Finance / July 16, 2018 / Alicia Franklin
Current liabilities are used to determine a company's ability to pay off its short-term obligations as they fall due. Current liabilities are used to evaluate the efficiency and short-term financial stability of a company. So, it is inferred that current liabilities are a measure of a company's level of liquidity.
The amount of cash or cash-equivalent which the company receives or gives out by the way of payment(s) to creditors is known as cash flow. Cash flow analysis is often used to analyse the liquidity position of the company. It gives a snapshot of the amount of cash coming into the business, from where, and amount flowing out.
Net equity valueNet equity value is the fair market value of a business’s assets minus its liabilities. This measured value is used to determine a business’s net worth - or the funds that would be left over and available to shareholders if all liabilities and debts were paid off.
Usually, whether you can afford a loan depends on whether you can afford the periodic payment (commonly a monthly payment period). So, the most important amortization formula is probably the calculation of the payment amount per period.
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