The Nexus between Financial Performance and Equilibrium: Empirical Evidence on Publicly Traded Companies from the Global Financial Crisis Up to the COVID-19 Pandemic

Financial performance and financial equilibrium are two key aspects that should be monitored by any business manager interested in passing the test of time and overcoming unpredictable events such as economic crises. The organic link between financial performance and financial equilibrium has rarely been studied in the long run for companies listed on the stock market. The present article fills this gap in the literature by examining the degree to which financial performance influenced long-term financial equilibrium using data from 34 major companies publicly traded on the New York Stock Exchange and operating around the world in a wide variety of industries and sectors. The period of analysis spread over a decade (2007Q1–2020Q3) in order to cover two major crises that have marked the dawn of the third millennium and occurred relatively close to one another: the 2008 financial meltdown and the COVID-19 pandemic crisis. By means of panel data modelling, the study showed that the short-term and long-term financial equilibria of these public companies measured by current ratio, quick ratio and debt to equity ratio were significantly impacted by different financial performance indicators. The study addresses various implications of the empirical results and lays out avenues for future research.

ALGORITHMS FOR CONSTRUCTING CRITERIA FUNCTIONS OF THE FINANCIAL EQUILIBRIUM OF A COMMERCIAL ORGANIZATION

В статье, продолжающей изложение методики анализа финансовой устойчивости коммерческой организации в рамках новой парадигмы анализа, рассмотрены возможности дедуктивно-аксиоматического обоснования алгоритмов построения критериальных функций финансового равновесия, являющихся необходимым элементом указанной методики. Предлагаемая концепция финансового равновесия основывается на общенаучных представлениях о равновесном состоянии системы. В качестве важных примеров представлены критериальные функции финансового равновесия, вытекающие из норм права, регулирующих условия несостоятельности (банкротства) и ликвидации коммерческих организаций. Предложен общий алгоритм классификации финансовых ситуаций, основанный на распределении рисков неплатежеспособности и ликвидации коммерческой организаций по возможным ситуациям и отражающий данное распределение с помощью значений критериальных функций. In the article, which continues the presentation of the methodology for analyzing the financial stability of a commercial organization within the framework of a new paradigm of analysis, the possibilities of deductive and axiomatic justification of algorithms for constructing criterion functions of financial equilibrium, which are a necessary element of this methodology, are considered. The proposed concept of financial equilibrium is based on general scientific ideas about the equilibrium state of the system. As important examples, the criteria of the financial equilibrium functions arising from the rules of law governing the conditions of insolvency (bankruptcy) and liquidation of commercial organizations are presented. A general algorithm for classifying financial situations is proposed, which is based on the distribution of risks of insolvency and liquidation of commercial organizations by possible situations and reflects this distribution using the values of criteria functions.

European Economic Governance and Rising Sovereignism

Europeans have experienced a variety of challenges in recent years. The rise of sovereignism is one of them. Against this backdrop, this chapter analyses the link between the economic crises and the development of right-wing populist parties. It assesses that while the European economic governance, through a set of mechanisms and institutions, acquired a renovated economic and financial equilibrium, it failed to deal with other salient imbalances concerning wage and fiscal policies across European Union (EU) member countries allowing sovereign parties to gain more legitimacy.

3.2. ПРИМЕНЕНИЕ ТЕОРИИ СИСТЕМ ЛИНЕЙНЫХ НЕРАВЕНСТВ В ПРОГНОЗНОМ АНАЛИЗЕ ФИНАНСОВОЙ УСТОЙЧИВОСТИ КОММЕРЧЕСКОЙ ОРГАНИЗАЦИИ

В статье, продолжающей изложение методики анализа финансовой устойчивости коммерческой организации в рамках новой парадигмы анализа, рассмотрены возможности применения в прогнозном анализе линейных неравенств, ограничивающих стоимостные величины хозяйственных операций, восстанавливающих финансовое равновесие, в качестве тестов для сравнения различных сценариев будущих хозяйственных операций и в качестве инструмента построения возможных сценариев восстановления финансового равновесия в виде решений систем линейных уравнений и неравенств. На численном примере демонстрируется алгоритм внутренних точек для решения таких систем.The article, which continues the presentation of the methodology for analyzing the financial stability of a commercial organization within the new paradigm of analysis, considers the possibilities of using linear inequalities in predictive analysis that limit the value of business operations that restore financial equilibrium as tests for comparing various scenarios of future business operations and as a tool for constructing possible scenarios for restoring financial equilibrium in the form of solutions to systems of linear equations and inequalities. A numerical example demonstrates the algorithm of internal points for solving such systems.

A systems approach to assessing the financial equilibrium of commercial organizations

Subject. We consider issues that relate to searching and achieving the proportions of financial equilibrium that ensures a balanced state and sustainable development of corporations. Objectives. The aim is to provide objective and complete interpretation of financial equilibrium of a corporate institution as a financial system, define the existing system interconnections and mechanisms for maintaining and restoring the balance, methods of achieving the balance of internal proportions of commercial organizations’ financial equilibrium and their market environment. Methods. We employ methods of analysis and synthesis, induction and deduction, generalization of financial and economic processes and phenomena, and financial equilibrium. Results. We define the category of financial equilibrium as the most important characteristics of commercial organizations’ financial system functioning. The paper identifies significant factors and underpins effective mechanisms for maintaining and restoring the financial equilibrium of financial system of commercial organizations with predetermined properties and characteristics. It also presents methods for achieving the balance of proportions of financial equilibrium, the violation of which leads to dysfunctions in the sustainable development of corporate institutions and in their interaction with market environment. Conclusions. The financial equilibrium is imperative for financial stability and guaranteed solvency. Harmonization of financial systems at different hierarchical levels contributes to efficient flow of financial and real capital to address priority areas of economic growth. The proposed mechanisms can be used for improving the intrafirm management of resource potential and in strategic financial planning when implementing regional programs for territory development.

Analysis of the financial position of the company in the globalization conditions

Globalization is a process that has significantly increased the level of competition, but also the interdependence of a large number of participants in the economy. In this regard, the task of the management structure of each company is to regularly analyze and evaluate the financial position. On this basis, it is possible to implement in a timely manner certain measures that contribute to the improvement of the financial position, and thus the further survival and development of the enterprise. This paper deals with the analysis of the financial position of the company in the conditions of globalization using the most important indicators: financial equilibrium, debt, liquidity, solvency, reproductive capacity and maintaining the real value of capital. The main objective of the research is to emphasize the importance of analyzing the financial position of the company in the conditions of globalization, as well as the usefulness of the information obtained by the analysis.

Technology of Predictive Analysis of Entity’s Financial Stability Based on Linear Constrains

This paper describes the technology for the predictive analysis of a business entity’s financial stability through the contemporary concept of equilibrium stability of a system. Analyzing the capability of business transactions to restore the financial equilibrium in the forecast period (where such financial equilibrium is disturbed as of the end of the reference period) is the most important part of the predictive analysis. In this paper, the author explains the structure, content of, and algorithms for this part of the predictive analysis of financial stability. The author has developed the general linear inequality to set the limits for the values of future business transactions that restore the financial equilibrium of a business entity

Modeling the external factors influence on financial balance of chemical enterprises of Ukraine

Introduction. The relevance of this study is due to the search for tools to ensure the sustainable development of Ukrainian economy real sector. A possible way of forming stable institutional prerequisites for building an strong economy with the prospect of its conversion to social equilibrium state is balancing finance of industrial enterprises. Chemical industry is one of the priority areas of Ukraine’s economy. The purpose of the article is a modeling of chemical industry enterprises financial equilibrium taking into account external factors’ influence. The main research methods are dialectics, deduction and induction, mathematical gnostic analysis, trend analysis. Results. The financial equilibrium stability index of chemical industry enterprises is proposed in this article. It characterizes the stability of chemical industry enterprises financial equilibrium to external factors’ influence. They are inflation, devaluation, innovation, chemical production, its export-import balance, credit rate and bank system capitalization. Based on the use of mathematical gnostic analysis, an economic and mathematical model was created to predict the stability index of chemical industry enterprises financial equilibrium taking into account the influence of monetary, production and market factors. Forecast of balancing of corporate finance in the chemical industry under external factors’ influence is made. The state of stable negative financial equilibrium of Ukrainian chemical industry is revealed. Conclusion. Suggestions for overcoming financial imbalances at chemical industry enterprises are formed. There are: enterprise debt inventory, revision of gas price, production innovations. The findings complement the scientific foundations of sustainable development in Ukraine and can be applied by the financial management of chemical industry enterprises for their stabilization.