Efficiency Solvency

Efficiency

• Information provided by the accounts dept must be
  -Complete
  -Accurate
  -On time
  
• This will contribute to the efficiency of the organisation.
  
• Quality Information – Accurate, Complete, Cost beneficial, User Targeted, Relevant & Reliable, Authorised, Timely, Easy to access [ACCURATE]

Solvency

• Solvency is also an important objective of an organisation
  
• Solvency means the ability to pay debts when they fall due
  
• Insolvent means you cannot pay your debts
  
• An insolvent individual becomes bankrupt
  
• An insolvent company goes into administration then liquidation resulting in court action, loss of jobs, closure of business, unpaid creditors
  
• To remain solvent a company must
  
• Monitor both present and expected money coming in and out of the business
  
• This can be by means of cash flow forecast/cash budget

Working Capital

• The surplus of money in or money shortly due in (money realised) is referred to as working capital
  
• Working capital can be calculated as Current Assets – Current Liabilities