QUICK DETERMINATION MODEL OF INSOLVENCY FOR A COMPANY

Cristina Rodica Gradea ()
Additional contact information
Cristina Rodica Gradea: Wales University of Bucharest, Romania, Faculty of Economic, Legal and Administrative Studies

The Annals of the "Stefan cel Mare" University of Suceava. Fascicle of The Faculty of Economics and Public Administration, 2011, vol. 11, issue 1(13), 237-244

Abstract: Under conditions of crisis, suppliers are faced with situations where a decision must be taken quickly if they supply or provide services for a company which they don’t know if it can honor invoices or not. In this research we propose a model for rapid determination of bankruptcy, which should lead the provider, in the short term, to the decision of cooperating or not with a company. The model was tested on financial statements from Arabesque Company and is based on a function of "scoring". Period considered was 2004-2009, during this period were analyzed five indicators: gross result, the period of debt repayment, period of the receivable debts, degree of indebtedness and patrimonial liquidity. Outcome research for ARABESQUE Company was as follows: YEAR -> CATHEGORY -> RISK TYPE 2004 D Low risk of bankruptcy, 2005 D Low risk of bankruptcy, 2006 D Low risk of bankruptcy, 2007 D Low risk of bankruptcy, 2008 C Moderate risk of bankruptcy, 2009 B Major risk of bankruptcy. Especially during the financial crisis, economic agents have so much need of liquidity. Relaxation process of lending by the banking system becomes a necessity. To believe, however, that whatever the results that there are there banks which give loans under stress conditions, would be a mistake. For that, careful monitoring, continuous and perseverance of bankruptcy risk , could ensure liquidity needs and the survival of society in times of crisis.

Keywords: bankruptcy; liquidity; receivable debts; debts; scoring; insolvency. (search for similar items in EconPapers)
Date: 2011
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.seap.usv.ro/annals/arhiva/ANNALS_vol.11,nr.1(13),2011_fulltext.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:scm:ausvfe:v:11:y:2011:i:1(13):p:237-244

Access Statistics for this article

The Annals of the "Stefan cel Mare" University of Suceava. Fascicle of The Faculty of Economics and Public Administration is currently edited by Editura Universitatii Stefan cel Mare din Suceava

More articles in The Annals of the "Stefan cel Mare" University of Suceava. Fascicle of The Faculty of Economics and Public Administration from "Stefan cel Mare" University of Suceava, Romania, Faculty of Economics and Public Administration Contact information at EDIRC.
Bibliographic data for series maintained by Liviu Scutariu ().