Absolute liquidity of balance and conditions of its existence.
Any commercial firm wishes to continue itsactivities as long as possible. This means that the financial position of the enterprise should be to a certain extent stable. And to make a conclusion about the financial situation, it is necessary to conduct some analytical procedures. One of the most important among them, but very simple, is the assessment of the liquidity of the balance sheet.
The purpose of any enterprise is absolute liquidity. Determine whether the balance of the enterprise meets this requirement, you can by creating a balance of liquidity. This is the most common method of analysis both in Russia and in other countries. Its meaning is to compare assets grouped by liquidity, with liabilities, grouped by urgency. Each financial manager can form groups based on research objectives or company characteristics, but we will consider the most traditional option, which implies the division of assets and liabilities into 4 groups.
Absolute liquidity is a criterion,It is possible to assign an asset to the first group. Cash has absolute liquidity, and short-term financial investments are equated with them. It is desirable to identify only those KFV, whose liquidity doubts do not exist.
The second group of assets is quickly realized. They are traditionally referred to as short-term receivables, assuming that it is quickly transformed into cash. In addition to this, other current assets are included here.
Less liquid assets are called slowrealizable, they form the third group. Obviously, the company's reserves, as well as long-term financial investments (with the exception of deposits in the capitals of other organizations) are required here.
Finally, the least liquid assets are represented by fixed assets, other non-current assets, as well as long-term receivables.
Likewise, we group liabilitiesenterprises, ranking the groups in order to reduce the urgency. Thus, the first group will contain the most urgent obligations, which consist of accounts payable and other short-term debts.
The second group consists of all other short-term obligations that were not assigned to the first group.
Long-term obligations in full form the third group of liabilities, that is, you can simply record the total of the 4 section of the balance sheet.
To the fourth group it is customary to refercalled permanent liabilities, that is, those that do not need to be returned. They are presented in the third section of the balance sheet and consist of capital and reserves. As you can see, grouping liabilities is very simple, there is almost no need to recount the results of the balance sections.
To determine whether the absolute liquidity ofbalance of the given enterprise or not, it is necessary to compare the received groups in pairs. From the size of the assets of each group it is necessary to subtract the value of the corresponding group of liabilities. Terms of absolute liquidity of balance - the presence of payment surplus (assets more liabilities) for the first three pairs of groups and a payment deficit (liabilities more assets) for the latter. Compliance with the last condition is especially important because it indicates that the enterprise has its own working capital. This, in turn, is a necessary condition for financial sustainability.
It should be noted that absolute liquiditycan be achieved quite difficult, but to strive for it is definitely worth it. The fact is that the lack of more liquid assets is compensated less liquid only arithmetically, but in practice it will be impossible to use them for repayment of urgent obligations.