Liquidity Itemized Detailed Estimation Method
Liquidity = Current Assets - Current Liabilities
Current Assets = Cash + Accounts Receivable and Prepayments Inventory
Current Liabilities = Accounts Payable and Receivable in Advance
Cash = (Annual Salary and Benefit Expenses - Annual Other Expenses)/Turnover
Annual Other Expenses = Manufacturing Expenses Administrative expenses Finance costs Selling expenses - wages and benefits, depreciation, maintenance, amortization, repairs and interest expenses included in the above four items
Turnover = 360/minimum number of days required to turnover
Accounts receivable (prepaid) = annual operating costs/turnover
Inventory estimation includes all kinds of purchased raw materials, fuels, packaging, low-value consumables, work-in-progress and other materials. Low-value consumables, products in process, purchased goods, collaborative parts,
Homemade semi-finished products and finished products:
Outside purchased raw materials, fuels=yearly purchased materials and fuels cost/turnover times
Products in process=(yearly purchased raw materials, fuels, and power costs yearly wages and benefits yearly repair costs yearly other manufacturing costs)/turnover times
Finished products=yearly operating costs/turnover times
Completed products = yearly Operating costs/turnover
Accounts payable = (annual cost of purchased raw materials, fuel and power, spare parts)/turnover