Financial and economic analysis of enterprises: a foundation for projecting positive outcomes in crisis conditions

Abstract

This paper expounds on the imperative of conducting financial and economic analyses within the framework of enterprise activities. It elucidates that, particularly during periods of business crisis, understanding the enterprise’s own level of financial capability becomes paramount. Positive outcomes resulting from financial and economic analyses serve as a critical characteristic of a well-formulated and implemented overarching strategy and managerial policy within the enterprise. The results of financial and economic diagnostics facilitate the identification of strengths and weaknesses inherent in its operational paradigm. The acquired findings from the financial and economic analysis form the basis for developing predictive models. Projected scenarios outlining future business events emerge as the most expeditious and accessible methods for enhancing the enterprise’s financial situation. The versatility of predictive models serves as the quickest managerial solution for extracting the enterprise from a crisis state. Furthermore, projected business event scenarios can reveal the enterprise’s future «vulnerabilities», ensuring its financial «rehabilitation». This research proposes and delineates the comprehensive structure of phased diagnostics and forecasting of the financial and economic state of the enterprise. The presented methodology comprises two interconnected blocks: financial and economic diagnostics of the enterprise and forecasting the financial and economic state of the enterprise. These two blocks mutually complement each other: the existing and anticipated permutations of the financial and economic state of the researched enterprise. Emphasis is placed on the assertion that financial and economic analysis of the enterprise’s overall state will contribute to the development of an effective forecast for the future, providing insight into the directions in which the enterprise needs to focus its efforts further. This, in turn, supports the enterprise’s operations based on elements of flexibility, adaptation, transformation, and business mobility. It crystallizes a realistic financial and economic «picture» of the business and its implementation in the practical activities of the enterprise. The study establishes that the most crucial condition for maintaining business positions is the execution of financial and economic analysis and comprehensive financial and economic diagnosis of the state and operations of the enterprise, coupled with short- and medium-term forecasting of the probability of attaining future positive financial and economic results.