What’s a Fixed Asset Turnover Ratio? The fixed asset turnover ratio is considered as a vital component of the ‘financial ratio’ associated with the net sales that are generated through fixed assets. It ensures that fixed-asset investments produce an ample amount of net sales to fulfill the desired requirements. The experts include ‘properties’, ‘plants’ and … Read more
Introduction: The Profitability Ratio is a major evaluation for understanding if organizations and companies are performing well. Considering this as a mandatory component, it is interesting to see that these theories are being practiced to avoid misinterpretations of sales and other aspects curating accurate results for the board of directors and owners. Here, profitability is … Read more
Introduction: The Debt Management Ratio is considered as the company’s evaluation for the debt amount in contrast to its available amount for financing the upcoming projects. It should be in our best interest that such ratios provide valuable insights and information regarding all the business units that are being supported through debt, whereas the other … Read more
Introduction: It is labelled as the most popular form of loan capital which companies opt for businesses or individuals for the sole proprietorship. There are multiple bank loans that can be issued from the banks, financial institutions and investment centers accordingly. Upon agreeing, the bank decides whether the loan is short-term or long-term and evaluates … Read more
Introduction: Simple interest is considered as the quickest and the most reliable methods of evaluating the interest rate that financial centers and banks would apply on the borrowed amount. It is universally determined by multiplying the percentage of the interest rate by the loaned amount and then by number of periods. It is being used … Read more
Introduction: The annuity is considered as a contractual product which is used by financial centers and institutions to understand about how funds grow from time to time. It is especially designed to evaluate how the money changes its nature after annuitization and delivers a series of payments to the individuals after a noticeable gap. Furthermore, … Read more
Introduction: The working capital is one of the most effective tools in the world of accountancy as it represents the company’s performance along with its financial position on a short-term basis. There is an organized method of evaluating the working capital which can help in finding some value-added insights regarding the company. It can be … Read more
Quick Ratio: The Quick Ratio represents an indication for the company which heavily emphasizes over its short-term liquidity and its potential to fulfill the temporary obligations with assets having maximum liquidity in particular. Therefore, it embarks on excluding inventories from the current assets and is evaluated by this universal formula – Quick ratio = (Current … Read more
Liquidity: Liquidity is defined as an extent to which assets as well as marketable securities are bought and even sold back in the markets without manipulating their original price. It’s a high-end trading activity which exhibits its occurrence in manufacturing companies that are willing to spend a great chunk of money over the inventory. Furthermore, … Read more
Introduction: The current ratio is depicted as another important aspect of ‘Liquidity Ratio’ and ‘Working Capital’ as it marks out the correct proportion of current assets that are available in the business setup in according with the current liabilities. It should be in our best interest that current ratio is quite essential, especially for the … Read more
Introduction: The investing activities are considered as another integral part of the cash flow statement, as it marks out the money which is being received through the help of long-term assets. It is worth mentioning that after collecting the money, investing activities might as well exhibit a positive trend in the cash-flow statement, whereas it … Read more
Introduction: The operating activities are considered as the company’s source of income which generates revenue on a regular basis. It highly focuses on the company’s core competencies and associations with their business activities. Furthermore, it evolves around various departments of the organization such as, manufacturing, distributing, selling, marketing and the finance section accordingly. These activities/services … Read more
Introduction: Considering it as an imperative aspect in accountancy, ‘Retained Earnings’ indicates the percentage of net earnings that are still unpaid in terms of the dividends. However, the same percentage is stashed and reinvested in the core competencies of the business. It is worth mentioning that on common grounds the incorporations pay off their debt … Read more
Introduction: Have we pondered over dividends? It should be in our best interest that ‘dividends’ are considered a specific portion of the company’s earnings, which caters its net profit and is evaluated through the supervision of top-line management as well as board of directors. Indeed, dividends are ‘profits’ coming in from the business world that … Read more
Introduction: According to accountancy professionals, the ‘common stocks’ represent an ownership in the entity. It is worth mentioning that individuals holding common stocks are supposed to exercise control by finalizing the board of directors and picking up the right corporate policies for their company. Furthermore, common stockholders are not valued to the fullest and wander … Read more
Introduction: It is appropriate to state that ‘preferred stocks’ are more powerful than the common stocks. Since their inception in the world of business, the accounting gurus have confirmed that preferred stockholders are given a higher value in the market along with a bigger claim on company’s earnings as well as its total assets accordingly. … Read more