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 profit center?2 Views

00:00

Finance a la shmoop what is a profit center? well here's a profit center and

00:09

here's a profit center yeah Google search is where Google makes like a [Google search of profits appear]

00:13

hundred forty-two percent of its profits so search for Google is its profit

00:19

center in fact if it weren't for its search engine well Google would actually

00:23

be losing money YouTube loses a billion dollars a year

00:26

depending on how you do the math Google Maps loses 100 million or so everything

00:31

else loses a few billion a year and search makes thirty billion dollars a

00:36

year annually yeah per year that's what it means

00:39

so more than makes up for everything else that's its profit Center and

00:43

without that profit center generating profits or cash to fund all these other [Man playing guitar with VR]

00:49

wacky ideas the driverless cars our favorite while Google would just be

00:53

searching for a way to make money but it doesn't it found it it's called search...

Up Next

Finance: What are Accounts Payable and Accounts Receivable?
111 Views

What are accounts receivable and accounts payable? Accounts receivable and payable are figures that show up on a company’s balance sheet. Account...

Finance: What is a Balance Sheet?
47 Views

What is a balance sheet? A balance sheet is a financial document that public corporations are required to use. It shows their assets and liabilitie...

Finance: What is a Consolidated Balance Sheet?
3 Views

What is a Consolidated Balance Sheet? A consolidated balance sheet is one that includes all of the subsidiary companies’ aggregate balance sheets...

Finance: What is a Money Market Fund?
80 Views

What is a Money Market Fund/Commercial Paper? Money Market Funds are mutual funds that are very safe and liquid. They invest in cash and securities...

Find other enlightening terms in Shmoop Finance Genius Bar(f)