How to calculate the solvency of the enterprise

The solvency of the enterprise implies the ability of the company to timely "repay" the amount of existing debts and obligations in the current period of time. Solvency analysis allows you to consider the assets of the company in the form of collateral for its debts.

Instruction manual

1

Carry out a solvency analysis of the enterprise. For this, it is necessary to calculate three fundamental factors. The first of which is the solvency ratio for the current period. This indicator allows you to assess the company's ability to repay its debts and reflects how much working capital will fall on one ruble of existing short-term obligations. There is a normative value of such a coefficient - 2. In turn, if the value of the coefficient is lower than the established standard, then this will indicate the presence of risk associated with untimely repayment of current obligations.

2

Calculate the value of the second indicator (quick solvency ratio). It is defined as the ratio of the value of receivables, financial short-term investments and the amount of cash to the value of short-term liabilities of the company. That is, when calculating this coefficient, it is necessary to subtract its reserves from the total assets of the enterprise. After all, stocks have not only the lowest liquidity, but also in the case of their necessary, quick sale, the sale price can be much lower than the cost of their acquisition or production. The standard value for this coefficient is 1.

3

Determine the value of the absolute solvency ratio. It can be calculated as the ratio of cash to the amount of short-term liabilities of the organization. This indicator shows what proportion of debts can be repaid at the moment due to available funds of the company. In turn, the normative value of such a coefficient is 0.25.

4

To assess the long-term solvency of the enterprise, calculate the value of positive net capital (or the amount of net assets of the company). Find the financial leverage ratio as the ratio of borrowed capital to equity. Calculate the amount necessary for the company to cover interest on long-term obligations. Use their repayment schedule.