2023-10-30 03:56:06
Assets and liabilities play a fundamental role in the financial accounting of companies. These elements are recorded in the balance sheet, an accounting report that demonstrates the financial and economic position of an organization.
What are Assets and Liabilities?
Assets are the goods and rights controlled by the company, which can be converted into monetary means and affect the liquidity of the business. They include cash on hand, furniture and real estate, machinery and stock of goods. Furthermore, they represent the company’s rights, such as debts receivable.
On the other hand, liabilities are the obligations assumed by the company, that is, the expenses that need to be paid. They include accounts payable, such as suppliers and taxes, and represent the amounts that generate cash outflows when they are settled.
The difference between the total value of a company’s assets and liabilities is known as net worth. This value indicates the position regarding activities, investments and the values that shareholders or partners have in a business. We can represent this relationship through the formula:
Ativo = Passivo + Patrimônio Líquido
Patrimônio Líquido = Ativo - Passivo
Current and Non-Current Assets
Assets are divided into two main categories: current and non-current. Current assets are those related to the company’s short-term availability, that is, those that can be realized in a period of less than one year. Some examples of these assets are:
- Availability: cash, bank account balance or immediate liquidity financial investments.
- Stocks: raw materials, products in production and finished products.
- Credits: accounts receivable, advances, taxes recoverable, short-term financial investments.
On the other hand, non-current assets record long-term assets and rights, which remain in the company for more than one year. These assets include:
- Fixed assets: land, machines, installations, furniture, vehicles, tools.
- Intangible assets: brands, patents, computer programs.
- Investments: financial investments and long-term shareholdings.
Current and Non-Current Liabilities
Like assets, liabilities are also divided into current and non-current. Current liabilities are the obligations that the company has in the short term, that is, that must be settled in a period of less than one year. Some examples of these liabilities are:
- Accounts payable: suppliers, salaries and labor obligations, rents.
- Loans and financing: borrowed capital to be paid in less than one year.
- Investments in the company: investments made in the company through third parties, such as debentures.
Non-current liabilities are obligations that the company has to fulfill in the long term, taking more than a year to be paid. Some examples of these liabilities are:
- Loans and financing: capital taken by the company to be paid over years.
- Investments in the company: bonds and debentures with terms longer than one year.
- Provisions: reserve for possible future expenses.
Current liquidity
A company’s current liquidity indicates its ability to pay its debts in the short term. To calculate current liquidity, it is necessary to consider current assets and current liabilities. The formula for calculating current liquidity is:
Liquidez Corrente = Ativo Circulante / Passivo Circulante
If the result is greater than 1, it means that the company has sufficient assets to pay its current debts. If the result is less than 1, it indicates that the company does not have enough cash to pay off its debts in the short term.
Conclusion
In short, assets represent the assets and rights controlled by the company, while liabilities are the obligations that the company has. The difference between the assets and liabilities is the company’s net worth. Both assets and liabilities are divided into current and non-current, depending on the period within which they can be realized or settled. Current liquidity is an important indicator for evaluating a company’s short-term payment capacity.
It is essential that companies maintain adequate control of their assets and liabilities, as this directly influences the financial health of the business. The correct management of assets and liabilities contributes to the company’s growth and success, ensuring a solid position in the market and establishing a solid foundation for future investments.
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