How the liquidity of assets is measured. Liquidity is in simple terms: types and instructions for raising. Absolute liquidity ratio

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 is an absolutely liquid medium of exchange. Liquidity- the ability of a financial asset to turn into cash. Asset liquidityis determined by how quickly and at what costs (in comparison with the value of their monetary value) these assets can be sold. Absolute liquidityhave the cash issued by the state. Highly liquidtreasury 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 in financial markets (since they are highly reliable), and the transaction costs will be very low. Intermediate or medium level of liquiditystocks 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 its functions: measures of value, means of circulation, means of payment, means of accumulation, world money. Money as a measure of valuemean that they are used to measure the value and price of goods. Money measures the value of goods, that is, the goods are equated to a certain amount of money, which gives a quantitative expression of the value of the goods. Price is 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. Through this, we can measure the value of economic goods.

Money as a medium of circulationparticipate in the sale and purchase of goods and services. In this case, money acts as a passing 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 face value, that is, the weight indicated on the coin), as well as paper money.

Money as a means of paymentact 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 increasingly replaces a medium of exchange, selling and buying on credit become the most common. The performance of this function by money led to the appearance of credit money: bills of exchange and bank notes.

Money as a store of valuedo 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, preserved after the sale of goods and providing 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 moneyis 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. The currencies of leading countries (dollar, pound sterling), as well as money created as a result of collective agreements (euros), act as world money.

The determination of the liquidity of any enterprise, bank, company or organization is dictated by the conditions of a market economy.

The investor should assess whether the company in which he invests capital will be able to pay dividends, how quickly will this happen? Economic sustainability, stability, rational management are directly related to liquidity. What it is? What information is needed for the assessment? Let's try to figure it out together, as well as find out the practical meaning of the term for a businessman.

What is liquidity?

The concept of liquidity (mobility, marketability), according to the economic dictionary, is a term that denotes the ability of assets to be quickly sold at market prices. In our own words, we can emphasize that liquidity is the ability of a company to transfer its capital, assets and labor objects into money, that is, to sell them in a short time, and not for a song, but at real value.

For the assessment, they take into account not only the money in the accounts of the company, but also any property belonging to it: land, semi-finished products, machines, real estate, cars, everything that has value. The need for a quick sale is dictated not only by the negative situation in the economy, but, for example, by the need for injections. If a company today seeks to conclude an agreement on tempting terms, it has to look for money urgently - whether it will be possible to carry out its plans directly depends on the degree of liquidity.

What is the liquidity depending on the object under study?

Possibilities for quick implementation can be assessed for any object. For example, a well-groomed budget car will be bought faster than an old worn out sofa or a collection of fridge magnets that you collected all over the world. But connoisseurs can be found for any thing. When it comes to business, the concept of liquidity is much broader and is usually applied to the entire company. There is liquidity:

Assets - the fastest way to withdraw money from current accounts, sell government securities, close deposits. But raw materials, equipment, premises are classified as low-liquid assets that reduce solvency;
Bank - the ability to pay deposits to the population, taking into account interest and capitalization, as well as to make a profit on loans issued. Liquidity increases due to credit funds from the Central Bank and banks, or savings, that is, personal resources and work results;
Balance - shows the ratio of the company's assets to its liabilities, in fact, it is possible to find out whether the company has enough funds to pay off its debts. Liquidity decreases with an increase in the size of liabilities, obtaining loans, attracting funds from outside;
Enterprises - a broad concept that requires you to find out the solvency, study the submitted reporting. Thanks to the analysis, it is possible to understand how the firm is stable and resistant to market fluctuations;
The organization - is a study of the ratios of current, urgent liquidity, coverage - excess own funds over credit.

The liquidity indicator depends on a variety of internal and external factors - the amount of own property, the amount of income, the profitability of the activity. Affected by skillful or inept management, the situation in the industry and in the country. The term is inextricably linked with other economic categories: solvency, accounts payable, accounts receivable, payback of the enterprise.

Types of assets by degree of liquidity

Of course, all property can be divided depending on the speed of its implementation. Liquid plan assets are property that can be sold in the short and long term, that is, there is consumer demand for it. In addition, several types of assets are distinguished:

Highly liquid - those that can be converted into money in the shortest possible time. Examples: deposits, cash on hand, funds in the company's current account, securities of large organizations (Sberbank, Rosneft), foreign currency, government bonds;
Medium liquid - assets are converted into money within six months, while not losing market value... This includes products ready for sale, property in demand, accounts receivable;
Low liquid - real estate, including land, obsolete machinery, equipment, that is, those products that will have to be sold for a long time;
Illiquid - long-term investments, fixed assets, intangible assets.

You need to understand that any property can be sold on the market, but for low-liquidity objects, the price may be below expected, or it will take several months until a buyer is found.

By the way, the assignment of specific types of assets to varying degrees of demand is conditional. For example, it is difficult to sell a huge warehouse in a remote village, where there are no communications and roads, so it is classified as an illiquid property. But a store or a kiosk in a promising area where commercial real estate is in demand can be sold in a few days or weeks.

Liquidity ratios for the analysis of enterprise activities

Determining the organization's ability to meet changing market needs requires a qualitative performance analysis. In a simplified version, quantitative mechanisms are used - indicators that assess stability and financial stability:

Total liquidity ratio - ratio working capital and credit obligations. When the figure is within the range of up to one, it means that the company is able to pay off the contracts, however, if it exceeds 3 units, we can talk about the irrational use of resources - the money simply lies in the accounts and does not work;
Quick liquidity ratio - the ability to fulfill debt obligations without attracting a reserve fund and raw materials. With a decrease to 0.7, the organization loses its attractiveness in the eyes of investors, and banks do not willingly cooperate;
Absolute liquidity ratio - ratio money on accounts and in cash to short-term obligations. Normally, when the indicator is above 0.2, otherwise a financial analysis of stability and solvency is required, and it is difficult for the company to pay off debts.

You need to understand that the above coefficients - by no means the most important indicators , which unambiguously testify to the successful conduct of business at the enterprise. It is necessary to take into account the economic situation, the date of foundation of the company, the specifics of a particular industry, for example, in agriculture seasonality plays a huge role.

Why do an investor and businessman need to know the degree of liquidity?

It would seem, why find out all these terms, give them definitions, find out what characteristics this or that enterprise has. In fact, everything is simple: you cannot invest money in business without careful analysis, you need to determine the performance indicators of the company, evaluate the results of work in numbers.

Even if at first glance the company looks successful, and the flow of buyers is growing, this does not mean that things are going well, and obligations to investors will be fulfilled on time. Perhaps a large flow of borrowed capital is used, the credit balance increases, and the organization simply cannot pay off the bills.

Analyzing where to direct your capital, it is recommended to make a portfolio of assets of varying degrees of liquidity. Of course, securities of large and successful companies are always in demand, but the profit on them is low. It is important for a businessman to study the property of money for sale, this will increase investment attractiveness, and will allow him to count on the help of banks if borrowed funds are needed.

Ways to increase liquidity: instructions

When a business owner realizes that the liquidity indicators in his enterprise are low, which makes it difficult for investors to participate, there are several ways to act:

Step # 1 : Reduce the amount of short-term liabilities - you need to conclude agreements on the provision of long-term loans, that is, to refinance the existing debt.
Step # 2 : Increase the number of circulating assets that are directly related to the concept of liquidity. At the same time, the size of non-current assets decreases.
Step №3 : Reduce the inventory turnover cycle - it is necessary to modernize the production so that the production of products is carried out in a shorter period, for example, 5 days instead of 7. New workers are attracted, the number of shifts is increased or improved work discipline.
Step # 4: Reduce the amount of accounts receivable, as well as the period of its repayment. If the contract with the buyers previously indicated a period for payments of 2 months, now it can be, for example, 4 weeks.
Step # 4: Implement unused surplus and inventory that doesn't work, but just stands on the balance sheet. These can be raw materials, excessive fixed assets - idle machines, as well as any fixed assets.

It is also possible to increase the liquidity of property. For example, if we are talking about real estate - an apartment, it is enough to make cosmetic repairs, but in business the attractiveness is increased by other, more complex methods, which were described above.

Liquidity is a very important term in economic activity any enterprise. Competently assessing this indicator, one can understand how skillfully the company manages its finances, whether it will be able to fulfill its obligations to depositors and creditors. The best and most demanded on the market are highly liquid assets - they will be sold as soon as possible at an attractive price for the owner.

From this article you will learn:

Short-term liabilities (P2) - short-term borrowed loans from banks and other loans due to be repaid within 12 months after the reporting date. When determining the first and second groups of liabilities, in order to obtain reliable results, it is necessary to know the time of fulfillment of all short-term obligations. In practice, this is only possible for internal analytics. When external analysis due to the limited information, this problem becomes much more complicated and is solved, as a rule, on the basis of the previous experience of the analyst performing the analysis.

Long-term liabilities (P3) - long-term borrowed loans and other long-term liabilities - items of section IV of the balance sheet "Long-term liabilities".

Permanent liabilities (P4) - items of section III of the balance sheet "Capital and reserves" and individual items of section V of the balance sheet, not included in the previous groups: "Deferred income" and "Reserves for future expenses". To maintain the balance of assets and liabilities, the total of this group should be reduced by the amount under the items "Deferred expenses" and "Losses".

To determine the balance sheet liquidity, the totals for each group of assets and liabilities should be compared.

The balance is considered absolutely liquid if the following conditions are met:

A1 \u003e\u003e P1
A2 \u003e\u003e P2
A3 \u003e\u003e P3
A4
If the first three inequalities are fulfilled, that is, the current assets exceed the external liabilities of the enterprise, then the last inequality must be fulfilled, which has a deep economic meaning: the enterprise has its own circulating assets; the minimum condition for financial stability is met.

Failure to comply with any of the first three inequalities indicates that the liquidity of the balance is more or less different from the absolute.

Current liquidity ratio

The current liquidity ratio shows whether the company has enough funds that can be used to pay off its short-term obligations during the year. This is the main indicator of the company's solvency. The current liquidity ratio is determined by the formula

Ktl \u003d (A1 + A2 + A3) / (P1 + P2)

Quick ratio

The quick liquidity ratio, or the “critical appraisal” ratio, shows how much an enterprise's liquid assets cover its short-term debt. The quick ratio is determined by the formula

Kbl \u003d (A1 + A2) / (P1 + P2)

Absolute liquidity ratio

The absolute liquidity ratio shows how much of the accounts payable the company can pay off immediately. The absolute liquidity ratio is calculated by the formula

Cal \u003d A1 / (P1 + P2)

Overall balance sheet liquidity

For a comprehensive assessment of the liquidity of the balance sheet as a whole, it is recommended to use the general indicator of the liquidity of the company's balance sheet, which shows the ratio of the sum of all liquid assets of the enterprise to the sum of all payment obligations (short-term, long-term, medium-term), provided that various groups of liquid funds and payment obligations are included in the indicated amounts with certain weighting factors that take into account their significance in terms of the timing of the receipt of funds and repayment of obligations.

The general indicator of balance sheet liquidity is determined by the formula

Number \u003d (A1 + 0.5A2 + 0.3A3) / (P1 + 0.5P2 + 0.3P3)

Liquidity analysis

The liquidity of the balance sheet is the degree of coverage of the company's liabilities by assets, the period of conversion of which into cash corresponds to the maturity of the obligations. The solvency of the enterprise depends on the degree of liquidity of the balance sheet. The main sign of liquidity is the formal excess of the cost of current assets over short-term liabilities. And the greater this excess, the more favorable the financial condition of the company from the position of liquidity.

The relevance of determining the liquidity of the balance sheet is of particular importance in conditions of economic instability, as well as in the liquidation of the enterprise due to it. This raises the question: does the company have enough funds to cover its debts. The same problem arises when it is necessary to determine whether the company has enough funds for settlements with creditors, i.e. the ability to liquidate (repay) the debt with the available funds. In this case, speaking of liquidity, we mean that the enterprise has working capital in an amount theoretically sufficient to pay off short-term obligations.

To analyze the liquidity of the balance sheet of the enterprise, assets are grouped according to the degree of liquidity - from the most quickly converted into money to the least. Liabilities are grouped according to the urgency of payment of obligations.

To assess balance sheet liquidity, taking into account the time factor, it is necessary to compare each asset group with the corresponding liability group.

1) If the inequality A1\u003e P1 is feasible, then this indicates the solvency of the organization at the time of drawing up the balance sheet. The organization has enough to cover the most urgent liabilities of absolutely and most liquid assets.

2) If the inequality A2\u003e P2 is feasible, then quickly realizable assets exceed short-term liabilities and the organization may be solvent in the near future, taking into account timely settlements with creditors, receiving funds from the sale of products on credit.

3) If the inequality A3\u003e P3 is feasible, then in the future, with the timely receipt of funds from sales and payments, the organization may be solvent for a period equal to the average duration of one turnover of working capital after the date of the balance sheet.

The fulfillment of the first three conditions leads automatically to the fulfillment of the condition: A4
The fulfillment of this condition testifies to the observance of the minimum condition for the financial stability of the organization, the availability of its own working capital.

Based on the comparison of groups of assets with the corresponding groups of liabilities, a judgment is made about the liquidity of the balance sheet of the enterprise

Comparison of liquidity and liabilities allows you to calculate following indicators:

Current liquidity, which testifies to the solvency (+) or insolvency (-) of the organization for the time interval closest to the considered moment: A1 + A2 \u003d\u003e P1 + P2; A4 prospective liquidity is a forecast of solvency based on a comparison of future receipts and payments: A3\u003e \u003d P3; A4 insufficient level of prospective liquidity: A4 balance is not liquid: A4 \u003d\u003e P4

However, it should be noted that the analysis of balance sheet liquidity carried out according to the described scheme is approximate, more detailed is the analysis of solvency using financial ratios.

1. The current liquidity ratio shows whether the company has enough funds that can be used to pay off its short-term obligations during the year. This is the main indicator of the company's solvency. The current liquidity ratio is determined by the formula:

K \u003d (A1 + A2 + A3) / (P1 + P2)

In world practice, the value of this coefficient should be in the range of 1-2. Naturally, there are circumstances in which the value of this indicator may be greater, however, if the current liquidity ratio is more than 2-3, this, as a rule, indicates the irrational use of the enterprise's funds. The value of the current liquidity ratio below one indicates the company's insolvency.

2. The quick liquidity ratio, or the “critical appraisal” ratio, shows how much the enterprise's liquid assets cover its short-term debt. The quick ratio is determined by the formula:

K \u003d (A1 + A2) / (P1 + P2)

The liquid assets of an enterprise include all current assets of the enterprise, with the exception of inventories. This indicator determines what proportion of accounts payable can be repaid at the expense of the most liquid assets, i.e., it shows what part of the company's short-term liabilities can be immediately repaid at the expense of funds in various accounts, in short-term securities, as well as receipts from settlements. The recommended value of this indicator is from 0.7-0.8 to 1.5.

3. The ratio of absolute liquidity shows what part of the accounts payable the company can pay off immediately. The absolute liquidity ratio is calculated using the formula:

K \u003d A1 / (P1 + P2)

The value of this indicator should not fall below 0.2.

4. For a comprehensive assessment of the liquidity of the balance sheet as a whole, it is recommended to use the general indicator of the liquidity of the company's balance sheet, which shows the ratio of the sum of all liquid assets of the enterprise to the sum of all payment obligations (short-term, long-term, medium-term), provided that various groups of liquid assets and payment obligations are included in the indicated amounts with certain weights taking into account their significance in terms of the timing of the receipt of funds and the repayment of obligations. The general indicator of balance sheet liquidity is determined by the formula:

K \u003d (A1 + 0.5 * A2 + 0.3 * A3) / (P1 + 0.5 * P2 + 0.3 * P3)

The value of this coefficient must be greater than or equal to 1.

5. The ratio of the provision of own funds shows how much of the company's own circulating assets, necessary for its financial stability. It is defined:

K \u003d (P4 - A4) / (A1 + A2 + A3)

The value of this coefficient must be greater than or equal to 0.1.

6. The coefficient of flexibility of functional capital shows what part of the functioning capital is contained in stocks. If this indicator decreases, then this is a positive fact. It is determined from the ratio:

K \u003d A3 / [(A1 + A2 + A3) - (P1 + P2)]

During the analysis of balance sheet liquidity, each of the considered liquidity ratios is calculated at the beginning and end of the reporting period. If the actual value of the coefficient does not correspond to the normal limitation, then it can be estimated by the dynamics (increase or decrease in the value). It should be noted that in most cases, achieving high liquidity is contrary to ensuring higher profitability. The most rational policy is to ensure the optimal combination of liquidity and profitability of the enterprise.

Along with the above indicators, to assess the state of liquidity, you can use indicators based on: net cash flow (NCF - Net Cash Flow); cash flow from operating activities (CFO - Cash Flow from Operations); Cash flow from operating activities, adjusted for changes (OCF - Operating Cash Flow); cash flow from operating activities, adjusted for changes in working capital and meeting the need for investment (OCFI - Operating Cash Flow after Investments); free cash flow (FCF - Free Cash Flow).

At the same time, regardless of the stage of the life cycle in which the company is located, management is forced to solve the problem of determining the optimal level of liquidity, since, on the one hand, insufficient liquidity of assets can lead to both insolvency and possible bankruptcy, and on the other hand, excess liquidity can lead to a decrease. Due to this, modern practice requires the emergence of more and more advanced procedures for analyzing and diagnosing the state of liquidity.

Absolute liquidity

Absolute liquidity ratio (English Cash ratio) - financial ratioequal to the ratio of cash and short-term financial investments to short-term liabilities (current liabilities). The data source is the company's balance sheet in the same way as for current liquidity, but only cash and equivalent funds are taken into account as assets: (line 260 + line 250) / (line 690-650 - 640).

Cal \u003d (Cash + short-term financial investments) / Current liabilities

Cal \u003d (Cash + short-term financial investments) / (Short-term liabilities - Deferred income - Provisions for future expenses)

It is believed that the normal value of the coefficient should be at least 0.2, that is, every day 20% of urgent obligations can potentially be paid. It shows what part of the short-term debt the company can pay off in the near future.

Absolute liquidity - the highest level of liquidity; inherent in money.

Liquidity indicators

An enterprise can be liquid to a greater or lesser extent, since the composition of current assets includes heterogeneous circulating assets, among which there are both easy-to-sell and hard-to-sell to pay off external debt.

According to the degree of liquidity, items of current assets can be conditionally divided into three groups:

1. liquid funds that are in immediate readiness for sale (cash, highly liquid securities);
2. liquid funds at the disposal of the enterprise (obligations of buyers, stocks of inventories);
3.Illiquid funds (requirements for debtors with a long term of formation (doubtful receivables), unfinished production).

The assignment of certain items of working capital to these groups may vary depending on specific conditions: the debtors of the enterprise include very heterogeneous items of receivables, and one part of it may fall into the second group, the other - into the third; at different duration production cycle work in progress can be classified either in the second or in the third group, etc.

As part of short-term liabilities, one can distinguish liabilities of varying degrees of urgency. In the practice of financial analysis, the following indicators are used:

Current liquidity ratio;
quick ratio;
absolute liquidity ratio.

Using these indicators, you can find the answer to the question of whether the company is able to meet its short-term obligations on time. This applies to the most liquid part of the company's property and its liabilities with the shortest maturity. These indicators are calculated on the basis of balance sheet items. In the balance sheet, assets are distributed in accordance with the degree of liquidity or depending on the time required for their conversion into cash. Liquidity indicators reveal the nature of the relationship between current assets and short-term liabilities (current liabilities) and reflect the company's ability to meet its financial obligations on time.

The current ratio, or working capital ratio, is derived as follows:

Current liquidity ratio \u003d Current assets (5) \\ Short-term liabilities (14)

In 1992 610/220 \u003d 2.8
in 1993 700/300 \u003d 2.3

This is the number of Czech crowns per one crown of short-term obligations.

The current liquidity ratio shows how many times short-term liabilities are covered by the company's current assets, i.e. how many times a company is able to meet the claims of creditors if it turns into cash all the assets at its disposal at the moment.

If the firm has certain financial difficulties, of course, it repays the debt much more slowly; additional resources are sought (short-term bank loans), trade payments are postponed, etc. If short-term liabilities increase faster than current assets, the current liquidity ratio decreases, which means (in unchanged conditions) the company has liquidity problems.

The current liquidity ratio depends on the size of individual active items and on the duration of the turnover cycle for certain types of assets. The longer their turnover cycle, the higher the “security level” of the company would seem. However, it is necessary to separate the actually functioning assets from those that outwardly improve the considered indicator, but in fact do not have an effective impact on the activities of the enterprise. Thus, the current liquidity ratio depends on the structure of reserves and on their correct (actual) assessment in terms of their liquidity; from the structure of receivables to be repaid due to the expiration of the statute of limitations, bad debts, etc.

The current liquidity ratio shows the extent to which short-term liabilities are covered by short-term assets that must be converted into cash for a period approximately corresponding to the maturity of short-term debt. Therefore, this indicator measures the ability of an enterprise to meet its short-term obligations.

According to the standards, it is believed that this coefficient should be between 1 and 2 (sometimes 3). The lower limit is due to the fact that the current assets must be at least sufficient to pay off short-term liabilities, otherwise the company may become insolvent for this type of loan. The excess of current assets over short-term liabilities by more than two times is also considered undesirable, since it indicates an irrational investment by the company of its funds and their ineffective use. Besides, special attention when analyzing this coefficient, it turns to its dynamics.

Accounts receivable in the balance sheet have already been cleared of doubtful debts. The stocks are easily marketable.

JSC "Kovoplast" is able to cover its obligations at the expense of current assets.

Quick ratio (acid test, quick ratio). Not all assets of a company are equally liquid; the least liquid item of current assets with the slowest turnover can be called inventories. Cash can serve as a direct source of payment of current liabilities, and stocks can be used for this purpose only after they are sold, which implies not only the presence of a buyer, but also the presence of the buyer of funds. This includes stocks not only finished products, but also semi-finished products, raw materials, materials, etc. Stagnation finished products may disrupt the marketability of stocks. Therefore, when measuring the ability to fulfill obligations, when testing liquidity at a certain moment, stocks are excluded.

Quick liquidity ratio \u003d ("Current assets" - "Inventories" \\ "Short-term liabilities"

For analysis, it is useful to consider the relationship between the quick ratio and the current ratio. A very low quick liquidity indicator indicates too much weight of reserves in the company's balance sheet. A significant difference between these indicators is noted mainly in the balance sheets of commercial companies, where it is assumed that stocks are quickly circulating and have high liquidity. In enterprises with a seasonal nature, there may also be large reserves, especially before the start of the sale season or immediately after its end. However, this seasonal "irregularity" levels off throughout the year.

In the company "Kovoplast" the urgent liquidity ratio can be considered satisfactory, the company is able to cover its obligations and does not feel the need to sell its stocks.

The most liquid items of circulating assets are funds that the company has in bank accounts and in the cash desk, as well as in the form of securities. The ratio of cash to short-term liabilities is called the absolute liquidity ratio. This is the most stringent criterion of solvency, showing what part of short-term obligations can be repaid immediately.

Absolute liquidity ratio \u003d (Money + Short-term securities) \\ Short-term. obligations

Asset liquidity

Asset liquidity is the ability of assets to compete in relation to market prices. The very fact of being converted into money is liquidity. There are three groups of assets in the financial world - highly liquid, low-liquid and illiquid assets.

Highly liquid assets are, of course, the cash itself and the securities of the largest companies.
Real estate, shares and small companies are considered to be low liquidity.
Illiquid assets are those assets that are not a product of the stock markets and do not generate interest from other shareholders.

A company achieves high liquidity if its assets are bought at a price much higher than they are sold, this difference determines the indicator and level of liquidity, which is achieved mainly when there are a large number of buyers and sellers in the market. Organizations often artificially raise trading volumes in order to trigger asset deals.

Before buying shares of small companies, it is very important to forecast the market during quiet times and during market shocks, otherwise the purchase of such shares may result in a financial loss or freezing of money during a crisis, although the price of low-liquid assets in difficult financial periods can sometimes reach a high level.

To summarize: asset liquidity is the ability of assets to be quickly sold at a price close to the market price.

Liquidity calculation

The purpose of the liquidity analysis is to assess the company's ability to timely and fully fulfill short-term obligations at the expense of current assets.

Liquidity (current solvency) is one of the most important characteristics financial condition organizations that determine the ability to pay bills on time and is actually one of the indicators of bankruptcy. The results of the liquidity analysis are important from the point of view of both internal and external users of information about the organization.

Calculation and interpretation of key indicators

The following indicators are used to assess liquidity:

The total liquidity ratio characterizes the company's ability to fulfill short-term obligations at the expense of all current assets. Classically, the total liquidity ratio is calculated as the ratio of current assets (current assets) and short-term liabilities (current liabilities) of the organization.

The current liabilities of the Russian Balance Sheet contain elements that, in their essence, are not liabilities to repayment - these are deferred income and reserves for future expenses and payments. When assessing the organization's ability to pay off short-term obligations, it is advisable to exclude these components from the current liabilities.

Total liquidity \u003d Current assets / (Current liabilities - (BP Income + EDP Reserves))

Where
BP income - deferred income, monetary units
PRP reserves - reserves for future expenses and payments

The above elements are reflected in the composition of short-term liabilities.

All indicators used in calculations must refer to the same reporting date.

The absolute (instant) liquidity ratio reflects the company's ability to fulfill short-term obligations at the expense of free cash and short-term financial investments

K-t of absolute liquidity \u003d Cash + KFV / (Current liabilities - (Income BP + Reserves PRP))

Where
KFV - short-term financial investments, monetary unit

The urgent (intermediate) liquidity ratio characterizes the company's ability to fulfill short-term obligations at the expense of the more liquid part of current assets.

When calculating this indicator, the main issue is the division of current assets into liquid and low-liquid parts. This issue in each specific case requires a separate study, since only cash can be unconditionally attributed to the liquid part of assets.

In the classical version of calculating the intermediate liquidity ratio, the most liquid part of current assets is understood as cash, short-term financial investments, non-overdue receivables (accounts receivable) and finished goods in stock.

K-t of urgent liquidity \u003d Cash + KFV + Deb. Debt + Finished Goods / (Current Liabilities - (Income of BP + Reserves of EDP))

For enterprises with significant reserves for future expenses and (or) deferred income, liquidity ratios calculated without adjusting current liabilities will be unreasonably underestimated. It should be borne in mind that the liquidity indicators of Russian enterprises are already low.

When calculating liquidity indicators of an enterprise, there is less difficulty than when interpreting them. For example, the managerial interpretation of the absolute liquidity indicator in fractional terms (0.05 or 0.2) is difficult. How to evaluate whether the obtained value is optimal, acceptable or critical for the enterprise? To get a clearer picture of the liquidity state of the enterprise, it is possible to calculate the modification of the absolute liquidity ratio - the ratio of coverage of average daily cash payments.

The meaning of such a calculation is to determine how many "payment days" are covered by the funds available to the company.

The first step of calculation is determining the amount of average daily payments made by the organization. The source of information on the value of the average daily payments can be the report on financial results (form N2), or rather, the sum of values \u200b\u200bfor the items of this report "Cost of sales", "", "Administrative expenses". Non-cash payments such as depreciation must be deducted from this amount. Such a recommendation is given in foreign literature. However, it is difficult to use it directly in relation to Russian enterprises.

First, Russian enterprises often have significant stocks of materials and finished products in stock. In this regard, the quantity real paymentsrelated to the implementation production process, can be much more than the cost of sales reflected in the N2 form. Another feature russian businessthat should be taken into account in the calculations - barter transactions, in which part of the resources used in the production process is paid not in money, but by the products of the enterprise.

Thus, to determine the average daily cash outflows, it is possible to use information on the cost of goods sold (less depreciation), but taking into account changes in the Balance items "Inventories", "Work in progress" and "Finished goods", taking into account tax payments for the period and net of material resources received through barter.

It is correct to take into account both positive (increase) and negative (decrease) increments in inventories, work in progress and finished goods.

Thus, the calculation of average daily payments is carried out according to the formula:

Cash payments for the period \u003d (s / s of manufactured products + administrative expenses + commercial expenses) for the period * (1 - the share of barter in costs) - for the period + Tax payments for the period * (1-share of barter in taxes) + Increase in stocks of materials , work in progress, finished goods for the period * (1 is the share of barter in costs) + .. other cash payments.

The source of information on the cost of goods sold is the statement of financial results. The source of information on the amount of increments in inventories, work in progress, finished goods is the aggregated balance sheet.

Note that for the calculation it is necessary that

Information on form No. 2 was presented for the period (not on an accrual basis);
all indicators used in the calculations refer to the same time period.

For a more accurate calculation of average daily payments, in addition to information on the costs of production and sales of products, you can take into account tax payments for the period, the cost of maintaining the social sphere and other periods. However, it is necessary to observe the principle of reasonable sufficiency - in the calculations it is recommended to take into account only "significant for" payments. Thus, businesses can create individual modifications to the formula for calculating average daily payments.

For example, from the cost of sold products depreciation charges may not be excluded. Thus, it is possible to offset part of other payments that need to be included in the calculation (for example, taxes or payments on social sphere).

The total amount of taxes paid for the period is not directly allocated in the form No. 2, therefore it is possible to limit it (highlighted in the form No. 2).

If the share of netting and barter in the enterprise's calculations is small, you can ignore the correcting factors of the formula, denoted as (1-share of barter).

If the share of barter (offsetting) in the organization's calculations is small and other cash costs are comparable to the amount of depreciation charged for the period, the calculation of cash costs for the period can be carried out using the formula

Cash payments for the period \u003d (c / c of manufactured products + administrative expenses + selling expenses + income tax + Increase in stocks of materials, work in progress, finished goods) for the period.

To determine the value of the average daily payments, it is necessary to divide the total cash payments for the period by the duration of the analyzed period in days (Int).

Average daily payments \u003d cash costs for the period / Interval

To determine how many "payment days" the cash available to the company covers, the balance of funds on the Balance must be divided by the amount of average daily payments.

Coverage ratio of average daily payments in cash \u003d Cash balance (by Balance) / Average daily payments

When calculating the coverage ratio of average daily cash payments, a fair remark may arise: the cash balance on the Balance may not accurately characterize the amount of cash that the company had during the analyzed period.

For example, shortly before the reporting date (the date reflected in the Balance Sheet), large payments could have been made, and therefore the balance of funds on the Balance is insignificant. The opposite situation is possible: during the analyzed period, the company's cash balance was insufficient, but shortly before the reporting date, the customer repaid the debt, and therefore the amount of funds in the company's current account increased.

Note that both the classic absolute liquidity indicator and liquidity in payment days are based on the data shown in the Balance Sheet. In this regard, the error of both coefficients is the same.

The obtained values \u200b\u200bof liquidity in days of payments are more informative than liquidity ratios and make it possible to determine the values \u200b\u200bof absolute liquidity acceptable for the enterprise.

For example, the head of an enterprise that has stable settlement terms with suppliers and buyers and manufactures serial products, believes that the coverage ratio of average daily cash payments of 10-15 days is quite acceptable. That is, the balance of funds covering 15 days of average payments is considered acceptable. At the same time, the absolute liquidity ratio can be 0.08, that is, be lower than the value recommended in Western practice of financial analysis.

Calculation of liquidity indicators acceptable for this enterprise (organizations)

In Western practice, to assess the liquidity of an enterprise (organization), it is used comparative method, at which the calculated values \u200b\u200bof the coefficients are compared with the industry average. Despite the fact that the optimal values \u200b\u200bof liquidity ratios for a particular industry and a particular enterprise are unique, the following values \u200b\u200bare often used as a benchmark:

For the total liquidity ratio - more than 2,
for the absolute liquidity ratio - 0.2 - 0.3,
for the intermediate liquidity ratio - 0.9 - 1.0.

In Russia, there is still no updated statistical base for optimal values \u200b\u200bof liquidity indicators of enterprises (organizations) in various fields of activity. Therefore, in Russian practice, when assessing liquidity, it is recommended

Pay attention to the dynamics of changes in the coefficients;
determine the values \u200b\u200bof the coefficients that are acceptable (optimal) for this particular enterprise

It is known that an organization's ability to meet its current obligations depends on two fundamental points:

Terms of mutual settlements with suppliers and buyers;
the degree of liquidity of current assets (property structure)

The conditions listed above are basic when calculating the total liquidity indicator acceptable for a given enterprise.

The calculation of the permissible value of total liquidity is based on next rule - to ensure an acceptable level of liquidity of the organization, it is necessary that the least liquid current assets and part of the current payments to suppliers, not covered by receipts from buyers, were financed from equity capital. Thus, the first step in the calculation is to determine the amount of own funds required to ensure uninterrupted payments to suppliers, as well as to allocate the least liquid part of the organization's current assets.

The sum of the least liquid part of current assets and equity funds required to cover current payments to suppliers is the total amount of equity funds that must be invested in the organization's current assets to ensure an acceptable level of liquidity. In other words, this is the amount of current assets that must be financed from its own funds.

Knowing the actual value of the organization's current assets and the value of current assets, which should be financed from its own funds, it is possible to determine the acceptable amount of borrowed sources of financing current assets - that is, the allowable amount of current liabilities.

The total liquidity ratio, acceptable for a given enterprise, is defined as the ratio of the actual value of current assets to the estimated allowable value of current liabilities.

Liquidity management

Typically, companies and businesses have a very large number of different accounts opened in many banks. Financial services face complex challenges on a daily basis to ensure the liquidity of aggregate funds to support payment obligations:

From what accounts, how much, when and where to transfer funds?
In what order should funds be transferred?
How to prevent cash flow gaps?
What is the minimum required cumulative bank balance, etc.

The Liquidity Management solution, which is based on the functionality of SAP Cash and Liquidity Management, provides financial management necessary tool to fulfill all the emerging tasks of managing cash flows.

Liquidity management is integrated with other application components such as cash inflows / outflows from financial accounting, purchasing management and sales management.

Liquidity management performs the following operational tasks:

Daily Cash Allocation (Short-Term View)
o Processing bank statements
o Filling in the Daily Summary (cash position) with additional information
o Making payments
o Concentration of funds in accordance with the payment strategy
o Execution of financial transactions
Daily liquidity forecast (mid-term view)
o View current orders, delivery status, invoices
o Analysis of currencies and financial transactions
Regular liquidity planning (long-term view)
o Analysis of liquidity plans (payment calendar)
o Development of an effective liquidity strategy

The daily financial summary (short-term view) is the result of entering all payments within a short time horizon. A daily summary of the state of finances is provided from various sources:

Bank transactions and transactions of the current account in the bank;
expected incoming or outgoing payments from investments / raising funds in,
FI postings to G / L accounts relevant to cash management
manual entry of individual entries (advice notes);
cash flows of business transactions managed through the Treasury Management component.

The liquidity forecast (medium-term view) shows the movement of liquidity through the accounts. The information displayed relates to the expected cash flows.

The liquidity forecast is based on incoming and outgoing payments for each customer and vendor position. Because the planning and forecasting of these payments is usually long-term, the likelihood that payment will be made on the scheduled date is less than the likelihood of payment recorded in the daily financial summary.

The liquidity forecast integrates incoming and outgoing payments from financial accounting (example: open items), sales (example: orders), and purchasing (example: purchase orders) to analyze the medium and long-term dynamics of liquidity.

Liquidity risk

Liquidity risk is one of the main types that a risk manager should pay attention to. It is necessary to distinguish between two similar in name, but essentially different, concepts of liquidity risk: - liquidity risk is the risk that the real price of a transaction may differ greatly from the market price for the worse. This is market liquidity risk. - liquidity risk is understood as the risk that the company may become insolvent and will not be able to fulfill its obligations to counterparties. This is the balance sheet liquidity risk. One of the consequences associated with the process of finance and financial risk was the increased influence of market liquidity on portfolio risk.

Almost all modern models and methods for assessing the market risk of a portfolio require the input of the values \u200b\u200bof the prices of the assets that make up the portfolio as input data. As a rule, the average market prices at some point in time or the price of the last transaction are used. But the real price of each particular transaction almost always differs from the average market price. There is no concept of "market price" in the market; at each moment of time there is a demand price and a supply price.

As long as the market situation is stable and it is in a balanced state, the costs of concluding a deal do not have a strong impact on the portfolio risk, which can be accurately estimated. But when the market goes out of balance, a panic or crisis begins on it, transaction costs can increase tens and hundreds of times.

To conduct any operation on the market, it is necessary to have a counterparty to the transaction who wants to perform the opposite operation. In the event of a market crisis, this is violated. If the majority of market participants strive to complete a transaction in one direction, then there will not be enough counterparties for all market participants. If the transaction is large, you will either have to spend a lot of time waiting for a suitable price, subject to all the time market risk, or incur high transaction costs due to liquidity risk.

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Question "What is the liquidity of an enterprise" is most often asked in context, but is discussed below in a broader sense.
The market economy dictates its own terms. Any entrepreneur wants to deal only with those companies that are able to pay off all their obligations within the agreed time frame. Therefore, it is so important to understand what indicators of the financial condition of the enterprise exist and what they mean. One of these indicators is the liquidity or the ability of a particular company to use the available circulating assets to quickly convert into money in order to pay off all creditors.

Definition of the concept of liquidity

Liquidity is the ability of material resources to quickly turn into money at a value that is as close as possible to the market value.

Money in the economy has the most important feature - it is completely liquid, i.e. they can be used as a means of payment at any time. Roughly speaking, a liquid material resource is quickly converted into money.
The concept of liquidity can be applied to an enterprise, banks, securities, assets and liabilities. Depending on the time it will take to convert the asset into cash, there are several types of liquidity:

Let's figure out what liquidity is on a real example: shares of a well-known gas company on the market can be sold in a couple of seconds, the difference in value compared to the purchase price will not be noticeable at all - only a couple of hundredths of a percent. And the shares of a little-known company will either be sold for much longer, or, as a result, will lose more than 10% of their market value.

Who needs liquidity and why

This is an important economic factor that potential investors first of all pay attention to when choosing a particular company for the purpose of investing their capital in it. This will allow him to invest funds as efficiently as possible, and if the option turns out to be a failure, he will always be able to quickly perform the reverse conversion of the firm's asset into money. People who are far from the investment process are interested in liquidity in order to understand which most reliable bank to give preference to.

The liquidity of the company is analyzed in order to assess its real financial position in the short and medium term.

What does it mean? The specialist, on the basis of the balance sheet (namely, the projected performance results) and the profit and loss statement, receives information about the availability of the company at the moment of a sufficient amount of working capital to pay off all obligations.

Liquidity, profitability and solvency: debriefing

Understanding what is liquidity, many people confuse it with ability to pay, believing that these concepts are identical. This is not entirely true. To determine liquidity, special ratios are used that show whether there is enough working capital to pay off short-term liabilities (even with small delays in payments).
The concept of solvency also means the presence of a sufficient amount of money or assets to pay off obligations, but short and long-term obligations. Solvent is called a company that has no overdue debts to creditors and has enough cash on its current account.

Conclusion: liquidity is the potential ability of a company to pay off short-term liabilities, solvency is a real opportunity to fulfill obligations to creditors.

It is impossible to ignore profitability, which serves as another indicator of economic efficiency and is also related to liquidity. Profitability can be achieved even with low liquidity.

For example, a small, newly launched mover company has two used cars and a small staff. The company received a loan for development. Liquidity in this case is low, after the sale of the property, the money will hardly be enough to cover the debt. But the form can generate large daily receipts, so the business pays off and is cost effective. Conversely, with low revenues, even an enterprise with high liquidity may soon go bankrupt.

Liquidity analysis. How and why to conduct it?

Thanks to the analysis of liquidity, one can judge the financial stability of a company, how it “keeps afloat” and clearly see whether it will be able to meet its obligations after the sale of existing assets and liabilities. Therefore, it is so important to analyze the financial condition of the enterprise.
Different users use this information from the outside:

Raw material suppliers for the company are most interested in the absolute liquidity indicator (what is the current total value of the company's assets, which can be used to solve the problem of current debts);
It is important for banks issuing loans to an enterprise to know the intermediate liquidity ratio (the ratio of high liquidity assets to short-term liabilities or liabilities);
Financial stability is important for investors and buyers of company shares, which is determined by the parameter of current or urgent liquidity (its ability to pay off debts if there are suddenly difficulties with the process of selling products).

The main sign of good liquidity - this is the excess of the company's current assets over its short-term liabilities.

Liquidity of money - the ability at any time or within a certain period of time to turn money into any kind of goods or services that the owner of money will need, is their natural property as a means of circulation and means of payment. Liquidity determines the possibility of monetary circulation, i.e. movement of money in society and the economy as a means of paying for private and public debts. This includes not only commodity circulation, but also the movement of labor and capital. Unfortunately, monetarist theories narrow the problems of money circulation to servicing commodity circulation. With this approach, the central problem of monetary regulation becomes the question of the amount of money required for circulation.

The economic tradition, from W. Petty and K. Marx to modern economists, adheres to the quantitative theory of money required for circulation. With all the discrepancies in the theoretical explanation of the ratios and content of individual quantities, the content of this theory is the same, changing mainly depending on changes in the money material - from precious metals to credit money. For the first time, the natural amount of money in circulation in the form of the simplest formula was defined by Karl Marx as follows:

"... for a request for a given period of time:

The number of revolutions of any current assets, including goods in cash, is determined by the formula
n \u003d c / s, (2.2)
where n is the number of turnovers of working capital for a certain period of time; c - the volume of sales of goods (equal to the sum of the prices of goods); S is the average amount of working capital.
We represent the formula in the form
M \u003d s / n, (2.3)
where M is the mass of money functioning as a medium of circulation. "

From a comparison of the above formulas, we obtain that M \u003d c / n \u003d S, i.e. "the mass of money in circulation" is equivalent to the average balance of circulating assets for the period serving a given volume of sales of goods.

However, this situation does not fully correspond to reality. Let us assume that the working capital of the country serving the general commodity circulation is considered. Obviously, the working capital cannot be all presented simultaneously in monetary form. Part of this capital should be presented in the form of goods at the stage of production, preparation of goods for shipment, on the way, in the trade network, etc.

Reasoning about the rate of money turnover based on the equality T \u003d M or M \u003d T in each individual commodity transaction does not stand up to criticism from the standpoint of reality, because the money supply is, first of all, a part of the country's working capital, and the needs for the sale of goods in money are determined by the size and speed of realization of the social product, as well as generally accepted forms of payment and settlement.

When analyzing this issue It is extremely important to note that in reality, the money in the national economic circulation breaks up into three streams, which at times merge again:

The first flow is money used to purchase goods by some participants in the economic process from others. This is money flowing from buyers to sellers - suppliers of raw materials, materials, equipment, etc. In other words, the cash flow from the sale of the final product to the enterprises that extract the initial raw materials. Its value is actually determined depending on the prices and volumes of purchased products.

At the same time, at each stage of the process of production and sale of products, part of the funds leaves the process of commodity circulation and forms the monetary income of the population. The latter have their own cycle and patterns of circulation. The main feature of the movement of money in this flow: the timing and frequency of income does not coincide with the speed of spending money on the purchase of goods and services. In fact, it is necessary to distinguish not one, but at least two rates of money turnover:

when paying income;
when spending income on the purchase of goods, i.e. as a means of servicing commodity circulation.

In the third flow, part of the cash is saved by the participants economic processes and then invested in the further development of production in the form of capital.

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