The main factors determining the financial condition are:
- the implementation of the financial plan and funding as and when the needs in working capital due to the profit;
- the speed of turnover of working capital (assets).
Signal characteristics, which clearly shows the financial condition of the solvency of the organization. Since the implementation of the financial plan depends mainly on the results of production and economic activity in General, we can say that the financial condition is determined by the totality of economic factors.
The financial position is evaluated from the point of view of short-term and long-term prospects.
From a position on the short term criteria of financial condition are liquidity and solvency of the enterprise, i.e. the ability to timely and fully make payments on short-term obligations.
Under the liquidity of an asset refers to its ability to be transformed into money and the degree of liquidity is determined by the duration of the temporary period during whom this transformation can be carried out. The shorter the period, the higher the liquidity of the asset.
With the long term financial condition of the enterprise is characterized by the structure of sources of funds, the degree of dependence of the enterprise on external investors and creditors, as well as the effective functioning of the enterprise, i.e. its profitability.