How to work out company solvency

83dons

We are looking at two possible companies to provide a service and I notice I can see their accounts online at companies house. Figures seem fairly similar but is there some general rules on how to compare them both to try and find out which company is in generally the best financial position currently?

Pennywise

Not really, the filed publicly available accounts are now very short-form and often just a balance sheet - it's only the larger companies that have to provide Profit and loss accounts and more detailed notes.

Obviously a company with a bigger figure as the balance sheet total is "on paper" worth more than one with a tiny or negative figure, but that takes no account of the actual business value nor how much it actually makes per year etc., so pretty useless really.

The current asset figure being a lot more than the current liability figure is about the best indicator you'll get of it's shorter term liquidity etc.