The balance sheet liquidity is the availability of working capital in such an amount that it is sufficient to pay off the short-term liabilities of this enterprise. Liquidity is the basis of the solvency of each enterprise, that is, its ability and ability to fully and timely fulfill its own payment obligations. An important characteristic affecting the conditions and forms of transactions, incl. the ability to get a loan is solvency.
The period required to convert assets into cash (liquidity of assets) must coincide in time with the maturity of the obligations of the enterprise. Liquidity indicators in most countries are regulated by law, i.e., a specific list of indicators is established and their criteria levels are determined. To assess the activities of enterprises, liquidity indicators are used that determine the acceptable ratios of individual passive and active balance sheet items, as well as ratios within the structure of liabilities and bank assets.
Such a system, as a rule, includes the following liquidity indicators: long-term, current and short-term liquidity. Liquidity indicators reflect the mobility of assets, the stability of liabilities, the correspondence between active and passive operations, the ability of an enterprise to fulfill its obligations.
In Russia, as well as in other countries, balance sheet liquidity standards have been introduced. To assess the financial stability of the enterprise, along with absolute indicators of solvency and liquidity, relative indicators of liquidity of the organization are also calculated.
The main liquidity indicators used in the Russian analysis:
- general indicator of liquidity. Based on this coefficient, a general assessment is given of the change in the financial situation of the enterprise;
- absolute liquidity ratio shows what proportion of short-term debt the company can repay in cash in the near future;
- the critical assessment coefficient shows what proportion of short-term liabilities the company can repay immediately using funds held in short-term securities in various accounts, as well as due to receipts from settlements;
- the current liquidity ratio reflects the adequacy of the company's funds to repay current debts;
- maneuverability coefficient of functioning capital shows the share of functioning capital immobilized in long-term receivables and in inventories;
- the share in working capital assets depends on which industry the organization belongs to;
- the equity ratio of an enterprise reflects the presence of its current assets of the company, which are necessary for its sustainability.
The structure of economic indicators includes absolute and relative liquidity ratios. Absolute indicators are expressed in monetary or physical units, for example, as pieces, weight, volume, dollars, rubles.
Relative indicators are the ratio of two indicators of different or identical dimensions. In the second case, we are talking about dimensionless indicators characterizing the ratio, proportion or rate of change of a particular economic quantity, measured as a percentage or in fractional terms. In the first case - dimensional indicators that characterize the rate of change of a certain value in a specific period of time, the effectiveness of the use of resources, as well as the sensitivity of a particular value relative to the factor that caused its change.
In general, liquidity indicators reflect the solvency of the company in its debt obligations.