Description

The sanitary crisis due to the Covid-19 pandemic generated several difficulties in the transport of population because of application of lockdowns enforced by authorities. These actions implied a strong restriction of economic activity and affect the flows of income of non-financial firms, this reduction of their sales and inventories values could stress their liquidity levels, which is an essential factor for repayment of liabilities. In this context we present an indicator that allows to compare the capacity of firm cash generation with the expenses. The indicator represents the months that each company has in order to face their costs and short-term liabilities, which will be denominated as “months of cash”. Utilizing a sample of fifty listed firms of Chile, the results indicate that, under the pandemic crisis and an adverse sales scenario, an 80% of the companies would have enough resources to maintain their expenditures at least for 6 months. This indicator of months of cash has an advantage respect to traditional ratios of liquidity given the flexibility allowed, so it is possible to quantify and identify the future liquidity risk of firms in different shocks scenarios. In contrast, the standard indicators only show an aggregate perspective with past information of companies.