Liquiditas Ratios : Current cash Needs

Liquidity is that the ability of a company to satisfy demands for money as they arise within the near-term (such as payment of current liabilities). Initial insights into the monetary performance of BDCC are often derived from associate degree analysis of relative amounts of current and non-current debt. This analysis is self-addressed during this section. 

Current (Short-term) versus Non-current (Long-term) Debt 

Short-term and long-run finance ways each have their benefits. The advantage of some short-run debt (repayable at intervals one year of the record date) is that it typically doesn't need interest payments to creditors. to Illustrate, accounts collectable might not need payment of interest if they're paid at intervals the primary thirty days they're outstanding. short-run debt additionally has its disadvantages; payment is needed at intervals a minimum of one year, and sometimes sooner. Interest rates on short-run debt ar typically above on long-run debt. a rise within the proportion of short-run debt is a lot of risky as a result of it should be revived and thus renegotiated a lot of ofttimes. 

The advantages of long-run debt area that payment is also remodeled associate degree extended amount of your time. Risk is also somewhat reduced through the employment of a proper written agreement agreement that's typically lacking with short-run debt. The disadvantages of long-run debt area that interest payments should be created at fixed times and also the amounts owing is also secured by assets of the corporate.