The importance of financial sustainability using financial analysis indicators

Abstract

Interest is growing in the concept of financial sustainability, which is a relatively recent concept, and the most controversial topic, because it expresses the challenges that can be faced by financial institutions, which depend on the expectations of current and future long-term cash flows, because these expectations help in modifying current policies, whether by increasing sources of funds or Reducing financial burdens, which means the ability of banks to pay their financial obligations through the tools they own, which give them the possibility of expansion, exploiting opportunities and dealing with unexpected risks.Financial sustainability does not work in isolation from the work of financial institutions, as it is interconnected and integrated with them with their methods and factors, that is, it is a means to achieve goals, chart data and continuity.Hence, financial sustainability has become a measure of the institution’s ability to achieve its vision and objectives, as well as permanently and continuously serve the beneficiaries by fulfilling their financial obligations and continuing its activity, which enhances the institution’s ability to survive and invest in its activity and the sustainability of its life, and this is what is called financial sustainability, Which is more.Based on the foregoing, the current research is directed to understanding and analyzing the financial variables that ensure the evaluation of the (Bank of Baghdad) sample of the research and the extent of its exposure to financial failure by knowing and studying the financial situation for several years to predict the extent of its ability to continue providing its services, using models to predict financial failure represented by models ( Sherrod) and (Springate).Through the results of the value of (Z) calculated according to the Sherrod model, it was less than the value (25) throughout the years of the study, that is, it falls in the third category, which means that it is difficult to predict the risks of bankruptcy (20>Z ≥5), and the value of (Z) calculated according to The Springate model was low for all years of study because its value is less than (0.862), which means that the bank is going through financial problems, and one of the most important recommendations of the research is to establish a database for these indicators to be expanded and gradually developed so that periodic reports on the bank’s condition can be submitted to face the possibilities of occurrence crises before they occur