Financial Improvements of the Enterprise and Restoration of its Solvency in the Conditions of Risk Management

Kirjanen Aleksandr (), Samodurov Alexandr () and Labudin Alexandr ()
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Kirjanen Aleksandr: Saint Petersburg State University and North-West Institute of Management — branch of the RANEPA, Saint Petersburg, Russia
Samodurov Alexandr: North-West Institute of Management — branch of the RANEPA, Saint Petersburg, Russia
Labudin Alexandr: North-West Institute of Management — branch of the RANEPA, Saint Petersburg, Russia

Baltic Journal of Real Estate Economics and Construction Management, 2019, vol. 7, issue 1, 300-309

Abstract: The goal of the article is to show how bankruptcy of an enterprise appears. Therefore, the generalised balance equation of financial and economic activity of the enterprise is considered. Graphs of two main characteristics of risk management are given. The conditions under which the income and expense curves can re-intersect are given. From this moment the bankruptcy procedure of the enterprise begins. There are four stages through which the company must pass until it is declared bankrupt. It is also indicated how zones of permissible, critical and catastrophic risks arise. On the basis of business speed and investment profitability, a table of SWOT analysis of financial improvements of the enterprise is built. Four strategies of economic security and possible risks are also considered. An example of one of the methods of financial recovery of the enterprise using intermediate risky activities is given. By means of calculations it is shown that long participation in risky business, can bring both the considerable income, and lead to almost complete loss of the capital. The conclusion is made: it is necessary to leave risky business in time.

Keywords: Bankruptcy; Economic security; Financial stability; Restoring solvency; Risk management; Speed of business process (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:bjrecm:v:7:y:2019:i:1:p:300-309:n:19

DOI: 10.2478/bjreecm-2019-0019

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