Importance of Current Assets and Current Liabilities
When you study the figures of a target company it is worth examining its current assets and current liabilities.
Current assets represent assets that can be quickly transferred into money. Some of them are:
- Cash
- Cash equivalents
- Inventories
- Accounts receivable (these are the money that customers owe to the company for services or products provided)
Current liabilities represent the short term obligations of the company. Some of them are:
- Accounts payable
- Short term debt
Current assets and current liabilities should be compared over periods of time. It is good if the current assets have increased significantly over longer periods of time. This means that the company generates cash. On the other hand, it can be also interpreted as the company not being able to collect the money it has to take from its accounts receivable. If the current liabilities of the company are growing at a fast pace, then there might be some problem with the company. However, this is not always bad since the company may incur higher liabilities since it needs money to finance some of its goals.
Finally, you should carefully study these indicators of the target company in order to determine its future potentials. You can quickly and easily obtain this information from financial statements.
To be a successful investor you need two main things - the knowledge and the right trading platform. For a trading platform we can recommend try you Zecco and TradeKing
.
Zecco offers free stock trades, no account minimum, real time quotes, trading community, and is also insured and protected against loss by SIPC.
Opening a Zecco account to benefit from $0 Stock/ETF trading is a smart idea. Free stock trades allow you to preserve more of your wealth and save money, which you can invest instead of paying brokerage commissions.
TradeKing has been rated #1 Discount Broker by SmartMoney’s (the Wall Street Journal Magazine) annual US broker survey. It was also awarded the highest 4-star ranking in Barron's survey of Best Browser-Based Online Brokers. TradeKing platform features real-time portfolio information, advanced order entry, stock, option and mutual fund screeners, customized charting and alerts, volatility charts, a pricing probability calculator, free research and integrated news, and interactive educational information. Open a TradeKing account here
| Rate this article : Low | High |
- Stock Investing vs. Saving
- Mutual Funds vs Individual Stocks
- Classes of Assets - Asset Class Definition
- Investment Goals Planning
- Stock Investing Basics
- Bond Definition and Concepts
- Zero Coupon Bonds Basics
- Convertible Bonds Basics
- US Treasury I Bonds Basics
- Discount Stock Brokers vs Full Service Brokers
- Financial Advisor Job Description
- Certified Financial Planner Designations
- Stock Broker Categories
- Types of Brokerage Accounts
- Stock Buyback Reasons
- Stock Basics
- Stock Dividends Basics
- Stock Market Cycles
- Federal Reserve Board (Fed) Functions and Importance
- Stock Market Sectors Classification
- Stock Split Basics
- Stock Market Indexes and Fair Value Indications
- Stock Share Types
- Bid and Ask Prices
- Stock Trading Basics and Order Types
- Market Makers Role and Responsibilities
- NYSE and Market Specialists
- Company Market Capitalization
- Stock Order Types
- Setting Stock Prices
- Newspaper and Online Stock Quotes
- Stop Loss Order Fundamentals
- Trailing Stop Order Basics
- Book Value Explanation
- Dividend Yield Explanation
- Stock Price Influences
- Advance Decline Ratio Basics
- Value Investing Basics
- Rising Interest Rates and their Effects
- Foreign Stocks Basics
- Asset Allocation Basics
- Stock Market Movements
- Earnings Season Basics
- CPI Basics
- Inverted Yield Curve Implications
- IPO Basics and Strategies
- Option Basics and Types
- Consumer Price Index Basics
- Stock Market Investing Basics
- Why Do Companies Go Public
- Introduction to Stocks
- Stock Price Volatility
- Large Cap Stock Characteristics
- Small Cap Stocks Characteristics
- Foreign Stock Characteristics
- Technology Stock Characteristics
- Fundamental Analysis Technique Basics
- Technical Analysis Basics
- Importance of Current Assets and Current Liabilities
- Price/Book Value Advantages and Disadvantages
- Understanding Return on Equity and Return on Assets
- Understanding Inventory Turnover Ratio
- Price to Earnings Growth Ratio (PEG) Explanation
- Price to Earnings (P/E) Ratio Basics
- Price to Sales Ratio (PSR) Explanation