A Model to Manage Debt through Equivalent Equations

Companies often face conditions of illiquidity, which leads them to positions of default withcreditors and suppliers. This leads to the need for debtors to restructure the debt with its creditors. This article presents a proposal for debt restructuring in a hypothetical scenario by applying equivalent equations. The results show that, under the new payment scheme, the creditor will receive an added profit, and the debtor will get more time to pay, allowing him for better cash flow and working capital management, and for generating best indicators of solvency and liquidity.