Classification of agricultural enterprises by their financial standing

Since 1994 the majority of Russian agricultural enterprises have been unprofitable, and have accumulated large liabilities. Their reorganization and liability restructuring is necessary. However, the differences in the financial standing of enterprises should be identified and taken into consideration. Here arises an important methodological task: to choose relevant studies, i.e. criteria for enterprise selection and classification by qualitatively different groups depending upon their financial and economic standing. This is a complex and still unsolved task. This article offers to evaluate the financial standing of an unprofitable enterprise by means of the ratio of the sufficiency coefficient to cover factor costs (K1). Factor costs are determined as a sum of labour costs, depreciation deductions and land costs. K1 enables one to evaluate the ability to preserve basic factors of production. K2 and K3 ratios, which make it possible to account for enterprise ability to survive by means of minimization of depreciation deductions and accumulation of accounts payable, are composed similarly. The ratios between enterprise liability levels and different asset components are also offered, and these make it possible to classify the enterprises by their liability level. Experimental confirmation of the developed scheme were performed with the figures of agricultural enterprises of the Leningrad Region (Oblast) for 1998. These enterprises were classified into five groups. Different approaches to their reorganization were offered.