Poor Financial Health Research Articles

Penilaian Tingkat Kesehatan Keuangan Berdasarkan Rasio Likuiditas, Solvabilitas, dan Profitabilitas Pada PT. Wilmar Cahaya Indonesia

The aim of this research is to assess the financial condition of PT. Wilmar Cahaya Indonesia in the 2019-2023 period based on liquidity, solvency and profitability ratios. The methodology used is quantitative descriptive analysis using secondary data from the company's financial reports. The research results show that although the company's liquidity is said to be liquid, a turnover ratio of more than 500% is considered too high. This indicates inadequate capital utilization. The solvency ratio shows a company's healthy financial position, identifying the company as being able to fulfill its long-term obligations. However, the profitability ratio shows poor financial health with the ratio far below standard, tends to decline, and has low ROA and ROE values. The company's inability to use resources efficiently to generate profits is the cause of this decline. Overall, even though PT Wilmar Cahaya Indonesia is liquid and solvable, its financial health for the 2019-2023 period still needs to be improved, especially in terms of profitability. The analysis shows that to increase profitability, companies must improve the effectiveness of current asset management and maximize resource utilization. This study provides an overview of the company's financial situation and can be used as a reference for future management.

Analis Rasio Keuangan Untuk Mengukur Kinerja Keuangan Pada PT. Astra Otoparts, Tbk Periode Tahun 2021-2023

Abstract : This study aims to assess the financial performance of PT Astra Otoparts Tbk from 2021 to 2023 using Liquidity, Solvency, Activity, and Profitability Ratios, based on secondary data from financial reports obtained from the IDX website. This study employs a qualitative descriptive method. The findings indicate that Liquidity Ratios and Solvency Ratios are below industry standards, reflecting an unhealthy financial condition, except for the Debt to Equity Ratio which is healthy. Activity Turnover Ratios in 2023 are also below industry averages, although Days of Receivable, Fixed Asset Turnover, and Working Capital Turnover in 2021-2022 show satisfactory conditions. Profitability Ratios, including Profit Margin on Sales, Net Profit Margin, and Return on Investment, remain below industry averages, indicating poor financial health.

Do we really need financial literacy to access the behavioral dynamics of generation Z? A case of Oman

The ability to manage money has been identified as a vital talent. In this context, financial literacy has a role to play. There are significant gaps, though, such as the financial connection to human behavior. The purpose of this study is to look at the overall effects of financial literacy (FL) on the behavioural aspects of materialism (ML), compulsive buying (CB), and tendency to debt (TD). It attempts to develop and evaluate a model that is based on these variables and to examine the relationships between these research constructs. The study looked at 233 respondents mainly students studying in Omani universities.A comprehensive literature review, confirmatory factorial analysis, Structural Equation Modelling (SEM), and comprehensive analysis were used to develop research hypotheses. The primary findings suggested that financial literacy had the most significant impact on compulsive purchasing behaviour in comparison to materialism and the propensity to accumulate debt, among the direct relationships that were suggested. The study's findings have important implications for the formulation of public policy and other interested parties, as financial literacy is advantageous for individuals with poor financial health and facilitates the participation in other psychological behaviours.

Financial Performance of Kerala State Co-operative Coir Marketing Federation Ltd. No.679

Aim: Established in the year 1979 as the Apex Federation of primary coir co-operatives functioning in the State, COIRFED plays a pivotal role in the coir sector of the country. It enjoys the unique status of dealing only in biodegradable and nature friendly products. With its headquarters located in the coir capital of the country, Alappuzha, COIRFED is one of the premier organizations in the coir Industry. COIRFED runs 11 factories for producing various coir related products. COIRFED runs around 50 signature shops throughout the country. Due to lack of operational efficiency, underutilization of production capacity, and lack of timely access to labour and raw materials, COIRFED and coir cooperatives are currently in a declining stage (Annual Report of COIRFED, 2019-20). COIRFED's overall performance and operation were based on the marketing of COIRFED products. Improvement is made possible by identifying the causes of loss or ineffective performance. Considering this, the study aimed to analyse the financial performance of COIRFED. Methodology: For the secondary data, past 10 years data from 2010-2011 to 2019-2020 was collected from the annual reports, websites and publications of COIRFED. Statistical tools like the Ratio analysis were used for the analysis. The study was conducted during the period August to September 2023. Results: COIRFED has been incurring losses for the past decade, reflecting poor financial performance. Solvency ratios indicate an unstable financial position, posing long-term stability risks. While liquidity and inventory turnover ratios are favorable, the net profit ratio remains consistently negative. Despite sales, COIRFED operates at a loss due to high production costs and debt burdens. As a cooperative, it prioritizes member welfare over profits. The Kerala State Cooperative Coir Marketing Federation struggles with financial challenges despite being the apex coir marketing authority. Conclusion: COIRFED's financial analysis reveals a decade-long streak of operating losses, signaling poor financial health. Solvency ratios highlight an unstable position with negative implications for its future stability. Though liquidity and inventory turnover ratios are positive, the net profit ratio remains persistently negative. Despite sales revenue, COIRFED struggles with overall losses, prioritizing member welfare over profits due to its cooperative ethos. Heavy debts and high production costs compound its financial woes. The Kerala State Cooperative Coir Marketing Federation, the leading authority in coir product marketing, grapples with financial challenges despite its prominent position.

Dimensions of Loan Dependency among Government Employees of the Municipality of Sulop, Davao Del Sur: An Exploratory Factor Analysis

Loan dependency is a symptom of poor financial health that can harm a person’s physical and mental health. This research intends to explore the dimensions of loan dependency among government employees. This study utilized a quantitative, non-experimental research method employing the Exploratory Factor Analysis technique involving 100 government employees from the Municipality of Sulop, Province of Davao del Sur. A researcher-made questionnaire was developed from in-depth interviews with ten government employees with different government positions, including a literature review and related studies have been employed. To validate the questionnaire, researchers used Cronbach’s Alpha. The questionnaire scored .856 on Cronbach’s Alpha Based on Standardized Items, accepting the set questionnaire as reliable. Using the Exploratory Factor Analysis (EFA), 19 item statements passed within the threshold of >0.40. The result shows that- accessibility and affordability, financial needs and responsibilities, specific purchases and investments, and personal goals and aspirations are the dimensions that make government employees dependent on loans.

Effect of Mobile Network Operator Facilitated Digital Credit on the Financial Health of Youth Borrowers in Kibera, Nairobi County, Kenya

Purpose: The increased advancements in technological integration within the financial sector has led to development of new credit platforms which improve access to borrowing among the youth. Further, with proliferation of digital lending platforms which provide unsecured loans has led to a debt chokehold among the youth. This has resulted in poor financial health among the youth. The general objective of the study was to analyze the effect of mobile network operator facilitated digital credit on the financial health of youth borrowers in Kibera, Nairobi County, Kenya.
 Methodology: The study employed a correlational research design. The population of interest for this study was youth borrowers who live and work in Kibera, Nairobi County. The sampling frame for this study was active users of digital credit who are between 18 and 35 years, residing in Kibera. The list was obtained from the Independent Electoral and Boundaries Commission’s (IEBC) voter register for Kibera Ward. A stratified sampling technique was used to select the respondents. The sample size was 399 respondents. Data was collected using structured questionnaires. SPSS was used to aid in the data analysis. A descriptive statistical technique of analysis was used and shall entail the determination of the mean and frequency distribution of the datasets. Further inferential analysis was conducted using both correlation and regression analysis. The data was presented in tables and figures.
 Findings: The study was able to obtain an 88 percent response rate, signifying high degree of accessibility of the youth in the area. Of these, most were male, while only 107 of the responses were from female respondents. The study established that mobile-facilitated digital credit on youth borrower’s financial health has a positive and significant effect on youth’s financial health. The study concludes that mobile network operator facilitated digital credit has a significant and positive effect on the borrower’s financial health. The study concludes that mobile operator facilitated loans are fast and easily accessible which increases their effectiveness to the user.
 Unique Contribution to Theory, Policy and Practice: The study recommends that mobile money operators that provide digital loans reduce their operation rates considering they have high interest rates for the small loans they offer. The study also calls for the development of progressive peer to peer regulations that would improve the penetration of these loan devices that have been identified as key to young entrepreneurs.

Low household income, financial literacy, or financial health: Which is the strongest risk factor and outcome of depressive symptomatology?

BackgroundDepression's relations to psychosocial processes are complex, bidirectional, and include financial functioning. The current study compared the extent to which household income, financial literacy (knowledge and skill), and financial health (saving, spending, borrowing, and planning behavior) were risk factors and outcomes of depression. MethodsA United States national sample of working-aged adults (N = 6565) completed self-report measures of financial functioning and depression in years 2020 and 2022. Depression scales assessed both negative (depressive symptoms) and positive (life satisfaction) affective dimensions. ResultsLower income, less financial literacy, and especially poorer financial health correlated significantly with more depressive symptoms and lower life satisfaction. Poorer financial health demonstrated the strongest prospective relations with increasing depressive symptoms and decreasing life satisfaction over the two-year retest interval. In parallel, higher depressive symptoms and lower life satisfaction each predicted subsequent decreases in financial health. LimitationsResults from this longitudinal, observational study suggested but could not establish causal connections between depression and financial functioning. The study's novel results require replication before clinical application. ConclusionsMore so than low income or limited financial literacy, poor financial health is both a risk factor and potential outcome of depression, including more depressive symptoms and lower life satisfaction. If these findings are replicated, financial health may be an important research and clinical target for depression assessment, prevention, and treatment.

Money troubles and problems ahead? The financial health of professional women's football clubs in England

PurposeDespite multiple structural changes since its 2011 inception, many English Women's Super League (WSL) clubs have recorded losses and carried debt, leading to concerns about the financial health of the league. This study is the first to analyse the financial health of any professional women's sports league in the world. The authors examine WSL club finances between 2011 and 2019, theoretically situate the findings within joint production, and make policy recommendations.Design/methodology/approach In total, 73 annual accounts of 14 WSL clubs between 2011 and 2019 were scrutinised.FindingsSince 2011, club revenue has increased 590% but is outstripped by club debt increase (1,351%). The authors find poor financial health throughout the league, which may damage both its and the clubs' future growth. Findings also indicate an emergent group of dominant clubs on and off the pitch, which may threaten long-term sporting integrity and disrupt the joint production of the WSL product.Practical implicationsWomen's football exists at an important crossroad, and its next moves need careful consideration in relation to its governance structures and league design.Originality/valueThe authors provide a road map for necessary action (e.g. revenue distribution, licensing criteria, rewards) to protect the financial health of the WSL's clubs and promote sporting competition to assist the sport to capitalise further on positive gains in recent years.

Effect of Digital Credit on the Financial Health of Youth Borrowers in Kibera, Nairobi County

The increased advancements in technological integration within the financial sector has led to development of new credit platforms which improve access to borrowing among the youth. Further, with proliferation of digital lending platforms which provide unsecured loans has led to a debt chokehold among the youth. This has resulted in poor financial health among the youth. Hence it’s vital to understand how various digital credit platforms have contributed to financial health of borrowers and help in advancing policy and practical solutions. The general objective of the study was to analyze the effect of digital credit on the financial health of youth borrowers in Kibera, Nairobi County. The study specifically analysed the effects of mobile network operator facilitated digital credit, commercial bank-based digital credit and fintech based digital credit on the financial health of youth borrowers in Kibera, Nairobi County. The study employed a correlational research design. The population of interest was youth borrowers who live and work in Kibera, Nairobi County. The sampling frame was active users of digital credit who are between 18 and 35 years, residing in Kibera. The list was obtained from the Independent Electoral and Boundaries Commission’s voter register for Kibera Ward. A stratified sampling technique was used to select the respondents. The sample size was 399 respondents. Data was collected using structured questionnaires. SPSS was used to aid in the data analysis. A descriptive statistical technique of analysis was used and entailed the determination of the mean and frequency distribution of the datasets. Further inferential analysis was conducted using both correlation and regression analysis. The data was presented in tables and figures. The study results shows that mobile network operator facilitated digital credit, Bank-facilitated digital credit and fintech facilitated digital credit has a positive and significant effect on youth’s financial health in Kibera Ward. The study recommends that mobile money operators that provide digital loans reduce their operation rates considering they have high interest rates for the small loans they offer. The study also calls for the development of progressive peer to peer regulations that would improve the penetration of these loan devices. The study recommends improved client assessment to increase borrower’s ability to access funds without long-term history. The study recommends that the firms make attempts to guarantee interoperability between devices as this would significantly improve access for borrowers with older phones.

Update on the Financial Well-Being of Surgical Residents in New England.

Poor personal financial health has been linked to key components of health including burnout, substance abuse, and worsening personal relationships. Understanding the state of resident financial health is key to improving their overall well-being. A secondary analysis of a survey of New England general surgery residents was performed to understand their financial well-being. Questions from the National Financial Capability Study were used to compare to an age-matched and regionally matched cohort. Overall, 44% (250 of 570) of surveyed residents responded. Residents more frequently reported spending less than their income each year compared to the control cohort (54% vs 34%, p < 0.01). However, 17% (39 of 234) of residents reported spending more than their income each year. A total of 65% of residents (152 of 234), found it "not at all difficult" to pay monthly bills vs 17% (76 of 445) of the control cohort (p < 0.01). However, 32% (75 of 234) of residents reported it was "somewhat" or "very" difficult to pay monthly bills. Residents more frequently reported they "certainly" or "probably" could "come up with" $2,000 in a month compared to the control cohort (85% vs 62% p < 0.01), but 16% (37 of 234) of residents reported they could not. In this survey, 21% (50 of 234) of residents reported having a personal life insurance policy, 25% (59 of 234) had disability insurance, 6% (15 of 234) had a will, and 27% (63 of 234) had >$300,000 worth of student loans. Surgical residents have better financial well-being than an age-matched and regionally matched cohort, but there is still a large proportion who suffer from financial difficulties.

Federated networks in England and Australia cricket: a model of economic dependency and financial insecurity

PurposeThe purpose of this study is to critically examine the financial health and performance of the English and Australian cricket networks. This includes the county cricket clubs (CCC) and state and territory cricket associations (STCA) affiliated to the England and Wales Cricket Board (ECB) and Cricket Australia (CA) respectively, as well as the ECB and CA themselves. The authors apply resource dependency theory to understand if there are any financial dependencies within the networks of cricket in England and Australia.Design/methodology/approachThe data for this research was obtained from the financial statements of the ECB, the 18 affiliated CCCs, CA and the six affiliated STCAs. This sample covers the last 5 years of financial information (2014–2019) for all the organisations at the time of writing. Ratio analysis was conducted on all organisations within the sample to assess financial health and performance.FindingsBoth CCCs and STCAs show signs of poor financial health. There is a clear dependence on the financial support they receive from the ECB and CA respectively and this dependence appears more prominent in Australia. The ECB and CA have better financial health which ultimately allows them to financially support the CCCs and STCAs.Originality/valueThe ECB and CA are facing difficult financial decisions to remain financially secure themselves due to the impact of COVID-19 but also to support their affiliated clubs. The affiliated clubs do not generate sufficient revenues and must diversity their revenue streams if they are to become financially self-sustaining. This financial structure and distribution mechanism will be vital in safeguarding the future of some of England’s and Australia’s most important cricket organisations.

Association of measured quality with financial health among U.S. hospitals.

High-quality care is a clear objective for hospital leaders, but hospitals must balance investing in quality with financial stability. Poor hospital financial health can precipitate closure, limiting patients' access to care. Whether hospital quality is associated with financial health remains poorly understood. The objective of this study was to compare financial performance at high-quality and low-quality hospitals. We performed a retrospective observational cohort study of U.S. hospitals using the American Hospital Association and Hospital Compare datasets for years 2013 to 2018. We used multilevel mixed-effects linear and logistic regression models with fixed year effects and random intercepts for hospitals to identify associations between hospitals' measured quality outcomes-30-day hospital-wide readmission rate and the patient safety indicator-90 (PSI-90)-and their financial margins and risk of financial distress in the same year and the subsequent year. Our sample included 20,919 observations from 4,331 unique hospitals. In 2018, the median 30-day readmission rate was 15.2 (interquartile range [IQR] 14.8-15.6), the median PSI-90 score was 0.96 (IQR 0.89-1.07), the median operating margin was -1.8 (IQR -9.7-5.9), and 750 (22.7%) hospitals experienced financial distress. Hospitals in the best quintile of readmission rates experienced higher operating margins (+0.95%, 95% CI [0.51-1.39], p < .001) and lower odds of distress (odds ratio [OR] 0.56, 95% CI [0.45-0.70], p < .001) in the same year as compared to hospitals in the worst quintile. Hospitals in the best quintile of PSI-90 had higher operating margins (+0.62%, 95% CI [0.17-1.08], p = .007) and lower odds of financial distress (OR 0.70, 95% CI [0.55-0.89], p = .003) as compared to hospitals in the worst quintile. The results were qualitatively similar for the same-year and lag-year analyses. Hospitals that deliver high-quality outcomes may experience superior financial performance compared to hospitals with poor-quality outcomes.

A STUDY ON FINANCIAL HEALTH OF SELECTED PUBLIC SECTOR MANUFACTURING COMPANIES OF INDIA : WITH REFERENCE TO Z-SCORE ANALYSIS

Financial distressed from a decade has become a common condition for manufacturing companies of India. Many public sector manufacturing companies have also witnessing poor financial health. This study has examined the financial health of eighteen selected public sector manufacturing companies which are further divided into four sectors as Metal, Sugar, Paper and Textile. The examination of financial health of selected companies has been performed by calculating Altman Z-score model for four year prior to become distressed. And it has been found by the analysis that most of the company was in either distressed zone or in grey zone. The study also finds that Altman Z-Score Model is a perfect tool to examine the health of public sector manufacturing companies.

COVID-19, liquidity and financial health: empirical evidence from South Asian economy

PurposeThe pandemic COVID-19 has affected every sector of an economy in every possible way. Banking sector of Bangladesh has been affected by it badly. The purpose of this paper is to find out the impact of COVID-19 on the liquidity and financial health of the listed banks in Bangladesh.Design/methodology/approachLiquidity ratios are calculated to measure the liquidity condition of the banks and revised Altman's Z-Score Model for non-manufacturing companies is used to measure the financial health. The ratios are compared before and during the COVID-19 periods to assess the impact.FindingsThe findings of this study indicate a deterioration of liquidity position and financial health of the listed banks after the emergence of this pandemic. Though the banks have poor liquidity ratios and financial health prior to the emergence of this pandemic, they have decreased more in the second quarter of 2020. Most of the banks have poor liquidity ratios and cash position. The listed Islamic Banks have poor financial health than the listed Commercial Banks and all the banks belong to the red zone in all the quarters.Practical implicationsThe results of this study will have policy implications for companies and regulators of money market.Originality/valueThis paper is a pioneer initiative in assessing the impact of COVID-19 pandemic on liquidity and financial health based on empirical data.

Migrating to reverse Auction mechanisms in wind energy sector: Status and challenges

India, with a total installed wind power capacity of 39.25 GW, is fourth largest wind producer in the world. The government aims to achieve 60 GW capacity of wind energy by 2022. Accelerated Depreciation (AD) and Generation Based Incentives (GBI) as policy mechanisms supported the initial growth, but the sudden transition to reverse auction mechanism in 2016 brought a big disruption in the market and the regime is yet to be stabilized. Till now 9 tranches of auctions have been conducted by Solar Energy Corporation of India (SECI) and 06 by various states. However, most of the projects allocated through auctions are behind the schedule and many tenders have gone undersubscribed. At present limited literature is available on the status and challenges arisen due to wind energy reverse auctions in India and this paper through systematic literature review does a comprehensive study on the same . Land availability, transmission and evacuation infrastructure bottlenecks, tariff revisions and renegotiation of PPAs by states, poor financial health of state discoms, financing problems, curtailment risk and tariff caps are identified as major challenges faced by wind power developers (WPDs) and these are required to be addressed by the government on priority.

The Effect Of Financial Health Levels To The Indication Of Financial Statement Fraud In Transportation Sector

Because of app-based transportation, traditional transportation companies are being abandoned because in terms of practicality, they are less accessible to various groups of people. Therefore, traditional transportation companies compete difficultly and have financial pressure. One example of financial pressure is poor financial health. Based on the Fraud Triangle theory, it is said that if a company is under pressure, the possibility of committing fraud will increase. This study is conducted to find empirical evidence whether the level of financial health could affect the possibility of financial statement fraud. This study is expected to provide knowledge to investors and potential investors how to use the Altman's Z-Score analysis method as a measuring tool for financial health level and the Beneish M-Score as a financial statement fraud red flag measurement tool, in order to avoid fraud in the future. The research method used is the method of causality. The data collected is secondary quantitative data in the form of financial statements of companies in the land public transportation industry for the period of year 2015 until 2019. Descriptive and verificative analysis will be done on these data. After conducting the analysis, it can be concluded that the level of financial health has a significant effect on financial statement fraud indications. But there are many other factors that can explain changes in the likelihood of a company committing financial statement fraud such as opportunity, rationalization and various other types of pressure.

The Solution to Safety Crisis in Railways after Privatisation

Privatisation of infrastructure is expected to improve the effectiveness of operation, whereas it is possible to cause excessive rationalization. Especially in the field of railways, excessive rationalization causes fewer investments in the maintenance of assets and undermines safety. Railways play a critical role to develop the economy in a sustainable way and have a significant impact in the region, but their safety must be prioritised. In fact, the UK government privatised British Rail and founded Railtrack, which was specialised in the railway track maintenance, but the Hatfield accident raised awareness for safety and led to the renationalising Railtrack into Network Rail. Likewise, in Japan, National Railways was privatised and divided into separate companies (JR), but among them JR Hokkaido has been causing a large number of accidents and troubles. Based on the review of the process and outcomes of the privatisation of railways in the UK and Japan, this paper discusses the way to improve their safety sustainably. In conclusion, it validates the intervention of governments in railway companies suffering from poor financial health.&#x0D; Keywords: Privatisation, Railways, Safety, British Rail, Railtrack, Network Rail, Governmental intervention

Over Worked and Under Paid: How Resident Finances Impact Perceived Stress, Career Choices, and Family Life

BackgroundThe magnitude of student debt plaguing our nation is a major topic in political and academic spheres with median medical student debt of $200,000. This is compounded by poor financial health during training. This study evaluates how debt and financial wellness influence resident perceived stress, mental health, career plans, and relationships. MethodsGeneral surgery trainees at an academic institution were surveyed regarding financial parameters, perceived stress, and the impact of finances on their career and family life. A validated stress assessment instrument, the Perceived Stress Scale, was used to evaluate trainee stress. The median perceived stress score was compared for groups using a Wilcoxon rank-sum test. ResultsFifty-eight (61% response rate) residents responded to the survey. The median (range) student loan debt was $200,000-500,000 ($0-750,000) and savings was $5000-10,000 ($0-20,000+). 18 (31%) trainees had monthly credit card debt. Half of the respondents did not have enough liquid assets for an emergency fund, defined as 3 mo of living expenses. The median perceived stress score was 16 (1-30) or moderate stress. Perceived stress score was significantly associated with the trainee’s response to how finances impacted their future career choice, practice style, and relationships (P < 0.005 for all). However, the perceived stress score was not associated with objective measures of financial wellness, such as the overall level of medical school debt, savings, or having an emergency fund. DiscussionThe trainee’s subjective perception of financial wellness, rather than objective financial parameters was associated with higher levels of perceived stress, the strain on relationships, and a greater impact on future practice styles. The majority of surgery residents did not have enough liquid assets for an emergency fund, independent of the level of debt, which emphasizes how financially leveraged residents are during training. Although burnout during surgical training is multifactorial, formal financial education incorporated into graduate medical education programs could increase financial literacy, help to mitigate financial risk, and ultimately decrease some of the perceived stress residents possess.

Paradox between perspectives of reverse auction process for allotment of solar PV projects in India

Since 2009, the central government and many state governments of India have introduced policies to promote solar PV technologies. The key feature of these policies is allotment through reverse auction process. Although, it has been claimed that through this process, the tariff of power from solar PV has been brought down significantly, question regarding the viability of solar PV project at such low tariff is also being raised. In this paper, paradox between favoured perspective and counter perspective of reverse auction process is elaborated. The favoured perspective is analysed with defending arguments such as poor financial health of utilities companies in India and danger of them becoming non-performing assets (NPA), low affordability of electricity by average customer and possibility of bringing better cost efficiency. The counter perspective is analysed with its effect on macro-economic condition of country, monetary policy, and trade balance and energy security.

Analyzing Financial Health of the SMES Listed in the AERO Market of Bucharest Stock Exchange Using Principal Component Analysis

In this paper we aimed to build a composite financial index for measuring the financial health of the companies listed in the AERO (Alternative exchange in Romania) market of the Bucharest Stock Exchange. We used a principal component analysis in order to build this composite financial index using the rates of return, liquidity and the management of 25 companies listed in the AERO market for the period 2011–2018. We conceived this composite indicator as a score function that established according to the numerical values that result from its application when a company was financially healthy, when it had a poor financial health and when it was financially stable. In order to test the financial health of the selected SMEs (small and medium enterprises), we used the one sample t-test under the model of the study and the three classifications of Z (Z &lt; 0—companies with poor financial health, 0 ≤ Z ≤ 0.5—companies with good financial health and Z &gt; 0.5—companies with very good financial health). In this study we also aimed to identify the possible correlations between the solvency rate and the financial health index and between solvency rate and the evolution of some economic and financial measures of the companies’ activities. The results of the regression analysis using panel data showed a positive and statistically significant relation between solvency and the three rates (rates of return, of liquidity and of management, respectively) determined using the analysis of the principal components. The former model of the solvency rate identified correctly 94.9% of the SMEs with poor financial health, 40% of the SMEs with stable financial health and 72.2% of the SMEs with good financial health.