We assess the liquidity of the balance sheet for assessing the financial position of the enterprise

The accounting reporting of the enterprise isextremely important documents, not only for external users, but also for internal users. The fact is that, based on the reporting data, you can thoroughly analyze the financial situation of the firm, identify problems and even suggest ways to solve them. In the Russian practice on the first place such form of the reporting as the balance sheet is put. Of course, it can not be concluded on the efficiency of the enterprise, but it's quite easy to analyze the financial state. I would like to dwell in more detail on how to assess the liquidity of the company's balance sheet.

Before proceeding to the description of the procedureanalysis, it is necessary to identify the purpose of such research. Liquidity of the balance reflects the extent to which the liabilities and assets of the enterprise are linked to each other in terms of volumes and terms. In other words, the company's urgent debts must be covered by liquid assets.

The simplest technique that allowsto assess the least laborious way, is to build a balance of liquidity. To do this, you must additionally group the balance sheet items so that the number of asset groups is equal to the number of groups of liabilities. And the assets need to be grouped, starting with the most liquid, and liabilities - from the most urgent. Most often, four groups are formed on each side of the balance sheet.

We begin the grouping of assets from the second section,closer to the end of which and contains the most liquid property. Obviously, the first group consists of money and financial investments, which are implemented for a short time. In this case, illiquid assets should be excluded from this group.

The second group consists of assets that can be quickly transformed into money. This requirement is largely met by other current assets, as well as short-term debts of debtors.

Then it is necessary to sum assets that areso quickly in money can not be turned, but you can use them to ensure not the most urgent obligations. This group includes stocks, as well as longer-term financial investments.

All other assets are included in the last - the fourth - the group. This property is most difficult to turn into a cash form, and this indicates its low liquidity.

Group liabilities in terms of urgency, perhaps eveneasier. Other short-term liabilities, as well as accounts payable are recognized as the most urgent obligations, and therefore form the first group.

The second group is created at the expense of all remaining short-term debts, which were not taken into account earlier.

The third and fourth groups are formed respectively by the fourth and third sections of the balance sheet, there is even no need for additional recalculation.

After the groups are created, they need to becompare with each other - the first group with the first, the second - with the second and so on. Absolute liquidity of the balance sheet is characterized by the fact that the assets of the first three groups must correspondingly exceed the amount of liabilities. The fourth group should observe a different ratio, since it indicates that the company has its own working capital.

If these conditions are not observed,to carry out certain activities in order to normalize the structure of the balance. It is clear that the balance will in any case converge, but less liquid assets will compensate for the more liquid only from the point of view of arithmetic, but it is impossible to really use them to repay debts. Liquidity of the balance sheet is a very important criterion, allowing to judge the current situation of the enterprise, as well as its future prospects.

Analysis of the balance sheet
Methods of financial analysis of the enterprise -
Net assets. The order of estimation and calculation.
Passive balance as the basis for adoption
How is the absolute coefficient
Solvency and liquidity
Assessment of the financial condition of the enterprise
Solvency analysis is an important procedure
Liquidity indicators of the organization
Top Posts