Calculation of Creditor

To calculate the creditor of a business, we need to use the following formula:

Creditor = Total Assets - Net Worth

Given that the total assets of the business are ₹1,30,000 and net worth is ₹80,000, we can calculate the creditor as follows:

Creditor = ₹1,30,000 - ₹80,000
Creditor = ₹50,000

Explanation of Creditor

The creditor of a business is the amount of money that the business owes to its creditors. These are the individuals or entities that have provided goods or services to the business on credit. In other words, they have extended credit to the business, and the business owes them money.

For example, if a business purchases goods worth ₹10,000 on credit from a supplier, then the supplier becomes a creditor of the business. The business owes the supplier ₹10,000, which is the amount of the creditor.

Creditor is an important metric for businesses as it indicates the amount of money that the business owes to its creditors. This information is useful for creditors, investors, and other stakeholders in assessing the financial health of the business. If the creditor of the business is too high, it may indicate that the business is not managing its finances effectively and may be at risk of defaulting on its payments.

In conclusion, the creditor of a business is the amount of money that the business owes to its creditors. It is calculated by subtracting the net worth of the business from its total assets.