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Liquidity position of the enterprise

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Why are suppliers of credit interested in the liquidity position of the enterprise?
Why is it beneficial for a small business enterprise also to make use of borrowed capital to finance the capital requirements of the enterprise?

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Solution Summary

The liquidity position of the enterprise is found. The beneficial small business enterprises that make use of borrowed capital to finance the capital requirements of the enterprises are determined.

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Liquidity (ratios) represent a firms ability to to meet short term debt obligations. The most common measure is the current ratio = (current assets)/(current liabilities). Credit is a current liability. The current assets which ...

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