Liquidity and solvency of the enterprise: methods of analysis.

Liquidity and solvency of the enterprise are, perhaps, the most important aspect, which is subject to analysis in the course of studying the financial state. In this regard, we will consider the main methods of how to calculate the liquidity of an enterprise and draw a conclusion about the situation in the organization from this point of view.

As you most likely know, liquidity is a general economic category and represents the ability of a property to acquire the monetary form as quickly as possible without loss of value. However, in relation to our situation, the liquidity of an enterprise means compliance with the terms and amounts between its obligations and the property that can be used to pay off these obligations. The liquidity and solvency of the enterprise is determined exclusively by the balance sheet. This, as well as the ease of calculation and significant economic sense make the liquidity analysis one of the most important methods of studying the financial state.

As a rule, to assess the liquidity of an enterprise, first of all, a number of liquidity ratios are calculated . These coefficients represent the ratio of some liquid assets to short-term debts of the enterprise. Under liquid assets in this case are understood fully or partially the current assets of the firm, depending on the specific coefficient. If we include all of the current assets as short-term liabilities , then we can determine the total coverage ratio. It characterizes the adequacy of the total amount of current assets to cover the most urgent debt. Current assets should be sufficient for this, but they should not exceed these liabilities more than twice. If we exclude stocks from the amount of assets (the least liquid part of assets), then we will determine the coefficient of intermediate coverage, which should be at least one. It shows the possibility of repayment of obligations in recovering all receivables. If we calculate the coefficient exclusively for absolutely liquid assets, that is, money and liquid financial investments, the result will be the absolute liquidity indicator. It characterizes the share of short-term liabilities, which can be returned immediately. This share should be at the level of one fourth of the part.

Another method that allows to establish the liquidity and solvency of the enterprise is to build a special liquidity balance. The essence of this method is extremely simple and consists in grouping assets and liabilities into the same number of groups for liquidity and urgency. After the groups are formed, it is necessary to compare them in pairs. Excess of assets over liabilities will be a payment surplus, but vice versa - a drawback. Absolute liquidity will be the situation where surplus is observed for all groups except those that are hard-to-find assets and permanent liabilities. As a rule, when assessing the liquidity of enterprises, the real economy resorts to compiling four groups on each side. As for financial institutions, especially banks, in this case everything is much more complicated. The fact is that correspondence between liabilities and assets is vital for a bank in terms of terms and volumes, so the groups in this case are much more.

If one or another type of analysis has identified an enterprise with insufficient liquidity, then this can lead to the inability to repay its obligations on time and in full. Such a situation can be a harbinger of bankruptcy, therefore it is extremely important to make management decisions aimed at increasing liquidity and solvency of the enterprise.