This indicator measures in percentage terms the relative weight of total liquidity (immediate liquidity and deferred liquidity without taking into account inventory) on the value of capital at a given moment in time. For this reason, this Key performance indicator is a pillar in the Financial Risk management and financial management for a deep analytical process and understanding financial sustainability.
Thypically this ratio is used for the analysis of the company's short-term financial cycle. However, the value indicates how a company is financially elastic in its operating cycle and therefore it gives vertically to each class of creditors an important index over the company's characteristic of the management as such as how the management is optimizing the deployment of capital.
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MONITORING ENTERPRISE CREDIT RISK: the first Smart XBRL Data Analytics Engine Toolkit for Financial Risk Analysis that facilitate Creditors and Investors in monitoring company's creditworthiness and financial sustainability
