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Definition of Current assets
Amounts receivable by the business within a period of 12 months, including bank, debtors, inventory and prepayments.
Cash and other company assets that can be readily turned into cash within one year.
Cash, things that will be converted into cash within a year (such as accounts receivable), and inventory.
current refers to cash and those assets that will be turned
Value of cash, accounts receivable, inventories, marketable securities and other assets that
Value of non-cash assets, including prepaid expenses and accounts receivable, due
Also called the quick ratio, the ratio of current assets minus inventories, accruals, and prepaid
Costs that increase with increases in the level of investment in current assets.
current time to maturity on an outstanding debt instrument.
Indicator of short-term debt paying ability. Determined by dividing current assets by current
A demand for additional funds because of adverse price movement. Maintenance margin
current assets minus current liabilities. Often simply referred to as working capital.
current assets minus inventories.
Indicator of a company's financial strength (or weakness). Calculated by taking current assets
Loan to finance current assets, The sale of the current assets provides the cash to repay
Costs that fall with increases in the level of investment in current assets.
Defined as the difference in current assets and current liabilities (excluding short-term
The management of current assets and current liabilities to maximize shortterm liquidity.
A ratio that shows how well a company could pay its current debts using only its most liquid or “quick” assets. It’s a more pessimistic—but also realistic—measure of safety than the current ratio, because it ignores sluggish, hard-toliquidate current assets like inventory and notes receivable. Here’s the formula:
A ratio that shows how many times a company could pay its current debts if it used its current assets to pay them. The formula:
Notes receivable are promissory notes that the company has accepted from its debtors. Most promissory notes pay interest. Those that are due within a year are shown under “current assets.” Those that mature in more than a year would be listed under “Long-term assets.” If a note is being
current assets less current liabilities. Money that revolves in the business as part of the process of buying, making and selling goods and services, particularly in relation to debtors, creditors, inventory and bank.
A method of preparing the operating section of the Statement of Cash Flows that does not use the company’s actual cash inflows and cash outflows, but instead arrives at the net cash flow by taking net income and adjusting it for noncash expenses and the changes from last year in the current assets and current liabilities.
Calculated to assess the short-term solvency, or debt-paying
A measure of the ability of a company to use its current assets to
A measure of how easily a company can use its most liquid current
total current assets minus total current liabilities
The amount of a company’s current assets minus its current liabilities;
Costs of maintaining current assets, including opportunity cost of capital.
net working capital
current assets minus current liabilities.
Costs incurred from shortages in current assets.
current assets minus current liabilities
current assets divided by current liabilities. This ratio indicates the extent to which the claims of short-term creditors are covered by assets expected to be converted to cash in the near future.
Funds invested in a company's cash, accounts receivable and inventory. Net working capital is current assets minus current liabilities.
Acquisition of assets
A merger or consolidation in which an acquirer purchases the selling firm's assets.
A firm's productive resources.
A common element of a financial plan that describes projected capital spending and the
Net flow of goods, services, and unilateral transactions (gifts) between countries.
A bond selling at or close to par, that is, a bond with a coupon close to the yields currently
Amount owed for salaries, interest, accounts payable and other debts due within 1 year.
In Treasury securities, the most recently auctioned issue. Trading is more active in current
Current rate method
Under this currency translation method, all foreign currency balance-sheet and income
For bonds or notes, the coupon rate divided by the market price of the bond.
Related: Benchmark issues
Exchange of assets
Acquisition of another company by purchase of its assets in exchange for cash or stock.
Claims on real assets.
Value of property, equipment and other capital assets minus the depreciation. This is an
The difference between total assets on the one hand and current liabilities and noncapitalized longterm
A tangible asset with unique physical properties, like a parcel of land, a mine, or a
Publicly traded assets
assets that can be traded in a public market, such as the stock market.
Identifiable assets, such as buildings, equipment, patents, and trademarks, as distinguished from a
A tangible asset with physical properties that can be reproduced, such as a building or
assets that remain after sufficient assets are dedicated to meet all senior debtholder's claims in full.
Return on assets (ROA)
Indicator of profitability. Determined by dividing net income for the past 12 months
Return on total assets
The ratio of earnings available to common stockholders to total assets.
Anything of value that a company owns.
Bills a company must pay within the next twelve months.
RATE OF RETURN ON TOTAL ASSETS
The percentage return or profit that management made on each dollar of assets. The formula is:
Things that the business owns.
Amounts due and payable by the business within a period of 12 months, e.g. bank overdraft, creditors and accruals.
Things that the business owns and are part of the business infrastructure – fixed assets may be
Intangible fixed assets
Non-physical assets, e.g. customer goodwill or intellectual property (patents and trademarks).
Tangible fixed assets
Physical assets that can be seen and touched, e.g. buildings, machinery, vehicles, computers etc.
Items owned by the company or expenses that have been paid for but have not been used up.
assets owned by the company that do not possess physical substance; they usually take the form of rights and privileges such as patents, copyrights, and franchises.
current means that these liabilities require payment in
An informal term that refers to the variety of long-term operating
return on assets (ROA)
Although there is no single uniform practice for
Fixed Assets Turnover Ratio
A measure of the utilization of a company's fixed assets to
Return on Total Assets Ratio
A measure of the percentage return earned on the value of the
Total Debt to Total Assets Ratio
See debt ratio
see simultaneous engineering
Typically the cash, accounts receivable, and inventory accounts on the
Under target costing concepts, this is the cost that would be applied to a
This is typically the accounts payable, short-term notes payable, and
A cluster of accounts that are listed after fixed assets on the balance sheet,
Annual coupon payments divided by bond price.
Claims to the income generated by real assets. Also called securities.
assets used to produce goods and services.
That part of the balance of payments accounts that records demands for and supplies of a currency arising from activities that affect current income, namely imports, exports, investment income payments such as interest and dividends, and transfers such as gifts, pensions, and foreign aid.
A variable like GDP is measured in current dollars if each year's value is measured in prices prevailing during that year. In contrast, when measured in real or constant dollars, each year's value is measured in a base year's prices.
The percentage return on a financial asset based on the current price of the asset, without reference to any expected change in the price of the asset. This contrasts with yield-to-maturity, for which the calculation includes expected price changes. See also yield.
Current Tax Payment Act of 1943
A federal Act requiring employers to withhold income taxes from employee pay.
Current Income Tax Expense
That portion of the total income tax provision that is based on
Preferred Stock Stock that has a claim on assets and dividends of a corporation that are prior
to that of common stock. Preferred stock typically does not carry the right to vote.
Realizable Revenue A revenue transaction where assets received in exchange for goods and
services are readily convertible into known amounts of cash or claims to cash.
Debts or other obligations coming due within a year.
Land, buildings, plant, equipment, and other assets acquired for carrying on the business of a company with a life exceeding one year. Normally expressed in financial accounts at cost, less accumulated depreciation.
Longer-Term Fixed Assets
assets having a useful life greater than one year but the duration of the 'long term' will vary with the context in which the term is applied.
assets, the title of which are held personally rather than in the name of some other legal entity.
For companies: Raw materials, items available for sale or in the process of being made ready for
Monetary / non-monetary method
Under this translation method, monetary items (e.g. cash, accounts
Compares a stock's market value to the value of total assets less total liabilities (book
current cost of replacing the firm's assets.
Short-term solvency ratios
Ratios used to judge the adequacy of liquid assets for meeting short-term
Under this currency translation method, the choice of exchange rate depends on the
acid test ratio (also called the quick ratio)
The sum of cash, accounts receivable, and short-term marketable
The amount necessary to duplicate a company's assets at current
Expenditures that are accounted for as assets to be amortized
Change in Accounting Estimate
A change in accounting that occurs as the result of new information
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