Overview of actions to strengthen financial stability of companies

Abstract

Based on a review of the recommendations of various scientists, the article presents measures to strengthen the solvency and financial stability of companies in various fields of production. These include effective receivables management, accelerated capital turnover, increased profits and cash flow. The article reveals the concept of financial stability as the main criteria of the company’s financial condition. As well the negative aspects of the financial condition of companies are discussed. All negative factors divided into three groups based on their characteristics: general economic factors, state factors, and market factors. The model of accounts receivable management, which includes three stages is presented. It is concluded that a high share of accounts receivable as part of assets can lead any company to loss of solvency. Ways to improve the structure of funding sources, aspects of increasing return on capital are considered. Several recommendations given to reduce the duration of capital turnover in order to increase the company’s solvency. As a factor of increasing profits a possible ways of minimizing costs are investigated. Ways of increasing production volumes are highlighted and described, measures to increase cash flow are analyzed. Considerable attention is paid to the irrational management of cash flows.

Features of capital investment in innovation: The case of industrial SMEs in the GUAM countries

“…To measure financial stability, the amount and growth rate of the company's assets, equity capital, Current Ratio, Return on Equity, and Return on Assets (Yerdavletova et al, 2020;Nashtaei, Choube & Talemi, 2016) for 2017-2022 were used.…”

“…Previous research has focused more on the nature of the personal impact of the level of corporate financial performance on a company's investment spending. The financial stability of a company determines the availability of financial resources, the company's solvency, and profitability (Yerdavletova et al, 2020). Less financially sound companies have fewer opportunities to invest and focus on building liquidity to restore solvency (Liu, Chen & Yang, 2022).…”

“…Then, the way out of the company from the crisis is a renewal and modernization of fixed assets, which is impossible without real investment. Another reason for the low level of financial stability may be the lack of product demand (Yerdavletova et al, 2020). To eliminate these issues, investments in innovations (product and technological) are necessary (Duong et al, 2022).…”