0
True or false the debit ratio measures how quickly a company pays off the long term liabilities it has incurred?
Wiki User
∙ 7y agoWant this question answered?
Be notified when an answer is posted
Add your answer:
Earn +20 pts
Why are some receivables classified as non current asset?
A current asset is an asset that is used up quickly or easily converted to cash. For example supplies are current assets, many receivables are "current" assets, however, if a receivable is a large amount and the company doesn't expect to receive the full payment quickly (usually within one accounting period or one year) then the receivable is classified as a non-current asset.For example if you are a finance company and you loan money to a customer to buy a car and the financing period is for 5 years, this account is a non-current asset.This is similar to Current Liabilities and Long-Term Liabilities.
Why assets are debit if it is increased?
Assets are real accounts and according to accounting debit and credit rules. Debit what comes in and credit what goes out. Assets has debit account by nature so when there is an increase in assets it is debited to assets accounts Liabilities are credit accounts because these are burden of the business to payback to their original owners that's why if liabilities increases it is credited to liablities accounts because according to rule mentioned above credit what goes out and liabilities are those items which ultimately need to go out from business at the time of dissolution of business. ---- The above so called rule is not accurate. It is entirely inaccurate to say that debit is what comes in and credit it what goes out. This can be proven quickly by looking at expense accounts. An expense to a company is something you "pay out", however all expense accounts have a DEBIT balance and are increased with Debits, not credits. Revenue is a CREDIT account (money received by the company, which is money coming IN) it is increased by a Credit, not a debit. According to the accounting equation Assets = Liabilities + Owners Equity When a company receives money for a service or sale, they will debit cash (to increase) and credit Revenue (to increase). In double entry accounting for every debit there is an equal credit. Assets have a debit balance - Liabilities have a credit balance + owners equity also a credit balance For example, if you have $19,000 in assets (debit balance) you need one or more credit balance accounts that equal this total. This could be for example $19,000 (assets) = $5,000 (liabilities) + $14,000 (owners equity)
Why are assets listed before fixed assets on a balance sheet?
Assets are listed in order of liquidity, or how quickly they can be converted into cash. Fixed Assets (Land, Buildings, Machinery, etc.) take longer to sell than stocks and bonds. Accounts Receivable will turn into cash in 30 days (for the most part) etc. Inventory will turn over several times in a year. The assets listed first are "Current Assets" - things that wil be used within the fiscal year. Fixed Assets have a longer life. This is similar to Current Liabilities (amounts due within 12 months) and Long-term Liabilities (amounts due beyond 12 months).
What is zero working capital?
Working capital is the current assets minus current liabilities. Creditors prefer high working capital levels as they signify a stronger ability to meet short term obligations. Still, financial managers prefer minimal working capital. This means a company's assets are not being tied up in daily operations and can be utilized elsewhere. When attempting to minimize working capital a company wants to convert receivables as quickly to cash as possible, they want to fill orders on demand instead of keeping heavy inventory, and they want to hold out on paying payables as long as possible without injuring credit. This requires awesome vendor or supplier relations and constant improvements in servicing clients. Technology has made zero working capital much easier to attain than in the past.
A reason why a company reports a significant net income but may be burning huge amounts of cash?
Most companies use the accrual basis of accounting, which recognizes income when it is earned rather than when cash is received. A company could be entitled to a lot of money for services performed, but find itself unable to collect it due to delinquent accounts. If a company is unable to generate sufficient cash flow, it's going to go under pretty quickly no matter what sort of income its reporting.
Are fixed assets a liability?
Fixed assets are not liabilities, they are assets that can not be quickly liquidated (turned into cash). If the company goes under, fixed assets would be difficult assets to get cash for.
What measures how quickly a reactant is disappearing or how quickly a product is appearing?
reaction rate
Measures how quickly CPU processes data?
Clock Speed
What measures how quickly the CPU processes data on a computer?
clock speed
How quickly do you report death to a creditor?
As quickly as possible! As soon as they are informed of the death, certain things happen, the most important being that the account is locked. This prevents additional debt from being incurred.
Why are some receivables classified as non current asset?
A current asset is an asset that is used up quickly or easily converted to cash. For example supplies are current assets, many receivables are "current" assets, however, if a receivable is a large amount and the company doesn't expect to receive the full payment quickly (usually within one accounting period or one year) then the receivable is classified as a non-current asset.For example if you are a finance company and you loan money to a customer to buy a car and the financing period is for 5 years, this account is a non-current asset.This is similar to Current Liabilities and Long-Term Liabilities.
The level of volatility in a market measures what?
How quickly prices go up and down in that market.
What the level volatility in a market measures?
How quickly prices go up and down in that market.
Level of volatility in a market measures what?
How quickly prices go up and down in that market.
Why quick acid ratio is called acid test ratio?
Acid-test or Quick Ratio measures the ability of a company to use its cash or near cash assets to extinguish or pay-off its current liabilities immediately. Near cash assets are those that can be quickly converted to cash at close to their book values.Formula:ATR = (Current Assets - (Inventories + Prepayments)) / Current LiabilitiesA company with a quick ratio of less than 1 cannot currently pay-off all its current liabilities. Any good company would want to maintain their acid test ratio to be greater than 1 at all times.
Why do you get a wig from the acme wig company so quickly?
* ----
What did trade do to unify the roman empire?
Trading throughout the empire helped unify it because the merchants used the same money, (or could quickly exchange it), the same language, the same weights and measures and the same regulations of trade.Trading throughout the empire helped unify it because the merchants used the same money, (or could quickly exchange it), the same language, the same weights and measures and the same regulations of trade.Trading throughout the empire helped unify it because the merchants used the same money, (or could quickly exchange it), the same language, the same weights and measures and the same regulations of trade.Trading throughout the empire helped unify it because the merchants used the same money, (or could quickly exchange it), the same language, the same weights and measures and the same regulations of trade.Trading throughout the empire helped unify it because the merchants used the same money, (or could quickly exchange it), the same language, the same weights and measures and the same regulations of trade.Trading throughout the empire helped unify it because the merchants used the same money, (or could quickly exchange it), the same language, the same weights and measures and the same regulations of trade.Trading throughout the empire helped unify it because the merchants used the same money, (or could quickly exchange it), the same language, the same weights and measures and the same regulations of trade.Trading throughout the empire helped unify it because the merchants used the same money, (or could quickly exchange it), the same language, the same weights and measures and the same regulations of trade.Trading throughout the empire helped unify it because the merchants used the same money, (or could quickly exchange it), the same language, the same weights and measures and the same regulations of trade.
