Thursday, July 14, 2011

Finance and Management - 11

In the earlier blog, we looked at the Non-current assets portion of the company. In today's blog, we look at the Liability section of the balance sheet.

One could classify the Liabilities section as current and non-current liabilities. Current Liabilities refers to the obligations the company has to pay off within the current year, these could include the payments to be done to suppliers, vendors etc. The non-current liabilities would represent those that it owes within duration more than a year. Generally this non-current section includes the bank and bondholder debt here.

A manageable debt is a good sign; if the debt is decreasing it is healthy sign. The rising debts are a cause of some worry for the investor. What is a good balance of debt would depend on the assets that it possesses, and the cash flow of the company.

Having too much debt, relative to the company's cash flow would mean it would pay a high amount of its revenue as interest and debt repayment. If the liability is not properly managed it could get the company Bankrupt.

Read in Kannada:
http://somanagement.blogspot.com/2011/07/blog-post_5564.html

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