HTA 602 Lecture Notes - Lecture 2: Current Liability, Capital Asset, Cash Flow

• School: Ryerson University
• Department: Hospitality and Tourism Management
• Course: HTA 602
• Professor: Bernard Mc Evoy

Document Summary

2. 1 statement of financial position: statement of financial position= balance sheet, snapshot of firm"s assets (what owns), liabilities (what owes) & equity. Assets: current/ fixed fixed: long life (tangible/ intangible) current: < 1 year convert to cash w/in 12 months listed in order of liquidity. Liabilities & owners" equity liabilities: current/ long-term: owners" equity= shareholders" equity= common equity residual value remained. Net working capital: net working capital= current assets- current liabilities. Positive when cash that will be received over next 12 months exceed over cash that will be paid out= healthy firm. Liquidity: speed & ease which asset can be converted to cash, ability to convert cash quickly w/o significance loss in value, valuable, more liquid a business is, less likely experience financial distress, but liquid assets earn lower return. Debt vs. equity financial leverage: use of debt in firm"s capital structure.