Liquidity (finance of company)
See also: Liquidity
The liquidity is a measurement of the capacity of a debtor has to refund his debts on the assumption of the continuation of its activities, unlike the Solvabilité which is placed on the assumption of the discontinuance of business. To measure the liquidity of a Entreprise one evaluates the importance of his cash in hand for his outlays (payment of the suppliers and other beneficiaries, financial interventions, etc), from the three ratios of following assessment:
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general Working capital ratio = (Active circulating)/(Passive exigible in the short run)
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Working capital ratio reduced = (Active circulating - stocks)/(Passive exigible in the short run)
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immediate Working capital ratio = (Active of treasury)/(Passive exigible in the short run)
The risk of liquidity increases when confidence in the company drops: The company cannot emit titles any more because the market will not buy them, whatever the project suggested. It is what arrived at Vivendi when the market lost confidence in Jean-Marie Messier and refused to renew the loans, for much at even runs very short term.
See too
- general Working capital ratio
- Risk of liquidity
- Crisis of liquidity
- Solvency
- Working capital
External bond
- Liquidity on vernimmen.net
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