Assessing and commenting on the company’s liquidity, solvency and profitability
Which financial statement should you examine first if you are interested in assessing solvency?
The financial statement that would be most relevant for assessing solvency is partly determined by the financial statement in which liabilities are recorded.
What is the relevant financial statement for a solvency assessment?
The balance sheet would be relevant for a solvency assessment. Amounts owed to lenders and other creditors are recorded in the balance sheet as short-term (‘current’) liabilities and long-term (‘non-current’) liabilities.
Does any other financial statement tell you something about solvency?
Shareholders expect to be paid any dividends at each financial year-end, but where does a company find the money to pay as dividends?
