Bookkeeping

Then employees receive their paychecks for that pay period on January 17. Until you pay employees, those wages are a liability because it’s money you owe. Typically, employees work for a period of time before you pay them for their work. Until the money comes out of your business’s account, that payroll is a liability. […]

A cautious investor could examine these figures and conclude that the company may be struggling with faltering demand or poor cash management. In this example, there is a strong divergence between the company’s revenue and earnings figures and its free cash flow. Based on these trends, an investor might suspect that Company XYZ is experiencing