Insolvency Calculator

How do you know if your company is at risk of becoming insolvent, or is already insolvent?

If you are no longer able to pay your debts when they are due, and your liabilities outweigh your assets, your company is likely insolvent. If a company is insolvent, the risks of continuing to trade for the Director(s) are significant, and in order to protect themselves, directors are recommended to take immediate action to work with an ASIC registered insolvency professional.

It can be difficult to know when a company has crossed the line from experiencing a cash-flow issue to becoming insolvent. To enable you to determine your liabilities (how much your company owes) compared to your company’s assets*, below is a simple calculator Insolvency Australia has put together. List all your company assets, cash in bank/on hand, and your liabilities (the amount you owe to debtors) to give you a snapshot of your business’s financial position.

If you believe your business is insolvent or heading that way, it’s important to take action immediately and speak with your accountant or an insolvency specialist to discuss the severity of the problem and to determine the best-outcome solution.

Insolvency Australia enables you to search, compare and connect with Registered Liquidators and Bankruptcy Trustees around Australia – 24/7. The sooner you seek advice, the greater the chance your company’s business surviving.

Please note this calculator is a guide only and should not be relied upon in any insolvency or legal process. The results will also vary based upon the information entered and the accuracy of the data.

items, cash, property, stock, plant, machinery, vehicles, fixtures, fittings and other items that have a financial value.

Cash in Bank	$
Cash on Hand	$
Debtors	$
Fixtures and Fittings	$
Plant and Machinery	$
Property	$
Stock and Inventory	$
Vehicles	$
Any Other Assets	$

Accounting Fees Due	$
Business Rates	$
CT Due (Corporation Tax)	$
Loan(s)	$
Mortgage(s)	$
Overdraft(s)	$
ATO/PAYG Pay as you go	$
Vehicles	$
Rent Due	($)
Trade Creditors	$
GST Due	$
Any Other Liabilities	$

Solvency Calculations

Total Assets		$	0
Total Liabilities	-	$	0
Net Value	-	$	0
Insolvency Status	-		Possibly InsolventPossibly Solvent

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Solvent V’s Insovent Formula :

i = TFA – TFL

How do I calculate if my company is insolvent?

Calculating your companies solvency is a strightforward math calculation, the challenge for most companies and individuals is typically the time it takes to gather all the information. The better companies (and also those who dont tend to become insolvent) keep regular records and accounts so know from one day to the next whether they are solvent and identifiy and rectify financial challenges as they are or ahead of their occurence by identifying trends, cause and effect.

We will look at the factors that are typically grouped as assets and liabilities to ascertain how each of those totals are calculated.

Solvency and Insovency are calculated using the following formula:

Solvent V’s Insovent Formula :

i = TFA – TFL

What are my Company's Financial Assets

In the context of this calculator, “Assets” are the items, cash, property, stock, plat, machinery, fixtures, fittings and other items which have a financial value. Your company’s financial assets can be simply defined by the following formula:

Company Financial Assets Formula:

TFA = cb + ch + d + f + pm + p + s + vh + z

Company Financial Assets Formula:

TFA = cb + ch + d + f + pm + p + s + vh + z

What are my Company's Financial Liabilities?

In the context of this calculator, “Company Liabilities” are the financial liabilities that the company has in terms of payments due and outstanding debts. In very simple terms, your company liabilities are the amount your company owes. Your company’s financial liabilities can be simply defined by the following formula:

Company Financial Liabilities Formula :

TFL = a + b + c + l + m + o + pa + r + t + v + x

What Happens when a company becomes Insolvent?

An insolvent company will need to discharge all its financial commitments, this may mean that the business owner has to produce a repayment plan to creditors (though this depends on contracts, company legal entity and other factors, insolvency cases are not always like for like). It is important to note that a business owner can have a business go insolvent and continue to trade with another business or set up another business at a later date. Insolvency is not the same as bankruptcy though many confuse the two as the same, they are very different.

Bankruptcy typically has financial and legal ramifications for the owners and/or board and continuing trade as a director/CEO owner is typically prohibited.

Legislation varies between countries but for simplicity, insolvency is a situation from which business recovery and operations are sustainable, bankruptcy on the other hand is legal and structured process from which business operations cannot continue. Bankrupt companies can however be bought out and, with fresh cash injection, continue to trade. This situation however requires clear comprehension of the business failure and will typically occur only if the fault lays with poor financial management, poor efficiency or another factor that can be altered to achieve a profit and return to successful business operations.

Solvent V's Insovent Formula

i = TFA - TFL

Insolvency Calculator

How do you know if your company is at risk of becoming insolvent, or is already insolvent?

Insolvency
Calculator

Solvency Calculations

Find The Right Professional

Close to 700 registered professionals at your fingertips

How do I calculate if my company is insolvent?

What are my Company's Financial Assets

What are my Company's Financial Liabilities?

What Happens when a company becomes Insolvent?

Solvent V's Insovent Formula

i : Insolvency Status: A negative figure indicates that a company is insolvent, a positive number indicates that a company is solvent.

TFA : Total Financial Assets

TFL : Total Financial Liabilities

Company Financial Liabilities Formula

TFL: Total Financial Liabilities

a:Accounting Fees Due

b:Business Rates

c:CT Due (Corporation Tax)

l:Loan(s)

m:Mortgage(s)

o:Overdraft(s)

pa:PAYE Due (Paye As You Earn)

r:Rent Due

t:Trade Creditors

v:VAT Due (Value Added Tax)

x:Any Other Liabilities

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