The influence of the classification of non-current assets as holding for sales on the liquidity of the company’s balance sheet

Abstract

Enterprises are in constant search for additional sources of financing their activities and increasing the liquidity of their balance. One of these methods is the classification of non-current assets as held for sale, which causes changes in the structure of assets of the company, affects its liquidity and solvency. At the same time, users of information should be sure of the reality of such operations for the classification of non-current assets. It is important to avoid manipulating balance sheets and artificially enhancing their liquidity by changing the structure of assets. The results of a study of the impact of operations on classification of non-current assets as held for sale on the liquidity of the company's balance sheet are presented in this article. The impact of non-current assets held for sale on liquidity is shown separately provided that they are included in the groups of fast-selling assets and slow-selling assets. The impact of such groupings on the liquidity indicators is shown by means of coefficient analysis. The nature and level of the impact of non-current assets held for sale on the liquidity of the balance sheet is identified by modelling a consistent change in their volume relative to the value of non-current assets and capital of the company. For the purpose of effective asset management, the optimal indicator of non-current assets held for sale in the company's balance sheet has been proposed, which avoids the risk of lowering the productivity of the existing equipment while ensuring the release of financial resources due to the sale of assets.

System of Projects’ Financial Analysis for Enterprise Management

“…рассматривают принятие решений о финансовых вложениях [6]. В международных экономических работах коэффициентный анализ применяется как вспомогательный инструмент, например, Shygun M.M., Ostapiuk N.A., Zayachkivska O.V., Goylo N.V. используют его для решения задач управления ликвидностью баланса [7]. Galbraith John W., Zinde-Walsh Victoria -как средство в построении эконометрических моделей [8].…”

“…Shygun M.M., Ostapiuk N.A., Zayachkivska O.V., Goylo N.V. подчеркивают важность информации о структуре активов и пассивов для управления организацией: "It is important to avoid manipulating balance sheets and artificially enhancing their liquidity by changing the structure of assets" (цитируется в оригинале. Перевод: «Важно избегать манипулирования балансами и искусственного повышения их ликвидности путем изменения структуры активов») [7].…”

Implementation of the Assets and Liabilities Structure’s Ratios in a Company Activity Evaluation

“…In international publications, the ratio analysis is used as an additional instrument, e.g. Shygun, M.M., Ostapiuk, N.A., Zayachkivska, O.V., and Goylo, N.V. use it for solving the accounting liquidity management problem [7]. Galbraith John W., Zinde-Walsh Victoria studied the econometric models building process [8].…”

“…Shygun, M.M., Ostapiuk, N.A., Zayachkivska, OV. and Goylo, N.V. point the importance of assets and liabilities' structure statements data for managing company: "It is important to avoid manipulating balance sheets and artificially enhancing their liquidity by changing the structure of assets" 1 [7].…”

“…of capital to liabilities of the company -formula (6equals 1/ DER.Debt-to-debt and equity ratio (DDER)characterizes the quotient of dividing liabilities to the company's liabilities and shows the level of financing of the company through borrowed funds -formula(7…”