2.3.2 Liquidity

• Statement of Financial Position: A statement that shows the assets, liabilities, and equity of a business at a specific point in time.

  A) 62,500

  B) total current assets

  C) (16,500)

  D) net assets

  E) 36,000

  F) net current assets

  G) total non-current assets

  H) total current liabilities

  
• Liquidity - how easily assets can be turned into cash

  Ways to improve liquidity:

  • use of overdraft facilities
  • negotiate additional short/long term loans
  • encourage cash sale / sell of stock
  • sale & leaseback
  • only make essential purchases
  • extend credit with selected suppliers
  • reduce personal drawing from business
  • introduce fresh capital