Liabilities refer to the debts which may include unpaid credit card bills, loans, or mortgages. Having a liability is having legal responsibility to pay your dues. In books of accounts, liabilities are depicted on the right and assets on the left. They refer to all things that you have borrowed and thus owe. For instance, …
Post Type Archives: Glossary
Liability
Liability refers to the legal obligation of an individual or a business to repay debts or fulfil other financial responsibilities. It can include loans, accounts payable and other financial obligations. Liabilities are recorded on a company’s balance sheet and are used to assess its financial health.
Line of Credit
A line of credit is a type of loan that allows a borrower to access a certain amount of funds from a lender, up to a pre-approved limit. The borrower can borrow and repay funds as needed and interest is typically only charged on the actually utilised. For instance, say you get a line of …
Liquidation
Liquidation means the sale of assets of a company to raise capital and pay off debt, such as to shareholders or creditors. Liquidation may be voluntary when a company is shutting its business, or compulsory when it is forced to shut down its business due to insolvency.
Liquidity
Liquidity refers to the ability of an asset or investment to be easily converted into cash or be used to make payments. High liquidity means that an asset can be quickly bought or sold without significantly affecting its price. Liquid assets usually come with a short maturity tenure and a low risk profile and include: …