(2.3.2) Liquidity Flashcards
What is Liquidity?
The ease with which assets can be converted into cash.
What are Assets?
Resources a business has
What are Liabilities?
Debts of the business
What is Capital?
Money put into business by owners.
What are two examples of assets?
Buildings and machinery
What are the two types of assets?
Current and Non-current
What are current assets?
Assets that can be changed into cash within a year.
What are two examples of current assets?
Stock and raw materials
What are non-current assets?
long term resources used by business repeatedly for more than one year.
What are two examples of non-current assets?
Land and property
What are current liabilities?
Money owed by business that must be paid within a year
What are two examples of current liabilities?
Trade credit and overdraft
What are non-current liabilities?
Money owed by a business that doesn’t need to be paid within a year
What are non-current liabilities?
Money owed by a business that doesn’t need to be paid within a year.
What are two examples of non-current liabilities?
Bank loan and mortgages
