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A new technique for solvency analysis

Business credit, 1993-09, Vol.95 (8), p.8

Copyright National Association of Credit Management Sep 1993 ;ISSN: 0897-0181

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  • Title:
    A new technique for solvency analysis
  • Author: Kleiman, Robert T
  • Subjects: Accumulated depreciation ; Balance sheets ; Bankruptcy ; Bankruptcy reorganization ; Credit investigation ; Current liabilities ; Equity ; Financial leverage ; Income statements ; Insolvency ; Operating ratios ; Ratio analysis ; Solvency ; Techniques
  • Is Part Of: Business credit, 1993-09, Vol.95 (8), p.8
  • Description: A new analytical method has been developed by Ross Healy of Solvency Analysis Corp. which integrates balance sheet information with income statement data. This technique, known as the operating ratio, appears to provide an accurate method of predicting a firm's ability to continue paying its bills. The operating ratio captures all the inputs and outputs that comprise the activities of the firm and shows what a company owes in relation to its ability to repay. The operating ratio is calculated using the following steps: 1. Determine operational assets. 2. Determine total debt. 3. Divide the operational assets by the total debt. The operating ratio has well defined break points, which are used in appraising the financial health of the company.
  • Publisher: New York: National Association of Credit Management
  • Language: English
  • Identifier: ISSN: 0897-0181
  • Source: ProQuest Central
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