Management Theory and Studies for Rural Business and Infrastructure Development, Volume 36, Number 4

Use of financial indicator for enterprises’ solvency evaluation

Inta Kotane

Abstract

One of the evaluation methods of the enterprises’ solvency is the calculation of the financial ratios and the establishment of the ratio mutual coherence..The research of the financial indicator use regarding the evaluation research of the solvency of the enterprises was carried out by the author, and the set of financial indicators was established including the groups of liquidity, solvency, activity
and profitableness ratios and was used in the solvency evaluation of Latvian enterprises. The practical research was carried out according to the accounting data of the small enterprises of Latvia. The aim of the research is to appraise the use of the financial indicators in order to evaluate the solvency of the companies. The results of the research point out that there is no essential difference between the financial indicators of a liquidated enterprise and a reorganized enterprise and there is no possibility to foresee precisely the financial position of the enterprises by taking into account only the financial indicators of the enterprises.

JEL codes: R11, G33.

Keyword(s): solvency, financial indicators, evaluation


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DOI: http://dx.doi.org/10.15544/mts.2014.081

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Management Theory and Studies for Rural Business and Infrastructure Development eISSN 2345-0355

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