Noncurrent Assets
What does it mean
Noncurrent Assets are a section of a borrower’s balance sheet. Assets is a listing of all of the stuff owned by a business, and this listing is broken into two sections, Current Assets and Noncurrent Assets. Noncurrent Assets contain all of the assets that will not convert to cash during the normal course of business in the next 12 months. Some examples of Noncurrent Assets would include Equipment and Real Estate. When a business purchases these items, these are long term investments, and these items are not likely to be sold and should not be viewed as a potential source of liquidity (at least liquidity through the sale of the asset).
Why does it matter
The reason why Noncurrent Assets matter is because this tends to make up a large amount of a borrower’s balance sheet. Additionally, these items probably form the basis for most of a borrower’s collateral.
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