B A 323 Chapter Notes - Chapter 2: Market Liquidity, Current Liability, Historical Cost
17 Jul 2018
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Document Summary
A convenient means of organizing and summarizing what a firm owns (its assets), what a firm owes (its liabilities), and the difference between the two (the firm"s equity) at a given point in time. Current: has a life of less than one years; normally means it will convert to cash within. Shareholder"s equity: the difference between the total value of the assets and the total value of the liabilities. Net working capital: the difference between a firm"s current assets and its current liabilities. Liquidity: refers to the speed and ease with which an asset can be converted to cash. A highly liquid asset is one that can be quickly sold without significant loss of value. Financial leverage: the use of debt in a firm"s capital structure. The more debt it has (as a percentage of assets), the greater is its degree of financial leverage. Market value: true value, amount of cash we would get if we actually sold it.
