Journal of Management and Economics
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TYPE
Original Research
PAGE NO.
23-26
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SUBMITED
08 April 2025
ACCEPTED
10 May 2025
PUBLISHED
18 June 2025
VOLUME
Vol.05 Issue06 2025
COPYRIGHT
© 2025 Original content from this work may be used under the terms
of the creative commons attributes 4.0 License.
Theoretical Foundations
For Analyzing Of The
Financial Condition Of An
Enterprise
Ismailova Maxbuba Mirxalilovna
Tashkent State University Of Economics, Uzbekistan
Abstract:
The article presents the theoretical
foundations of the financial situation of enterprises and
describes the views of various scientists. Also, the
economic essence of the financial condition, techniques
and approaches to conducting an analysis of the
financial condition of an enterprise and algorithm for
conducting analysis of the financial condition of the
enterprise.
Keywords:
Financial condition, financial analysis,
economic analysis, financial stability, solvency, liquidity,
profitability, business activity, bankruptcy.
Introduction:
Topic financial condition analysis is
relevant at any time, since enterprises in the process of
conducting their activities are constantly faced with the
impact of various factors that can affect the financial
condition of the enterprise in one way or another. And
a high-quality analysis of the financial condition of the
enterprise on a regular basis allows the enterprise to
stay afloat and avoid financial insolvency or bankruptcy.
The analysis of the financial condition of the enterprise
takes place in the current economic situation, caused by
the increased influence of various risk factors, which can
weaken the financial position of the enterprise.
Thus, analysis of the financial condition of an enterprise
is the most important area of the enterprise’s activity,
as it allows timely adoption of certain management
decisions aimed at strengthening it.
ANALYSIS OF LITERATURE
“Financial
condition
–
this is one of the most important
characteristics of the activities of economic entities,
which reflects the availability of financial resources, the
appropriateness and efficiency of their placement and
use, solvency and financial stability” [
1].
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“Financial condition
- the state of the enterprise is one
of the main economic categories. This qualitative
characteristic determines the following aspects of the
company’s functioning: competitiveness; prospects for
partnership; degree of confidence in achieving the set
goals. The financial condition as a whole is a category
of an ambiguous nature. The system of indicators that
form the content of the concept of “financial
condition” reports on the availability of financial
resources at the enterprise, sources of their receipt,
the ability to repay debts on loans and credits in a
timely manner”. [2]
Under the financial condition of an enterprise is
understood as the characteristics of the composition
and placement of funds, the structure of their sources,
the rate of capital turnover, the ability of the enterprise
to repay its obligations on time, as well as other factors.
[3]
The financial condition of an enterprise is an economic
category that reflects the process of the state of capital
in its circulation and the ability of the enterprise to
develop in a certain period of time. [4]
Analysis and results
Four key areas are highlighted in understanding the
essence of the financial condition, which are presented
in Figure 1.
Figure 1. The economic essence of the financial condition
Thus, the financial condition acts one of the key
components in the activities of an enterprise, which
requires high-quality analysis in order to develop
various solutions to improve the efficiency of the
enterprise, to increase the investment attractiveness
of the enterprise, and to reduce the likelihood of
bankruptcy of the enterprise.
“Assessment of the financial condition of an enterprise
is part of financial analysis and can be carried out with
varying degrees of detail, depending on the available
information, the objectives of the analysis, etc. It is
characterized by a certain group of indicators reflected
in the balance sheet as of a certain date. The main
target setting and content of financial analysis is to
assess the financial condition and identify the
possibility of ways to improve the efficiency of the
economic entity with the help of rational financial
policy.
Analysis of the financial condition shows that in what
directions this work should be carried out, which
makes it possible to identify the most important aspects
and the weakest points in the financial condition of the
organization. Based on this, the results of the analysis
provide an answer to the question of what are the most
important ways to improve the financial condition of the
organization in a specific given period of its activity. But
the main goal of the analysis is to promptly identify and
eliminate shortcomings in financial activities, as well as
find reserves for improving the financial condition of the
organization and its solvency. [5]
In this regard, the methodological aspects of conducting
an analysis of the financial condition of an enterprise
will be discussed below.
To conduct the analysis and assessing the financial
condition of an enterprise, there are many different
methods and approaches that are described by
researchers.
In general, approaches to conducting analysis and
assessing the financial condition of an enterprise are
partially used in parallel.
Description of the placement of enterprise funds and
their dynamics in the reproduction process, which
reflects the enterprise’s ability to develop in the long
term.
A component of the economic potential of an enterprise,
through which its financial results are reflected.
Accounting and analytical approach is a set of indicators
of the financial statements of an enterprise.
Investment attractiveness of the enterprise,
characteristics of its competitiveness in the financial
market.
Financial
condition
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The following methods are distinguished and
approaches to conducting an analysis of the financial
condition of an enterprise:
horizontal and vertical (structural) analysis,
trend analysis,
analysis of relative indicators (ratio analysis),
comparative(spatial) analysis,
factorial analysis.
Detailed description of these methods and approaches
is presented in Figure 2.
Figure 2. Techniques and approaches to conducting an analysis of the financial condition of an enterprise.
This algorithm, in our opinion, it allows us to analyze
the financial condition of the enterprise quite
consistently. However, this algorithm does not present
profitability indicators, and does not assess the
probability of bankruptcy of the enterprise.
Below in Figure 3 the algorithm is presented, according
to which the financial condition analysis will be
conducted within the framework of this study. This
algorithm systematizes the key approaches to
conducting the analysis of the financial condition of the
enterprise.
Horizontal analysis
Comparison of current indicators with indicators of
previous periods
Vertical (structural)
analysis
Identifying the degree of influence of a separate
balance sheet item on the overall result
Trend analysis
Identifying trends over time
Analysis of relative
indicators (ratio analysis)
Analysis of the ratio of absolute reporting values.
Comparison of results with standard values
Comparative analysis
Comparison of the financial indicators of the
organization with similar ones of its divisions or
competitors plan
Factorial analysis
Identification of the degree of influence of external
and internal factors on the result
1 Analysis of the structure of assets and capital
enterprises
2 Analysis of the dynamics of assets and capital
enterprises
3 Analysis of indicators of profitability, business activity
(turnover), financial stability, solvency (liquidity)
4 Assessment of the probability of bankruptcy of the
enterprise
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Figure 3. Algorithm for conducting analysis of the financial condition of the enterprise.
First- analysis of the structure of assets and capital. It
consists of determining the share of individual items of
assets or capital in the structure
balance sheet currencies (ratio of item value to the
balance sheet currency) or in the section structure (the
ratio of the item value to the section value), as well as
in determining the share of balance sheet sections in
the balance sheet currency structure (the ratio of the
section value to the balance sheet currency). The share
is usually expressed as a percentage.
Second
–
analysis of the dynamics of assets and capital.
It consists of determining the growth rates or growth
rates of the value of individual items or sections over
several periods (years). The growth rate or growth rate
can be either chain (when the dynamics are
determined in relation to the previous value) or base
(when the dynamics are determined in relation to the
base value). The growth rate is calculated as the ratio
of the current value to the previous (or base),
expressed as a percentage. That is, if the value is less
than 100%, then there has been a decrease, if the value
is more than 100%, then there has been growth. The
growth rate is calculated as the ratio of the difference
between the current value and the previous (base)
value to the previous (base) value, expressed as a
percentage. That is, if the value is negative, then there
has been a decrease, if the value is positive, then there
has been growth. If you subtract 100% from the growth
rate, you get the growth rate.
Third- analysis of profitability indicators, business
activity (turnover), financial stability, solvency
(liquidity). In this case, absolute and relative indicators
are calculated based on the data of the financial
statements of the enterprise.
CONCLUSION
The economic essence of the concept of financial
condition of the enterprise is revealed in the works of
various researchers. Thus, the financial condition of an
enterprise can be understood as the enterprise’s
ability to develop, as part of the economic potential of
the enterprise, as indicators of financial statements, as
the investment attractiveness of the enterprise. The
financial condition is one of the key components in the
activities of the enterprise, which requires high-quality
analysis in order to develop various solutions to
improve the efficiency of the enterprise, to increase
the investment attractiveness of the enterprise, and
reduce the likelihood of bankruptcy of the enterprise.
There are many different methods and approaches to
analyze and assess the financial condition of an
enterprise, including horizontal analysis (dynamics),
vertical (structural) analysis, trend analysis, analysis of
relative indicators (ratio analysis), comparative (spatial)
analysis, factor analysis. The algorithm by which the
financial condition will be analyzed within the
framework of this study: analysis of the structure of
assets and capital of the enterprise, analysis of the
dynamics of assets and capital of the enterprise, analysis
of profitability indicators, business activity (turnover),
financial stability, solvency (liquidity), assessment of the
probability of bankruptcy of the enterprise.
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