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| An entity is 'cash flow insolvent' when its cash flows and liquid assets, supported by any additional sources of liquidity, are inadequate for it to pay its debts as they fall due.
| | International Financial Reporting Standard 7, dealing with financial instruments: disclosures. |
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| In the non-financial sector, this is sometimes known as 'commercial' insolvency.
| | Issued by the International Accounting Standards Board. |
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| Cash flow insolvency is contrasted with 'balance sheet insolvency', which usually relates to accumulated losses and negative equity.
| | == See also == |
| | | * [[FRS 102]] |
| | | * [[IAS 32]] |
| It is possible for profitable businesses to be cash flow insolvent, for example as a result of 'overtrading' and poor cash forecasting and management.
| | * [[International Accounting Standards Board]] |
| | | * [[Loans payable]] |
| | | * [[Market risk]] |
| ==Banking== | | * [[Other price risk]] |
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| Banks generally fund longer term assets with contractually shorter term - but stable - liabilities, including customers' deposits.
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| The cash flow solvency of banks depends on the repeated rolling over - or replacement - of their shorter term liabilities, including deposits.
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| == See also == | | ==External link== |
| * [[Balance sheet insolvent]] | | *[https://www.iasplus.com/en/standards/ifrs/ifrs7 IFRS 7 - IAS Plus] |
| *[[Cash]]
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| *[[Cash balance]]
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| *[[Cash flow]]
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| * [[Equity]]
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| * [[Insolvency]]
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| * [[Liquidity]]
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| * [[Over trading]]
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| * [[Run]]
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| * [[Solvency]]
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| * [[Survival period]]
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| [[Category:Accounting,_tax_and_regulation]] | | [[Category:Compliance_and_audit]] |
| [[Category:The_business_context]]
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Latest revision as of 16:35, 2 March 2022
International Financial Reporting Standard 7, dealing with financial instruments: disclosures.
Issued by the International Accounting Standards Board.
See also
External link
