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Monday, 22 March 2010

My company cashflow is very poor: So how do I know if my company is insolvent?

If my company has a cashflow problem is it insolvent?

This is by far the most common question that we hear every day. Most people don't understand the issues and are surprised when they read and learn all the insolvency tests.

Most people assume that a negative or insolvent balance sheet automatically means the company IS INSOLVENT. Many assume that a positive or solvent balance sheet means the company IS SOLVENT. Both assumptions may be wrong.

Cashflow is a fundamental test independent of the balance sheet issues.

For a simple to follow guide see this page.

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