The term in question is an economic value, which, in turn, characterizes the ability of funds to be sold most quickly at the highest price, which is close to market in value. In other words, we can say that the concept of "liquid" means "convertible into money."
It should also be noted that the faster the above process occurs, the higher the feasibility of assets. In relation to goods, the value of the considered value will correspond to its nominal value. Thus, the amount of value added and all kinds of additional discounts will not be taken into account.
Classification
Currently, experts are evaluating the financial results of the economic activity of the enterprise using special indicators. One of them is the current ratio on the balance sheet. Consider this criterion in more detail. To begin with, it should be noted that the calculation of this value is carried out in conjunction with the calculation of the balance sheet. The organization’s ability to repay existing liabilities for the period under review as a result of using current assets for the same period of time most accurately illustrates the current liquidity ratio.
The formulas for the calculation can have a variety of forms, but in most cases the following simplified version of this expression is used: the amount of working capital is divided into liabilities for the period under consideration. However, in this case, of course, it is necessary to remember the degree of liquidity of the component assets.
Thus, the higher the value of the current liquidity ratio, the more confidently we can talk about the viability of the organization. Currently, accounting experts have accepted that the value of the indicator in question, greater than or equal to 1.5, is sufficiently reliable, which, in turn, allows you to maintain the value of the company's shares at a constant level.
Current ratio (formulas)
In addition to the simplified type of the desired expression presented above, there are many different modifications that, to one degree or another, reveal the described action. For example, the formula Ktl = (OA - DZd - ZU) / KO shows the effect of long-term receivables (DZd) and liabilities of the founders (ZU) regarding payments and contributions to the authorized capital fund on the value of current assets (OA).
At the same time, the current liquidity ratio can be expressed (the formulas are obviously different) as follows: Ctl = (A1 + A2 + A3) / (P1 + P2). Such an equation clearly characterizes the share of indicators with varying degrees of feasibility (A1, A2, A3), as well as the urgency of repayment of obligations (P1, P2).
Application
The current liquidity ratio (formulas indicated above) may be of interest not only for the founders of the company or the management of the enterprise, but also for investors. Knowing the value of this indicator, people understand where it is advisable to invest their money.