What is a liability? Liabilities are existing debts that are generated by past transactions or events and are expected to lead to the outflow of economic benefits. In fact, this is an economic debt. The repayment period or specific amount has been stipulated and restricted by the contract and articles of association at the time of occurrence or establishment, which is an obligation that enterprises must fulfill. When a company needs funds in its operation, it can borrow funds from banks or other institutions with a certain period of interest payment and principal repayment in addition to the funds provided by shareholders. Accounts used to record changes in funds generated by these transactions are classified as? Liabilities? .
Corporate liabilities are generally divided into interest-bearing liabilities and interest-free liabilities. Interest-bearing liabilities are loans that need to pay interest, and the most common is bank loans. Interest-free liabilities generally refer to accounts receivable, notes payable and accounts payable received in advance from dealers who pay first and then receive goods. The simple understanding of interest-free liabilities is that enterprises run their own enterprises by owing money to the upstream and downstream industrial chains.
Listed companies need to raise funds by issuing stocks. Generally speaking, the difference between industrial investment and stock investment is that industrial investment depends on performance rather than stock price, and industrial investment depends on performance, that is, dividends, in order to get returns; Stock investment only pays attention to the stock price and does not pay attention to dividends. Therefore, an industrial investment project, investors will not require a profit within one year, and it is common to make a profit after three to five years; But if you invest in stocks, investors will have no patience to wait for three to five years before making a return. If it doesn't go up within a year, it will be difficult to continue. For example, Buffett bought an insurance company and used the insurance company as a platform to obtain long-term low-interest funds as leverage to invest in stocks. So Buffett doesn't need to look at the stock market and short-term stock price trends when he works. He just needs to pay attention to the company's own performance like industrial investment.