The main economic activity of an enterprise is to raise the necessary funds from the capital market, then purchase the operational assets, and organize the production and operation activities by using these assets and the remaining funds. As an important part of the basic activities of enterprises, financing activities play an important role in the whole operation process of enterprises. Debt financing is one of the basic ways of financing activities. Therefore, whether debt financing and the proportion of debt financing have attracted the attention of enterprises. In order to expand the scale of production, improve the products and make the enterprise get better development, the enterprise must have enough funds. In order to raise sufficient funds, many enterprises inevitably choose debt financing. If the proportion of debt financing is kept within a reasonable range, it can bring financial leverage benefits to enterprises and maximize shareholders' equity. However, if the proportion of corporate debt financing will bring certain financial risks to the enterprise, which will lead to the financial crisis of the enterprise, and then the company will face the risk of bankruptcy. The financial status of an enterprise is closely related to its solvency. An enterprise should always pay attention to its solvency, so as to obtain a high-quality financial management result and guarantee the development of the enterprise. The purpose of this paper is to analyze the change of solvency of Luliang Yinhe Paper Co., Ltd. in 2016-2018. Through the calculation and analysis of the internal factors that cause the changes, the paper provides suggestions for the future decision-making of the enterprise, in order to seek the stable and efficient development of the enterprise. Furthermore, it shows that the analysis of solvency should be an important part of enterprise decision-making.
Key words: solvency; index analysis; financial risk
