Modified Kovalev-Volkova model in assessing financial stability of oil and gas service companies (case study of JSC Gazprom Diagnostics)

Abstract

Importance: methodological approaches to the analysis of financial stability of oil and gas service enterprises. Purpose: modification of the classical Kovalev-Volkova financial stability model as applied to the specifics of JSC Gazprom Diagnostics. Research design: an analysis of the financial stability of Gazprom Diagnostics JSC was conducted based on the Kovalev-Volkov five-factor model. Its irrelevance was revealed with respect to the specifics of the activities of the research object, which provides services for technical diagnostics and examination of technological facilities of Gazprom PJSC. The absence of production activities is the reason for the low share of reserves in the structure of assets and working capital of the organization. As a result, the calculated integral indicator of financial stability cannot always be recognized as adequate. In this regard, the authors came to the conclusion about the need to modify the Kovalev-Volkova model as applied to organizations providing services. Results: аs a result of applying modern econometric methods, such as correlation and retrospective analysis, it was possible to level out the shortcomings of the classical KovalevVolkova model and test the modified model using the example of Gazprom Diagnostics JSC. Testing showed that the authors’ recommendations for the use of the modified integral indicator of financial stability can form the basis for modeling the financial stability of organizations in similar sectors of the economy, for which the classical Kovalev-Volkova model was previously inapplicable.