Global Economic Crisis & Liquidity Management

• Introduction
• History of Economic Crisis
• The Great Depression of 1929
• The Financial Crisis of 2008- Causes
• The Financial Crisis of 2008- Impact
• The Financial Crisis of 2008- Govt intervention
• Lessons Learned
• Liquidity Risk
• Liquidity Management
• Liquidity Reporting

Liquidity management is one of the main pillars of a company’s financial management, because it ensures solvency. Here we show you why it is so important for companies, how it works in principle and how companies can implement it in practice. Investors, lenders, and managers all look to a company’s financial statements using liquidity measurement ratios to evaluate liquidity risk. This is usually done by comparing liquid assets—those that can easily be exchanged to create cash flow—and short-term liabilities. The comparison allows you to determine if the company can make excess investments, pay out bonuses or meet their debt obligations. Companies that are over-leveraged must take steps to reduce the gap between their cash on hand and their debt obligations. When companies are over-leveraged, their liquidity risk is much higher because they have fewer assets to move around. Almost five years since the collapse of Lehman Brothers and the start of the global financial crisis, the global economy continues to feel the aftershocks. Policymakers continue to grapple with the policy response. The start of 2013 saw tail risks recede in the global economy, thanks to policy actions in the U.S. and euro area. While financial market conditions have improved markedly across the board for the last half year or so, the real economy continues to lag. We still are not seeing the levels of growth needed to drive a real global recovery, and we are not generating the jobs needed for the millions who have fallen into unemployment over the past five years.