Absolutely liquid means of payment are. Liquidity - what it is in simple words. What is project liquidity

Hello, dear readers! Ruslan Miftakhov is glad to welcome you again! Many of us have heard about liquidity, and general outline imagine what it is. But few people know what exactly this concept means.

Liquidity is in simple words degree of stability of the enterprise.

We will consider its essence, significance, coefficients and varieties today.

Liquidity is the ability to effectively and quickly exchange property for cash and receive it in hand.

Assets and financial instruments include everything that has market value– bank deposits, securities, real estate, commercial products, and the enterprises themselves.

Liquidity, based on the speed of “exchange” for money, is divided into 3 main types: high, medium and low.

For example, securities (they can be sold in a couple of seconds on a specialized market), bank deposits have high liquidity, but real estate, business, goods in the production process have low liquidity.

However, this indicator may be different for one financial instrument. An example of such an instrument is shares.

If securities are classified as (shares of Gazprom, VTB, and large corporations), then the demand for them is constantly increasing, they can be sold at a favorable price - this is highly liquid assets.

Second-tier shares sell a little longer and are in less demand - these are shares with average turnover.

TO low liquidity include so-called “junk” shares, which can be sold only after the price has dropped by 20-30%, so their acquisition is associated with great risk.

The general condition of the enterprise and its solvency are closely related to the liquidity of the balance sheet.

Balance sheet liquidity is the company’s ability to timely repay debt on accounts owned by the property. It shows how well the company’s property is managed.

The company's property consists of assets and liabilities.

Depending on the possibility of sale, assets are divided into:

highly liquid (finance and short-term investments);
quickly sold (short-term debt);
negotiable (slowly sold);
non-current (poorly realizable, long-term obligations).

The company's liabilities are grouped according to maturity into urgent (expired liabilities), current (goods payables), long-term liabilities and equity.

Main odds

Now let’s look at how an organization’s liquidity and solvency is analyzed. For this purpose, the following liquidity ratios are used:

The current (coverage ratio) determines the overall assessment of the company's liquidity, and is determined by the ratio of all current (current) assets to the organization's short-term liabilities.
Fast (intermediate) - characterizes the payment potential of the company. To determine immediate liquidity, highly liquid and marketable assets are summed up and divided into short-term debts. The bank pays attention to its value when lending to an organization.
Absolute – the ratio of quickly realizable assets to short-term liabilities is determined. The resulting indicator characterizes the reliability of the borrower, as well as cooperation with the organization, and its ability to quickly pay off debts.

The acceptable value of indicators depends on various factors (the scope of the company’s activities, lending rules, cash turnover, reputation and image of the organization).

However, according to practice, indicative standard values coefficients: current liquidity – equal to 2, quick – 1, absolute – from 0.05 to 0.1.

Why is good performance so important?

IN modern world many companies require loans as well as investor funds.

Before issuing a loan, banking institutions assess the condition of the company, its solvency (they are mainly interested in a large percentage of ownership own funds compared to borrowed ones).

If these indicators are satisfactory and meet the standards, the company receives a loan that can be spent on development and activities. And this is very important for an organization to have additional funds.

As for investors, they are interested in making a profit on their investments, and in case of unforeseen circumstances, they prefer to be able to quickly sell their existing assets. Therefore, they choose financial instruments that are highly liquid.

If we talk about real estate, investors will be more interested in low-cost properties, since expensive housing is harder to sell.

To reinforce the concept of liquidity, let's watch the video. By the way, this video contains a hint for the fifth crossword puzzle, watch it carefully.

So we have come to the end of the article, quite interesting and easy to understand, right? If you liked it, don’t forget to rate it, this is very important to us!

I would like to wish you success! And see you again!

Ruslan Miftakhov was with you.

Liquidity is the ability to “get rid of” a certain product as quickly as possible by exchanging it for a cash equivalent. If a product is in demand on the market and sells well, this indicates its high liquidity. Depending on the speed of sale of a product, its liquidity will be determined as high, medium or low.

It seems that all the basic definitions and concepts are given in simple language - this is approximately how Wikipedia describes the concept of “liquidity”. Next, we will consider separately the liquidity of shares, enterprises and real estate, as well as the factors that influence and shape liquidity. We will separately consider liquidity ratios and methods for assessing the solvency of a business.

Highly liquid and low liquid: what is the difference

All goods can be considered highly liquid or low liquid, depending on the speed of their sale. Therefore, from the point of view of receiving money as quickly as possible, securities and bank deposits are highly liquid goods, because sometimes a couple of minutes are enough to convert them into banknotes. Real estate will be “illiquid” in comparison, and the more expensive it is and the more difficult it is to sell, the less liquid it will be considered a product.

Liquid currencies are the most popular banknotes used throughout the world or in a certain large region to carry out purchase and sale transactions. The liquidity of a currency is affected by the economy of the countries in which this currency is listed as the main or reserve currency. The most liquid currencies in the world:

U.S.
Euro.
British pound.
Japanese yen.
Swiss frank.
Australian dollar.
Canadian dollar.

The ruble is currently an illiquid currency.

Liquidity of securities: what makes blue chips special

Securities are bills of exchange, shares, bonds and other monetary documents that certify certain property rights of their owner (for example, the right to pay dividends - part of the company's profit). Being a highly liquid commodity, securities in their group are also divided into “liquid” and “illiquid”. Unliquid goods They are rarely in short supply - there is little demand for them, and few people buy them.

Securities in their own hierarchy are divided into "blue chips", second-tier securities, third-tier securities and so on. In simple terms, the further echelon the securities belong to, the lower their liquidity. Such securities are difficult to sell at a good price - as a rule, you can lose about a quarter of their original value by selling them.

“Blue chips” is a concept that came from American casinos. There, blue chips have the highest monetary denomination. Today this is the name given to the most liquid stocks - shares large companies, located in the top thirty largest companies in their country or in the world (depending on which market we are assessing).

In our country, “blue chips” mainly include shares of banks and gas and oil production and processing companies: Rosneft, Gazprom, LUKOIL, Sberbank. In America, blue chips are concentrated in the IT sector - these include securities of Google, Microsoft, Facebook and a number of other corporations.

Business liquidity: what it depends on

The liquidity of an enterprise is a very important indicator of its solvency and general condition. IN economic analysis The success of the company is not least played by the liquidity of the balance sheet - the company’s ability to timely distribute cash flows to pay off debts. Simply put, the larger the company’s “golden parachute” of free funds, which it can redistribute to eliminate problems, the higher the liquidity of such a company’s balance sheet. Investors will invest money in such a company.

The property of an enterprise is divided into assets and liabilities.

Assets can be:

highly liquid (investments and finance).
quickly sold (short-term debts).
negotiable (sold slowly).
non-negotiable (sold very slowly).

Liabilities can be:

urgent.
current.
long-term.
the company's own capital.

Business liquidity analysis in general terms

To analyze the liquidity of an enterprise, the so-called liquidity ratios are used:

current ratio.
quick ratio.
coefficient absolute liquidity.

The current ratio (also known as the coverage ratio) determines the ratio financial assets the company and its short-term liabilities. It is believed that ideally this coefficient should be equal to 2.

The quick liquidity ratio is calculated as the sum of all highly liquid assets divided by the company's short-term debts. Quick liquidity is an indicator of solvency. Ideally, its indicator should be equal to 1.

The absolute liquidity ratio varies from 0.05 to 0.1 and shows the reliability of the borrower.

Real estate liquidity: how is it determined?

Real estate itself has low liquidity. However, if we consider, for example, an elite luxury home and a new building in the budget segment on the outskirts of a large city, the new building will have much greater liquidity, since many more people can buy apartments in it, and it will be easier to sell them.

In the sale of real estate, the same rules apply to determine liquidity - the easier it is to sell, the higher the liquidity.

Why is liquidity so important?

Potential investors are most interested in liquidity. On the one hand, they must be confident that the project can be profitable and their securities will increase in price. On the other hand, loss control rules force investors to choose projects from valuable papers which will be easier to get rid of in case of unforeseen difficulties.

The stock market periodically experiences crashes, and traders whose portfolios contain only low-liquid stocks are forced to look at falling prices and count their losses, unable to get rid of illiquid securities.

Definition

Liquidity- the ability of assets to be quickly sold at a price close to the market. Liquidity is the ability to turn into money (see the term “liquid assets”).

Typically, a distinction is made between highly liquid, low liquid and illiquid values (assets). The easier and faster you can get the full value of an asset, the more liquid it is. For a product, liquidity will correspond to the speed of its sale at the nominal price.

In the Russian balance sheet, the company's assets are arranged in descending order of liquidity. They can be divided into the following groups:

A1. Highly liquid assets (cash and short-term financial investments)

A2. Quickly realizable assets (short-term receivables, i.e. debt for which payments are expected within 12 months after the reporting date)

A3. Slowly moving assets (other current assets not mentioned above)

A4. Hard to sell assets (all non-current assets)

Balance sheet liabilities according to the degree of increasing maturity of obligations are grouped as follows:

P1. The most urgent obligations (raised funds, which include current accounts payable to suppliers and contractors, personnel, budget, etc.)

P2. Medium-term liabilities (short-term loans and borrowings, reserves for future expenses, other short-term liabilities)

P3. Long-term liabilities (section IV of the balance sheet "Long-term liabilities")

P4. Permanent liabilities (organization's own capital).

To determine the liquidity of the balance sheet, you should compare the results for each group of assets and liabilities. He considers ideal liquidity to be one in which the following conditions are met:

A1 > P1
A2 > P2
A3 > P3
A4< П4

For example, the above liquidity analysis by group can be performed automatically in the Your Financial Analyst program.

Calculation of liquidity ratios

In practice financial analysis There are three main indicators of liquidity.

Current liquidity

Current (total) liquidity ratio (coverage ratio; English current ratio, CR) — financial ratio, equal to the ratio of current (current) assets to short-term liabilities (current liabilities). This is the most common and frequently used liquidity indicator. Formula:

Ktl = OA / KO

where: Ktl - current liquidity ratio;
OA - current assets (attention: until 2011, long-term receivables were indicated in the Balance Sheet as part of current assets - they must be excluded from current assets!);
KO - short-term liabilities.

The ratio reflects the company's ability to pay off current (short-term) obligations using only current assets. The higher the indicator, the better the solvency of the enterprise.

A coefficient value of 2 or more is considered normal (this value is most often used in Russian regulations; in world practice, it is considered normal from 1.5 to 2.5, depending on the industry). A value below 1 indicates high financial risk due to the fact that the company is not able to consistently pay current bills. A value greater than 3 may indicate an irrational capital structure.

Quick liquidity

The quick liquidity ratio (sometimes called intermediate or quick liquidity; English quick ratio, QR) is a financial ratio equal to the ratio of highly liquid current assets to short-term liabilities (current liabilities). The source of data is the company’s balance sheet in the same way as for current liquidity, but inventories are not taken into account as assets, since if they are forced to sell, losses will be the greatest among all working capital. Quick liquidity formula:

Kbl = (Short-term accounts receivable + Short-term financial investments + Cash) / Current liabilities

The ratio reflects the company's ability to pay off its current obligations in the event of difficulties with the sale of products.

A coefficient value of at least 1 is considered normal.

Absolute liquidity

Absolute liquidity ratio is a financial ratio equal to the ratio Money and short-term financial investments to short-term liabilities (current liabilities). The source of data is the company’s balance sheet in the same way as for current liquidity, but only cash and funds close to it in essence are taken into account as assets:

Cal = (Cash + short-term financial investments) / Current liabilities

Unlike the two above, this coefficient is not widely used in the West. According to Russian regulations, a coefficient value of at least 0.2 is considered normal.

The current, quick and absolute liquidity ratio can be automatically calculated using the balance sheet data in the program "

Hello! In this article we will talk about liquidity.

Today you will learn:

What is liquidity?
What are the types of liquidity?
What influences liquidity in business?
How to analyze liquidity.

What is liquidity in simple words

Liquidity is an important economic term, ignorance of which can have a detrimental effect on a business or individual.

Liquidity is the ability of an asset to quickly turn into money without losing value.

In simple words, liquidity determines how long it takes to sell a product at the market price. The shorter this period, the more liquid the product is.

For example, currency is a highly liquid asset because it can be exchanged at any time without losing value. Real estate, on the contrary, is a low-liquidity asset, because finding a buyer for an apartment is much more difficult.

Types of liquidity

Let's take a closer look at the most popular types of liquidity:

Current liquidity means whether the company can pay off short-term (up to 1 month) obligations using highly liquid assets (cash and accounts receivable).
Quick liquidity is the company’s ability to pay off obligations using highly liquid assets, goods and materials.
Instant liquidity means whether a company can pay off a day's debt with available funds.

Current is also called short-term liquidity, and instant liquidity is called absolute.

According to the areas of application of the indicator, additional types can be distinguished:

Liquidity of a product is the ability of a particular product to be sold at a market price in a short time.
Balance sheet liquidity is the ability of an enterprise's assets to quickly pay off the company's liabilities.
Bank liquidity is the ability of a credit institution to pay its obligations.
A company's liquidity is its ability to quickly repay debts.
Market liquidity is the ability to reduce losses when prices fluctuate for various groups of goods.
Currency liquidity is the ability of a state to quickly pay debts internationally.
Liquidity of securities is the ability of a security to be sold at a market price.

Now let's look at the specific application of the concept of liquidity in each of three popular areas: liquidity of goods (including money and securities), enterprise and balance sheet.

Product liquidity

Liquidity of a product is the ability to be quickly sold at the average market price. If the product is highly liquid, then its sale will require a relatively short period - up to 1 day. If the product has average liquidity, then the sales time will range from 1 day to several weeks. If the product is low-liquid, then the timing of its sale may be significantly delayed.

Even currencies have their own liquidity. Despite the fact that money is the most highly liquid asset, this does not happen with all currencies. For example, if you have a rare currency from the country of Congo, then in some provincial city it is a low-liquid asset. But if you have dollars, then in any case locality you can exchange them for the same value.

The less demand a currency has on the world stage, the less liquid it is.

Liquidity of securities is very important indicator. Despite the fact that exchange turnover has long exceeded billions of dollars, there are some securities whose liquidity remains quite low. Usually these are shares and bonds of companies of the 2nd - 3rd echelons (medium and small players or those who have outstanding obligations).

For example, in 2010 - 2012, there were many stories about how people who bought shares of small companies could wait weeks to sell them at the average market price. That is, the exchange itself gave a quote for these shares, but no one wanted to buy at the specified price. But not selling an asset for real value is a huge liquidity risk.

Now the situation with securities liquidity in the country is slowly improving. More and more people are interested in investing in stocks, bonds and investment funds.

The more people are interested in an asset, the higher its liquidity. Low liquidity means that the product is less in demand at a given time.

Company liquidity

One of the main tasks of the efficiency of an enterprise is to assess its solvency. This indicator directly depends on the liquidity of the company's assets.

To assess the liquidity of an enterprise, liquidity ratios are used and 4 groups of asset liquidity are distinguished:

A1 - the most liquid assets (cash and financial investments);
A2 - quickly realizable assets (materials + goods and short-term receivables);
A3 - slowly selling assets (VAT and long-term receivables);
A4 - difficult to sell assets (intangible assets).

There are also 4 groups of liabilities:

P1 - the most urgent obligations;
P2 - short-term liabilities;
P3 - long-term liabilities;
P4 - permanent liabilities.

The company is liquid if A1>/=P1, A2>/=P2, A3>/=P3, A4 liquidity shortage can lead to the fact that the company’s free cash will not be enough to pay off debts.

Bank liquidity

Credit organizations are fully-functioning mechanisms, the work of which is monitored by the Central Bank. If the standards are not met, the Central Bank may either fine the credit institution or revoke its license (in case of repeated violation).

As for the liquidity indicator for bank assets, its essence is as follows. The bank cannot issue loans to everyone, relying solely on its assets and depositors' funds. Financial organizations it is necessary to have available funds to pay urgent obligations, and to have capital to return deposits claimed ahead of time.

There are three banking liquidity standards: N2, N3 and N4. H2 - limitation of non-fulfillment of obligations within one calendar day. That is, the bank’s cash desk must contain the funds needed to repay all obligations + an additional 15% of this amount.

If a bank has open demand deposits in the amount of 10,000,000 rubles, then within one day there should be about 11,500,000 rubles in the cash desk.

N3 - monthly liquidity ratio. Its minimum value is 50%. N3 includes all demand deposits and those that will be returned in the next 30 days.

N4 is an indicator that determines liquidity standards for long-term assets. Violation of this standard indicates that the bank is using borrowed funds to issue loans for long term. For example, a bank issues a loan for 5 years, but received these funds for 1 year from a foreign credit institution.

Unlike a company, which can decide for itself how much liquidity it should have, banks are subject to clear requirements from the Regulator.

Balance sheet liquidity - 3 formulas

Current ratio shows whether short-term liabilities can be paid off with short-term assets.

It is calculated like this: (Line 1200) / (line 1500-1530-1540)

A normal current ratio should range from 1.5 to 2.5. A value less than 1 indicates that the company cannot pay short-term debts, and a review of the asset structure is required.

Quick liquidity ratio means whether the company will be able to pay off its obligations if difficulties arise with the sale of products.

It is calculated like this: (1230+1240+1250) / (1500-1530-1540)

The normal value of the quick liquidity ratio is in the range from 0.7 to 1. But the majority of assets should not be accounts receivable, which are difficult to collect from borrowers.

Absolute liquidity ratio- an indicator that determines whether it is possible to pay off short-term liabilities using cash and short-term receivables.

It is calculated as follows: (1250+1240) / (1500-1530-1540)

A normal value would be 0.2 or more. This means that every day the company will be able to pay approximately 20% of its short-term debts using free cash flow.

These indicators help redistribute free cash into different assets. A loss of liquidity for an enterprise can lead to an increase in debt obligations and a lack of funds to repay them. Therefore, it is recommended to keep the indicators within normal limits.

Liquidity analysis

Liquidity analysis can be divided into two categories: liquidity of investments and liquidity of enterprise assets. Let's start with our own investments.

Investments are made based on long-term prospects. Medium-liquid and low-liquidity assets, such as real estate, non-government bonds and shares of 2-3 tiers, may be suitable for this.

For conservative investors, the ratio of assets with high and low liquidity can be approximately 50/50.

With constant trading on the stock exchange, the situation is exactly the opposite. In order to instantly lock in profit, the asset must be sold quickly and profitably without loss of value. That is why people involved in trading and playing in the securities market understand that low-liquid stocks and bonds will simply be difficult to sell at an advantageous moment.

For stock market players and aggressive investors, it is better to have about 80% of assets with high liquidity. Long-term liquidity plays a role here important role. And the level of liquidity of each security can be determined by the difference between the purchase price and the sale price.

The liquidity of the enterprise's assets is formed based on internal assets. Most of the organization's assets are extremely difficult to convert into money. It is difficult to sell a building, equipment and materials without a significant loss in their value. That is why you need to carefully monitor liquidity - the amount of goods in circulation and the amount of money in accounts.

Each enterprise chooses its own indicator as a liquidity standard. If the use of borrowed funds is minimal, and you do not need a lot of money to purchase materials, you can reduce this indicator. But if a company actively uses credit money, much more liquid assets are needed. You can focus on the formulas given in the paragraph “Enterprise Liquidity”, selecting the ratio of assets that is acceptable for a particular type of business.

Conclusion

Liquidity is an important indicator for both those involved in business and investors. For the former, this is an indicator of the normal ratio of free money and the company’s liabilities, for the latter, it is a way to optimize their investments.

The concept of liquidity is often found in professional literature, but novice investors rarely pay attention to it. And in vain. After all, the amount of risk and profitability depend on the liquidity of assets. And the quality of the investment portfolio determines the investment tactics and strategy, not to mention financial stability. Let's take a closer look at this important economic category.

Economic essence

What is liquidity in simple words? Liquidity is the ability to quickly turn into money without large financial losses. The term liquidity comes from the Latin liquidus - liquid, current, that is, easily converted into money.

The above definition sets the main parameters:

transformation time;
the amount of financial costs associated with the transformation.

How is liquidity measured?

The number of days required to sell an asset at the average market price:

So, you can sell or redeem a high-yield security within a few minutes;
and the financial liquidity of investments in the construction of a cottage community is measured in years.

The most indicative in this sense is the structure of assets of any production or trading enterprise. Liquidity:

Absolute. Assets do not require transformation and are ready-made means of payment (cash and cash equivalents).
Urgent (up to 7 days). Short-term investments (for example, in government bonds and bills).
High (up to 30 days). Goods shipped, short-term accounts receivable.
Medium (up to 90 days). Work in progress, inventories in warehouses (raw materials, materials and finished products).
Low (up to 360 days). Long-term investments, accounts receivable.
Illiquid assets. Fixed assets (machinery, equipment, buildings, structures) and intangible assets.

Keep in mind that the above classification is quite arbitrary, since in each group it is possible to identify specific assets that have varying degrees of turnover depending on the specifics of the activity. Thus, the “life” of receivables may vary. “Long” debt becomes low-liquidity or even illiquid.

With the urgent transformation of any instruments into cash, financial losses are inevitable, which include:

discount to the market price of an asset provided by the buyer for the purpose of prompt sale;
additional selling costs (taxes, fees, duties, commissions, etc.).

The following classification of financial losses has been adopted: low (up to 5%); average (up to 10%); high (up to 20%); very high (over 20%).

Obviously, financial losses and the speed of transformation are inversely related.

Why is she so important?

Liquidity is the second most important (after profitability) characteristic of any asset, including investment.

For an investor, especially one operating in the financial market, assessing the quality of an investment portfolio becomes more important than for a large manufacturing or trading enterprise. Causes:

An individual investor is one by definition. Its ability to attract alternative sources of capital (and thus reduce risks) is limited.
The average investor, as a rule, does not have a large “safety cushion” behind him in the form of fixed assets: buildings, structures, machinery and equipment.
In pursuit of profitability, he tends to invest in riskier assets.

Thus, for a portfolio investor, high liquidity means:

flexibility investment strategy and tactics (the ability to quickly withdraw funds from ineffective projects and reinvest them);
speed of turnover, and therefore profitability (the faster you earn money on an investment instrument, the higher the interest rate of effective profitability);
personal financial stability.

Rule 1. All things being equal, invest in assets with high degree liquidity. This will give you freedom of maneuver in the process of managing your investment portfolio.

Rule 2. Profitability and liquidity are interconnected. Investments in low-liquid assets should generate greater investment income.

How to assess the liquidity of an asset

The liquidity of an asset represents the market capacity in which it can be sold or bought.

Market liquidity is determined by:

Number of transactions.
The spread (difference) between the maximum stated purchase price (demand) and the minimum stated sale price (offer).

Rule 3. The larger the volume of transactions and the narrower the spread, the more liquid the market.

Thus, individual transactions will not have a significant impact on the market as a whole. This means that if you have an asset with average market parameters, you can sell it at any time.

By analogy with the general rules:

the instant liquidity of a security on the stock market is determined by the amount quotation bids(the author indicates the price and volume, giving other players the opportunity to buy or sell a financial instrument at any time);
the trading liquidity of a security is determined by the number of market orders (the author indicates only the volume, the transaction is concluded automatically at the best quotation price).

You will always find such information on stock exchange portals, financial and brokerage sites.

Increased price volatility and decreased trading volume indicate investor anxiety and are the first symptoms of increased investment risks. If the situation continues for more than the first week, the liquidity of securities, and with it the profitability, will inevitably begin to fall.

Obviously, it is possible to assess the liquidity of assets in this way only on the exchange market, where the circulation of securities occurs in the open financial market and free competition.

The rules for trading in the over-the-counter market are established by the counterparties themselves, and the process of concluding a transaction becomes several times more complicated (searching for clients, attracting intermediaries and guarantors, confirmation operations legal status transactions, etc.). As a result, the degree of liquidity of assets in the over-the-counter market is an order of magnitude lower. Moreover, it is difficult to accurately predict and calculate it.

Study the one-room apartment market segment: the number of transactions during the period, the average price per square meter, the average price of the property, the price range. You can easily obtain such information from real estate market reviews, analytical studies, and agency websites. From the analysis you will learn that the market for economy class apartments in Moscow is considered a well-liquid segment of the real estate market.
Determine the required level of profitability from the sale.
Predict the time required to find a buyer.
Calculate the time required for the entire range of legal and administrative procedures related to the sale (about 1 month).
Assess the associated financial and tax costs.

Thus, only operating cycle sales (searching for a buyer, completing a transaction and receiving funds) will take you 2–3 months. And if you are counting on excess income, the process may take up to six months. That is, a “good” asset by the standards of the real estate market is quickly turning into a low-liquid asset.

What is project liquidity

For the purposes of this article, we will define it as the period of time that has passed from the moment of the first investment until the potential sale of the asset at a price that compensates for the investment, taking into account the time factor (discounting). If you invest money in a venture project today, this investment asset will not become liquid until you are able to exit it with a profit. The event is probabilistic in nature, which means that in the early stages such investments are completely illiquid.

How to assess the liquidity of an investment portfolio

How to value a specific asset is relatively clear. But what to do if we are talking about a comprehensive assessment of the quality of the portfolio of an individual investor or an investment company? In commercial enterprises, special coefficients are used for this:

Absolute liquidity = (Cash and cash equivalents + Short-term investments) / Current liabilities. Standard: 0.2.
Quick (quick) liquidity = (Current assets - Inventories) / Current liabilities. Standard: 1.
Current liquidity = Current assets / Current liabilities. Standard: 2.

What is enterprise liquidity? The higher the ratios, the faster the company will be able to turn part of its assets into cash to avoid problems. Moreover, the value of the last coefficient already borders on the assessment of the state of financial stability.

What should a simple investor do? Go the same route.

Assess the level of liquidity of each specific asset included in your investment portfolio.
Group your assets.
Calculate the share of each group in the total portfolio.

Instead of a conclusion

Investment asset

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