Unit 35 - Liquidity Flashcards
Def: acid test ratio
Similar to current ratio but excludes stocks from current assets. More severe test of liquidity
Def: assets
Resources that belong to a business
Def: capital
Money put into the business by owners
Def: current assets
Liquid assets (assets that will be converted into cash within one year)
Def: current liability
Money owed by the business that must be repaid within one year
Def: current ration
Assess whether or not a business has enough resources to meet any debt that arises int the next 12 months
Def: intangible assets
Non physical assets such as brand names patents and customer lists
Def: inventory
Stocks such as raw materials and finished goods held by business
Def: liabilities
Money owed by the business to banks and suppliers
Def: liquidity
The ease with which assets can be converted into cash
Def: net assets
Total assets - total liability
Def: non current assets
Long term resources that will be used by the business repeatedly over a period of time
Def: non current liabilities
Money owed by business for over a year long term
Def: shareholders equity
The amount of money owed by the business to the shareholder
Def: statement of financial position
A summary at a particular point in time of value of a firms assets liabilities and capital
Def: Trade and other payables
Money owed by business to suppliers and utilities (trade creditors)
Def: trade and other receivables
Money owed to business by customers and payments
Def: working capital
Funds leftover to meet day to day expenses after current debts paid off
