MINING AND BENEFICIATION COMPANIES LIABILITIES FIGURES CORRECTION
MINING AND BENEFICIATION COMPANIES LIABILITIES FIGURES CORRECTION

Summary/Abstract: It is important to define accurately enterprise liabilities figures, because they are used in calculation of those financial ratios, based on which conclusions of enterprises financial performance are made. When determining indicators of liabilities of mining and beneficiation enterprises of Ukraine, the following factors shall be considered: company internal indebtedness (that is debt of the company to itself); loan guarantees that are provided to other enterprises of the same vertically integrated structure for which the certain company relates to; enterprise liabilities to affiliates. Internal indebtedness appears at enterprises because of insufficient financing of obligatory programs. Untimely fulfilment of such programs may lead to future increasing of enterprise’s costs and consequently lower financial and economic results. Thus, an enterprise internal indebtedness has to be considered in the companies liabilities. Mining and beneficiation enterprises of Ukraine belong to different vertically integrated structures and often act as guarantors for credits that are provided to other enterprises of the same structures. Such liabilities are not shown in the balance of the mining and beneficiation enterprises. But in case of insolvency or bankruptcy of enterprises being credited, the obligations of loans payment will be transferred to enterprises-guarantors (in our case to mining and beneficiation enterprises).Therefore, liability reserve of guarantees shall be created and it shall be considered in long-term liabilities of the enterprises. Another peculiarity of mining and beneficiation enterprises operating as a part of vertically integrated structures is existence of affiliated liabilities. Two groups of affiliated liabilities shall be distinguished: absolutely affiliated (liabilities of the enterprise to other companies which are fully controlled by the same owners); conditionally affiliated (liabilities of company to other companies which are partially controlled by the owners of the same company).Absolutely affiliated liabilities shall be transferred from current to long-term liabilities; conditionally affiliated liabilities are current by their essence. Thus, methodology of correcting of mining and beneficiating enterprise liabilities has been developed in the scope of this Article that will allow increasing of preciseness of defining of its financial and economic results and assessment of financial condition.

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