An organization's liquidity is a reflection of its financial soundness. Also, it is the company's liquidity that determines the company's ability to fulfill all its obligations at the agreed time. At the same time, such a firm is liquid that is able to cover its own short-term liabilities.
Instructions
Step 1
Pay off your receivables. After all, the liquidity of a company is determined based on relative indicators. For example, the absolute liquidity indicator will reflect the company's ability to fulfill its own short-term obligations in the form of cash flows, as well as short-term financial deposits. This ratio determines what amount of current liabilities must be repaid in a short period.
Step 2
Eliminate the inventory amount from the liquidity calculation. After all, they are the least liquid part of current assets. In this case, you will receive an indicator of quick liquidity, which characterizes the organization's ability to cover current liabilities as a result of the full repayment of existing receivables.
Step 3
Boost your quick liquidity by increasing the growth of your own working capital stocks. In turn, if the growth of this indicator is associated with an increase in the amount of overdue accounts receivable, then this cannot be a positive aspect of the functioning of the enterprise.
Step 4
Restrain the growth of non-current assets, as well as the increase in long-term receivables. At the same time, the current liquidity ratio determines the ability to pay off current liabilities with the condition of repayment of short-term loans and the sale of all current reserves. That is why, in order to increase this ratio, it is necessary to increase the size of the company's equity capital.
Step 5
Issue new shares to raise funds. This will help reduce the impact of factors that can cause a decrease in liquidity. Such factors include: a decline in overall production, bankruptcy of debtors, imperfect legislation, outdated technologies, a shortage of own funds, and an increase in debt.
Step 6
Conduct factoring operations and conclude an assignment agreement (assignment of obligations, transfer of ownership). In addition, improve contractual work and tighten contractual requirements.
