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How can you tell the financial standing from assets and liabilities?
Wiki User
∙ 10y ago
Logically, your liabilities taken away from your assets would show you your financial standing:
assets - liabilities = how much money you have
If your liabilities are greater than your assets, your answer will be negative and you're in debt. If your assets are greater than your liabilities, your answer will be positive and you have enough assets to get rid of your liabilities.
Wiki User
∙ 10y ago
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What does the accounting equation tell us?
How the assets of a company are financed i.e., the amounts of liabilities and capital used for assets.
If assets are 365000 and equity is 120000 then liabilities are?
can't tell from this information.
What does a balance sheet contain?
a balance sheet is a snapshot of an entity, i.e. it is information particular to a specific point in time as opposed to a report containing info over a period of time. for instance, a balance sheet will tell you the amount of your bank account balance, but it won't tell you how it got so low. with that said, a balance sheet simply contains a listing of your assets, liabilities/debts, and equity/net worth.
What is the meaning of credit and debit in business accounting?
Credit is giving money and debit is taking. A shop will debit its customers in exchange for goods and the customers will credit the shop for the goods.In Accounting:Debits represent increases in value of assets and expenses and decreases in income, liabilities and equityCredits represent increases in liabilities, equity and income and decreases in assets and expensesExample: To record the purchase for cash of office furnitureDebit Office Furniture and Credit CashThe shop example above is an excellent example of the reason accounting seems backwards to most people. The way two parties account for a transaction is a mirror image. When shops and banks tell you they are crediting your account, they are telling you how they are accounting for it, which is backwards from the way you account for it.
How do you find the net income when assets are given?
Answer:You can't. Assets are resources the company uses and net income tells how well the company has performed the last year. You can't tell by the mere value of assets at a point in time how well the assets have been managed (profitability) over the last year. Assets could have dropped as a result of losses, or gained as a result of gains. As a complicating factor, assets can still drop if there has been a profit, for example, when the profits have been used to pay down debt.
What does the accounting equation tell us?
How the assets of a company are financed i.e., the amounts of liabilities and capital used for assets.
If assets are 365000 and equity is 120000 then liabilities are?
can't tell from this information.
What is super quick ratio?
To find super quick ratio, first we have to find super quick assets and super quick assets can be found as under; Super Quick Asset = Quick Assets - Accounts Receivable (Net) Quick Assets = Current Assets - (Inventory + Prepaid Expense) Super Quick Ratio = Super Quick Assets / Current Liabilities Actually, Super Quick Assets tell the amount of money available to pay off current liabilities.
What does a balance sheet tell us about a business?
Answer:The balance sheet shows the assets (resources) that the company is using, and how these assets have been funded with equity (shareholders funds) and liabilities (loans, etc). The balance sheet is always at some date, for example, end of year.The assets can tell us:- how much cash does the company hold- does the company sell on account?- how much inventory at year end?- how much machinery/buildings/etc does the company have- are those relatively old or new? (depending on the cumulative depreciation)- etceteraThe liabilities and equity section tells us:- the current liabilities: how much needs to be paid within 12 months- long term liabilities: how much needs to (re)paid in the long run- how much have the investors paid for their shares- how much of profits are retained in the company (not paid as dividend)- how much potential (future) losses the company can absorb with their equity
What is financial inclusion?
tell me the answer what is financial inclusion
Describe the five question approach to using financial ratios?
Leverage Financial Ratios Those financial ratios that show the percentage of a company's capital structure that is made up on debt or liabilities owed to external parties Liquidity Financial Ratios Those financial ratios that show the solvency of a company based on its assets versus its liabilities. In other words, it lets you know the resources available for a firm to use in order to pay its bills, keep the lights on, and pay the staff. Operating Financial Ratios These financial ratios show the efficiency of management and a company's operations in utilizing its capital. In the retail industry, this would include metrics such as inventory turnover,accounts receivable turnover, etc. Profitability Financial Ratios These financial ratios measure the return earned on a company's capital and the financial cushion relative to each dollar of sales. A firm that has high gross profit margins, for instance, is going to be much harder to put out of business when the economy turns down than one that has razor-thin margins. Likewise, a company with high returns on capital, even with smaller margins, is going to have a better chance of survival because it is so much more profitable relative to the shareholders' contributed investment. Solvency Financial Ratios These financial ratios tell you the chances of a company going bankrupt. There's really no elegant way to say that. The whole point of calculating them is to make sure that a company isn't in danger of going under anytime soon.
What are some specific liquidity and solvency ratios that you could use for analysis purposes?
The most basic liquidity ratio is the current ratio, which can be obtained by dividing the current assets by current liabilities* Email Print * del.icio.us * digg * newsVine* * * font sizeFinancial ratios are the nuts and bolts of financial statements. They could be a very handy tool for investors. But they are useful only if you know which nut and bolt fits where. Otherwise, handling so many financial ratios could be painful. A few Illustration: Jayachandran / Mint.weeks ago, our friends Jinny and Johnny talked about one of the most important ratios - the P-E multiples. Now Johnny wants to understand some more ratios: liquidity ratios, turnover ratios, coverage ratios, profitability ratios or any other ratio he can lay his hands on.Jinny: Hi, Johnny! You are looking quiet today. What's the matter?Johnny: I have been looking at financial statements of a few companies but I don't really know how I can compare their strengths and weaknesses.Jinny: Well, financial statements of companies are full of numbers that can tell you a lot about companies' strengths and weaknesses but the problem is that numbers talk with numbers only. So you can make an intelligent analysis only if you know how to establish the relationship between different set of numbers.In this respect, financial ratios are of great help. They provide us relationships between two different sets of numbers. In a nutshell, they can tell us how effectively the company is managing its inventory or how quickly the company is receiving its sales proceeds. To find the right answers, we just need to choose the right ratio.By comparing financial ratios we can very well compare the performance of two different companies or the present performance of the same company with its past performance or with the present performance of the industry as a whole.Johnny: It seems ratios are of great use. Tell me about some key financial ratios.Jinny: There are a lot many ratios, each having its own significance. Today I will tell you about just one of them, so let's start with the liquidity ratios, the favourite of lenders of companies. Liquidity ratios tell us how well placed a company is in meeting its short-term liabilities. The most basic liquidity ratio is the current ratio, which can be obtained by dividing the current assets by current liabilities. This ratio tells us how many times the current assets are worth in terms of the current liabilities. If the current ratio is 2, then it means that the current assets are worth two times the current liabilities. That means the company is in a position to comfortably pay its dues.But, you may ask, what exactly is included in the current assets and liabilities? Well, current assets are assets which can be converted into cash within a short period of time, normally not exceeding one year. It includes many things, such as cash and bank balances, investments in different securities, money receivables, short-term loans and advances, inventory of raw materials as well as stock in progress and finished goods, etc.Current liabilities are short-term obligations which the company has to meet within the next one year. It includes all short-term borrowings repayable within one year, instalments and interests of term loans, deposits maturing within one year, sundry creditors for raw materials, stores and consumable spares, etc. You can find the current assets and liabilities of the company from its balance sheet.Johnny: What other liquidity ratios can be used?Jinny: Well, we can also use the acid test or quick ratio to make a more strict measurement of liquidity. This ratio excludes inventory from the current assets of the companies. This means that only cash and bank balances, investment in different securities and money receivables are treated as current assets. Current liabilities include all the components that I have told you about.Why are inventories excluded? This is done because it is difficult to convert inventories like raw materials or stocks in progress quickly into cash. Even finished goods can be converted into cash only with some time lag. The quick ratio tells us how well placed the company is in quickly meeting its short-term obligations. A company that has a high quick ratio is keeping its chequebook ready and will not ask its lenders to pick up unsold fish curry as repayment of its debt. Good for lenders.But there is yet another ratio, called super acid test or super quick ratio, that measures liquidity in even more strict terms. This ratio treats only cash, bank deposits and investments in different securities as current assets and excludes money receivables from current assets. Money receivables are what others owe us and sometimes it is really difficult to get them back.A company with a high super quick ratio is keeping most of the money in its own pocket. A good sign if the company owes you money, but not a very good sign for the owners of the company. A high super quick ratio means that the company is keeping its cash idle. That's not a very smart way of doing business.Johnny: That's true, Jinny. Sitting on idle cash is like sitting on fire.What:Financial ratios help in analysing the financial statements of companies.Who: Lenders and investors examine liquidity ratios to understand how well a company is placed to meet its short-term liabilities.How: Different liquidity ratios compare different elements of current assets with current liabilities.Shailaja and Manoj K. Singh have important day jobs with an important bank. But Jinny and Johnny have plenty of time for your suggestions and ideas for their weekly chat. You can write to both of them at realsimple@livemint.com
What type of security training do you need to work in a bank?
Typically banks require that you have no felonies on your record and you are in good financial standing. Contact the HR department of the bank you are applying for and they'll be able to tell you the exact requirements.
What does a balance sheet contain?
a balance sheet is a snapshot of an entity, i.e. it is information particular to a specific point in time as opposed to a report containing info over a period of time. for instance, a balance sheet will tell you the amount of your bank account balance, but it won't tell you how it got so low. with that said, a balance sheet simply contains a listing of your assets, liabilities/debts, and equity/net worth.
I'm a grandmother who wants to help pay tuition for her granddaughter to graduate school. What are my tax liabilities?
I'm not sure what you mean about your tax liabilities, but you can give $12000 per year to any individual without triggering the gift tax. So, you could contribute that amount to your granddaughter to apply towards tuition. I'm not aware that there would be any problems if you paid the tuition bills yourself either. Tell her to contact the school's financial aid office.
What did pony boy tell cherry while standing in line for popcorn?
he tell her about what happened to johnny
What is the meaning of credit and debit in business accounting?
Credit is giving money and debit is taking. A shop will debit its customers in exchange for goods and the customers will credit the shop for the goods.In Accounting:Debits represent increases in value of assets and expenses and decreases in income, liabilities and equityCredits represent increases in liabilities, equity and income and decreases in assets and expensesExample: To record the purchase for cash of office furnitureDebit Office Furniture and Credit CashThe shop example above is an excellent example of the reason accounting seems backwards to most people. The way two parties account for a transaction is a mirror image. When shops and banks tell you they are crediting your account, they are telling you how they are accounting for it, which is backwards from the way you account for it.
