How to calculate the autonomy ratio?

Under the ratio of autonomy (or financial independence) is understood as an indicator that characterizes the share of the organization's assets, which are provided by own funds. The higher the indicator, the more stable the enterprise is, the more stable from a financial point of view and practically independent of creditors. Consequently, the autonomy ratio shows the success of the entire organization as a whole.

In order to correctly calculate the coefficient of autonomy, it is required to compose first the aggregate balance on the basis of the already existing balance sheet. It is important to note that this kind of transformation inside the balance sheet does not violate the existing structure of assets and liabilities, moreover, they allow to combine the articles according to economic content.

Undoubtedly, the coefficient of autonomy can be calculated without resorting to compiling an enlarged form of balance. On the other hand, in this case it will be necessary to increase the article "Capital and Reserves" by an adjacent amount of "Expenses of future periods".

Using available data, the autonomy ratio is calculated by dividing the amount of equity to the existing total assets of a particular organization.

In this case, its own funds are understood as all existing financial resources of the organization, which, in turn, usually consist of the funds of the founders, as well as directly from the financial activities of the organization. It is important to note that in the balance sheet they are usually reflected in a section called "Capital and Reserves".

The term "total assets" includes all property of the organization, including tangible and intangible assets. Aggregate assets are the result of the balance sheet.

The coefficient of autonomy is measured exclusively in fractions. In this case, the normative critical value is 0.5-0.7 (and in the world practice up to 0.3). According to experts, it is reasonable to consider this indicator in dynamics. Thus, the constant growth of the coefficient in dynamics testifies to the stability of the organization, the gradual increase in its independence with respect to external creditors.

The coefficient of autonomy in the first place plays an important role for potential investors and creditors. The higher this indicator, the lower the risks of possible losses on the part of investors.

The larger the specific organization's share of so-called non-current assets, the longer the long-term sources are required for subsequent financing, hence the share of equity should be greater, respectively, and higher the coefficient of financial autonomy.

It is important to note that there are other coefficients and indicators (coefficient of capital maneuverability, capital concentration coefficient, long-term borrowing ratio, etc.), thanks to which it is also possible to judge the financial stability and independence of an enterprise.