The working capital financial leverage as a tool to the efficiency analysis of the enterprise operational activity

Abstract

Purpose. Under the modern conditions of the management analysis of the effectiveness of the enterprise activity the main focus is made to the individual financial indicators and their combinations within the additive models or methods of economy and mathematic modeling which are associated with the significant level of abstraction. However, the financial manager needs comprehensive and relatively simple tools for the financial analysis of operations, in particular, the methods of leverage in the economics.

The subject of the research. We consider  the mechanisms of the financial analysis of the enterprise operational activity to be the subject of the research.

The purpose of the research is to justify the essence of the working capital financial leverage as a category and to identify the areas of using appropriate methods to the efficiency analysis of the enterprise operational activity.

Methodology. The scientific and methodological approach to the determination and implementation of the working capital financial leverage indicator is proposed. It is based on the synthesis of models and methods of financial and marginal analysis.

Value and Conclusion. It is proved that the universal tool of the management analysis of economic activity of the enterprise is the method of marginal analysis, which combines the interconnectedness of indicators and the simplicity in the determination of the appropriate dependencies. It is determined that indicators of the financial and operational leverage do not take into account their mutual influence in the prediction of the processes of operational activity and capital attraction. The financial leverage of working capital is a short-term effect associated with the change in the ratio of current liabilities and working capital. In practice, the use of working capital leverage helps to determine the maximum cost of credit and the amount related to the financing of the operational activity of the enterprise.

Finding: The proposed theoretical approach is used to improve the enterprise management system through the introduction of new tools for analyzing the financial performance of its operating activities.