Financial stability of the enterprise
Posted: Thu Jan 23, 2025 3:39 am
First of all, this implies the possibility of using credit resources, the interest rate on them, included in the company's expenses, the volume of existing debt obligations. In case of low financial stability, it is advisable to use own profit to stabilize it, which will automatically raise the question of reducing dividend payments or postponing them.
The possibility of using borrowed funds depends on the credit rating of the enterprise . If it falls, then it becomes more difficult to get approval for a loan, the interest rate increases. This is how the risks of investing in the relevant company increase.
In the worst-case scenario, the company's profits may be entirely spent on paying off previously assumed obligations. In this case, there can be no talk not only of payments to investors, but also of expenses for the company's development.
In business, such problematic moj database enterprises are called zombie companies. In particular, we can recall "Sibirsky Gostinets", which used an excessive amount of borrowed financial resources and was unable to return them in a timely manner. For three years, the company's financial position has been close to pre-bankruptcy, and the management is negotiating with creditors to provide a deferment of the fulfillment of obligations.
Current market situation
Forecasting risks is a key component of strategic planning. For example, in 2020, there was a massive refusal by companies to pay dividends amid an expected decline in revenues and a reduction in financial resources caused by a decline in economic growth.
Download a useful document on the topic:
Checklist: How to Achieve Your Goals in Negotiations with Clients
Approaches to the analysis of the company's dividend policy
During the implementation of the dividend policy, its results are assessed. The main indicators are the price of shares and their sales volumes. They are compared with the values recorded in previous years. Dividend payments, their changes in different periods, and the profitability of ordinary and preferred shares are also assessed. All this together gives a fairly clear picture of the well-being of the enterprise.
DP analysis involves assessing the key economic indicators of the company's activities: profitability, profitability, quality of personnel and their comparison with forecast values. Based on the assessment results, an idea of the effectiveness of the dividend policy is obtained; the calendar year is usually taken as the assessment period.
Analysis of the company's dividend policy
It is also possible to evaluate indicators over a short period: month, quarter, half-year. These data are analyzed, systematized and transferred to the administration. It is advisable to use them when preparing the final annual report.
This approach allows us to respond in a timely manner to changes in market conditions and to determine the areas of the company’s activities that require changes and strengthening.
The possibility of using borrowed funds depends on the credit rating of the enterprise . If it falls, then it becomes more difficult to get approval for a loan, the interest rate increases. This is how the risks of investing in the relevant company increase.
In the worst-case scenario, the company's profits may be entirely spent on paying off previously assumed obligations. In this case, there can be no talk not only of payments to investors, but also of expenses for the company's development.
In business, such problematic moj database enterprises are called zombie companies. In particular, we can recall "Sibirsky Gostinets", which used an excessive amount of borrowed financial resources and was unable to return them in a timely manner. For three years, the company's financial position has been close to pre-bankruptcy, and the management is negotiating with creditors to provide a deferment of the fulfillment of obligations.
Current market situation
Forecasting risks is a key component of strategic planning. For example, in 2020, there was a massive refusal by companies to pay dividends amid an expected decline in revenues and a reduction in financial resources caused by a decline in economic growth.
Download a useful document on the topic:
Checklist: How to Achieve Your Goals in Negotiations with Clients
Approaches to the analysis of the company's dividend policy
During the implementation of the dividend policy, its results are assessed. The main indicators are the price of shares and their sales volumes. They are compared with the values recorded in previous years. Dividend payments, their changes in different periods, and the profitability of ordinary and preferred shares are also assessed. All this together gives a fairly clear picture of the well-being of the enterprise.
DP analysis involves assessing the key economic indicators of the company's activities: profitability, profitability, quality of personnel and their comparison with forecast values. Based on the assessment results, an idea of the effectiveness of the dividend policy is obtained; the calendar year is usually taken as the assessment period.
Analysis of the company's dividend policy
It is also possible to evaluate indicators over a short period: month, quarter, half-year. These data are analyzed, systematized and transferred to the administration. It is advisable to use them when preparing the final annual report.
This approach allows us to respond in a timely manner to changes in market conditions and to determine the areas of the company’s activities that require changes and strengthening.