Audit and economical analysis

Table 239

Indicators and their recognition mode

Factors indicator	Factors	Recognition mode	Recognition according to IFRS
X1	Current liquidity coefficient	Circulating assets/Short-term liabilities	(WorkingCapital) / Current liabilities
X2	Capitalization coefficent	(Lomg-term liabilities+Short-term liabilities)/Private equity	Book value of Total Liabilities/ Value of Equity

Z <0 - the potential for economic insufficiency less than 50%;

Z> 0 - the potential for economic vulnerability exceeds 50%;

Z = 0 - the potential for economic deviation is 50 percent.

Altman's fiveFactor formula: Z = 1.2 * X ₁+ 1.4 * X₂ + 3.3 * X ₃+ 0.6 * X₄ + X₅

Table 240

Indicators and their recognition mode

Factors indicator	Factors	Recognition according to IFRS
X1	The share of circulating capital in assets	(WorkingCapital) / Total Assets
X2	Profitability of assets	RetainedEarnings / Total Assets
X3	Operational profitability	EBIT / Total Assets
X4	The market value of shares	Market value of Equity/ Book value of Total Liabilities
X5	Effectivness of assets	Sales/Total Assets

Z> 2.9 - fixed financial zone (green zone);

1.8

Typically, Altman's formula is used for large firms and companies, for private enterprises, in a separate order for non-production enterprises.

The Altman model's accuracy rate is 90-91 percent in determining economical deficits.

Table 241

The possibility of economic insolvency

Determination of Indicators
Circulating assets/Short-term liabilities	11 683 693 105/1848646840=6,32
(Lomg-term liabilities+Short-term liabilities)/Private equity	12312891628/10 124 233 076=1,21
Dual Factor formula: Za= -0.3877 — 1.073*6,32 + 0.0579*1,21=-0,3877-6,78136+0,070059=-7,09901
(WorkingCapital) / Total Assets	11 683 693 105 / 24 276 893 065 =0,4812
RetainedEarnings / Total Assets	974 038 284 / 24 276 893 065 =0,0401
EBIT / Total Assets Market value of Equity/ Book value of Total Liabilities	1 415 400 093 / 24 276 893 065 =0,0583 10 124 233 076 / 14 152 659 989 =0,7153
Sales/Total Assets	5 180 801 340 / 24 276 893 065 =02134

Za=1.2*X₁+1.4*X₂+3.3*X₃+0.6*X₄ X₅=1.2*0.4812+1.4*0.0401+3.3*0.0583+0.6*0.7153+0.2134=0.5774+0.05614+

0.19239+0.42918+0.2134=1.46851

The model Zavgren (USA).

Zz= 0.23883 – 0.108*X₁ – 1.583*X₂ – 10.78*X₃ + 3.074*X4₄+ 0.486*X₅ – 4.35*X₆ – 0.11*X₇

P = 1/(1+e—z):

Hereby: P-probability of bankrupt

Coefficients	Calculating according to IFRS
X1	AverageInventories / Sales
X2	AverageReceivables / AverageInventories
X3	(Cash + MarketableSecurities) / Total Assets
X4	QuickAssets /Current liabilities
X5	Income from Continuing Operations / (Total Assets - Current Liabilities
X6	Long-Term Debt / (Total Assets - Current Liabilities)
X7	Sales / (Net Working Capital + Fixed Assets)

Lis model. It was developed by the English professor in 1972. The formula for recognizing it is as follows:

Zl=0,063X₁+0,092X₂+0,057X₃+0,001X₄

Table 242

The Lis model of economical deficiencies

Indicators	Determination of Indicators	Probability rate
X1	Working capital/Total assets	If: Z < 0,037 – The probability of Bankrupt is high Z > 0,037 – The probability of Bankrupt is low
X2	Operational profit/Total assets
X3	Net profit/Total assets
X4	Private equity/Debt capital

A four-factor bankruptcy formula is recommended by British scientists,Tafler and Tishoular(1977).

Table 243

The Tafler and Tishoular model of economical deficiencies

Indicators	Determination of Indicators	Probability rate
X1	Operational profit/Short-term liabilities	If: Z > 0,3 – The probability of Bankrupt is low Z < 0,2 – The probability of Bankrupt is high
X2	Working capital/Total assets
X3	Short-term liabilities/ Total assets
X4	Net Income from sales/Total assets

Besides that,In the world Olson model (1980 ), Fulmer model(1984 ) Springeyt model (1978), Konan-Galder model(1979 yil),Bivermodeli are used widely.

Table 244

Different models of determination of Bankrupt and their comparability

The formula of determination	Probability rate
Model of Olson Y=-1,3-0,4Y1+6,0Y2-1,4Y3+0,1Y4 -2,4Y5-1,8Y6+0,3Y7-1,7 Y8-0,5Y9
Y1=Total assets/total product indices	They are calculated by that formula p=11+e-y
Y2=Total liabilities/Total assets
Y3=Working capital/Total assets
Y4=Total liabilities/Current capital
Y5=If total liabilities exceeds the sum of aggregate assets equal to 1,in another positions it is equal to 0
Y6=Net profit/Total assets
Y7=Operating Income/Total liabilities
Y8=If, in last two years,profit is negative,it is equal to 1,vice versa 0
Y9= (profitin current year-profit in last year)/Amount of the model profit for the current and previous years

Table 245

Fulmer’smodel

Z=5,528A+0,212B+0,073C+1,27D-0,12E+2,335F+0,575G+1,083H+0,894I-6,075

A= Net profit/Total assets
B= Net Income from sales/Total assets	If Z < 0 The condition of enterprise is economic defficiency
C=Benefits until tax is paid/private capital
D=Chande of the balance of funds
E=Debt capital/Total assets
F=Current liabilities/Total assets
G= Tangible Loans/Total assets
H= Owned assets/Credit liabilities

Table 246

Springeyt’s model

Zs=1,03A+3,07B+0,66C+0,4D

A=Own turnover/Total assets
B=Profit until taxes and interest are paid/Total assets	If Z< 0,862 , the economical defeciancy is high
C=Profit until taxes are paid/Total liabilities
D=Net Income from sales/Total assets

Table 247

Konan-Golder’s model

KG=-0,16Y₁+0,222Y₂+0,87Y₃+0,10Y₄-0,24Y₅

Y1=Liabilities of debt and turnover/Total Balance	The condition of economical defeciany is determined by KG indeks: - (+0,048) - 90%; - (-0,026) – 70%; - (-0,068) – 50%; - (-0,107) – 30%; - (-0,164) – 10%.
Y2=Private capital and long-term liabilities/Total balance
Y3=Amount of loan and loan interest/ Net Income from sales
Y4=Staff costs/Added value after taxes
Y5= Profit until taxes and interest are paid/Debt capital

Table 248

Biver’smodel

Kb=(Net profit+Depriciation)/Debt capital	Kb. > 0,35 – normal; 0,17 < Kb. < 0,3 – defeciancy; 0,15 < Kb. < 0,16 – crisis
Kt.1=Circulating assets/Current liabilities	Kt. l. > 2 - normal; 1 < Kt. l. < 2 - defeciancy; Kt. l. < 1 – crisis
Ke.r=Net profit/Total Balance	6-8% and higher- normal; 2-5% - defeciancy; from(-22%) to 1 – crisis
Kf.1=Debt capital/Total Balance	Kf.l. < 35% -normal; 40% 80% - crisis
Kp.=(Private capital-Non informal assets)/Balance	Kp. > 0,4 - normal; 0,3 defeciancy; Kp. < 0,1 – crisis

Bankruptcy Processes: Specific features of surveillance, external management, sanitation, liquidation

In the case of bankruptcy of a legal entity, the following procedures shall be applied:

- supervision - the right of the court to declare the debtor bankrupt for the purpose of ensuring the safety of his property in respect of the debtor-legal entity, carrying out the financial, the application of the application from the date of receipt of the application to the next process;

Prejudicial rehabilitation - measures to be taken by the founders (participants) or the property of the debtor's legal entity, creditors and other persons for the purpose of preventing the insolvency and bankruptcy of the debtor;

In case of bankruptcy symptoms before the court, the debtor's manager shall inform the founders (participants) of the debtor, management bodies or the property owner of the debtor in writing.

Judicial sanation is the procedure applied by the court to the debtor-legal entity for transferring its solvency and dismissing the manager of the debtor's business for the management of debtor's debts; Judicial rehabilitation shall be extended for a maximum period of twenty-four months, which may be extended by the court for a period of not more than six months for the persons who have ensured the performance of their obligations.

An amicable agreement is an agreement between the parties on the termination of a judicial dispute on a reciprocal basis.

External management is a bankruptcy process, which is settled by a court when considering a bankruptcy case and is used to restore the debtor's solvency by transferring powers of the debtor's property to the external manager. It is easy to say that instead of a poorly-positioned debtor, a person who is well-acquainted with the industry, who has deeply mastered the economy and management secrets, will be appointed by the court for a certain period of time (external manager). From the moment of introduction of external management the head of the debtor shall be denied his functions and his powers shall be transferred to the external manager. The moratorium on the debtor's obligations under the creditors' demands and the penalties is introduced (frozen). A candidate for a foreign manager may be offered to the court by the creditor, the debtor, the proprietor, the authorized public body. However, these candidates are considered by the creditors' meeting and approved by the majority of the candidates who have won the majority (in more than one case) and then submit them to the court for appointment.

If the candidate for the external manager is not provided by the creditor, the debtor, the proprietor or the competent public authority, the court shall appoint a candidate nominated by the Committee on Economic Affairs. The external manager is appointed by the court simultaneously with the introduction of external management and the ruling is issued. External management is introduced for a period of twelve to twenty-four months.

In the case of bankruptcy of an individual entrepreneur, the following procedures shall apply:

• 
  the infraction contract;
  
• 
  production proceedings.
  
• 
  in practice, there are several action plans for enterprises declared bankrupt;
  
• 
  -sanation (provision of financial assistance);
  
• 
  changing the direction of publicity;
  
• 
  diversification (transition to product production in not more than one nomenclature);
  
• 
  voluntary termination;
  
• 
  forced liquidation.
  

In cases of deliberate and fraudulent bankruptcy, heads of the undertakings are liable for unlawful actions in accordance with the law on bankruptcy. Such unlawful acts include the concealment of a part or all of the debtor's property or obligations, the concealment or destruction of fraudulent documents of the debtor's financial-economic activity, the personal interests of the officials or debtor's property, or the interests of third parties intentionally deliberate bankruptcy by any other means, with the aim of causing damage to the debtor, and so on. according to the articles 180 and 181 of the Criminal Code of the Republic of Uzbekistan criminal liability for confiscation of bankruptcy and bankruptcy is envisaged. In accordance with the Law of the Republic of Uzbekistan "On bankruptcy", it is necessary to fully satisfy creditors' demands for money, including to compulsory payments to taxes, duties, budgets and off- The enterprises that are not able to get rid of are considered bankrupt (economically insecure). At the same time, the bankruptcy must be declared by the court and the debtor must voluntarily declare it. The court shall consider bankruptcy cases submitted by the debtor, creditor and prosecutor. After acknowledgment of a bankruptcy, the trustee (authorized person) shall perform the necessary steps to liquidate the enterprise, including the debtor, under the supervision of the liquidation commission.

When considering a case of bankruptcy of a placeholder enterprise and a bankrupted enterprise, the relevant local public authority and (or) the relevant ministry, state committee, department of management, economic management shall be recognized as the person participating in the case are offered. External management of a constituent enterprise and an equated enterprise shall be executed by the economic court on the basis of the decision of the creditors' meeting, in the absence of such decision, as well as upon the petition of the local public authority or the ministry, state committee, department and economic management body, provided that the Borrower is liable for its obligations. Before the submission of this plan to the creditors' meeting by the city-forming enterprise and a balanced enterprise, the external management plan should be submitted to the local public authority, and the Ministry of Finance, the State Committee for Property Management, must be agreed with the authority. In accordance with the request of the local public authority and the ministry, state committee, department, economic management body, in case of their fulfillment by the debtor of its obligations, including the provision of state guarantees, the debtor's transfer to judicial rehabilitation, if such proceedings had not been previously applied to the debtor. External management of a constituent enterprise and a parent enterprise may be extended by one year by economic court upon request of a local public authority. The plan for improving the financial standing of the enterprise by investing in the enterprise, as well as by investing in the enterprise, as well as through the creation of new jobs and other ways to restore the solvency of the debtor, is intended to cover external management beyond the time limits set by this Article the basis for the extension.

A debtor and a balancing debtor, which form the city, may be sold as a property unit to meet the creditors' claims during external management. Sale of the enterprise and the equated enterprise shall be carried out by way of auction or auction. The mandatory conditions for selling the enterprise in the competition are as follows: - preservation of jobs for at least seventy percent of the workers employed at the moment of selling the enterprise; - Obligations of the buyer to re-train or hire these employees in the event of changing the scope of their activities. Obligatory conditions for competitive selection of enterprises that provide protection of the state's defense capability and security are as follows:

- ensuring the maintenance of the property of the enterprise, which ensures the defense capability and security of the state, and the purpose of the mobilization of the property;

- fulfillment of the contract with the client related to the defense of the state defense orders, the state's defense and security needs.

Obligatory conditions of sale of the enterprise, being the subject of natural monopoly, are as follows:

- consent of the buyer to accept the obligations of the debtor under contracts of delivery of goods, subject of regulation of the legislation on natural monopolies, ensures free access to consumers of goods (works, services) being produced and (or) sold;

- availability of a license in the buyer to carry out the type of activity, if the activity of the debtor is subject to licensing.

If the city-forming enterprise and its equivalent are not sold on a competitive basis, the enterprise is sold at the auction. Features of agricultural bankruptcy. Prejudicial rehabilitation may be applied to them prior to commencement of bankruptcy proceedings of agricultural enterprises in the order established by the legislation. During prejudicial rehabilitation, the duration of prejudicial rehabilitation can be prolonged by twelve months, in case of a decline in the production and deterioration of the financial position of the agricultural enterprise due to natural disasters and other fraudulent cases. Local government authorities may also be involved in the case of bankruptcy of an agricultural enterprise.

The agricultural enterprise shall be accredited for a period up to the end of the appropriate period of agricultural work, taking into account the time required for the sale of the agricultural product of surveillance, judicial rehabilitation and external management. At the same time, the duration of the supervisory process should not exceed three months, and the period of judicial rehabilitation and external management should not exceed the set deadline. During the period of judicial rehabilitation or external management, the duration of the judicial rehabilitation or external management can be extended by twelve months if there is a decline in production and deterioration in the financial situation of the agricultural enterprise due to natural disasters and other force majeure cases. External management practices are not applied to farms and dehkan farms, which form a legal entity. In the sale of the debtor's property (in favor of another person), the manager of the debtor or the debtor's manager must place the agricultural enterprise as a property complex for the sale of the initial auction. Owners of the land plot shall be entitled to the preferential right to acquire the debtor's property, as well as to the right to own land, directly engaged in the production of agricultural produce and directly to the debtor's land parcel. The manager of the debtor or the debtor is obliged to carry out the assessment of these property and property rights in the sale of these property as well as property rights (in case of their relinquishment in favor of another person) and to propose the property at the estimated value. In case of liquidation of the agricultural enterprise as a bankruptcy, the land plots transferred to the enterprise may be transferred to another person or transferred to another person in accordance with the procedure established by the legislation. Features of Bankruptcy of the Bank. In order to consider the application for the bankruptcy of the bank, the economic court receives a license for banking operations only after withdrawal by the Central Bank of the Republic of Uzbekistan. In the event that the debtor bank is unable to meet the creditors' claims, the peculiarities of the consideration of bankruptcy proceedings and bankruptcy proceedings are regulated by the law. External management of the bank is not implemented. Insolvency of the insurer. In the case of bankruptcy of the insurer, the specially authorized state body in the sphere of insurance activity shall be considered as the participant, except for the cases envisaged by the law. Sale of the property complex of the insurer can be carried out during the external management process. Only the insurer can be the buyer of the property complex of the insurer.

In case of selling the property complex of the insurer in the course of external management, all rights and obligations under insurance contracts that have not occurred on the date of sale of the property complex of the insurer transfer to the person who purchased the complex. In case of liquidation proceedings, the property complex of the insurer may be sold only upon the consent of the buyer to accept insurance contracts without occurrence of which the insured has been recognized as the bankrupt. In order to consider the application for the bankruptcy of the bank, the economic court receives a license for banking operations only after withdrawal by the Central Bank of the Republic of Uzbekistan. In the event that the Economic Court recognizes the insurer as a bankrupt, the creditors 'claims shall be satisfied in the following order:

• 
  insurers' requirements for compulsory insurance contracts in the life insurance industry;
  
• 
  claims of insurants on other obligatory insurance contracts; - requirements of other insurers (beneficiaries) in third place;
  
• 
  requirements for payment (execution) documents, which provide compulsory payments in the fourth order. Upon full satisfaction of these claims social insurance claims and compensation for damages inflicted on property as a result of criminal or administrative offense shall be satisfied;
  
• 
  requirements of other insurers of the fifth priority of the insurer. Features of the bankruptcy of professional securities market participants. The securities market regulator shall be deemed to be the person participating in the securities market, except for those charged with bankruptcy of a professional securities market participant. Specific features of bankruptcy procedures of professional securities market participants, not regulated by this Law, as well as measures to protect the rights and interests of investors in the securities market, may be established by law. The procedure for pre-trial procedures for the prevention of bankruptcy and restitution of the solvency of professional securities market participants is defined by the legislation. From the moment of introduction of the supervision, the interim manager within ten days from the moment of his / her appointment shall issue to the investors of the securities market the securities, admitted to management of the professional securities market participant, and a temporary administrator shall be obliged to notify the court that the case has been instituted.
  

From the moment of introduction of external management or liquidation proceedings, the remaining securities of the clients shall be returned to the customer if the external manager or liquidation manager has not agreed otherwise with the client agreement. During the external management of the professional securities market participant, the external manager may transfer the securities transferred to him by the client with the consent of the client and on behalf of other professional securities market participants. Regulation of bankruptcy of a physical person who has lost a status of an individual entrepreneur or individual entrepreneur. Bankruptcy related to an individual entrepreneur or individual entrepreneur who has lost a status of an individual entrepreneur. An application for a bankruptcy of an individual entrepreneur or individual entrepreneur who has lost a status of an individual entrepreneur shall be submitted to the Economic Court by a natural person, creditor, procurator, and the public tax authority and other persons who have lost the status of an individual entrepreneur or an individual entrepreneur. other competent authorities. The creditors have the right to file a petition on the recognition of the individual entrepreneur or the individual entrepreneur who lost the status of a sole entrepreneur, compensation for damages caused to his life or health, alimony payment as well as creditors, who shall set forth other personal requirements. In the event of a debtor's individual entrepreneur or individual entrepreneur who has lost a status of an individual entrepreneur, a claim for recovery of damages to life or health, alimony compensation, as well as personal creditors have the right to submit their claims. The requirements of these creditors remain valid even after the end of the bankruptcy process of an individual entrepreneur or individual entrepreneur, who has lost the status of an individual entrepreneur, unless the bankruptcy procedures have not been reported. An individual entrepreneur or individual entrepreneur, who has lost a status of an individual entrepreneur, may submit a debt repayment plan to the debtor's bankruptcy application. If the copies of the plan are not available to the creditors and the bankruptcy case, the court may approve the debt repayment plan, which will serve as a ground for the suspension of the bankruptcy case for up to two months.

The economic court may, at the motivated request of persons participating in a bankruptcy case, change the debt repayment plan, including the prolongation or reduction of the time period for its execution, the amount of monthly remuneration for the debtor's or his family members' consumption, distribute or reduce it. Bankruptcy proceedings must be discontinued if the claims of the creditors are satisfied in full in the result of fulfillment of the debt repayment by an individual entrepreneur or individual entrepreneur who has lost the status of an individual entrepreneur. The Economic Court's Decision on the Recognition of a Debtor Individual Entrepreneur or Individual Entrepreneur who Has Lost Individual Entrepreneur and Introduction of Liquidation proceedings, and a Carrying Out of a Debtor's Property Transfer Carry out the sale of the debtor's livelihood to the public performer. The property of the following must be sold except for the property which does not fall under the liquidation mass according to this Law: all property of the debtor individual entrepreneur; the property of the individual who lost the status of an individual entrepreneur from the previous business activity. At the same time, the economic court establishes whether property is a property of a natural person acquired during the previous business activity. Bankruptcy of the liquidated legal entity. If the value of the property of a legal entity that has taken a decision to terminate its financial and economic activities in connection with the non-formation of its authorized fund, is not sufficient to meet the creditors' the legal entity shall be liquidated in accordance with the procedure stipulated by the Law. The Economic Court shall decide on the liquidation of the liquidated legal entity and initiate liquidation proceedings, and shall appoint the liquidation manager. In the bankruptcy process of the liquidating legal entity, surveillance, judicial rehabilitation and external management shall not be applied. Creditors shall have the right to submit their demands to the liquidated legal entity within a period of one month from the date of publication of the announcement on declaring the liquidated legal entity debtor bankrupt.