Some researchers in government accounting and public financial management use financial health and financial sustainability as synonymous terms. Do you agree with them?
conceptually financial health is about current financial situations while sustainability is about future viability. this term sometimes use interchangably
FINANICIAL HEALTH refers to the condition of th organization's finance, i.e. performance evaluated by performance evakuation ratios. Wheras sustainability, itbrefers to long_term conituous positive performance. The two terms are not ibterchangeable.
If the ratio of own money to borrowed money in a firm is 1:3 and current ratio is 1.33, then the unit is healthy by all means. Provided current assets are not older than 90 days.
Sustainability is reflected in cash flows being able to maintain above ratios all along
Дорогой коллега!
Финансовое здоровье, как и здоровье человека бывает отличным, удовлетворительным и слабым!
А Финансовая устойчивость - это когда "здоровье - отличное".
Current ratio as such has nothing with financial health, because it's optimal value depends of net working capital that is needed. More about this:
http://www.irdo.si/skupni-cd/cdji/cd-irdo-2015/referati/37-zivko-bergant-paper-final-(.pdf.
Financial health is mainly used in short-term focus, while financial sustainability is long term view.
Financial health looks at balance sheet of an individuals; in other words to ensure that his or her assets are more than the liabilities.
Financial sustainability focus more on financial instruments that will give continuous stream of income to the investors.
Sustainability itself means something having positive future orientation without jeopardizing the resources at the cost of time to come.Financial Health is the scenario depicted by Assets/Liabilities in the current period,whereas, the implications of our present financial decisions which are basically irreversible determine the financial sustainability.
Four main areas of financial health that should be examined are liquidity, solvency, profitability and operating efficiency. ... Standalone numbers such as total debt or net profit are less meaningful than financial ratios that connect and compare the various numbers on a company's balance sheet or income statement. ( https://www.investopedia.com/articles/investing/061916/what-best-measure-companys-financial-health.asp )
Similarly, following paper introduces several sustainability indicators varying in how closely they are related to the sustainability definition (the infinite and finite horizon gaps), whether they take account of the future evolution of spending (the primary gap and the tax gap) and what target value of debt is set at the end of a finite horizon. ( Article Fiscal Sustainability - Definition, Indicators and Assessmen...
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