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What is Solvency

Chapter 8
Global Trends of Modernization in Budgeting and Finance
Is the ability of a company to meet its long-term financial obligations. Solvency is essential to staying in business as it asserts company’s ability to continue operations into the foreseeable future. Liquidity should not be confused with solvency, however. Solvency is directly related to the ability of an individual or business to pay their long-term debts including any associated interest. To be considered solvent, the value of assets, company’s or individual, must be greater than the sum of debt obligations.
Published in Chapter:
Scoring Modeling in Estimating the Financial Condition of Russian Agro-Industrial Companies
Oleg Y. Patlasov (Omsk Regional Institute, Russia) and Olga K. Mzhelskaya (Omsk Humanitarian Academy, Russia)
Copyright: © 2019 |Pages: 25
DOI: 10.4018/978-1-5225-7760-7.ch008
Abstract
The chapter presents the authors' estimations according to the scoring modeling techniques; also, internationally spread models of bankruptcy forecasting are systematized. Advantages and disadvantages of dynamic modelling methods as applied to financial condition assessment are presented here. Methodological problems of financial modelling are explained here in detail. Regression, logit-regression, and discriminant models are built on the basis of data on the Rosselkhozbank and Sberbank of Russia regulations, taking into account the agrarian specifics of organizations and regional specificity of the Omsk region. An attempt has been made to balance the simplicity of calculations and the accuracy of predictions. Graphs, to be used for express analysis, are constructed on the basis of two core financial indicators.
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More Results
Chapter 1
The Impact of COVID-19 on the Business Performance and Financial Position in Hotel Industry: The Case of Croatia
A level of financing assets with liabilities in a manner that a company is able to generate sufficient cash flows for normal business operation and meeting interest expenses and repaying principal from long-term debt.
Published in Chapter: The Impact of COVID-19 on the Business Performance and Financial Position in Hotel Industry: The Case of Croatia; From: Handbook of Research on the Impacts and Implications of COVID-19 on the Tourism Industry
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Chapter 14
Performance of Airlines: A Comparative Analysis for the COVID-19 Era
It is the ability of a company to meet its long-term debts and other financial obligations.
Published in Chapter: Performance of Airlines: A Comparative Analysis for the COVID-19 Era; From: Digitalization and the Impacts of COVID-19 on the Aviation Industry
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Chapter 19
Towards Predicting Financial Failure in Non-Profit Organisations
The solvency of an entity refers to the ability of the entity to meet its long-term financial obligations.
Published in Chapter: Towards Predicting Financial Failure in Non-Profit Organisations; From: Handbook of Research on Financial and Banking Crisis Prediction through Early Warning Systems
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