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Importance of Liability Featured

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Importance of Liability Importance of Liability

Potential investors must attention to this item as a significant parameter that tells us real matters inside a company.

A company's legal debts or obligations that arise during the course of business operations. Liabilities are settled over time through the transfer of economic benefits including money, goods or services (investopedia.com).

For example, when a company tries to pay its liabilities and decreased amounts; it may be a good alarm that this company is healthy. But, if you see increase liabilities year after year. It may be a sign of internal problems that affected performance of company.

Imagine you have a lot of financial problems. Your first priority is solving these problems by managing problems and overcome instead of try to pay your liabilities. So, another hand, when you have not any financial problem you try to pay your liabilities to increase stability and decrease stress about future events.

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