Accounts Receivable + Inventory - Accounts Payables. (excludes prepaid expenses and accrued liabilities)
stock subscription payables is debt ?
Yes, payables are those that are not yet payed or plainly, a liability. ;3
Trade Debtors form part of working capital - they are an asset on the balance sheet, but are NOT part of inventory. Trade debtors represent the amount owed by customers to a business for goods/services sold on credit (i.e.not sold for cash). Inventory usually represents a business's stock (also part of working capital) - there are normally 3 sub-categories of inventory, being Raw Materials, Work-in-Progress (or part-finished goods) and Finished Goods (i.e. goods ready to sell / deliver to customers). The other element of Working capital is Payables (or Creditors), which are amounts owed by the company to others, typically suppliers. Working Capital = Debtors + Inventory - Payables
Operating CycleAn operating time cycle is the average time period between the acquisition of inventory and the receipt of cash from the inventory's sale. A short operating cycle means a more prompt return on investment for the firm's inventory. During an economic downtown, an operating cycle typically lasts longer than in periods of economic growth. Cash Conversion CycleThe cash conversion cycle is the number of days required for a company to convert resources to cash flows. This measure calculates the time period during which each input dollar is committed to production and sales processes before it is converted to cash through the accounts receivable process. The cash conversion process gives insight into the financial stability of a company because it reflects the time period during which assets are committed to business processes and therefore are not available to invest to achieve even greater returns. As a result, the shorter the cash conversion cycle, the better. Calculating the Operating CycleTo calculate the operating cycle, determine the duration of each element of the operating cycle including raw materials, work-in-process, finished goods and bills receivable. Next, calculate the aggregate duration of the cycle by adding together each of these elements. The greater the operating cycle, the greater the business requirement for working capital. The greater the working-capital requirement, the higher the inventory-carrying cost, including interest payments, and the greater the opportunity cost due to the inability to invest funds in a higher use. In addition, the lower the operating cycle, the greater the number of completed cycles per year, and the greater the annual gross and net profits. Caculating the Cash ConversionThe cash conversion cycle calculation uses elements of the operating cycle equation, including raw materials, work-in-process, finished goods and bills receivable, in addition to the days' payables outstanding. The days' payables outstanding is the average time required by the company to pay its vendors. First, calculate the accounts payable turnover by dividing the cost of goods sold by accounts payable. Next, divide 365 days by the accounts payable turnover to determine the days' payables outstanding. To determine the cash conversion cycle, first add the days' sales outstanding and the days' sales in inventory, and then subtract the days' payables outstanding. The resulting cash conversion cycle measures the time period between the cash outflow for materials required for the production of a product or service and the cash inflow from sales. A decrease in the cash conversion cycle can lead to an increase in the operating profit margin.
The taxes which is owed by a corporation in the goverment authority.
Without knowing the specifics of the business in question, it is difficult to provide an effective answer, but there are general steps a business can take to improve future cash flows. The two primary keys to cash flow are receivables (A/R) and payables (A/P). If possible, the business should take steps to decrease the amount of time it takes to collect on its receivables, and lengthen the time it takes to fund its payables. Depending on the type of business, collecting receivables faster and delaying payables may not be possible. However, both steps do not need to be taken in order to increase cash flow. If it is only possible to extend payables (for example), this essentially generates an interest-free loan on behalf of the company's vendors and/or suppliers. It should be noted that these steps will only result in a one-time benefit. In order to gain future benefits from A/R or A/P turns, the corresponding times will have to be increased/decreased again. One final item that can influence cash flow is inventory. Effective inventory management can greatly impact a company's use of cash, so inventory turns should be high on the priority list for any company looking to improve cash flows.
Liability payables or provissions made.
Gross profit = sales revenue - cost of goods sold Operating Cash Flow = net income (after all expenses) + increase in operating liabilities (payables, etc) - increase in operating assets (receivables, inventory, etc)
It depends on many factors. The demand for the product. when the demand for the product is established. then you make projections for sales. The Return on investment should be high. its a results of net profit/(current assets + fixed assets). The ROI will be high when the denominator is low. So when you keep current asset level low at the year end. the ROI will be high. You can keep the current assets level low only when your cash conversion cycle(CCC) is shorter. you can have shorter CCC. only when the Inventory turnover, and Recievables turnover are high and payables turn over is low (or) Inventory turnover, and Recievables turnover are low and payables turn over is high (if you have good credit terms with suppliers). Over the years it was a bone of contention for many finance manager on how to manage an optimum level.still a lot of work is going on to find out the optimum levels for current assets.
Goods Received: Debit Stock Credit Goods Received Invoice Received: Debit Goods Received Credit Trade Payables Result: Debit Stock (Asset) Credit Trade Payables (Liability)
Accounts Payable Cash/Bank/Goods etc
contracts should be filed separate from accounts payables?
Current liabilities are those liabilities and payables that would be paid withing 12 months
NO, Account payable is a balance sheet item it does not appear in the income statement.
There are two ways to calculate Creditors Turnover. First is using the COGS (Cost of Goods Sold) as the basis. Creditors Turnover = COGS / Creditors (A/c Payables) . Second is the more common method which uses Sales as the basis. Creditors Turnover = Net Sales / Creditors (A/c Payables).
Funds are generated internally through net income that is retained to fund growth rather than paid out in dividends. There also measures that can be taken to improve working capital to free up funds, such as more aggressive collection of receivables and negotiating longer terms with vendors for payables.
Funds are generated internally through net income that is retained to fund growth rather than paid out in dividends. There also measures that can be taken to improve working capital to free up funds, such as more aggressive collection of receivables and negotiating longer terms with vendors for payables
unpaid expenses (a.k.a payables) are recorded on the balance sheet in the current liabilities section.
No, bills payables is not a real account but it is a personal account .My answer:Bills receivable is a real account. Bills receivable for one person is bills payble for another person. The same instrument cannot be Real for one person and personal for another. Hence, in my opinion Bills payable is also a real account.
It is quite possible in the case where you have high levels of Accounts receivables and inventory and low levels of accounts payables. A sale is recorded the moment an invoice is raised and shipment deliverd that does not necessarily mean you received cash and goes to acc receivables. Similarly, if you maintain high levels of inventory, lot of your money remains tied up untill the inventory gets sold off. on the contrary, if you have weaker payment terms with your suppliers, you end up paying earlier than your acc recivables convert to cash. Therefore, high sales and high profit does not necessarily mean a good cash position.