solvency

Examples of solvency in the following topics:

• Trends in Credit After 2008

  • Other reasons why banks might suddenly stop or slow lending activity: An anticipated decline in the value of the collateral used by the banks to secure the loans; an exogenous change in monetary conditions (for example, where the central bank suddenly and unexpectedly raises reserve requirements or imposes new regulatory constraints on lending); the central government imposing direct credit controls on the banking system; or even an increased perception of risk regarding the solvency of other banks within the banking system.
  • Other causes can include an anticipated decline in the value of the collateral used by the banks to secure the loans; an exogenous change in monetary conditions (for example, where the central bank suddenly and unexpectedly raises reserve requirements or imposes new regulatory constraints on lending); the central government imposing direct credit controls on the banking system; or even an increased perception of risk regarding the solvency of other banks within the banking system.
  • In this case, accessing additional credit lines and "trading through" the crisis can allow the business to navigate its way through the problem and ensure its continued solvency and viability.
  • It is often difficult to know, in the midst of a crisis, whether distressed businesses are experiencing a crisis of solvency or a temporary liquidity crisis.

• Comparisons Within an Industry

  • The main purpose of conducting financial analysis is to measure a business's profitability and solvency.

• Debt Utilization Ratios

  • Debt utilization ratios provide a comprehensive picture of the company's solvency or long-term financial health.