ASSESSMENT OF FINANCIAL SUSTAINABILITY AND MEASUREMENT OF SEE-RISKS OF MACHINE-BUILDING ENTERPRISES: A TWO-LEVEL DIAGNOSTIC PROCEDURE

Abstract

The relevance of the study is determined by the fact that the positive dynamics of individual statistical indicators of the machine-building industry of Ukraine did not spread evenly across all enterprises of that industry: approximately every fourth machine-building enterprise remained unprofitable even in the year with the highest aggregate financial result before taxation for the period under study, so that the values aggregated across the industry lose their diagnostic suitability with regard to a separate enterprise. The purpose of the article is to substantiate and to test a two-level procedure for diagnosing and measuring the risks of machine-building enterprises in which both levels perform complementary functions. The analysis of the components of performance of the economic process reveals a threat at the stage when it has not yet appeared in the balance sheet, since the performance of the process of gross income formation is presented as the product of scale and effectiveness, while the change of each component is measured by the growth rate of the corresponding index. The assessment of financial sustainability by the actual level of six ratios, with each calculated value assigned to a safe zone, a risk zone or a critical zone, shows whether the enterprise has enough margin of safety to withstand that threat. Three types of agreement between the results of the two levels are distinguished. Under the confirming type both levels move in the same direction. Under the leading type a deterioration of the process is covered by equity accumulated earlier and is not yet visible in the balance sheet. Under the growth quality signal the process improves while the share of equity falls. It has also been established that the change of the capital structure of an enterprise occurs approximately one year later than the change of the indicators of the components of performance. The practical value of the work is confirmed by the proven possibility to distinguish these types, to locate the risk zones in the activity of the enterprise and to measure the risks of the enterprise quantitatively by means of the growth rates of the indices.