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Quick Determination Model Of Insolvency For A Company

Listed author(s):
  • Cristina Rodica GRADEA


    (Wales University of Bucharest, Romania, Faculty of Economic, Legal and Administrative Studies)

Registered author(s):

    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.

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    Article provided by "Stefan cel Mare" University of Suceava, Romania, Faculty of Economics and Public Administration in its journal The Annals of the "Stefan cel Mare" University of Suceava. Fascicle of The Faculty of Economics and Public Administration.

    Volume (Year): 11 (2011)
    Issue (Month): 1(13) (June)
    Pages: 237-244

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    Handle: RePEc:scm:ausvfe:v:11:y:2011:i:1(13):p:237-244
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