In the economic literature there are many different terms, at first obscure the simple reader who decided to devote himself to the study of issues of business and finance.When I first read the same MakKonnellovsky "Economics", do you think that volatility, branding and liquidity - are all terms used only some special caste dedicated and understand their mere mortals did not come.In this article, we will refute this opinion and in detail tell about liquidity.
This term is increasingly found not only in specialized books and articles, but also in media communications.That's because it represents one of the most important characteristics of the enterprise and the individual assets.Liquidity - the ability of something quickly be turned into money, in other words - profitable implemented.If an asset can be converted into cash quickly, it is called liquid - if not illiquid.
easy to guess that the asset with the highest liquidity - this is money on hand or on account of the company.A bit harder to quickly sell different kinds of deposit certificates, checks, promissory notes, shares and other securities.Even more difficult it is to get the receivables, which is also a part of the assets.Next in order of decreasing liquidity of finished products are placed in storage, raw material inventory and fixed assets of the company.
As you can see, the company's assets can be ranked in terms of the ability to make quick cash.However, liquidity can cover not only a single type of asset.If the economic analysis is seen as the liquidity of the company - is its ability at a time to cover their obligations from existing assets.As we have seen, the assets have different liquidity, and on this basis they are divided into four groups - those that are easiest to implement, to the fact that it is practically impossible to sell.Likewise rank and liabilities - from short-term to long-term.Next, look at the ratio of each group and liabilities, and, depending on the liquidity of the company that is classified as an absolute, total, partial and zero.
One of the indicators taken into consideration during the analysis, is the current liquidity - the so-called "coverage ratio", which shows the ratio of the most liquid assets to the most urgent to settle the obligation.This indicator gives analysts an idea of whether the company is able to cope with the current situation, or is already planned crisis.If the coverage ratio is greater than one, then there is no reason to worry, but it is believed that its optimal value should be between 1.3-1.5 - it gives us a "safety margin" in the event of unforeseen circumstances.If the coverage ratio is less than one, it means that the company can not pay its counterparty, ie there is a crisis of liquidity, which in the absence of urgent action to resolve may cause bankruptcy.
As we can see, liquidity - is one of the most important indicators of any company.Continuous monitoring of liquidity, regular monitoring of the dynamics of the coverage ratio allows time to make decisions on the regulation of the current situation in the company.In an audit, this indicator is also of great value, and if the inspection reveals problems with liquidity of its duty to warn the company management of emerging issues.Timely information will give an impetus to advance the adoption of measures to resolve the crisis, which will help provide a transition from decline to prosperity.