Absolute liquidity ratio of tea and coffee manufacturers in Russia

Information agency Credinform prepared a ranking of the largest companies in Russia, mainly specializing in the production and supply of tea and coffee.

The TOP-10 list of enterprises was drawn up for the ranking on the volume of revenue, according to the data from the Statistical Register for the latest available period (for the year 2014). These enterprises were ranked by increase in turnover. Moreover following data are presented: on the dynamic of revenue related to the previous period, absolute liquidity ratio and solvency index GLOBAS-i (s. Table 1).  

Absolute liquidity ratio (%) is the relation of the amount of cash, being at the disposal of a company, to short-term liabilities. It allows to determine the share of short-term liabilities, which an enterprise can pay off in the near future (at once), without waiting for the payment of accounts receivable and sales of other assets. The recommended value is > 0,15. The higher is the indicator the better is the solvency of an enterprise. 

On the other hand, too high ratio value may testify to irrational capital structure, out-of-work assets in the form of cash and funds deposited in accounts, that depreciate and lose their initial liquidity in view of time factor and inflation (at the time of their receipt). 

For getting of the most comprehensive and fair picture of the financial standing of an enterprise it is necessary to pay attention not only to the level of profitability of investments, but also to all presented combination of financial indicators and company’s ratios.