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Day 8 About Basic Finance and Accounting Concepts Here's Some New Concepts In finance, Liabilities represent obligations or debts that an individual or organization owes to others. They indicate an outflow of resources, either cash or services, that must be fulfilled over time. Liabilities are essential for understanding a company’s financial health, as they influence cash flow and future obligations. Liabilities are divided into two primary types 1. Current Liabilities Current liabilities are short-term obligations that a company or individual needs to pay within one year. These are crucial for managing day-to-day cash flows. Examples of Current Liabilities: Accounts Payable: Short-Term Loans: Accrued Expenses: Taxes Payable: Dividends Payable: Importance of Current Liabilities: Properly managing current liabilities is essential for maintaining liquidity, which ensures a business or individual can meet short-term financial obligations.
Trying to do better • 8m
Day 9 About Basic Finance and Accounting Concepts Here's Some New Concepts 2. Non-Current (Long-Term) Liabilities Non-current liabilities are long-term debts that are due beyond one year. These are generally used to fund large purchases or investme
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Daily dose of financial ratios by Anirudh Gupta Current ratio: =Current assets/current liabilities Purpose: -To evaluate the company's short-term financial health and liquidity. -This ratio tells us whether the company can meet its short term ob
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Day 5 About Basic Finance and Accounting Concepts Here's Some New Concepts An asset is anything that an individual, company, or government owns that holds value and can generate future benefits. Assets are essential components in financial accounti
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Day 10 About Basic Finance and Accounting Concepts Here's Some New Concepts 3. Contingent Liabilities Contingent liabilities are potential obligations that may arise depending on the outcome of a future event. These liabilities are not always guar
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Daily dose of financial ratios by Anirudh Gupta Quick ratio: =Quick assets/Current liabilities Where quick assets means, (current assets-inventory) Purpose: -Unlike the current ratio (as we have discussed in the previous post), the quick ratio s
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Day 7 About Basic Finance and Accounting Concepts Here's Some New Concepts 8. Liquid Assets Easily convertible into cash without a significant loss in value. Examples: cash, cash equivalents, and accounts receivable. 9. Illiquid Assets Assets
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Day2 About Basic Finance Concepts Here's Some New Concepts 2. Corporate Finance Capital Budgeting: Deciding on long-term investments like new projects or equipment to enhance business profitability. Capital Structure: Determining the best mix of d
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Daily dose of financial ratios by Anirudh Gupta Debt service coverage ratio: =Earnings available for debt services/(Interest+Installments) Where earnings available for debt services are EBITDA or EBIT based on the case. Purpose: -Yesterday,we d
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