liquidicity

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liquidicity
how much cash a business has and how easy it is to pay debts
1 of 15
statement of financial position
shows the assets, liabilities and net worth of a business on a given date
2 of 15
assets
what a business owns e.g. buildings
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liabilities
what a business owes e.g. bank loan
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current ratio
current assets / current liabilites
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acid test ratio
current assets - stock / current liabilities
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fixed asset
are intended to be held for more than one year e.g. buildings, land, machinary and vehicles
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current assets
cash or assets that will be turned into cash, within the year e.g. stock, debtors, bank, cash
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what the acid test ratio answer means
this means for every £1 owed by the business they have to pay (answer) in current assets minus stock to pay the debt
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what the current ratio answer means
this means for every £1 owed by the business they have (answer) in current assets to pay the debt.
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inventory
another word for stock
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ways to improve business liquidicity
reduce current liabilities e.g. pay off loans the business has
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ways to improve business liquidicity
getting money off debtors (people who owe the business money) quciker
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ways to improve business liquidicity
reduce the stock levels by using JIT. this reduces space needed and reduces storage costs
14 of 15
working capital
current assets - current liabilities
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Other cards in this set

Card 2

Front

shows the assets, liabilities and net worth of a business on a given date

Back

statement of financial position

Card 3

Front

what a business owns e.g. buildings

Back

Preview of the back of card 3

Card 4

Front

what a business owes e.g. bank loan

Back

Preview of the back of card 4

Card 5

Front

current assets / current liabilites

Back

Preview of the back of card 5
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