STUDY ON THE RISK OF INSOLVENCY WITHIN THE LIMITED LIABILITY COMPANIES

Abstract

Every company has to stand up to various risks during its activity, such as the country risk or the currency risk mainly for the multinational companies or for those performing operations of foreign trade, the technological and supply risk mainly for production companies or the HR involved risk, which appears for any type of companies mainly during periods of crisis or high taxation pressure. However, one of the most important risks is the risk of insolvency, which could be measured by various methods, some of them based on the companies’ patrimony, some of them based on the companies’ performance and some of them taking into consideration both of the aspects. The present paper has as a purpose to emphasize, mainly in a practical way, the evolution of the risk of insolvency during a three years period within a sample of four limited liability companies, by using two of the most known methods and correlating various balance sheet and income statement elements with the results returned by the two methods of valuating the risk of insolvency. On this line, there are used various research methods, such as the case study, the sample, the correlation of factors, the induction and the deduction.