Abstract:

The article is devoted to testing the analytical potential of free cash flow in macro- and microeconomic research on the financial stability of nonfinancial businesses. Using the example of Russian companies in the transport industry, it is shown that the possibilities of applying this indicator in conditions of an undeveloped financial market are limited. An analysis of available information about Russian companies in the industry under study in the Bloomberg Professional system revealed that the FCFF to net debt ratio data, which could theoretically be successfully applied in monitoring the financial stability of the corporate sector, is not indicative. In particular, there are inaccuracies and inadequate information on companies of interest. At the level of individual enterprises, the potential for free cash flow in assessing financial stability should be generally assessed positively. For this purpose, it was proposed to apply the ratio of the company's value, estimated on the basis of the adjusted value of FCFF, and its net debt, which corresponds to the concept of assessing the corporate liabilities by Black-Scholes-Merton. It is argued that the accuracy of the assessment largely depends on the completeness of the information on the company's investment and financial plans, the possibility of their implementation, in turn, is often limited in the Russian financial market.