Entrepreneurs need to understand the difference between assets, liabilities, cash flow and solvency. A business can look successful from the outside while experiencing serious financial pressure internally, since property may not be immediately convertible into cash.
Source: Companies Act 71 of 2008
Frequently Asked Questions
What is an asset?
An asset is an economic resource controlled by a business that has value.
What is a liability?
A liability is an obligation or debt owed by the business.
Does owning property mean a company can always pay its debts?
No — property may not be immediately convertible into cash, and its value may not match the company's immediate obligations.