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Economic Analysis: Theory and Practice
 

The financial stability of the military-industrial complex enterprises with long production cycles

Vol. 14, Iss. 7, FEBRUARY 2015

PDF  Article PDF Version

Available online: 9 February 2015

Subject Heading: ANALYSIS OF FINANCIAL SUSTAINABILITY

JEL Classification: 

Pages: 9-19

Popov A.B. Concern CSRI Elektropribor, JSC, State Research Centre of Russian Federation, St. Petersburg, Russian Federation
apopov@eprib.ru

Importance Till now, there are no common approaches to the definition of financial sustainability and methods of its analysis and assessment. All this fully applies to organizations of the military-industrial complex of the country.
     Objectives The aim of this paper was to examine the financial sustainability of these organizations.
     Methods For the study, I used the methods of economic and empirical analysis.
     Results I have considered the specificity of activity of the enterprises of the military-industrial complex. I selected balance sheet features of various defense organizations of the shipbuilding industry of the country and proved the necessity of the accounting of industry in examining the type of financial sustainability of the organizations. The paper shows that application of traditional methods of assessing a financial strength type using absolute indicators to specific enterprises does not always lead to correct results. I am offering a model of evaluating the financial stability of organizations of the military-industrial complex with long technological cycles of production or execution of the project (research and development). The model includes components that play a decisive role in the overall value of stocks and the costs and sources of their formation. I identify five types of financial sustainability. The article gives the expressions, obtained for the indicators of financial stability and the conditions for its growth. I have analyzed the financial stability of the Concern CSRI Elektropribor, JSC. The study shows that the dynamics of financial strength indicator almost completely corresponds to the behavior at the time of the total gross volume of work performed by the enterprise.
     Conclusions I concluded that the proposed model correctly describes the financial stability of the military-industrial complex organization with long production cycles. The applicability of the model to other types of businesses requires further study.

Keywords: financial sustainability, types, long-term production cycle, defense industry enterprises, industry-specific features, model, estimation

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