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Quick ratio is liquidity indicator that defines current ratio by measuring the most liquid current assets in the company that are available to cover liabilities. Unlike to the current ratio, inventories and other assets that are difficult to convert into the cash are excluded from the calculation of quick ratio. [22] [23]
The ratio is calculated by dividing current assets by current liabilities. An asset is considered current if it can be converted into cash within a year or less, while current liabilities are ...
Capital surplus, also called share premium, is an account which may appear on a corporation's balance sheet, as a component of shareholders' equity, which represents the amount the corporation raises on the issue of shares in excess of their par value (nominal value) of the shares (common stock).
Equity = Assets − Liabilities. Assets are reported on the balance sheet. [11] On the balance sheet, additional sub-classifications are generally required by generally accepted accounting principles (GAAP), which vary from country to country. [12] Assets can be divided into current and non-current (a.k.a. fixed or long-lived). Current assets ...
The conversion ratio is the number of shares the investor receives when exchanging the bond for common stock. The conversion price is the price paid per share to acquire the shares when exchanging the bond for common stock. [6] Market conversion price: The price that the convertible investor effectively pays for the right to convert to common ...
An asset is often defined as the opposite of liability, which is money you owe. Assets can be liquid or illiquid. A liquid asset means that it is either cash or can quickly and easily be converted ...
Assets Liabilities Equity Explanation 1 + 6,000 + 6,000 Issuing capital stock for cash or other assets 2 + 10,000 + 10,000 Buying assets by borrowing money (taking a loan from a bank or simply buying on credit) 3 − 900 − 900 Selling assets for cash to pay off liabilities: both assets and liabilities are reduced 4 + 1,000 + 400 + 600
The discipline exists because assets that are of capital value to business entities or other legal persons require management to aim to achieve optimal, adequate or otherwise sufficient capital performance of the assets at hand. Underperforming capital assets pose a liability to the finances and continued existence of any legal entity ...