An organization’s records (e.g., invoices) are processed into reports, some of which are general-purpose (i.e., available to the public) and financial (e.g., statement of activities | income statement). This processing is manual (e.g., data are inputted by clerks) and automated (e.g., data are posted from journal to ledger). The outputs are subjected to managerial inspection and oversight (e.g., end-of-period adjusting journal entries). Putting aside the validity of the information (e.g., is the investment X really worth $Y?), the analyst’s task may be broadly classified into two overarching concerns:

1. Liquidity of financial condition – will the organization meet its financial obligations with its rights to assets in the short-term (e.g., one-year horizon)? This demands an analysis of the organization’s (net) current financial resources (e.g., accounts receivable). Specialists such as attorneys are helpful in determining the nature of the obligations and rights.
2. Solvency of financial condition – will the organization financially thrive over the long-term (e.g., greater than one-year horizon)? This demands an analysis of the organization’s (net) economic resources (e.g., current financial resources + long-lived assets). Specialists such as credit rating agencies are helpful in developing prognoses of macroeconomic and industry trends.

Theoretically, an organization with a readily accessible, unlimited line of credit (LOC) from a reliable lender (e.g., the Federal Reserve Bank of New York FRBNY) may survive in perpetuity as an organization’s debts otherwise unmanageable are rolled over (i.e., refinanced) and deferred into the continually extended future. For example, if the Madoff organization were to have had such an LOC with the FRBNY, the public, including investors, could still be celebrating his genius. However, there are significant issues that are generally off-balance sheet (e.g., availability of physical resources such as readily convertible sources of energy, potable water, willingness | flexibility of potential workforce) that pose an existential threat to most organizations. Specialists such as intelligence agencies | risk managers are helpful in assessing these hazards.