Instruments to Improve Economic Entities Solvency

Abstract

The article analyzes the instruments to improve the solvency of economic entities proposed both by specialists and scientists. This analysis leads the authors to the conclusion that the mistakes in forming the list of these procedures result from ignoring the content of the concept “solvency”, on the one hand, and, on the other hand, from using the improper methods to assess the level of solvency. The authors offer to use the factor of comparability over time of accounts payable and assets allocated to repay the liabilities to creditors as a basic criterion for correctness of the solvency ratio. As a tool to improve the solvency of the entity the authors propose to amend the financial statements by adding the items on maturities of liabilities to the items listing the types of payables, As a second tool the authors propose to use a bank deposit as a mechanism to put together the creditors requirements to guarantee the liabilities repayment and the requirements of the management of an entity to ensure the of financial investments efficiency. The article describes three main conditions of forming the bank deposit: the ability to manage it; a minimum balance requirement, objectivity of the value of a deposit related to its targeting. The procedures of forming a bank deposit are presented for enterprises with different types of cash flows: regular, periodic, one-time.