Short-term creditors, Financial Accounting

Short-term Creditors:  Bankers and another short-term creditor have an interest same to those of the debenture holders and equity shareholders who are interested in the profitability and long-term stability of the business. Their main interest, though, is in the current position of the firm that is its capability to produce sufficient funds working capital to meet current operating requirements and to pay current debts promptly.

The amount of working capital is measured through the excess of current assets over current liabilities. What is significant to short-term creditors is not only the amount of working capital obtainable but more so-is its quality. The major factors affecting the quality of working capital are:

(i)  the behaviour of the current assets comprising the working capital and

(ii) The length of time needed to convert these assets in cash. During this context we may compute the subsequent ratios:

a. Inventory turnover ratio         

b. Account receivable turnover ratio

Posted Date: 4/9/2013 2:21:13 AM | Location : United States







Related Discussions:- Short-term creditors, Assignment Help, Ask Question on Short-term creditors, Get Answer, Expert's Help, Short-term creditors Discussions

Write discussion on Short-term creditors
Your posts are moderated
Related Questions
Surviving Spouse - This is a person whose wife or husband died during tax year. A surviving spouse can file a JOINT RETURN for the year in which death occurred. Additionally a join

Question: Lucy Kim is in the car hire business. The following information came from her Fixed Asset Register on 31 December 2009: On 31 March 2009, she sold the car wh

Calculat capital expenditure, How to define Capital expenditure This is kind of expenditure on fixed assets like as plant or equipment, the cost of which is spread over several

In January 2013, Mitzu Co. pays $2,600,000 for a tract of land with two buildings on it. It plans to demolish Building I and build a new store in its place. Building 2 will be a co

In June 2012 Company has supplied some goods to a customer on a sale on return basis. The value of the goods was Rs. 120,000. The company recorded this transaction as credit sale,

What is the relation of profit and matching principle? Do you have a form for this kind of assignment in writting Financial Accounting?

Piecemeal Realizations and Distributions Partnership dissolutions may take a substantial number of days even months) so it is unlikely that all cash generated will be simultane

Q. Business risk in company? Business risk is the likelihood of a company experiencing changes in the level of its profit before interest as a result of changes in turnover or


In January 2011, Rogers Co. purchased a machine that cost $85,000. The equipment is estimated to have a 5-year life and a salvage value of $15,000. a) Compute the amount of depr