitative research. The research sample consists of 5 148 firm-years. Data were retrieved from Worldscope Database via Refinitiv Eikon for domestic, going concern, non-financial companies listed on the Warsaw Stock Exchange from 2005 to 2021. For comparison, the U.S.-related data was retrieved from Internet resources as ready-made ratios. Methods used in the analysis include descriptive statistics, parametric and nonparametric ANOVA, confidence intervals, and linear and parabolic trend analysis. Findings:The tests show that identifying a benchmark for the current ratio is problematic. Benchmarks vary between countries and industries; universal standards do not exist. The benchmark for the current ratio commonly suggested, 1.2-2.0, may be used only as a rough evaluation of the desired value. The findings indicate that the acceptable range for CR is much broader, from 1.1 (the first quartile) to 2.3 (the third quartile) for the total sample. Moreover, the SIC division's quartiles vary from 0.7 to 1.2 (the first) and from 1.6 to 3.6 (the third). Statistical tests indicate that benchmarks do not vary annually. However, the distribution's median and the third quartile change slowly over time toward higher values. The Covid-19 pandemic resulted in a substantial increase. On the contrary, the first quartile of about 1 remains relatively stable over time, indicating the reasonable lower bound for CR. The mean of the distribution is useless as a benchmark because of its sensitivity to outliers. Various techniques must be used to assess the benchmark. Implications & Recommendations: Since there are material between-industry and between-country differences in benchmarks, analysts and investors should be very sensitive to the standards suggested in the literature and interpret them cautiously. Variability over time exists but is low unless a shock in the economy appears. Contribution & Value Added:The main contribution of the paper is empirical verification of the benchmarks for the current ratio provided in the literature. Tests show that suggested benchmarks are not universal. Seeking a benchmark, an analyst must compare the firm's financial standing with other firms from the same country, industry, and period. Article type:research article

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Section: Literature Reviewmentioning

confidence: 99%

Questing benchmarks for the current ratio: An analysis of the Warsaw Stock Exchange firms

Wójtowicz

2022

IER

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“…Ukrainian scientists (Baranovs'kyy, 2004;Blank, 2004;Donets & Vashchenko, 2008;Yermoshenko & Horyacheva, 2010;Delas et al, 2015;Davydenko, 2015;Vergun & Topenko, 2016;Bilomistniy et al, 2017;Blakyta & Ganushchak, 2018;Ramskyi & Solonko, 2018;Khudoliei, 2018;Kondratenko et al, 2020 and others) and authors from other countries (Koleda & Lāce, 2008;Cernavskis, 2012;Pera, 2017;Zwolak, 2017;Mbatha & Ngibe, 2017;Safargaliev, 2019;Sylkin et al, 2020;Valaskova et al, 2020;Nguyen & Nguyen, 2020) have devoted a considerable amount of their work to the issues of the substance of financial security as an economic category and the problems of its evaluation and provision. In fact, there has been increased interest in this category over the past few decades and remains relevant.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Authors, which assessing the financial security of the enterprise based on the overall financial state of an enterprise, that is calculates and analyses key groups of financial indicators: profitability, business activity, solvency, financial stability, the efficiency of cash flow management (Blank, 2004;Delas et al, 2015;Yeletskykh, 2017;Pera, 2017;Kharchuk et al, 2020). Ganushchak (2017), Khudoliei (2018), Azarenkova et al (2018), Kosaynova et al (2019), Kharchuk et al (2020) offer to assess the financial security of the enterprise based on the definition of a generic integral measure of the financial security of an enterprise, based on the use of the different set of financial indicators and the determination of the relevant weights (limit values) for each of them.…”

Section: Literature Reviewmentioning

confidence: 99%

“…The main approaches to estimating the level of financial security of the enterprise, which are currently presented in the professional literature -are the coefficient, which involves the calculation of a set of financial indicators (Delas et al, 2015;Yeletskykh, 2017;Pera, 2017;Kharchuk et al, 2020); integrated, based on the definition of an integrated indicator of financial security (Ganushchak, 2017;Khudoliei, 2018;Azarenkova et al, 2018;Kosaynova et al, 2019;Kharchuk et al, 2020); based on the diagnosis of the probability of bankruptcy (Valaskova et al, 2020;Sylkin et al, 2018Sylkin et al, , 2019Sylkin et al, , 2020Koleda & Lāce, 2008;Bilomistniy et al, 2017;Britchenko et al, 2018;Nguyen & Nguyen, 2020;Franchuk et al, 2020). There are also several author's methods for assessing financial security: Hryhoruk et al (2019) -model for assessment of the financial security level of the enterprise based on the desirability scale; Zwolak (2017) -empirical model based on the Cobb-Douglas power function.…”

Section: Introductionmentioning

confidence: 99%

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Financial Security of the Enterprise: An Alternative Approach to Evaluation and Management

Dokiienko¹

2021

Business, Management and Economics Engineering

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Purpose – The main purpose of the article is to justify an alternative approach to assessing the level of financial security of the enterprises based on use the model of modified and adjusted financial statements. Research methodology – The following methods of general theoretical and empirical research were used in the writing of the article: abstract-logical (when systematizing scientific publications on the problems of financial security management of enterprises), comparisons and grouping (when developing and validating a model of modified financial statements), coefficient (when considering and using models for adjusting modified financial statements), grouping (when clustering enterprises depending on the results of the analysis), formalization (when developing a matrix for diagnosing the level of financial security of enterprises), generalization (when formulating research findings). Findings – Based on an established sample from nine of sunflower oil production enterprises of Ukraine their modified financial statements have been developed, it was adjusted to the consumer price index, key financial indicators of the model have been identified and the level of their financial security over the past 7 years have been assessed. The research identified a direct relationship between the level of financial security of enterprises and key financial indicators: financial stability, solvency and financial risk. Also, the proposed methodological approach can be not only an important tool for diagnosing the level of financial security of enterprises, but also its forecasting. Research limitations – The research limitation is associated with sampling size and geographical scope. Also, the diagnostic results may differ depending on the chosen adjustment base, determination of adjustment method and selection of inflation measurement method for the modification financial statements. Practical implications – Practical use of the proposed model proves that it is a convenient, simple, understandable and effective tool for diagnosing the financial security level of enterprises in terms of the main components: financial stability, solvency, and risk. The use of the proposed approach to the assessment of the financial security of the enterprise can serve as an indicator of the overall efficiency of its management at sunflower oil production enterprises and as an informative tool for factor analysis. Originality/Value – Consideration of a significantly different, alternative approach that allows enterprises to quickly and easily diagnose the level of their financial security; to manage it effectively during the current period, and can also become the basis for the formation of strategic directions of financial development and forecasting of the level of financial security for prospective period.

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“…Istnieje wiele kryteriów systematyki ryzyka zagranicznego (Pera, 2017). Praktyka gospodarcza dotychczas nie opracowała jednolitych zasad jego klasyfikacji, bowiem możliwości ich porządkowania wydają się niemalże nieograniczone (Kaczmarek, 2010, s. 23-24).…”

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Ryzyko działalności biznesowej polskich i niemieckich przedsiębiorców w kontekście uregulowań niemieckiego prawa upadłościowego

Kaszuba

2018

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An enterprise’s financial stability and its sustainable growth. A risk-based perspective

Cited by 6 publications

References 1 publication

Questing benchmarks for the current ratio: An analysis of the Warsaw Stock Exchange firms

Questing benchmarks for the current ratio: An analysis of the Warsaw Stock Exchange firms

Financial Security of the Enterprise: An Alternative Approach to Evaluation and Management

Ryzyko działalności biznesowej polskich i niemieckich przedsiębiorców w kontekście uregulowań niemieckiego prawa upadłościowego

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