2.3.2 liquidity Flashcards
liquidity
measures the ability of a firm to find the cash to pay its bills
balance sheet
a snapshot of the businesses assets and its liabilities
assets
what a business owns or is owed
liabilities
what a business owes
two types of assets
non-current
current
non-current assets
long term assets of a business which are not expected to be sold within the next year of trading.
intangible and tangible
intangible assets
copyright, patents, trademarks, goodwill
tangible assets
property, plant and equipment
current assets
short term assets of the business which are likely to be turned into cash within the next year of trading
e.g. inventories, trade and other receivables, cash
inventories
stocks of raw materials, finished goods and work in progress
trade and other receivables
trade debtors who owe money to the business
cash
cash at bank held by the business
two types of liabilities
non current
current
non current liabilities
debts which are not expected to be paid off within the next year of trading
long term
retirement benefit obligations
