FINANCIAL ANALYSIS OF LIQUIDITY AND PROFITABILITY AS A TOOL FOR EARLY IDENTIFICATION OF CORPORATE RISKS

Abstract

The article examines financial analysis of liquidity and profitability as a practical tool for the early detection of corporate risks (financial instability, threat of default, deterioration in earnings quality, and reduced sustainability of the business model). Based on classical studies on the predictive power of financial ratios and modern approaches to risk management, the logic for constructing an early warning system (Early Warning System (EWS): from the selection of indicators to the interpretation of "weak signals" over time and linking the results to management decisions. It has been shown that a combined analysis of liquidity and profitability improves the quality of diagnostics compared to the isolated use of individual ratios.