Liquidity Ratio and Business Capitalization

A member of the Academy of Preferred Financial Advisors, Cubby Bice is an experienced wealth management executive who has served as president of Bice Wealth Management in Mooresville, North Carolina, since 2004. Cubby Bice provides families and business owners with personalized financial planning solutions.

Liquidity planning is an important aspect of financial planning for businesses, since it centers on ensuring that an organization remains solvent over the duration of the plan. Liquidity planning can also serve as an effective element of attracting investors to a business.

A solvent business is a company that has the capacity to settle all its debts. Liquidity ratios can help determine whether a business is solvent and its level of solvency. For example, the current liquidity ratio divides a company’s current liquid assets by its current liabilities. If the current liquidity ratio is one, a business has the same amount of assets that can be used to settle its debts as it has debts. A current ratio of less than one means a business’ liabilities could outstrip its resources and the business could end up insolvent. Current ratio above one means a business could settle its debts and still have resources remaining.

Investors and creditors often prefer to invest in businesses with current liability ratios above one to minimize the risk of losing money to bankruptcy (a liquidity crisis). A business with a current liquidity ratio above two has more than twice the monetary value of its debt in liquid assets and has a low chance of going bankrupt. Because of this prospect, the business can easily obtain capital from other entities to finance projects.

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Essential Components of a Well-Rounded Estate Plan

 

Based in Mooresville, North Carolina, Cubby Bice delivers coordinated financial planning solutions. One of the client-driven areas of focus for Cubby Bice and his team is estate planning.

Involving the disposition of assets following one’s death, estate planning helps ensure that intended beneficiaries receive the maximum inheritance possible. This begins with a will in place that stipulates who will act as a personal representative overseeing the distribution of assets and the payment of outstanding debt. The will also provide the personal representative with instructions on accomplishing a task that would otherwise fall to the state.

Another estate planning must is a trust, which provides tax advantages by separating assets from the person who creates the trust and those who ultimately receive assets from it. Living trusts further name a designated person to oversee one’s assets if incapacitation occurs. A related option is giving someone power of attorney, which allows them to make financial decisions on your behalf, or those of loved ones if certain situations occur.

How Probate Court Resolves Financial Issues after a Death

Based in Mooresville, North Carolina, Cubby Bice drives financial planning solutions across a wide range of asset classes. Assisting clients with estate planning, Cubby Bice knows complex processes such as probate.

Probate is a process that addresses the unresolved financial and legal affairs after a death. As probate proceeds, the property is identified, cataloged, and ultimately appraised. If taxes or debt are outstanding, they are paid with a portion of the proceeds. Considering the variables of assets and legal obligations, probate can be complex and time-consuming, particularly when someone passes without leaving a valid will.

The probate court must ensure that the assets of the deceased are distributed according to state law. When a valid will does exist, the probate court oversees asset distribution per the deceased’s wishes.

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