Without any doubt, any financial manager must be able to analyze the indicators contained in the financial statements of the enterprise for the benefit of which he works. It is difficult to overestimate the benefit of this analysis, since it is on its basis that the entire work of the financial department is built.
Western economists and analysts recognize the profit and loss statement as the most significant form of reporting, as nothing more than profit is the most important final indicator of performance. In Russia, the priority is given to the balance sheet, which is also not without meaning. Analyzing its constituent indicators, we can conclude about the financial stability of the company, as well as the level of its liquidity. Further, it will be considered exactly the features of how to evaluate the liquidity of the balance sheet of the enterprise.
Both domestic and foreign practices offer various options for such an analysis, but the most widespread is the compilation and study of the so-called liquidity balance. Using this method, balance sheet liquidity is determined by combining the liability and asset indicators into the same number of groups, followed by a comparison of the obtained values.
These groups are formed in the order of decreasing liquidity (for an asset) or in the order of decreasing urgency (for a liability). Each financial manager can choose the number of groups at his discretion, but we will consider the most traditional option, in which the liquidity of the enterprise balance is studied by pairwise comparison of four “baskets” of assets and liabilities.
Before considering the composition of individual groups, it is necessary to explain a little the meaning of the concept of "liquidity". This category characterizes the ability of a property with the least possible loss and in the least amount of time to take a monetary form. Thus, the most liquid asset, obviously, is money. And, for example, the liquidity of shares is determined by the demand for them: the more people who want to buy them, the easier you can sell them at a normal market price.
As already mentioned, money is more liquid than any other asset, therefore it is they that are included in the first group. Also, it can include short-term financial investments, doubts about which liquidity are absent. The second group consists of quick-selling assets (other current assets and short-term receivables). The third - from all stocks and long-term financial investments (from them the amounts of participation in the capitals of other organizations should be excluded). Accordingly, all other assets form the fourth group and are recognized as being slowly realized.
A number of groups are also formed in the liability. Accounts payable and other short-term debts are included in the first group, the remaining short-term liabilities - in the second, and long-term - in the third. Liabilities that are not debt go to the formation of the fourth group.
To determine the liquidity of the balance sheet, a comparison is made of the size of the created groups. The first three groups of assets must exceed the corresponding group of liabilities. The ratio between the fourth groups is regulatory. If these conditions are met, then the financial condition of the enterprise is at an acceptable level. If there are deviations, then measures must be taken to bring the structure of the asset and liability into line.
During the implementation of the financial management process, it is very important to evaluate the liquidity of the balance sheet. Enterprises that do not monitor these indicators run the risk of being in a difficult position when they cannot pay off their debtors.