Liquidity

Liquidity shows whether a company is able to meet its expected payment obligations and debts within a given period of time, and whether it has a sufficient amount of money.

Adequate liquidity means that the company can meet its payment obligations on time at any time within a certain period of time. The liquidity situation can be examined for a month or half a year, but the annual outlook is most often used. 

A liquidity problem is typically to be reckoned with if the company a capital binds too much of it permanently. This may result in the company not being able to pay its liabilities on time, as it is not able to monetize the pledged assets on time. Against this, he mostly led normally cash-flow you can defend yourself with a board. 

In addition, the company may also face liquidity problems if its customers pay late. For the latter situation, the factoring can be a solution.

The for start-up businesses it is often typical that development is limited by liquidity problems, or that the necessary coverage due to its lack, they do not receive from the banks credit. Of course, more mature businesses can also have similar problems, for example in the case of a larger project that needs to be financed in advance. In this case, however, businesses with a sufficiently long operational history can choose from several bank loan products.

To measure liquidity a liquidity index we use. This expresses that a liquid assets how many times the claims against the company are, i.e. how well the company can meet all of them current liabilities.