The solvency analysis is necessary for anyenterprises, because with the help of its instruments it is possible to characterize the financial position of the business entity. In other words, this is an assessment of the possibility of timely repayment of their payment obligations available cash resources.
Analysis of liquidity of balance and solvencyThe enterprise is carried out based on the liquidity characteristics of the current assets and is determined by the time interval that is necessary to convert them into cash. In this case, it is necessary to take into account that the value of the liquidity indicator depends on the time taken to deduce this asset, i.e. the higher the liquidity, the less time is needed to collect this asset.
Analysis of solvency shows the possibilitycompanies turn assets into cash and repay their own obligations. At the same time, the maturity of liabilities is matched by the time when assets are converted into money. These indicators depend on the results of the comparison of the amount of payment means available to the enterprise and the amount of short-term liabilities.
The liquidity of the company is more generalin comparison with the liquidity of the balance. The second indicator characterizes the enterprise's ability to seek funds only from internal sources. For example, from the sale of assets. However, the company can attract external borrowed funds with a favorable financial image in the business market and a sufficiently high level of attractiveness in the investment aspect.
Analysis of solvency and liquidity is similar inmethods, but the second concept is more capacious. After all, if you understand more, liquidity depends on solvency. At the same time, with the help of liquidity, the characteristics of both the current state of payments and the outlook are given. The company can be recognized solvent at a specific date, and at the same time unfavorable results of its activity in the near future are expected.
In the specialized literature there is a notion"Liquidity of current assets", with the help of which solvency analysis is conducted. And another term - "liquidity of total assets" is used to assess the possibility of their quick sale in case of bankruptcy.
All three terms in question are inclose relationship with each other. Thus, the liquidity of the balance sheet is the "foundation" of the company's liquidity and solvency. In other words, liquidity is the main way to regulate solvency. At the same time, if there is a sufficiently high image, the enterprise constantly maintains a high level of solvency, thanks to which it is much easier to maintain liquidity at the proper level.
Analysis of solvency and financialstability is an obligatory part of the analysis of the financial activities of the entity. In itself, the notion of "financial stability" shows the balance of all financial flows, the availability of the necessary funds to maintain its activities by the enterprise in a certain period of time in the process of carrying out basic economic activities, repaying financial loans, etc.
In other words, financial stability is a predictor of solvency for a long period of time.
Solvency must be distinguished from suchindicator, like creditworthiness. The second term is used for internal financial analysis by the company's special structural units.