Importance of Liabilities (accounting)

The importance of liabilities is sometimes taken lightly when evaluating a company. Indeed, they can say a lot about the circumstances in which said firm finds itself. Thus, according to the proportion of Passives manifested in terms of assets, the financial situation of the company can be promising or complicated. On the other hand, the reason that led to contracting said Passives I was also able to tell a lot about the health of the company. from a perspective simplistic, it may be considered that it is better to avoid as much as possible the Passives, but the truth is that they must be seen in terms of the revenues that can be obtained from the project that is intended to be financed with them.

Needless to remember that the Passives Are the obligations that a certain company has. Thus, it is worth mentioning debts as its main component. These debts can be long-term if they exceed one year or short-term if they are less than one year. In contrast, assets are the elements that a company has and that serve to generate income as well as the rights that it can claim. This type of vision is typical of the current accounting record and has a long tradition.

Given, that the Passives They are obligations that will eventually mean an outlay of money, perhaps there is a temptation to consider them a problem. However, as already outlined, on many occasions the acquisition of a liability is what makes the motion of the company to carry out a certain action that will generate great returns. What is certain is that this variable must be viewed with some suspicion in such a way that it is managed in a certain proportion with respect to assets.

Studying this variable is essential to know the health of a specific organization. In fact, in the world of finance there is a current called fundamental analysis that focuses in the evaluation of this type of data as the most efficient way to analyze the possible investments. In the case of liabilities, it will tell us if there will be financial problems or if there is a program of investment future that guarantees sustainability to the company. Obviously, this must imply an exhaustive and meticulous enough analysis to reach conclusions that are the most accurate possible, avoiding false evaluations in this regard.