MGTA02H3 Chapter Notes - Chapter 4: Quick Ratio, Accounts Payable, Leveraged Buyout
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MGTA02H3 Full Course Notes
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Assets: current assets cash and other assets that can be converted into cash within a year; normally listed in order of liquidity the ease and speed with which an asset can be converted to cash; cash is perfectly liquid. Business debts can usually be satisfied only through payments of cash. Market able securities as short term investments are slightly less liquid but can be sold quickly if necessary. These include stocks or bonds of other companies, gov"t securities, and money market certificates. There are 3 important non-liquid assets held by many companies: accounts receivable, merchandise inventory and prepaid expenses: accounts receivable --amounts dues to the firm customers who have purchased goods or services on credit. Most businesses expect to receive payment within 30 days of a sale. Total accounts receivable assets are decreased accordingly: merchandise inventory cost of merchandise that has been acquired for sale to customers but is still on hand.
