Trade Payables

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Trade Payables

Explanation: Trade payables, also known as accounts payable, represent the amounts owed by a company to its suppliers or vendors for goods or services received on credit. These liabilities arise when a company purchases goods or services on credit terms and has not yet made the payment. Trade payables are typically short-term obligations and form a part of the company’s working capital.

Example: Maruti Suzuki had trade payables of 11,785.50 crore rupees as of FY23. This amount signifies the outstanding payments owed by the company to its suppliers for goods or services acquired on credit.

Trade payables are an important aspect of a company’s financial management as they represent obligations that must be settled within a relatively short period, typically within one year. Managing trade payables effectively is crucial for maintaining good relationships with suppliers while ensuring sufficient liquidity and cash flow to meet payment obligations on time.

Assessing trade payables aids in evaluating the company’s liquidity position, its capability to manage short-term liabilities, and its relationship with suppliers.

You can view the Trade Payables for any company on Radar under Current Liabilities in the Balance Sheet section.

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