Individual Debt Ratio as a Way of Assesing the Financial Conditions of Local Government Units
Ładowanie...
Data
2021
Inny tytuł
Typ
Artykuł recenzyjny
Redaktor
dc.contributor.advisor
Dyscyplina PBN
Ekonomia i finanse
Czasopismo lub seria
EUROPEAN RESEARCH STUDIES JOURNAL
ISSN
1108-2976
ISBN
DOI
10.35808/ersj/2189
Strona internetowa
Wydawca
Wydawca
Wydanie
Numer
Strony od-do
Tytuł monografii
item.page.defence
Tytuł tomu
Opis
Rodzaj licencji
Abstrakt (en)
Purpose: The aim of the study is to analyze existing methodological approaches and
developments used to assess the financial condition.
Design/Methodology/Approach: The methodology was based on the methods of analysis
and logical construction, the basics of descriptive statistics (to determine the phenomenon of
debt), as well as the basic approach typical of the heuristic method.
Findings: Despite the development of methods of assessing the financial condition, practice
very often confirms that the primary direction of assessing the financial condition is the
ability to absorb debt. This approach forces a search for an answer to the question, can the
individual debt ratio (IWZ) be a measure that answers the question about the financial
condition of local government units?
Practical Implications: The IDR applied in Poland seems to be an effective instrument for
controlling the debt of local government units. The structure of this indicator allows, on the
one hand, systemic control of the debt of the entire public finance sector, and, on the other
hand, it is flexibly adapted to the specificity and level of affluence of a given entity.
Therefore, it is worth promoting such solutions in individual European Union countries as
an effective tool for limiting LGU's uncontrolled debt.
Originality/Value: Results of the study reflect that IDR concerns the possibility of debt
service, but it cannot be a measure of financial condition, because in local government units
there are liabilities not only classified as debt obligations. The omission of these obligations
and their impact on the financial condition makes the information value of IDR imperfect
and incomplete. It is difficult to indicate the optimal solution that would fully reflect the
current financial condition. It is possible as well as from the point of view of additional
workloads, difficult to implement in practice.