What Is the Ability to Pay?
The ability to pay refers to the ability of an enterprise to repay debts and pay dues.
Ability to pay
Right!
- Chinese name
- Ability to pay
- Foreign name
- Payment Ability
- Explanation
- Ability to repay debt to a business
- Affiliation
- economic
- The ability to pay refers to the ability of an enterprise to repay debts and pay dues.
- The mathematical method of measuring the company's ability to pay is to calculate the ability to pay at a certain point in time and the ability to pay near it; the ability to pay is slightly greater than 1, and less than 1 indicates weak ability to pay. Not even able to pay debts. The calculation method is: [1]
- Payability factor at the end of the period = Balance of monetary funds at the end of the period / Amount of overdue payments
- Proximity to payability factor = Funds to be used to pay debts / Funds to be paid
- The strength of the company's ability to pay is an important indicator of whether the company's liquidity turnover is normal and its financial status is good. An enterprise's ability to pay too much indicates that monetary funds are stuck too much, and the turnover function of funds cannot be brought into full play. Too weak a payment ability can easily cause the turnover of funds to fail, and will also affect the credibility of the enterprise and endanger its survival and development.