Quick liquidity ratio: the formula for the balance sheet. Indicators of solvency

One of the signs of financial stabilityThe company is a solvency. If an enterprise can pay its short-term obligations at any time using cash resources, it is considered solvent.

This article examines such concepts as liquidity, the structure of the analytical balance, the formula for quick liquidity ratios, current and absolute liquidity.

Enterprise solvency

The main indicator of solvencythe company is the absence of overdue payables and the availability of a sufficient amount of cash on the current account. These conditions will be met if the amount of a firm’s liquid assets exceeds its short-term liabilities at a fixed point in time.

Current solvency analyzed byon financial flows: cash flow should cover the fulfillment of current obligations. Prospective solvency is investigated using liquidity indicators.

Balance liquidity is the company's abilityTurn your assets into cash to pay off liabilities. The less time required for this operation, the higher the liquidity of such an asset. At the same time, the period of circulation shall not exceed the period of performance of the obligation.

The liquidity of the company - a more capacious concept.It can be defined as the ability of an enterprise, through internal and external sources, to seek means of payment in order to repay its obligations.

Tasks for the analysis

Analysis of liquidity at the enterprise is carried out in order to verify and adjust the management of the company's solvency. When conducting this analysis, evaluate:

• liquidity of current assets of the company;
• liquidity of the balance sheet of the company as a whole;
• the solvency of the company at the moment and in the future;
• general company policy aimed at maintaining the required solvency;
• development prospects and recommendations for addressing possible adverse factors.

Asset grouping

To analyze the liquidity of the balance, you need to compare the assets and liabilities of the company. For convenience, it is customary to divide them into several groups, that is, to make an analytical balance.

The balance assets, depending on the degree of their liquidity, are divided into 4 groups.

• The A1 group includes absolutely liquid assets. This category includes financial investments (short-term) and cash. In the balance sheet, these are lines with codes 1240 and 1250.
• Group A2 includes assets whose implementationmay take relatively little time. These include accounts receivable (according to the balance sheet, code 1230). Also in some sources to the A2 group include other current assets. In this group, liquidity depends on the solvency of the counterparties of the company, on the forms of settlement and the speed of payments.
• A3 group contains slowly sold assets. This category includes product stocks andmaterials, work in progress, VAT. It will take some time to convert their cash. In the balance sheet, the A3 group includes lines with codes 1210, 1220 and 1260. Some authors include in this category and fixed assets (code 1150).
• Finally, the most difficult to sell assets are classified as A4. This is the entire Section I balance sheet (code 1100).

Categories of liabilities

All liabilities of the balance are divided depending on the urgency of their repayment into groups:

• Group P1 is considered the most urgent.liabilities to which it is customary to assign short-term payables to employees of the organization, budget and extra-budgetary funds, contractors and suppliers, etc. (code 1520).
• In group P2 include short-term liabilities. This category includes short-term loans and borrowings (code 1510), other liabilities (code 1550).
• Group P3 includes long-term loans and borrowings (code 1410).
• Group P4 includes permanent liabilities, including equity funds (codes 1300, 1530, 1540).

Liquidity ratios

In addition to the absolute indicators apply relative indicators of solvency of the enterprise. There are coefficients of absolute, fast and total liquidity.

Consider the absolute liquidity ratio.It reflects the share of short-term liabilities, which the company can quickly repay using the funds currently available. Calculated as the ratio of the indicator A1 to the sum of P1 and P2. The high value of this ratio indicates that the company will repay its debts with high probability.

The next factor is the value of the currentliquidity. It demonstrates how the company's current liabilities are covered by its current assets. The indicator is calculated as follows: current assets (A3 + A2 + A1) are divided into short-term liabilities (P1 + P2). The higher this figure, the greater the confidence of creditors that the obligations will be repaid.

Finally, quick liquidity isEssentially, an intermediate value. It helps to assess how the firm will be calculated on its obligations (short-term) in the case when it is not possible to realize the stocks.

The presented liquidity ratios are calculated not only for the internal purposes of the enterprise, but also for external users.

Quick liquidity calculation

Calculation of quick ratiois as follows: the sum of A1 and A2 is divided by the sum of P1 and P2. That is, we put in the numerator: cash + financial investments (short-term) + accounts receivable. The denominator will be the amount of short-term borrowed funds, accounts payable and other liabilities.

Using the line code on the balance formula of the quick ratio looks like this:

CD = p. 1250 + p. 1240 + p. 1230 / p. 1550 + p. 1520 + p.

Calculate the ratio of the example of the balance of the fictional company. Unit of measurement - thousand rubles.

According to the balance, the formula for the quick liquidity ratio as of December 31, 2016 will look like this:

Kb = 2 640 + 45 + 225/1 725 + 3 180 + 37 = 0.58.

In the same way, we calculate the indicator as of December 31, 2015:

Kb = 1 570 + 14 + 68/1 615 + 1 925 + 20 = 0.46.

The calculation shows that the rapid liquidity of the enterprise has increased.

Regulatory value

In the economic literature, the value of the coefficientquick liquidity is considered to be normal in the range of 0.5-1 and above. However, the indicator may vary depending on the industry and the area where the company operates. So, for retailers, the figure will be 0.4-0.5.

In the analysis should pay attention not onlyon the overall value of the indicator, but also on the structure of its components. Thus, a significant portion of liquidity may be accounts receivable, which is difficult to collect. In this case, the quick liquidity rate will be the value above one.

The Russian legislation containsseveral standard values. Thus, the Order of the Ministry of Economy of the Russian Federation No. 118 dated 10/18/1997 recommended a quick liquidity rate of one and more with an explanation that at lower values ​​the enterprise needs to constantly work with debtors to prevent late payments.

The Decree of the Government of the Russian Federation No. 52 of January 30, 2003 gives the value of the coefficient for agricultural producers from 1.2 to 1.5.

Risk analysis

The concept of solvency is connected with the enterprise.liquidity risk. It reflects the likelihood that the borrower will not be able to fulfill its payment obligations in full and on time.

Оценку рисков ликвидности проводят на основе уже the above group of assets and liabilities. The risk is the higher, the lower the liquidity of the assets and the shorter the payment period for existing liabilities. The general table is presented below:

Such a group clearly shows the proportionliquid assets and liabilities in the overall structure. Next, carry out a comparison of the values ​​of assets and liabilities within the same risk group. The resulting ratio shows the type of liquidity and the risk zone in which the company is located.

So, the balance of an enterprise is considered liquid if the following inequalities are observed:

A1≥P1, A2≥P2, A3≥P3, A4≤P4 - it is considered that there are no risks at such ratios.

Liquidity is considered to be permissible with the ratio A1

The ratio A1

Finally, with the inequalities A1

conclusions

Liquidity reflects the degree of solvency of the enterprise. In conducting the analysis, various methods are used to obtain a more complete and realistic description of the financial condition of the company.

Using the method of grouping are analytical balance.

Using balance data, coefficient formulasrapid liquidity, current and absolute liquidity, make conclusions about the dynamics of changes in the indicators of assets and liabilities, on the liquidity of balance sheet items, on the compliance of the results obtained with the normative and average industry indicators.

It is important to note that the analysis of liquidity determines the solvency of an enterprise only in the short term (up to 12 months).