Start networking and exchanging professional insights

Register now or log in to join your professional community.

Follow

What are the consequences of a poor appraisal of demand on the solvency of the company?

user-image
Question added by Nadjib RABAHI , Freelancer , My own account
Date Posted: 2016/12/25
Tamer Elbeshbishy
by Tamer Elbeshbishy , Financial and Administration Manager , Muscat Towers Holding Group

The company may reach the point that will not be able to meet the long-term obligations.

Ibrahim Akram
by Ibrahim Akram , Senior Specialist ( Budgeting , Costing and Reporting) , Maaden

A low appraisal of sale means low projected revenues , especially in high leveraged operations a small decline in sale can result a big change in bottom line. if the trend goes long term then it will lead to inability to pay their long term obligation ( solvency). a firm may have problem in short term obligation (liquidity) but that may be seasonal or part of plan. simply a failure in long term obligation is bankruptcy (business can not run foreseeable future) and a liquidity problem can proceed to solvency but it's not necessary.

Ashraf E. Mahmoud (PhD)
by Ashraf E. Mahmoud (PhD) , University Lecturer, Freelancer Consultant and Trainer for Int'l Business & Banking TF. , FreeLancer

Thanks for invitation,

Low or poor demand will affect total sales and consequently, the organization will not be able settle its short term commitments or part of it on due time, due to the liquidity problem.

Ali Hassan Mohammed Saleh
by Ali Hassan Mohammed Saleh , Financial Manager , Jumaan Exchange

Not the company's ability to meet its short-term obligations, or borrowing

More Questions Like This