MANAGEMENT OF FINANCIAL RISKS OF ENTERPRISES AS A PREVENTION COMPONENT OF THEIR FINANCIAL INSTABILITY AND BANKRUPTCY FOR THE SUSTAINABLE DEVELOPMENT ACHIEVING

Liudmyla Burkova; Vira Shepeliuk; Serhii Rtyshchev

doi:10.36690/2674-5208-2023-1-98

Authors

Liudmyla Burkova Kryvyi Rih National University https://orcid.org/0000-0002-2840-5785
Vira Shepeliuk Kryvyi Rih National University https://orcid.org/0000-0001-6270-5936
Serhii Rtyshchev Kryvyi Rih National University https://orcid.org/0000-0002-7751-542X

DOI:

https://doi.org/10.36690/2674-5208-2023-1-98

Keywords:

development, changes, sustainable development, unsustainable development, financial instability, bankruptcy, liquidation, risk, maximum permissible risk, risk management

Abstract

The development is impossible without ups and downs, as a result the stability is disrupted. It is hypothesized that development cannot occur continuously, and therefore it does not exclude the possibility of unstable states. The enterprise unsustainable development is characterized by its financial failure, which is identified with its bankruptcy. At the same time, bankruptcy and liquidation of enterprises in Ukraine is currently a fairly common phenomenon. The purpose of the article is to systematize the methods of financial risk management of enterprises as an ingredient prevention of their financial instability and bankruptcy for achieving sustainable development. A set of general scientific and special research methods were used to solve the set tasks, in particular: generalization and comparison - to establish similarities and differences between the results of research by other authors regarding their understanding of the essence of the categories "development", "sustainable development" and "risk"; grouping of indicators - to operate with information of the kinds and types of risks existing in the scientific literature and to operate with statistical data of the initiated bankruptcy procedures number of legal entities in Ukraine; mathematical - to develop a model for determining the maximum allowable value of lost cash flow of the enterprise, graphic - to visualize the presentation of information, etc. It is substantiated that the prevention of bankruptcy of enterprises is a tool for the sustainable development ensuring. An economic and legal tool is the plan of sustainable development of the enterprise that helps to solve the problem. Its component should be an economic analysis of the company's financial condition. At the same time, any enterprise carries risks related with its business activities. Scientists mostly recommend to use the minimum cost criterion for measures to reduce risk to its acceptable level as the main criterion for risk management. However, the question arises: what risk is considered to be acceptable? For the determination it is advisable to model the movement of the company's cash flows and to identify the limits that lead to unacceptable results for the company, For example, that can lead to the deterioration of the company's financial condition as well as to its bankruptcy and even liquidation. It is taken into account that the economic activity of the enterprise can take place both under normal operating conditions and burdened by certain extraordinary events. The method of determining the maximum permissible risks for enterprises of two groups is substantiated: for the ones, which violation of the bankruptcy procedure in general is possible; for the ones, which violation of the bankruptcy procedure is unlikely. The events that determine the risks during the export of products are considered.

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Author Biographies

Liudmyla Burkova, Kryvyi Rih National University

Ph.D. (Economics), Associate Professor, Associate professor of Department of Accounting, Taxation, Public Governance and Administration, Kryvyi Rih National University, Kryvyi Rih, Ukraine

Vira Shepeliuk, Kryvyi Rih National University

Ph.D. (Economics), Associate Professor, Associate professor of Department of Accounting, Taxation, Public Governance and Administration, Kryvyi Rih National University, Kryvyi Rih, Ukraine

Serhii Rtyshchev, Kryvyi Rih National University

Ph.D. (Economics), Associate Professor, Associate professor of Department of Management and Administration, Kryvyi Rih National University, Kryvyi Rih, Ukraine

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