Short term loan and advances

Explanation: Short term loans and advances represent funds lent by a company to other parties or advances made for a short duration, typically less than one year, and are classified as current assets on the balance sheet. These assets include short-term loans extended to employees, suppliers, customers, or other parties, as well as advances for business purposes such as prepayments, deposits, or security payments. Short term loans and advances are considered as liquid assets that can be converted into cash within a short timeframe.

Example: Maruti Suzuki has 3,741 crore rupees in short term loans and advances as of FY23, indicating the amount of funds lent or advances made by the company that are expected to be recovered within the next twelve months. These assets are included in Maruti Suzuki’s current assets on the balance sheet and represent short-term receivables or prepayments made by the company. Analyzing short term loans and advances helps assess the company’s liquidity position, credit management practices, and the nature of its short-term financial commitments.

You can view the short-term loans and advances for any company on Radar under Current Assets in the Balance Sheet section.