The Analysis Of Short-term Solvency Indicator' Standard Values For Manufacturing Industry In The Modern Economic Environment

In the evaluation of enterprise short-term solvency,we always take the number 2 and 1 as the reference standard values for current ratio and quick ratio.However,through data and case research,I found that traditional standard values were not fit for the modern economic environment.Through the article research I achieved following goals:Firstly,finding out the reason why traditional standard values are not fit for the modern economic environment,and depth profiling those reasons.Secondly,amending current ratio and quick ratio according too its shortcomings,making contribution for the improvement of financial evaluation and analysis in the modern economic environment.Thirdly,researching and calculating the new standard values of amended current ratio and amended quick ratio in modern economic environment,and providing references for the short-term solvency evaluation.This article made the research through six chapters.The chapter 1 described the origin of this research and reviewed the literatures about short-term solvency indicators and its standard values.The chapter 2 analyzed the current using situation of the traditional standard value of the short-term solvency indicators from different sides.I found that we could not make accurate judgment about an enterprise financial position by using traditional standard values of current ratio and quick ratio.This section also made a preliminary analysis for the reason of the problem.There were two reasons caused the problem:the changing of economic environment,the shortcomings of short-term solvency indicators and its traditional standard value.The chapter 3 mainly researched the characteristics of the modem economic environment and its influence on manufacturing industry.The modern economic environment increased financing capacity of the enterprise,so the solvency of the enterprise could be judged not only from the balance sheets;off-balance sheets financing capacity also largely determined the enterprise's short-term solvency.The modern economic environment made the corporate to change internal management philosophy.So proportion of each project for assets and liabilities had changed.Naturally the values of the current ratio and quick ratio changed.All of those made the original short-term solvency basic indicators and its standard values no longer adapt to the evaluation of short-term solvency for the enterprise under the modern economic environment,we needed to improve these.The chapter 4 researched mainly two points:shortcomings of short-term solvency indicators,shortcomings of traditional standard values.The chapter three and four analyzed clearly the reasons why traditional standard values are not adapt to the modern economic environment.And the above two chapters laid the foundation for next two parts writing.The chapter 5 amended current ratio and quick ratio according too its shortcomings.After amending I got amended current ratio and amended quick ratio.The two amended indicators can reflect the real short-term solvency of a corporation.Through scientific method,the chapter 6 calculated standard values of amended current ratio and amended quick ratio for manufacturing industry.And the new standard values not only provided a reference standard for evaluating the short-term solvency of the manufacturing industry,but also provided a basis of the calculation for other industry standard values.The contributions of this article were as following:(1)through data analysis,I got the distribution of current ratio value and quick ratio value for all industries,especially manufacturing industry.The article also test effectiveness of traditional standard values for the current ratio and quick ratio.(2)through scientific and rational methods,the article amended current ratio and quick ratio according too its shortcomings,The two amended indicators can reflect the real short-term solvency of a corporate.That made contribution for the improvement of financial evaluation and analysis in the modern economic environment.(3)using scientific method and selecting reasonable sample,the article calculated the new standard values of amended current ratio and amended quick ratio in modern economic environment,provided scientific and reasonable references for financial evaluation.It also provided a reference for these two indicators' standard values calculaltion in other industry.