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

Mariya M. Shygun (), Nataliia A. Ostapiuk (), Oksana V. Zayachkivska () and Natalia V. Goylo ()
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Mariya M. Shygun: Kyiv National Economic University named after Vadym Hetman, Ukraine
Nataliia A. Ostapiuk: Kyiv National Economic University named after Vadym Hetman, Ukraine
Oksana V. Zayachkivska: National University of Water and Environmental Engineering, Ukraine
Natalia V. Goylo: Kyiv National Economic University named after Vadym Hetman, Ukraine

Entrepreneurship and Sustainability Issues, 2020, vol. 8, issue 1, 430-441

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.

Keywords: non-current assets; held for sale; liquidity; liquidity analysis; ratio analysis of liquidity; capital; reclassification of non-current assets (search for similar items in EconPapers)
JEL-codes: G32 M21 M41 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:ssi:jouesi:v:8:y:2020:i:1:p:430-441

DOI: 10.9770/jesi.2020.8.1(30)

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