of any enterprise is quite multifaceted process, and consists not only of production but also of marketing and financing of the organization, and of the other components.In this context, analysis of the company should also be multi-faceted.Moreover, this also applies to the analysis of the financial situation.Describe all aspects of this type of analysis is very problematic, so a closer look at the study of the liquidity of the enterprise, using a method such as the assessment of balance sheet liquidity.
Category liquidity in general is a general economic and characterizes the ability of a property in the shortest time possible and without losses to acquire cash.Often, this concept applies to bonds, stocks and other things, but it is the assessment of the securities portfolio primarily made in terms of risk and return.
With regard to the concept of enterprise liquidity characterizes its ability to fully and without violating the terms settle their debts.To conclude, if the company meets these criteria, an evaluation of balance sheet liquidity.The simplest and most frequently used method is the compilation of balance of liquidity.The essence of this method is an additional group of assets and liabilities, liquidity and maturity respectively.Then the comparison of a specific group of liabilities with assets, the term transformation in the form of money which is similar maturity obligations.Most analysts use the creation of the four groups on each side of the balance sheet, although nothing prevents you to use a larger number of less aggregated groups.
First, consider the way that groups of assets.The first consists of liquid assets completely.In other words, this includes cash, as well as the property which can also be considered conditional cash - short-term investments.The second group consists of assets that can be quickly converted into cash.These include accounts payable, the repayment of which is expected during the year, as well as other current assets.The property is the third group is converted into cash, or more slowly, or with a greater loss of value.It reserves and investments for the long term.Everything that was not included in the first three groups, forms the fourth.This property becomes the hardest form of money, and therefore, the least liquid.
assessing the liquidity balance would be incomplete if we do not associate with assets of liabilities, so turn to the groups on the second side of the balance sheet.By the liabilities of the first group are the most urgent debts, ie, accounts payable and other liabilities with maturity less than one year.All other short-term debts are added up and the second group.Long-term liabilities are fully applicable to the third group, and the results of the third section of the balance can be shamelessly written as a sum of the fourth group, also called permanent liabilities.
By creating groups you want to compare them with each other by deducting from the assets of the corresponding liabilities.If the difference is positive, then there is a surplus of payments, or else - lack.Absolute liquidity is the presence of an excess of the first three groups, but the lack of the fourth.This is the flaw is very important, as characterized by the presence of the disposal of the company working capital.
If the described condition is not met, it is necessary to take measures to normalize the financial condition in terms of liquidity and solvency.A more complete assessment of the situation is possible, if it is carried out not only the evaluation of balance sheet liquidity, but also the analysis and evaluation of the profitability and financial stability.
