Solvency analysis of Spanish start-up companies

Abstract

Many companies have financial problems at the beginning, as their sales and profit figures are often low, but they become successful. For this reason, some investors do not always pay enough attention to accounting information until the company is mature. Financial statements reflect the performance of a company and reveal the changes that occur in the company over time. The financial statements of mature, large, and non-innovative companies show minor changes compared to those of new, small, and innovative companies. In this sense, the general objective of this paper is to analyse the solvency of Spanish start-ups. Scientific research related to research was chosen. Likewise, the methodology of this study is qualitative in the sense that it involves the use of scientific information addressed by different authors on the solvency and valuation of start-ups in Spain. This documentary research work challenges a pillar of conventional wisdom. It touches on issues that need to be further investigated within the SME literature. It can be concluded that automatic and generalised downsizing is not the best way to achieve business recovery and should not be implemented as a reflex response to insolvency. It can be observed in this study that inventory and employee downsizing are significantly associated with liquidation. Furthermore, neither intangible assets nor the reduction of tangible assets is associated with survival. Only debt reduction is associated with survival.