This indicator correlates the value of current assets with the total invested capital (total asset) in order to measure in percentage terms the financial strength of the company's capital structure. For this reason, this Key performance indicator is another pillar of the Risk management and financial management deep analytic process. As a "stand-alone" indicator, its value indicates the degree of structural elasticity of the capital used for the company’s business.
CURRENT ASSETS / TOTAL ASSETS
The outcome value, index the degree of structural elasticity of the invested capital that have been used for the business activity of the company in a given timeline. In fact, it expresses the structural capacity of the company to cover the total invested capital with the use of current assets only.
What is it for the elasticity of Assets ?
The uniqueness of this structural KPI is that it provides information to the company's Credit Risk Management and therefore to the company's Stakeholders, thus correlating the value of current assets with the overall value of the investments used in the company. It is usefule to measuring and understand the potential dynamics related to present and driven by the past financial risks and therefore it is certainly of considerable interest for the Governance of one's company in order to make decisions that may impact on its financial structure.
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