|
Accounting Liquidity Concept
The expression Accounting Liquidity
designates the quickness or easiness with which the assets detained by
an entity can be converted in payment method. For example, the current
assets (products stocks, debts own by customers, etc.) are faster
converted into payment methods than the fixed or tangible assets
(facilities, equipments, etc.). The bigger the quantity of high
liquidity assets the company owns, lower will be the probability of not
being able to honor to honor its financial commitments near third
parties. However, high liquidity assets usually present a lower capacity
to generate high returns for that investment decisions should always
include the compliance risk analysis of financial commitments and the
profitability analysis generated by these assets.
To evaluate the liquidity level of a
certain company can be calculated several liquidity indicators, whose
compare the value of certain assets groups with certain liquidity levels
with liabilities with lower chargeability deadlines.
Translated from Portuguese
by Susana Saraiva, Portuguese-English and English-Portuguese translation
specialist. Contact: spams@sapo.pt.
|
