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
Q. Strengths and Weaknesses of Capital asset pricing model? Strengths - Gives a risk adjusted discount rate precise to the project's activities. - Books of betas are r

Q. What is Auditors report explain? Special Report - Special report is a term used for Auditors' reports issued in connection with various types of financial presentations, inc

In February, one of Team Shirts' best customers went bankrupt owing team shirts $85. Team shirts uses the sales method for estimating bad debts. February sales were $15,000. The ac

You have just started work for Warren Co. as part of the controller's group involved in current financial reporting problems. Jane Henshaw, controller for Warren, is interested in

What have been the dividends per share? What is the CAGR of dividends per share from 2008 to 2010? What was the retention ratio for 2008 to 2010? Calculate the DPS growth

what are five modern financialaccounting techniques

The economic demand quantity can also be found out with the assist of a graph. In this technique ordering cost, carrying cost and total inventory costs as per various lot sizes are

Leverage or Gearing Ratios - These ratios include the Long Term Debt to Equity Ratio, Total Debt to Equity Ratio, Interest Coverage Ratio. Here, the interest coverage ratio is al

Valuing Callable Bonds: Bowdeen Manufacturing intends to issue callable, perpetual bonds with annual coupon payments. The bonds are callable at $1,350. One-year interest rates

Open "Hoyle CPA: Earnings Per Share." Under "Free Questions" select "Financial Accounting & Reporting."