Interrelated finance which is an adequate indicator of liquidity. Liquidity of money, its calculation. Types of assets by liquidity. Money, liquidity and asset types

Definition

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

Usually distinguish 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 commodity, liquidity will correspond to the speed of its sale at a nominal price.

In the Russian balance sheet, the assets of the enterprise 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. Quick-selling assets (short-term receivables, i.e. receivables expected to be paid within 12 months after the reporting date)

A3. Slowly realizable assets (other, not mentioned above, current assets)

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

Balance sheet liabilities by the degree of increase in the maturity of obligations are grouped as follows:

P1. The most urgent liabilities (borrowed 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 ( equity organizations).

To determine the liquidity of the balance sheet, the totals for each group of assets and liabilities should be compared. He considers liquidity ideal if the following conditions are met:

A1> P1
A2> P2
A3> P3
A4< П4

For example, the above analysis of liquidity by groups can be performed automatically in the program "Your financial analyst".

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) is a financial ratio equal to the ratio of current (current) assets to short-term liabilities (current liabilities). This is the most common and commonly used measure of liquidity. Formula:

Ktl = OA / KO

where: Ктл - current liquidity ratio;
ОА - current assets (attention: until 2011, long-term accounts receivable were indicated in the Balance Sheet as part of current assets - it must be excluded from current assets!);
KO - short-term liabilities.

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

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 a high financial risk due to the fact that the company is not able to consistently pay current bills. A value of more than 3 may indicate an irrational capital structure.

Fast liquidity

Quick ratio (sometimes called intermediate or quick ratio; 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 in the composition of assets, since when they are forced to sell, the losses will be the maximum among all working capital... Quick liquidity formula:

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

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

A coefficient value of at least 1 is considered normal.

Absolute liquidity

Coefficient absolute liquidity- 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 them are taken into account in the composition of 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 ratio of current, quick and absolute liquidity can be automatically calculated according to the balance sheet data in the program "

Real estate.

If we evaluate all financial instruments, real estate is a low liquid instrument. But if we consider it only one, then again there is a division into low and high liquidity.

Let's say elite apartments, country houses with high prices are low-liquid real estate. It takes a significant amount of time (several months) to sell it at a fair market price. And even then, at the end, you still have to throw off the price of the buyer.

And if you take economy-class housing, and even in a good place in the city (somewhere in the center, or in a normal area), then you can consider it as highly liquid real estate due to the fact that there is always demand for it and it can be easily sold literally in a couple of weeks, at least 1-2 months.

Why is liquidity so important?

The concept of liquidity is important for investors who want to make a profit on their investment. And in the event of any negative circumstances in the financial market, they should be able to quickly get rid of unnecessary assets at affordable prices. And transfer the money received to another most promising (and more profitable) financial instrument.

Therefore, when investing money, an investor always tries to choose highly liquid instruments.

For example, if we consider the real estate market, then with a tendency to decrease them, you can most quickly get rid of inexpensive real estate objects. Those. if you choose between ordinary Khrushchev buildings and premium housing, the investor will choose the first one, in view of their high liquidity.

The same is true about the stock market. In the event of a possible collapse of the stock market (which happens periodically), the investor must quickly and with minimal losses get rid of the falling asset. And if he has only low-liquid shares in his portfolio, on which there is no buyer, then all that remains is to watch how the value of the purchased shares decreases. And count the losses in your mind.

The concept of liquidity is often found in professional literature, but novice investors rarely pay attention to it. And in vain. Indeed, the amount of risk and profitability depends on the liquidity of assets. And the quality of the investment portfolio determines the tactics and strategy of investment, not to mention financial sustainability... 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, flowing, 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 the asset at the mid-market price:

so, you can sell or redeem a highly profitable 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 commercial enterprise... Liquidity:

Absolute. Assets do not require transformation and represent ready-made funds payment (cash and cash equivalents).
Urgent (up to 7 days). Short-term investments (for example, in government bonds and bills of exchange).
High (up to 30 days). Goods shipped, short-term receivables.
Medium (up to 90 days). Work in progress, stocks 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 rather arbitrary, since in each group it is possible to distinguish specific assets with varying degrees of turnover depending on the specifics of the activity. So, the term of "life" accounts receivable may be different. Long-term debt becomes low liquid or even illiquid.

With an urgent transformation of any instruments into monetary form, financial losses are inevitable, which include:

a discount to the market price of an asset provided by the buyer in order to speed up the sale;
additional costs of the sale (taxes, fees, duties, commissions, etc.).

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

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

Why is it so important?

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

For an investor, especially acting in the financial market, the assessment of the quality of the investment portfolio becomes more important than for a large industrial or commercial 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 big "safety cushion" behind him in the form of fixed assets: buildings, structures, machinery and equipment.
In pursuit of profitability, he tends to invest in more risky assets.

Thus, for a portfolio investor, high liquidity means:

flexibility of investment strategy and tactics (the possibility of the earliest possible withdrawal of funds from ineffective projects and their reinvestment);
turnover rate, and, therefore, profitability (the faster you earn on an investment instrument, the higher the effective rate of return);
personal financial stability.

Rule 1. Invest in assets with a high degree of liquidity on a level playing field. This will give you the freedom to maneuver in the portfolio management process.

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

How to assess the liquidity of an asset

An asset's liquidity represents the market opportunities in which it can be sold or bought.

Market liquidity is determined by:

The number of transactions.
The spread (difference) between the maximum declared bid price (bid) and the minimum declared bid price (bid).

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

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

By analogy with the general rules:

instant liquidity of a security in the stock market is determined by the amount quotation bids(the author indicates the price and volume, allowing other players 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 specifies only the volume, the transaction is concluded automatically at the best quoted price).

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

Increased price volatility and decreased trading volume indicate investor excitement and are the first symptoms of increased investment risks. If the situation does not last for the first week, liquidity valuable papers, and with it the profitability, will inevitably begin to fall.

Obviously, it will be possible to assess the liquidity of assets in this way only on the exchange market, where the circulation of securities takes place in the mode of an open financial market and free competition.

The rules of circulation in the over-the-counter market are established by the counterparties themselves, and the process of concluding a transaction is complicated several times (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 segment of the one-room apartments market: the number of transactions for the period, the average price per square meter, the average price of the object, the range of prices. You can easily find such information in reviews of the real estate market, analytical studies, on 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 return on the sale.
Predict the time it will take to find a buyer.
Calculate the time required for the entire complex of legal and administrative procedures related to the sale (about 1 month).
Estimate the associated financial and tax costs.

So only operating cycle sales (finding a buyer, making a deal and receiving funds) will take you 2-3 months. And if you are counting on super profits, then the process can take up to six months. That is, a “good” asset by the standards of the real estate market is turning into a low-liquid asset before our very eyes.

What is project liquidity

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

How to assess the liquidity of an investment portfolio

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

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

What is the liquidity of an enterprise? The higher the value of the ratios, the faster the company can turn part of its assets into money in order to avoid problems. At the same time, the value of the last coefficient already borders on the assessment of the state of financial stability.

What should an ordinary investor do? Follow a similar path.

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

Instead of a conclusion

Investment asset

Money is the universal equivalent of value. Money- a special product that plays the role of a universal equivalent in the exchange of goods. Money - absolutely liquidity exchange. Liquidity- the ability of a financial asset to be converted into cash. Asset liquidity is determined by how quickly and at what costs (in comparison with the value of their monetary value) these assets can be sold. Absolute liquidity have the cash issued by the state. Highly liquid Treasury bills, short-term government securities, are considered. This is due to the fact that the market prices of these securities change only slightly from day to day, and also because they can be easily sold at financial markets(since they are highly reliable), and the transaction costs will be very low. Intermediate or medium level of liquidity stocks and long-term bonds issued by private corporations own, since the prices of these assets change much more over time and the fees charged for transactions with such securities are much higher. Real estate (houses, industrial buildings) is illiquid, since the market price for it is very volatile, it is difficult to predict it before the transaction is made. The costs of such transactions can be very high.

The essence of money is manifested in their functions: measures of value, means of circulation, means of payment, means of accumulation, world money. Money as a measure of value mean that they are used to measure the value and price of goods. Money is commensurate with the value of goods, that is, the goods are equated to a certain amount money, which gives a quantitative expression of the value of the goods. Price - the value of a thing expressed in money. The state uses a certain monetary unit (ruble, dollar) as a scale for measuring value. Also, weight is measured using units of weight (gram, kilogram, etc.), the value of the product has a monetary value. This allows us to measure the value of economic goods.

Money as a medium of circulation participate in the sale and purchase of goods and services. In this case, money acts as a fleeting intermediary. The use of money as a medium of circulation reduces the costs of circulation by reducing the effort and time for the sale and purchase. This function of money explains the appearance in circulation of defective coins (coins, the content of gold and silver in which is less than the denomination, that is, the weight indicated on the coin), as well as paper money.

Money as a means of payment act in the payment of wages, taxes, insurance payments, the sale of goods on credit and in many other cases when the movement of money is not mediated by the movement of goods. If the goods are sold on credit, then the means of circulation are not money itself, but debt obligations expressed in money. With the development of industrial society, a means of payment is increasingly replacing a medium of exchange, selling and buying on credit become the most common. The fulfillment of this function by money led to the appearance of credit money: bills of exchange and bank notes.

Money as a store of value do not participate in the turnover and act as a financial asset. Money is a convenient form of wealth storage. Here money acts as a special asset that is preserved after the sale of goods and provides its owner with purchasing power in the future. True, keeping money, unlike owning stocks, bonds, savings accounts, does not bring additional income... However, the advantage of money is that it can immediately be used as a medium of exchange or a means of payment.

Function world money is carried out in the world market when servicing the movement of goods and services, capital and labor. World money is the same as national money, only at the international level. Currencies of leading countries (dollar, pound sterling), as well as money created as a result of collective agreements (euros), act as world money.

Liquidity is the ability to “get away with” a certain product as quickly as possible by exchanging it for a cash equivalent. If any product is in demand on the market and is being sold well, this indicates its high liquidity. Depending on the speed at which a product is sold, its liquidity will be defined as high, medium or low.

It seems that all the basic definitions and concepts are given in simple language - this is how Wikipedia describes the concept of "liquidity". Next, we will consider separately the liquidity of stocks, enterprises and real estate, as well as the factors that affect and shape liquidity. Let us consider separately the 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 as highly liquid or low liquid depending on the speed of their sale. Therefore, from the point of view of the earliest possible receipt of money, securities and deposits in banks are highly liquid goods, because sometimes even a couple of minutes is enough to convert them into banknotes. Real estate will be "illiquid" in comparison with them, and the more expensive it is and the more difficult it is to sell it, the less liquid it will be considered a commodity.

Liquid currencies are the most popular banknotes used all over the world or in a certain large region for making purchase and sale transactions. The liquidity of a currency is affected by the economies of countries in which this currency is listed as the main or reserve one. 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 called promissory notes, shares, bonds and other monetary documents certifying some of the property rights of their owner (for example, the right to pay dividends - part of the company's profits). Being a highly liquid commodity, securities in their group are also divided into “liquid” and “illiquid”. Illiquid goods they are rarely in short supply - there is little demand for them, they are bought a little.

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

"Blue Chips" - a concept that came from American casinos. There, blue chips have the highest denomination. Today, this is the name of the most liquid stocks - stocks large companies, located in the top thirty largest firms in their country or in the world (depending on which market we are evaluating).

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

Business liquidity: what does it depend on

The liquidity of the enterprise is very important indicator his solvency and general condition. V economic analysis the success of the company, an important role is played by the liquidity of the balance - the ability of the company to timely distribute cash flows to pay off debts. Simply put, the more a kind of "golden parachute" of free funds of the company, which it can redistribute to eliminate problems, the higher the liquidity of the balance sheet of such a company. Investors will invest in such a company.

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

Assets can be:

highly liquid (investments and finances).
fast-selling (short-term debt).
negotiable (sold slowly).
non-negotiable (sold very slowly).

Passives can be:

urgent.
current.
long-term.
own capital of the company.

On the analysis of business liquidity in general terms

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

current liquidity ratio.
quick ratio.
absolute liquidity ratio.

The current liquidity 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 ratio is considered as the sum of all highly liquid assets divided by the firm's short-term debt. Fast 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 house and a new building in the budget segment on the outskirts of a large city, the new building will have much more 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 sure that the project can be profitable and their securities will rise in value. On the other hand, the loss control rules force investors to choose projects, from which it will be easier to get rid of securities in case of unforeseen difficulties.

The stock market periodically crashes, and traders, in whose portfolios there are only low-liquid shares, in such cases are forced to look at falling quotes and calculate their losses, being unable to get rid of illiquid securities.

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