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
The balance sheet and income statement for Bingle Ltd is presented to you as follows: Balance Sheet Extract as at 30 June 2012 with comparatives

Please prove that the maximum throughput of input queued switch is 0.586 when switch size N approaches infinity. Assume the incoming traffic is uniformly distributed. Please dem

Suppose you are a financial manager of Yuen Cheong Manufacturng Company. Due to the rising demand of product X, Yuen Cheong Manufacturng Company decides to open a new production pl

economic substance as in recognition of revenue

Calculation of Efficiency ratios  -                     2008 2009 2010 M Net Sales

During 2012, Kimmel Co. incurred average accumulated expenditures of $600,000 during construction of assets that qualified for capitalization of interest. The only debt outstanding

When Lydia started her vending machine business, she instituted flexible budgeting for the first few months of operations. Her first monthly budget numbers were these: Cost of g


Question: The following data are obtained from the record of a factory:                                                        £                   £ Sales 4,000 units @ £2

how do I calculate the adjusting balance