ABSTRACT
Assessing the financial performance of state enterprises is made difficult by the understatement of liabilities due to low depreciation rates for equipment and plant together with valuing inventories at full price regardless of their real value or lack of it. Even without adjusting for this, Lardy (1998) places the average liability to asset ratio of state enterprises at 85 per cent, against an average of 50 per cent in advanced market economies. The figures suggest that a significant number of state enterprises are insolvent. Furthermore, many state enterprises show a continual rise in the ratio of liabilities to assets, suggesting that many
Our discussions about accounting practices with managers in the state sector produced the following comments.
