How To Increase The Company's Solvency

Table of contents:

How To Increase The Company's Solvency
How To Increase The Company's Solvency

Video: How To Increase The Company's Solvency

Video: How To Increase The Company's Solvency
Video: Solvency | Definition | Calculation (with Example) 2024, March
Anonim

Currently, the assessment of financial stability and solvency is coming to one of the first places in the field of financial management of domestic enterprises. This is due to the aggravation of the crisis of non-payments, which is widespread everywhere.

How to increase the company's solvency
How to increase the company's solvency

Instructions

Step 1

In order to increase the solvency of an enterprise, it must be remembered that it is determined primarily by the structure and qualitative composition of current assets. After all, solvency is the ability of an enterprise to pay off its debts on time. And this can be done by quickly selling assets. Therefore, they should be easy to implement. Therefore, the management of current assets should mean ensuring a balance between the costs of maintaining assets in the amount and structure that guarantees an uninterrupted technological process, between the losses associated with the risk of losing liquidity and income from the involvement of new funds in circulation.

Step 2

Please note that solvency depends on the rate of turnover of assets, as well as on its correspondence to the rate of turnover of short-term liabilities. The current activities of the enterprise can be financed from its own funds, i.e. direction of the share of net profit for the acquisition of current assets, as well as at the expense of long-term and short-term borrowed sources. If the organization's current activities are supported by short-term receipts, then the sources of additional funds can be loans and borrowings, accounts payable to suppliers and employees of the enterprise. If an organization has a declining asset turnover and management does not take measures to attract additional sources, this can lead to a decrease in solvency, even if it is currently profitable.

Step 3

If your company has a tendency to increase the operating cycle, then take measures to stabilize the financial condition. For example, reduce the shelf life of stocks, goods, materials, pay attention to improving the system of settlements with customers, work with debtors who violate payment terms, etc. At the same time, do not lose sight of the fact that additional sources of funding are always associated with the cost of attracting them. In general, the solvency of the enterprise can be increased by improving the quality of products, as well as by mobilizing sources that will ease the financial tension at the enterprise.

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