How To Analyze The Asset Liability Ratio In Management Accounting Practice

　　 Asset liability ratio It is an important sign to measure the level of debt and the degree of risk.

The lower the asset liability ratio, the better. Liabilities The less assets acquired, the poorer the ability of enterprises to use external funds; the higher the assets and liabilities, the greater the risk that enterprises can raise by borrowing debt. Therefore, asset liability ratio should be maintained at a certain level.

In practice, it is difficult to judge the debt situation with the level of assets and liabilities. Because asset liability ratio is too high, it shows that corporate financial risk is too large, and too low indicates that enterprises do not make enough use of financial leverage.

What kind of debt ratio should be determined by an enterprise depends on the manager's prediction of the enterprise's self earning and the ability to bear financial risks in the future. It is generally believed that the appropriate level of asset liability ratio is 40%~60%. But in different industries and regions, there are differences in handling debts. In order to reduce financial risks, enterprises with relatively high operating risk usually choose relatively low asset liability ratio. For example, many high-tech enterprises have low debt ratio. Enterprises with low operating risk usually choose relatively high asset liability ratio for increasing shareholder returns, for example, the assets and liabilities ratio of water supply and power supply enterprises are relatively high. In our country, the attitude of the basic industries, such as spanportation, spanportation, electricity and other basic industries, is different from the industry differences, and in different countries or regions. Britain and the United States rarely have more than 50% of their assets and liabilities, while Asian and European companies have significantly higher asset liability ratios than 50%. Successful enterprise It even reached 70%.

Different stakeholders are driven by different interests and comment on asset liability ratio from different angles.

1) from the perspective of creditors.

The lower the asset liability ratio, the better. Because the ratio is low, the ratio of capital provided by creditors is lower than that of total capital of enterprises, and the possibility that enterprises can not repay is small. The risk of enterprises is mainly borne by shareholders, which is very advantageous for creditors. On the contrary, the ratio of assets and liabilities is high, and the proportion of funds provided by creditors is higher than that of total capital of enterprises. The possibility that enterprises can not repay debts is large, and the risk of enterprises is mainly borne by creditors, which is very unfavorable to creditors.

2) for business owners.

The high debt ratio has the following advantages: first, when the total assets return rate is higher than the debt interest rate, because of the role of financial leverage, it can raise the real rate of return of shareholders; two, it can acquire control rights of enterprises with less capital, and spanfer part of the risk of enterprises to creditors, which can also get the advantage of low capital cost for enterprises, but debt also brings risks to investors, because the cost of debt is fixed. If the business is not well managed or hit by accident, the risk of large profits will be paid as usual. The loss will inevitably be borne by the owner, thereby increasing the risk of investment.

In this regard, investors often use the expected assets return rate and loan interest rate to compare and judge. If the former is greater than the latter, it shows that investors' capital invested in enterprises will get double benefits, that is, at the same time that they get normal profits, they can also get the difference between the assets return rate and the loan interest rate. When the asset liability ratio is bigger, the better. If the former is less than the latter, it shows that part of the interest on the borrowed capital should be compensated by the amount of profits that the owner invested in assets. At this time, investors hope that the smaller the asset liability ratio is, the better.

3) from the perspective of business operators.

To a large extent, the debt ratio depends on the operator's confidence in the future of the company and his attitude towards risk. If a business operator is confident of the prospect of the enterprise and has a more radical style of operation and thinks that the total assets return rate of the enterprise will be higher than the debt interest rate in the future, it should maintain an appropriate high debt ratio so that the enterprise can have enough funds to expand its business and grasp more investment opportunities to gain more profits. Conversely, the operator thinks that the prospect of the enterprise is not optimistic or the business style is conservative, so it is inclined to make full use of its own capital and avoid the debt ratio being controlled at an appropriate level. Because of the pre tax deduction of debt cost and the profit function of financial leverage, any enterprise will inevitably make use of debt. However, when debt exceeds a certain level, it can not be accepted by creditors, and subsequent loans of enterprises are difficult to sustain. With the increase of liabilities, the financial risks of enterprises are increasing, which will endanger the stability of security and income of equity capital, and will also shake investors' trust in business operators. Therefore, when making use of debt, the operator should consider both the profitability and the risks arising from it, and make the best decision by scanning the potential.

When analyzing the asset liability ratio, we should also pay attention to the following issues:

1) in practice, the formula for calculating the asset liability ratio is controversial. Some argue that current liabilities should not be included in the formula. The reason is that current liabilities are not long-term sources of funds and should be excluded; if they are not excluded, they can not reflect corporate debt properly. This is because:

(1) current liabilities are part of the external sources of funds for enterprises. For example, for an account payable, it should be paid within a certain period of time, though it is a current liability. However, due to the needs of business, accounts payable as a whole have become part of the total amount of external sources of capital and exist permanently within enterprises.

Second, from the perspective of sustainable management, long-term liabilities are repaid after being converted into current liabilities. Correspondingly, if long-term assets are used to repay debts, they must first be spanformed into the spanformation of current liabilities and the spanformation of long-term assets to current assets, which shows that when calculating the asset liability ratio index, the current liabilities can not be excluded.

2) creditors, investors and operators have different attitudes towards asset liability ratio indicators. How to safeguard the interests of all parties? The key is to make full use of the advantages of debt management while controlling the asset liability ratio to a reasonable level. How many of them are reasonable? They are different in different time and space. In the analysis, we should compare and judge the overall economic conditions of the country, the development trend of the industry and the competitive environment of the enterprises.

3) in essence, the index of asset liability ratio is to determine the relationship between the total assets and the total liabilities of an enterprise in the worst case of bankruptcy, and to analyze the repayment ability of the enterprise's liabilities and the degree of protection to the creditors' interests. That is, how much protection can a creditor go to when the enterprise is bankrupt. However, when the index reaches or exceeds 100%, it is declared that the enterprise is insolvent. However, in the analysis of financial statements, enterprises are regarded as a continuous operation unit, not based on bankruptcy liquidation. A continuous enterprise cannot repay debts by selling long-term assets. Therefore, we should also pay attention to one of the main purposes of this index, which is to reveal the degree of protection of creditors' interests.