Liquidity is an enterprise's ability to generate cash, and financial indicators reflecting enterprise liquidity include current ratio and quick ratio.
The current ratio is an index reflecting the proportional relationship between the total current assets and the total current liabilities of an enterprise. The current assets of an enterprise are greater than the current liabilities, which generally indicates that the enterprise has strong short-term debt repayment ability. Quick ratio is an index reflecting the ratio between quick assets and total current liabilities, which is used to judge the payment ability of enterprises.
The core reason for the tight liquidity of enterprises is the weak liquidity of current assets: (65,438+0) the high proportion of restricted assets leads to the high solvency; The monetary funds and accounts receivable of enterprises are restricted to a greater extent, further reducing the funds available for debt repayment. (2) The decrease of operating efficiency leads to the increase of working capital demand; When the main business structure is relatively stable, once the operating efficiency declines, it will increase the demand for working capital and aggravate the liquidity tension. (3) The crowding out of current assets by non-operating activities: the formation of current assets in non-operating activities is often related to the capital exchange between affiliated enterprises, which lacks strong binding force on capital recovery.
Current assets refer to the assets that an enterprise can realize or use within a business cycle of one year or more, mainly including monetary funds, short-term investments, notes receivable, accounts receivable and inventories.
Current liabilities, also known as short-term liabilities, refer to debts that will be repaid within a business cycle of one year or more, including short-term loans, notes payable, accounts payable, advance receipts, dividend payable, taxes payable, other temporary payments payable, accrued expenses and long-term loans due within one year.
Generally speaking, the higher the current ratio, the stronger the liquidity of enterprise assets and the stronger the short-term solvency; On the contrary, it is weak. It is generally believed that the current ratio should be above 2: 1, and the current ratio is 2: 1, that is to say, the current assets are twice as much as the current liabilities, and even if half of the current assets cannot be realized in a short period of time, all the current liabilities can be guaranteed to be repaid. However, if the proportion is too large, it means that the current assets occupy more, which will affect the turnover efficiency and profitability of operating funds. Therefore, it is generally considered that the reasonable minimum flow ratio is 2.