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practical difficulties companies experience when applying solvency and liquidity tests?

Asked by: 604 days ago - 1 Answers - 1339 views

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    In general, solvency and liquidity tests vary in both preference and reliability. Although it’s math, as with many other finance issues, it can have too high of a level of objectivity. Nothing is a perfect system. Have you ever strongly disagreed with a rating system and eventually been proven right? That’s kinda applicable here. A creditor may accept unworthy applicants and reject reputable ones. Not purposefully, but when you rely solely on a system without using intuition, bad things can happen. Take the subprime mortgage crisis for example.

    Answer by Rick 603 days ago


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