The liquidity of an enterprise is the most important characteristic used in assessing its financial condition. In the process of analyzing liquidity, enterprises are considering its ability to timely pay off financial obligations through the sale of assets.
Instructions
Step 1
In order to determine the current liquidity of the organization, use the current liquidity ratio. It also has another name - coverage ratio. This indicator characterizes the overall provision of the enterprise with circulating assets and shows how many rubles of current assets fall on one ruble of current liabilities. The current liquidity ratio is calculated as the ratio of the actual value of all current assets to the organization's short-term liabilities.
Step 2
When calculating the current liquidity ratio from the total volume of current assets, subtract the amount of value added tax on acquired assets and the amount of deferred expenses. Reduce short-term liabilities by the amount of deferred income, reserves for future expenses and payments, as well as consumption funds. The logic behind the calculation of this indicator is that the organization pays off its short-term liabilities for the most part at the expense of current assets. This means that if current assets exceed current liabilities, the company is theoretically successful.
Step 3
Remember that the value of the current liquidity indicator must be at least two. However, this value is indicative. The growth of the current liquidity ratio in dynamics is a positive aspect of the company's activities.
Step 4
When assessing the current liquidity in conjunction with this ratio, you can use the indicator of the organization's own working capital. It is defined as the difference between equity and non-current assets divided by current assets. This coefficient characterizes the amount of working capital formed at the expense of the company's own capital. The ratio of the provision of own circulating assets must be at least 0, 1. If both of the indicators under consideration do not meet the standard values, then the enterprise is considered illiquid. It can be restored if at least one of them meets the established standard.
