On the other hand, entities belonging to manufacturing and capital intensive industries may have operating cycles considerably longer than one year period.
This will allow you to calculate whether or not your company has the monetary means necessary to fulfill your various obligations.
Hence, the companies may choose to ignore showing other current liabilities separately.
Many entities have varying trading activities throughout the year due to the nature of industry they belong.
Although an extensively applied tool for liquidity analysis, current ratio has only a limited usefulness.
High accounts payable denotes greater credit facility being availed by the company.