The liquidity of the company is determined on the basis of relative indicators. Coefficient of absolute liquidity reflects the ability of the firm to meet its short term obligations through the implementation of cash and short-term financial investments. This ratio shows what proportion of current liabilities may be repaid in the shortest possible time. The main factor in the increase of absolute liquidity is the timely and equitable repayment of receivables.
Quick liquidity ratio characterizes the company's ability to cover current liabilities due to full repayment of receivables. In this case from the calculation excludes inventories, the least liquid part of current assets. If the growth factor is associated with the increase in overdue debts, this is not a positive aspect of an enterprise. To increase quick liquidity necessary to facilitate the growth of coverage of own working capital. This is possible with the build-up of working capital and reducing inventory levels.
The current ratio shows ability to pay current obligations, subject to repayment of short-term accounts payable and current inventory. To improve this ratio it is necessary to increase the equity of the enterprise and to restrain the growth of non-current assets and long term receivables.
Ways of increase of liquidity and solvency on the enterprise will depend on the factors that caused their decline. The external causes include the decline of production in the country, bankruptcy of debtors, outdated technology, imperfect legislation, etc. to reduce the impact of these factor, predpriatie can release into circulation of new shares to raise funds.
The internal factors in the reduction of liquidity include obratnykh deficit of own funds, the increase in accounts receivable and accounts payable, the imperfection of the price mechanism, low contract enforcement. In this case, the company needs to repay the receivables. This can be achieved by conducting factoring transactions or signing a contract-assignment, i.e. the assignment of claims and transfer of property rights. In addition, it is necessary to improve the contract work and to tighten the contractual requirements.