Standardized financial liabilities change rate
factor.formula
Financial Liabilities =
Average Total Assets =
Standardized financial liabilities change rate =
The factor consists of three formulas: the calculation of financial liabilities, the calculation of average total assets and the calculation of the final standardized financial liabilities change rate.
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Refers to a loan with a term of less than one year that an enterprise borrows from a financial institution to meet short-term funding needs.
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Refers to financial liabilities held by an enterprise for trading purposes.
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Refers to unpaid amounts such as commercial bills issued or accepted by an enterprise when purchasing goods or receiving services.
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Refers to the long-term liabilities that the company will repay within one year, such as long-term loans and bonds payable.
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Refers to a loan with a term of more than one year that an enterprise borrows from a financial institution to meet longer-term funding needs.
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Refers to bonds issued by enterprises to raise long-term funds.
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Refers to the total assets at the beginning of the reporting period.
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Refers to the total assets at the end of the reporting period.
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Refers to the total amount of financial liabilities during the current reporting period, calculated using the above financial liabilities formula.
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Refers to the total amount of financial liabilities in the same period of the previous year, calculated using the above financial liabilities formula.
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Refers to the average level of total assets during the reporting period and is used to normalize changes in financial liabilities.
factor.explanation
The standardized financial liabilities change rate achieves the standardization of enterprise size by dividing the change in financial liabilities by average total assets, thereby more accurately reflecting the dynamic changes in the enterprise's financial leverage and debt risk. The advantages of this indicator are:
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Excluding scale effect: The absolute change in financial liabilities of enterprises of different sizes may vary greatly, but they are more comparable after standardization.
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Risk warning: The increase in this indicator may indicate an increase in the company's financial risk, including potential debt repayment pressure.
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Strategic insight: The change in this indicator may reflect the company's business strategy, such as active expansion or conservative operation.
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Profitability reference: Generally speaking, the moderate use of financial leverage can improve the profitability of an enterprise, but excessive leverage may bring greater risks. This factor can assist in analyzing how an enterprise supports its operations through debt financing.
In addition, financial liabilities mainly include interest-bearing debts, which are usually more reliable and transparent in accounting, and have relatively small room for profit manipulation, so the signal strength of this indicator is higher.
According to academic research, changes in financial liabilities are positively correlated with a company's future profitability and also with future stock returns, which may reflect a positive signal that the company is using debt financing for expansion or indicate the company's expectations for future profit growth.