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Is profitability of the firm important in the short term debt paying ability of a firm?
Yes, profitability is important for a firm's short-term debt paying ability, as it influences cash flow and the capacity to meet immediate financial obligations. A profitable firm typically generates sufficient income, which can be used to cover short-term liabilities. However, liquidity also plays a crucial role; a firm may be profitable yet still face challenges if it lacks sufficient liquid assets. Therefore, while profitability is significant, it should be considered alongside liquidity to assess short-term debt repayment capability effectively.
What else can I help you with?
How might you measure a company's liquidity and short-term debt paying ability?
CALCULATE CURRENT RATION Type your answer here...
Short-term creditors are usually most interested in assessing?
profitability
What is contribution as per marginal costing?
contribution can be expressed in two ways.... a)sales - variable cost b)Fixed cost + profit. In short period fixed costs are ineffective due to their stagnant nature, variable cost become the most important cost in deciding profitability.
What are the principle of employment of bank funds?
the principles are as follows 1) Safety 2) Liquidity 3) Diversity 4) Profitability 5) Short Term Loan
Would you expect net income to be a good measure of a company's liquidity?
Generally I would not use Net Income as a measure of liquidity. Net Income is a good measure of profitability, but it does not indicate a company's ability to meet short-term obligations. Some good measures of liquidity include working capital, the current ratio, and the quick ratio.
important of accounting information to shareholders?
Financial statements are important to investors because they can provide enormous information about a company's revenue, expenses, profitability, debt load, and the ability to meet its short-term and long-term financial obligations. There are three major financial statements.
What is profitability and sustainability?
Profitability refers to a company's ability to generate revenue and maximize its profits relative to its expenses. Sustainability, on the other hand, refers to the ability of a company to operate in a way that meets its current needs without compromising the ability of future generations to meet their own needs, focusing on social, environmental, and economic dimensions. Profitability is often seen as a short-term measure, while sustainability is a long-term approach to business success.
How might you measure a company's liquidity and short-term debt paying ability?
CALCULATE CURRENT RATION Type your answer here...
Short-term creditors are usually most interested in assessing?
profitability
A short-term creditor would be most interested in?
profitability
What are the four building blocks of financial statement analysis?
The four building blocks of financial statement analysis are profitability, liquidity, solvency, and efficiency. Profitability measures a company's ability to generate earnings relative to its revenue, assets, or equity. Liquidity assesses a firm's capacity to meet short-term obligations, while solvency evaluates its ability to meet long-term debts. Efficiency reflects how well a company utilizes its assets to generate revenue.
What are the Liquidity ratios?
measure of a firms ability to meet short term cash payments. bassically liquidity ratios show how good a business is at paying off its debts. hope this helps :)
What thinking skill is most important for short answer quizzes?
The ability to quickly analyze and summarize information is the most important thinking skill for short answer quizzes. Efficiently identifying key points and conveying them concisely demonstrates understanding and mastery of the material.
Is Working capital is a measure of a company's profitability?
No, working capital is not a direct measure of a company's profitability. Instead, it represents the difference between current assets and current liabilities, indicating a company's short-term financial health and liquidity. While sufficient working capital can support operations and indirectly contribute to profitability, it does not directly assess a company's overall profitability, which is typically measured by metrics like net income or return on equity.
What is The ability to transfer energy explosively into force is?
frequencey
What role do fixed costs of production play in determining a firm's profitability in the short run?
Fixed costs of production are expenses that do not change regardless of the level of output. In the short run, fixed costs play a significant role in determining a firm's profitability because they must be covered before a company can make a profit. If a firm cannot generate enough revenue to cover its fixed costs, it may experience losses in the short run.
What is the difference between profitability and liquidity?
liquidity is how quickly an item can be converted to cash, usually to pay short term debts, profitability is how much money an entity has after taking sales revenue - cost of goods sold...so gross margin
