SOLVENCY ANALYSES

Brownstone Associates' solvency and reasonably equivalent value analyses involve extensive investigation of financial statements and notes, economic and industry research, management interviews, facilities inspections, and utilization of computerized financial models.

We have the comprehensive understanding and provide the due diligence necessary to independently and objectively project cash flows and derive value. Courts require this level of independence and objectivity to test issues relating to fraudulent conveyance.

Our analysts utilize three basic financial tests for solvency opinions. The first test requires valuation analyses consisting of cash flow modeling and market comparable studies to determine if asset values exceed liabilities. The second test includes projections of sales, costs, expenses, capital expenditures, debt terms, and working capital to determine the ability to pay liabilities as they mature. The final test involves in-depth ratio and sensitivity analyses pertaining to short- and long-term capital.

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