CORRELATION DEPENDENCE OF INVESTMENT IN FIXED CAPITAL ON FINANCIAL INDICATORS

Abstract

One of the burning issues in identifying the financial status of an industrial enterprise is a well-balanced system of financial indicators. Existing methods of financial assessment are similar in comprising the following indicators: current liquidity ratio; profitability ratio; indicators of financial sustainability and financial results: receivables and payables; limiting constraints. The specifics of extractive industry companies dictate the need to consider dependence of financial indicators on investments in fixed capital. A brief description of the concepts of current liquidity ratio, profitability ratio, indicators of financial sustainability and financial results, receivables and payables, internal and external limiting constraints are presented in the interpretation of Russian scientists. Correlation matrices are constructed and correlation window technique is applied to identify relations between independent and dependent variables for different periods of companies’ operation. The data for the case of extracting companies is taken from All- Russia integral interagency system of information and statistics. Frequent dependences occur between the following pairs of independent variables: current liquidity/corporate loan payables; return on assets/financial results; corporate loan payables/limiting constraints. The data from correlation windows substantiated the dependence of investment in fixed capital on financial indicators, specifically close relations between independent variable of current liquidity and dependent variability of investment in fixed capital are revealed. This fact can lead to the conclusion that current liquidity ratio is most essential indicator for creation and reproduction of corporate fixed assets.