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The Finance Book, 2nd Edition
book

The Finance Book, 2nd Edition

by Stuart Warner, Si Hussain
April 2022
Beginner
535 pages
11h 35m
English
Pearson Education
Content preview from The Finance Book, 2nd Edition

26 Long-term solvency performance measures

‘It’s our contention that equity may be in the money, depending on where the liabilities lie.’

David Tepper, American businessman

In a nutshell

Solvency is critical to risk management and long-term success.

Solvency is the ability of a business to service its long-term debts. Raising and maintaining the right type of cost-effective finance enables a business to achieve solvency.

Solvency performance measures provide an indication of ‘financial strength’ – the ability of a business to withstand exposure to short-term setbacks and achieve long-term growth.

The key measures of solvency are gearing and interest cover.

Need to know

Why is this important?

Banks and other providers of debt place demands ...

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Publisher Resources

ISBN: 9781292402000