Financial Risk Criteria In Determining Financial Secutiry Of Company
Abstract
The company’s ability to withstand various threats is a key factor in ensuring its good financial situation. This work reviews the main approaches to the financial security of a company and some of its components. We study the theoretical aspects of financial security, i.e. its criteria and financial stability indicators. We analyze the notion of financial risk in the context of company capital structure and describe the main approaches to determining financial risk. We also deal with the basic existing financial security assessment methods that include liquidity and solvency, business activity, and profitability indicators, as well as those of financial stability. We identified the threshold values for the basic indicators of financial stability. We analyzed the correlations between financial leverage and its degree indicator. We identified the risk criteria across the levels of financial leverage differentiation factor, clarified the criteria for the key financial stability indicators to adapt them for the assessment of the financial security of a company. We hypothesize that the proposed financial risk criteria are versatile and can be used for companies of various types. We give an example of financial risk calculations for specific Russian companies to assess their financial security using the proposed methods. When the differentiation factor is used, the level of financial security of the companies in question is a bit higher than that obtained using the conventional methods, which means better assessment results. We identified the advantages of the proposed methods and determined further research prospects for financial security.
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This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
About this article
Publication Date
21 June 2021
Article Doi
eBook ISBN
978-1-80296-110-2
Publisher
European Publisher
Volume
111
Print ISBN (optional)
-
Edition Number
1st Edition
Pages
1-1168
Subjects
Social sciences, education and psychology, technology and education, economics and law, interdisciplinary sciences
Cite this article as:
Savchenko, N., & Derbeneva, V. (2021). Financial Risk Criteria In Determining Financial Secutiry Of Company. In N. G. Bogachenko (Ed.), Amurcon 2020: International Scientific Conference, vol 111. European Proceedings of Social and Behavioural Sciences (pp. 846-852). European Publisher. https://doi.org/10.15405/epsbs.2021.06.03.112