Have you ever wondered how businesses evaluate their profitability? Every business sets certain targets to achieve. Among these set targets is the amount of profit to make over a set period. Once the target is in place, it’s time to ensure the goal yields the expected fruits. Many companies have Read more…
Opening balance equity is an account supported by accounting software that offsets opening balance transactions within a business. The opening balance equity accounts are part of the equity section in a balance sheet that includes other equity accounts such as retained earnings. Business novices may not comprehend such terms; that Read more…
Businesses need to determine how well they are utilizing their working capital to improve sales and make profits. They can only measure the efficiency of their working capital using a working capital turnover ratio. And in this article, you are going to understand the basics of working capital, including working Read more…
For companies to make maximum profits, they must carefully consider the costs involved in the operation of the business. Variance analysis comes in handy to help management make important decisions and improve the overall performance of a company. Not all variances are useful in making decisions, though. Some of the Read more…
Every business needs to keep proper financial records to reveal the true state of the business. Business owners and shareholders also need to know the worth of their investment in a company. They can only determine the returns on their investments from a statement of owner’s equity. If you are Read more…
There is no single financial leverage definition that captures all aspects of the ratio. However, it loosely refers to using debt to buy assets. An entrepreneur may use debt to buy an asset to help increase returns on its investment. Typically, a company needs financial capital to run its activities. Read more…
Did you know that running a business takes quite a lot of costs, including overhead costs? Thanks to these added expenses, your expenditure can go quite high. You need the funds to run the operation, so it’s not possible to reduce overhead costs. Here is where activity based costing comes Read more…
Company revenue and costs play a significant role in the enterprise. The moment when the company reaches the break-even point is when the two are equal. The best way to ascertain this is to calculate and get a viable outcome. Read on and get to learn much more about the Read more…
We come into contact with deferred revenue more often than you think. If you have ever subscribed to get a year’s supply of magazines at $24, the company earns a deferred payment of $2 for each month it delivers a magazine to you. The same applies when you go to Read more…
A trial balance is a great tool that accountants use to ensure their credits and debits are balanced for a financial statement or auditing adjustments. But why would a company need to keep track of all the balances in its ledger accounts? What role does a trial balance play in Read more…