Author Description

Insolvency arises as a result of many negative factors surrounding a business enterprise. Prominent among them are inadequate capital and the use of faulty financial management models which though may be effective in the short run and in the determination of the creditor to assets availability relationship, are, however, ineffective in forecasting long term or futuristic solvency status of the enterprise. This book, based on a recent study, examined the causes of insolvency generally and made a bold attempt at finding an effective early warning tool capable of predicting insolvency situations (using a firm s intrinsic variables) before they arise. The study produced a robust model for finding the operational break-even point of a business and for measuring the enterprise s adequate working capital and its Relative Solvency Ratio (RSR) which are central to the solvency status and going- concern feature of any business.