BU121 Study Guide - Final Guide: Contingent Liability, Capital Cost Allowance, Deferred Income
Document Summary
Capital structure is the mixture od debt and equity that finances the short- and long-term operating requirements of a company. When deciding how to best finance, managers must consider the financial risk associated with the source of financing and the return to shareholders on their investment in the company. Liabilities are debts or obligations arising from past transaction that will be paid with assets or services. When a liability is first recorded, it is measured in terms of its current cash equivalent. A company will usually pay more than the liability because of interest on the debt. Current liabilities are short term obligations that will be paid within the normal operating cycle or one year, whichever is longer. Analysts say that a company has liquidity if it has the ability to pay its current obligations. Aka quick assets to satisfy its current liabilities. High is good but too high suggest inefficient use of resources.
