Many enterprises in the process of carrying out activities face financial problems. In order to solve them, it is necessary to carry out measures for financial diagnostics and subsequent financial recovery. When making a "financial diagnosis", it is easiest to use certain financial ratios and indicators. As a rule, the analysis is based on the study of financial ratios belonging to four groups: liquidity ratios , financial stability indicators , as well as profitability and business activity indicators. Consider more closely the coefficients characterizing the liquidity of the enterprise.
The first and most general is the indicator, which has a very characteristic name - the coefficient of total liquidity. With its help, there is a comparison of working capital at the disposal of the studied company, and short-term debts that were formed in the course of activities. Obviously, current assets must fully cover these debts - this is a liquidity requirement. On the other hand, there is a requirement of efficiency - it is believed that more than double excess of current assets over liabilities with the shortest term indicates an inefficient use of these assets.
However, the normal value of this indicator for a particular enterprise may differ from the generally accepted one. To determine it, it is necessary to proceed from the assumption that current assets after repayment of obligations should be sufficient to continue operations. In other words, current assets should normally be equal to the sum of current liabilities and inventory standards. Interestingly, this ratio, having its own boundaries, is a limiter for another indicator, which is called the intermediate liquidity ratio.
The ratio of current assets to term liabilities also determines the ratio of quick (intermediate) liquidity. However, in this case, the least liquid ones, which are traditionally recognized as reserves, should be excluded from the composition of current reserves. It can be formulated in such a way that the interim liquidity ratio shows the extent to which the firm will be able to repay the most urgent debts when recovering the entire amount of receivables. The lower limit of the indicator is also set to unity.
The above calculation is simple, but not entirely accurate. The fact is that some stocks may be more liquid than individual short-term investments or, for example, dubious “receivables”. The intermediate liquidity ratio is more accurately determined if the calculation includes the cost of products sold on a prepayment basis and excludes not only illiquid financial investments, but also receivables in part of which repayment is doubtful.
The solvency of the enterprise, that is, its ability to immediately make settlements on the most urgent obligations, is described by the coefficient of the same name. For its calculation, only the most liquid assets are left in the numerator . Obviously, this will be cash and property equivalent to them. It should be borne in mind that in no case should you include illiquid financial investments in the calculation, since this will distort the real situation. Most Russian organizations have this indicator at a level of no more than 0.1. Such a level in the Western economy is clearly unacceptable, since it adopted a restriction from 0.2 from below to 0.25 from above.
In some cases, an entity may calculate a liquidity ratio when raising funds. It characterizes what part of the most urgent obligations can be repaid if all the stocks of the enterprise are realized.
For an accurate analysis of activities, it is necessary to calculate not only, for example, the intermediate liquidity ratio, but also all the others. It is also very useful to study the dynamics of liquidity with the identification of trends.