№ 2/2017

Fìnansi Ukr. 2017 (2): 81–95https://doi.org/10.33763/finukr2017.02.081

FINANCES OF THE INSTITUTIONAL SECTORS

PARASIY-VERGUNENKO Iryna ¹

¹Kyiv National University of Trade and Economics
OrcID ID : https://orcid.org/0000-0001-6506-6965

Static and dynamic approaches to the business entities liquidity and solvency analysis

Liquidity and solvency are the key indicators of the entities financial condition, a sufficient level of which is the characteristic of their financial stability. In the article the essence of the “liquidity” and “solvency” concepts and the relationship between them have been defined. The method of liquidity and solvency analysis is based on static and dynamic approaches. By the solvency evaluation the need to consider not only the liquidity of assets, but also liabilities liquidity has been proved. Based on the author’s understanding of the economic substance of these concepts, the indicators system of the evaluation of the static liquidity and entity’s balance sheet liquidity have been proposed. The liquidity algorithms were specified taking into account the new financial statements forms. A dynamic approach to the liquidity analysis as a flow based on the turnover indicators of certain types of assets and liabilities has been suggested. The benefits of the turnover calculating of certain types of assets and liabilities using insider trial balances data have been proven and the appropriate algorithms for their calculation were suggested. In determining the turnover of certain types of current assets and liabilities based on the financial reports, the benefits of calculation methods based on turnover trial balances data were proven. The method of sufficiency analysis of monetary holdings reserve, debt receivables, reserves considering the length of the turnover and the liabilities turnover has been developed. The consideration of these relationships by the justification of the liquidity values criteria was recommended?. The internal and external factors that positively and negatively affect the company’s liquidity and solvency were systematized. The problematic issues and areas of information sources improvement for the liquidity analysis by the dynamic balance building were determined.

Keywords:liquidity, solvency, turnover, coverage ratios, assets, current liabilities.

JEL: G30, G32

Parasiy-Vergunenko I. . Static and dynamic approaches to the business entities liquidity and solvency analysis / I. . Parasiy-Vergunenko // Фінанси України. - 2017. - № 2. - C. 81-95.

Article original in Ukrainian (pp. 81 - 95)

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