Posts Tagged ‘liability’

What is Debt Really?

Take a look at your company’s balance sheet and see if you identify everything that is debt. Is there anything hidden?

A Simple Example

Let’s consider the balance sheet below and see if we can form some conclusions.

what is debt

When we look at this balance sheet we could come to several conclusions. One, we might consider debt to be only Read the rest of this entry »


Necessity of Working Capital

No business can continue to operate if they don’t pay their bills. Because of that it is important to keep tabs on your company’s ability to pay bills on time. There are several financial indicators of this ability, among them being the quick ratio, current ratio, and working capital. For now let’s look at the necessity of working capital.

A Definition

The definition of working capital is simply Read the rest of this entry »


3 Tips for Managing Cash

In the posting Cash Management -It’s Not About the Cash Account we looked at how cash management is more about managing other accounts. The reason is that it is these other accounts, like accounts receivable and inventory, that ultimately determine your cash balance. Knowing that, are there some helpful tips for managing cash? Well, here are three.

Remember What Determines Your Cash

This may seem redundant, but you must always be cognizant of Read the rest of this entry »


When an Asset is Not an Asset

When is an asset not an asset? Let’s start out with some basics before we get into the meat of this article.

Asset Defined

According to one of the definitions of an asset is an item of value owned or item(s) on a balance sheet showing the book value of property owned. For accounting purposes this is a good working definition. It would include such things as cash, receivables, inventory, land and building, equipment, and pre-paid expenses. There are other things that can be classified as an asset, but this list does not need to be all inclusive for the purpose of this blog.

How Are Assets Used?

Assets are used to Read the rest of this entry »


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