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Gurdzhiyan V.

Strategy for Restoring Solvency under Financial Sanation of a Deflationary Organization

Keywords: solvency, bankruptcy, financial sanation, insolvency, solvency ratios, financial analysis in bankruptcy, external management plan, solvency restoration, financial sanation strategy

In the economy of the Russian Federation, there has been a gradual increase in the share of insolvent organizations, which, in turn, worsen the socio-economic climate of the country. A number of organizations for which solvency restoration was not crowned with success, find themselves in the state of bankruptcy. The article analyzes solvency of organizations in the Russian Federation, the Volga Federal District and the Chuvash Republic. Based on statistical data, the solvency level was assessed in various sectors of the economy. The most and the least solvent industries are identified. The status of credit indebtedness is assessed as well. It is noted that overdue accounts payable make 7% of the total amount of the debt, which raises concerns because of payment discipline tightening. Criteria for organizations’ insolvency are defined. The article presents solvency coefficients which should be calculated in relation to each business entity. Their recommended values are presented as well. As a result, the study offers the stages to restore solvency within the framework of financial sanation of the organization. The article presents directions of the company's management activities to achieve the goals of financial sanation. The objects of attention in the process of restoring solvency are: credit policy, current assets, non-current assets, sources of forming the assets of a business entity. Based on regulatory literature studying, the list of measures aimed at restoring the organizations’ solvency being under the bankruptcy proceedings is determined.

References

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About authors

Gurdzhiyan Vladimir
candidate of economics, management and marketing department associate professor, Chuvash State University, Russia, Cheboksary (vladim_leo@mail.ru)

Article link

Gurdzhiyan V. Strategy for Restoring Solvency under Financial Sanation of a Deflationary Organization [Electronic resource] // Oeconomia et Jus. – 2019. – №2. P. 9-16. – URL: http://oecomia-et-jus.ru/en/single/2019/2/2/.