The factors that reduce the liquidity of enterprise's current assets are contingent liabilities formed by pending litigation and arbitration.

Liquidity is the ability of an enterprise to generate cash, and the financial indicators reflecting the liquidity of an enterprise include current ratio and quick ratio.

the current ratio is an indicator reflecting the proportional relationship between the total current assets and the total current liabilities of an enterprise. Current assets of enterprises are greater than current liabilities, which generally indicates that enterprises have strong ability to repay short-term debts. Quick ratio is an index that reflects the proportion between quick assets and total current liabilities, and is used to judge the payment ability of enterprises.

the core reason for the tight liquidity of enterprises is the weak liquidity of current assets: (1) the high proportion of restricted assets leads to the false high solvency; The monetary funds and accounts receivable of enterprises are limited to a greater extent, which further reduces the funds that enterprises can use for debt repayment. (2) The decrease of operating efficiency leads to the increase of working capital demand; In the case that the main business structure is relatively stable, once the operating efficiency drops, it will increase the demand for working capital, which will aggravate the liquidity tension. (3) The crowding out of current assets by non-operating activities: the formation of current assets in non-operating activities is often related to the exchange of funds between affiliated enterprises, which lacks strong binding force on the recovery of funds.

: Current assets refer to assets that an enterprise can realize or use in a business cycle of one year or more, mainly including monetary funds, short-term investments, notes receivable, accounts receivable and inventories.

Current liabilities, also known as short-term liabilities, refer to debts that will be repaid within a business cycle of one year or more, including short-term loans, notes payable, accounts payable, accounts received in advance, dividend payable, taxes payable, other temporary accounts payable, accrued expenses and long-term loans due within one year.

generally speaking, the higher the current ratio, the stronger the liquidity of enterprise assets, and the stronger the short-term solvency; On the contrary, it is weak. It is generally believed that the current ratio should be above 2: 1, which means that the current assets are twice as much as the current liabilities. Even if half of the current assets cannot be realized in a short period of time, all the current liabilities can be guaranteed to be repaid. However, if the ratio is too large, it means that the current assets occupy more, which will affect the turnover efficiency and profitability of operating funds. Therefore, it is generally considered that the reasonable minimum flow ratio is 2.