AP/AR

  

Accounts Payable/Accounts Receivable. This important and basic indicator shows the "proof in the pudding" that a company is making a consistent profit.

Accounts payable is the money going out. Accounts receivable is the amount coming in. If accounts payable is higher than accounts receivable the business model is failing. Bad investment decisions are in place.

Related or Semi-related Video

Finance: What is a Money Market Fund?80 Views

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finance a la shmoop. what is a money market fund? isn't it a strange concept

00:08

to think about going to a market to buy money? [man walks through grocery store]

00:12

well yeah it's strange but the practice exists and it's a huge multi trillion

00:17

dollar market today. the key word here is money and not investment. why such a big

00:23

diff? well because the notion of investing implies duration. that is when

00:28

you invest in a nice fixer-upper home or a tractor distribution company or shares

00:34

in a fat dividend-paying bank you're investing for presumably a long time [people stand in line]

00:40

like years maybe decades maybe centuries if you can find the right miracle pill.

00:44

but here we're talking about money like the stuff you can buy candy with. so it's

00:49

short term not long and a money market fund basically comprises many series of

00:55

pretty safe bonds that are all coming due in the next 30 to 90 days. sometimes [pie chart]

01:00

longer than that sometimes shorter but generally in the very near future. so why

01:04

would you care about a money market fund? well because it pays you slightly more

01:09

interest on your money than say a bank checking account. and lots of people in

01:13

corporations need cash just sitting around to pay their bills, so there are

01:18

tons of money market funds out there available and that's the gist of a money

01:21

market fund. we're sure you'll have plenty of experience with them by the

01:25

time you hit your sixth hundredth birthday day [people cheer and hold birthday cake]

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