Theoretical aspects of the analysis and prevention of risks of enterprise bankruptcy

Abstract

The relevance of the research lies in the fact that in conditions of economic instability and sanctions among states, even the most self-confident companies are not immune to the risks of bankruptcy and financial instability. Bankruptcy is a complex multi-stage process, at the end of which both the complete financial recovery of an individual/legal entity and its liquidation as a business entity are possible. Bankruptcy of an enterprise is allocated to a separate direction within the bankruptcy of legal entities, as it is often associated with obligations not only to creditors, but also to employees. Every organization aims at financial independence and prosperity, but this phenomenon is becoming very difficult every year, because the number of companies is growing, and therefore competition in all areas of activity is growing. It is because of these circumstances that companies begin to respond sensitively to any changes in market activity. As a result of changes and processes taking place in the market, companies increasingly have to face the risks of instability, financial dependence, and this leads to bankruptcy. Bankruptcy diagnostics are used to prevent financial collapse. It implies a comprehensive analysis of the company's work, including management activities, the circulation of funds and external factors. This tool is used by managers and leaders of companies at the initiative of owners and creditors. The benefit of diagnostics consists in minimizing the costs of overcoming the crisis, in predicting crisis phenomena and preventing consequences, and in selecting the most effective solutions based on the results of the analysis. The ultimate goal of bankruptcy diagnostics is to identify the risks of future failure of the enterprise and ways to eliminate them.