Business Finance: Most Popular Articles
These articles are the most popular over the last month.
most profitable businesses 2012
Here are ten of the most profitable small businesses opportunities with lower initial investments to start in 2012.
Here are ten of the most profitable small businesses opportunities with lower initial investments to start in 2012.
most profitable businesses 2013
Here are ten of the most profitable small businesses opportunities with low initial investments to start in 2013.
Here are ten of the most profitable small businesses opportunities with low initial investments to start in 2013.
Calculate Breakeven
Learning how to calculate breakeven point helps a business owner make decisions about fixed costs, variable costs, and the price of the product as they relate to the firm's profit potential.
Learning how to calculate breakeven point helps a business owner make decisions about fixed costs, variable costs, and the price of the product as they relate to the firm's profit potential.
Profitability Ratios
Profitability ratios are the most important ratios in financial analysis to company investors. Net profit margin, return on assets, and return on equity are some of the most common profitability ratios. Analyzing the profitability ratios in order to make recommendations for a firm is one of the most important tasks of the financial manager.
Profitability ratios are the most important ratios in financial analysis to company investors. Net profit margin, return on assets, and return on equity are some of the most common profitability ratios. Analyzing the profitability ratios in order to make recommendations for a firm is one of the most important tasks of the financial manager.
Debt and Equity Financing
An overview of debt and equity financing for the small business; the advantages and disadvantages of debt financing for your small business; the advantages and disadvantages of equity financing for your small business; cost of capital
An overview of debt and equity financing for the small business; the advantages and disadvantages of debt financing for your small business; the advantages and disadvantages of equity financing for your small business; cost of capital
Credit Card Financing
Small business owners are having to turn to credit cards for financing their new business. Since bank loans are hard to get due to the credit crisis, small businesses don't have much choice but to use credit cards for financing a startup business.
Small business owners are having to turn to credit cards for financing their new business. Since bank loans are hard to get due to the credit crisis, small businesses don't have much choice but to use credit cards for financing a startup business.
Accounting Equation
The accounting formula represents the relationship between the assets, liabilities and owner's equity of a small business. It represents the relationship between the balance sheet and income statement of the business firm.
The accounting formula represents the relationship between the assets, liabilities and owner's equity of a small business. It represents the relationship between the balance sheet and income statement of the business firm.
Total Asset Turnover Ratio
The total asset turnover ratio is an asset management ratio that measures how efficiently a company can use its assets to generate sales. Turnover ratios, in general, demonstrate a company's efficiency in handling its asset base. This ratio is the summary ratio for the asset turnover ratios as a group.
The total asset turnover ratio is an asset management ratio that measures how efficiently a company can use its assets to generate sales. Turnover ratios, in general, demonstrate a company's efficiency in handling its asset base. This ratio is the summary ratio for the asset turnover ratios as a group.
Market Price Per Share
The market price per share of stock is the current measure of the price of a share of stock based on information from a company's financial statements instead of historical data.
The market price per share of stock is the current measure of the price of a share of stock based on information from a company's financial statements instead of historical data.
Interest Rates
Interest rates are the cost you pay to borrow money on a loan. It's important to know how to calculate interest rates on bank loans. This article shows you how to calculate interest rates using a variety of methods before you take out a bank loan.
Interest rates are the cost you pay to borrow money on a loan. It's important to know how to calculate interest rates on bank loans. This article shows you how to calculate interest rates using a variety of methods before you take out a bank loan.
Fixed and Variable Costs
There are two types of costs or expenses in a small business firm. They are fixed and variable costs. Variable costs change as sales change. Fixed costs do not change with sales volume.
There are two types of costs or expenses in a small business firm. They are fixed and variable costs. Variable costs change as sales change. Fixed costs do not change with sales volume.
top accounting software 2012
Here is a list of the top small business accounting software packages for 2012. Some of these are free accounting software packages. One of these software packages should be right for any type of business from the tiny microbusiness to small and medium-sized businesses.
Here is a list of the top small business accounting software packages for 2012. Some of these are free accounting software packages. One of these software packages should be right for any type of business from the tiny microbusiness to small and medium-sized businesses.
Journal Entries
When a small business makes a financial transaction, they make a journal entry in their accounting journal in order to record the transaction. There are actually two entries made - one is a debit to the appropriate account and the other is a credit.
When a small business makes a financial transaction, they make a journal entry in their accounting journal in order to record the transaction. There are actually two entries made - one is a debit to the appropriate account and the other is a credit.
solvency ratios
Solvency ratios measure the ability of the firm to survive in the long run. Solvency ratio are a part of financial ratio analysis that deal with long-term debt servicing as opposed to the concept of liquidity that looks at the short-term.
Solvency ratios measure the ability of the firm to survive in the long run. Solvency ratio are a part of financial ratio analysis that deal with long-term debt servicing as opposed to the concept of liquidity that looks at the short-term.
Gearing Ratio
: What is the Gearing Ratio, What Does it Mean, and How is it Calculated? : A gearing ratio is a financial
: What is the Gearing Ratio, What Does it Mean, and How is it Calculated? : A gearing ratio is a financial
Direct Indirect Costs
Part of the process of pricing your product is including the costs of producing that product. These costs are called direct and indirect costs.
Part of the process of pricing your product is including the costs of producing that product. These costs are called direct and indirect costs.
Shareholder Wealth
Shareholder wealth maximization or maximizing the value of a business firm's stock price should be the goal of businesses in capitalist societies. Shareholders own the firm and money accrues to them through the increased value of their stock. Social responsibility can co-exist with shareholder wealth maximization.
Shareholder wealth maximization or maximizing the value of a business firm's stock price should be the goal of businesses in capitalist societies. Shareholders own the firm and money accrues to them through the increased value of their stock. Social responsibility can co-exist with shareholder wealth maximization.
Operating Profit Margin
The operating profit margin is a type of profitability ratio known as a margin ratio. The figures to calculate operating profit margin come from a company's income statement. The operating profit margin tells a business owner a lot about the cost control of the firm.
The operating profit margin is a type of profitability ratio known as a margin ratio. The figures to calculate operating profit margin come from a company's income statement. The operating profit margin tells a business owner a lot about the cost control of the firm.
Cash Flow Statement
Here is a line-by-line explanation of the cash flow statement using the indirect method.
Here is a line-by-line explanation of the cash flow statement using the indirect method.
Capitalism Socialism
Capitalism and socialism are two different types of political, economic, and social systems.
Capitalism and socialism are two different types of political, economic, and social systems.
Inventory Turnover Ratio
The inventory turnover ratio is one of the most important ratios in financial ratio analysis. It is a crucial asset management ratio as it measures the efficiency of the firm in managing and selling its inventory.
The inventory turnover ratio is one of the most important ratios in financial ratio analysis. It is a crucial asset management ratio as it measures the efficiency of the firm in managing and selling its inventory.
Cash Flow Ratios
Cash flow analysis uses ratios that focus on cash flow and how solvent, liquid, and viable the company is. Here are the most important cash flow ratios with their calculations and interpretation.
Cash flow analysis uses ratios that focus on cash flow and how solvent, liquid, and viable the company is. Here are the most important cash flow ratios with their calculations and interpretation.
what is leverage
Business and financial risk refer to the amount of leverage a business firm employs. Operating leverage is the use of fixed assets to increase returns. Financial leverage is the use of debt financing to increase returns. Combined leverage is the total risk to the firm of these two types of leverage.
Business and financial risk refer to the amount of leverage a business firm employs. Operating leverage is the use of fixed assets to increase returns. Financial leverage is the use of debt financing to increase returns. Combined leverage is the total risk to the firm of these two types of leverage.
Source Document
A source document in an accounting transaction is evidence that the transaction has occurred. It should be recorded as a journal entry as soon as possible. Examples are canceled checks, invoices, purchase orders, and other business documents.
A source document in an accounting transaction is evidence that the transaction has occurred. It should be recorded as a journal entry as soon as possible. Examples are canceled checks, invoices, purchase orders, and other business documents.
limitations of ratio analysis
Even though financial ratio analysis is one of the most popular methods of financial analysis, it does have some limitations. Ratio analysis for a company should be benchmarked to ratios in the industry and window dressing should not be used.
Even though financial ratio analysis is one of the most popular methods of financial analysis, it does have some limitations. Ratio analysis for a company should be benchmarked to ratios in the industry and window dressing should not be used.
How to do Cash Budget
Cash flow can be defined as the way money moves into and out of your business; it is the difference between just being able to open a business and being able to stay in business. Preparing a cash budget is a tool of cash flow analysis that helps you as a business owner check up on your firm’s financial health on a frequent basis. It is the study of the movement of cash through your business to determine patterns of how you take in and pay out money. The goal is to maintain sufficient cash for firm operations from month to month.
Cash flow can be defined as the way money moves into and out of your business; it is the difference between just being able to open a business and being able to stay in business. Preparing a cash budget is a tool of cash flow analysis that helps you as a business owner check up on your firm’s financial health on a frequent basis. It is the study of the movement of cash through your business to determine patterns of how you take in and pay out money. The goal is to maintain sufficient cash for firm operations from month to month.
cost volume profit analysis
Cost-volume-profit analysis is one of the major tools of financial analysis. Financial managers use the contribution margin to do profit planning for the business firm. Here are some articles that will help you, as a business owner, in planning for profit.
Cost-volume-profit analysis is one of the major tools of financial analysis. Financial managers use the contribution margin to do profit planning for the business firm. Here are some articles that will help you, as a business owner, in planning for profit.
Trial Balance
After you complete your general ledger entries for an accounting cycle, the next step is to prepare a trial balance. A trial balance is the process of totaling the debits and credits from the general ledger to make sure they balance for the accounting period in question.
After you complete your general ledger entries for an accounting cycle, the next step is to prepare a trial balance. A trial balance is the process of totaling the debits and credits from the general ledger to make sure they balance for the accounting period in question.
common size income statement
There are a number of types of financial statement analysis that a business owner can use to determine the financial health and position of the business firm. A simple form is common size or vertical analysis.
There are a number of types of financial statement analysis that a business owner can use to determine the financial health and position of the business firm. A simple form is common size or vertical analysis.
Why Companies Merge
Many reasons are given for companies to merge and acquire other companies. Some of those reasons are financial and some are non-financial. Here are some of the most common financial reasons for companies to merge with other companies.
Many reasons are given for companies to merge and acquire other companies. Some of those reasons are financial and some are non-financial. Here are some of the most common financial reasons for companies to merge with other companies.
Net Profit Margin
The net profit margin ratio shows how many dollars of after-tax profit a company generates per dollar of sales.
The net profit margin ratio shows how many dollars of after-tax profit a company generates per dollar of sales.
Adjusting Entries
Adjusting entries are made in your accounting journals at the end of an accounting period. The purpose of adjusting entries is to adjust revenues and expenses to the accounting period in which they actually occurred.
Adjusting entries are made in your accounting journals at the end of an accounting period. The purpose of adjusting entries is to adjust revenues and expenses to the accounting period in which they actually occurred.
Business Budget Worksheet
Small businesses need to use worksheets to develop their budgets. This is a sample worksheet that a business can use to develop a generic budget.
Small businesses need to use worksheets to develop their budgets. This is a sample worksheet that a business can use to develop a generic budget.
Chart of Accounts
When you start a small business, develop a chart of accounts as part of setting up your accounting and bookkeeping system. The chart of accounts is the basis of your company's accounting system because this is where all the company's financial information is filed. It is the first thing you do when you start the process of setting up your company's financial information.
When you start a small business, develop a chart of accounts as part of setting up your accounting and bookkeeping system. The chart of accounts is the basis of your company's accounting system because this is where all the company's financial information is filed. It is the first thing you do when you start the process of setting up your company's financial information.
Free Cash Flow Example
Free cash flow is the cash a company has available after meeting all its obligations including increases in fixed assets. Free cash flow is a better method of determining a company's financial health than earnings per share. Here is a free cash flow example.
Free cash flow is the cash a company has available after meeting all its obligations including increases in fixed assets. Free cash flow is a better method of determining a company's financial health than earnings per share. Here is a free cash flow example.
cost of debt
There are four components of the cost of capital and debt is one of those. Debt is usually the cheapest component of the cost of capital. Here is how you calculate the cost of debt capital.
There are four components of the cost of capital and debt is one of those. Debt is usually the cheapest component of the cost of capital. Here is how you calculate the cost of debt capital.
Businesses in Recession
Some small businesses actually prosper in a recession. These are called counter-cyclical businesses. Other small businesses survive but don't actually thrive.
Some small businesses actually prosper in a recession. These are called counter-cyclical businesses. Other small businesses survive but don't actually thrive.
Most Profitable Businesses 2011
Here are ten of the most profitable small businesses to start in 2011.
Here are ten of the most profitable small businesses to start in 2011.
Beginning Bookkeeping Tutorial
Understanding a firm's asset, liability, and equity accounts is part of the foundation of bookkeeping.
Understanding a firm's asset, liability, and equity accounts is part of the foundation of bookkeeping.
Liquidity Ratio Analysis
Analyzing liquidity ratios like the current and quick ratios, plus net working capital, give company's a picture of their current financial position.
Analyzing liquidity ratios like the current and quick ratios, plus net working capital, give company's a picture of their current financial position.
LIFO and FIFO
LIFO and FIFO are two of the most popular methods of inventory accounting. Each has a very different effect on the company's bottom line. Here are the explanations.
LIFO and FIFO are two of the most popular methods of inventory accounting. Each has a very different effect on the company's bottom line. Here are the explanations.
Closing Entries
Closing entries are journal entries made at the end of an accounting cycle to set the balance of temporary accounts to zero to begin the next accounting period. The accounts that are closed are revenue, expense, and drawing accounts. The assets, liabilities, and owner's equity accounts are not closed because their ending balances are the beginning balances for the next accounting period.
Closing entries are journal entries made at the end of an accounting cycle to set the balance of temporary accounts to zero to begin the next accounting period. The accounts that are closed are revenue, expense, and drawing accounts. The assets, liabilities, and owner's equity accounts are not closed because their ending balances are the beginning balances for the next accounting period.
va business loans
Military men and women who have businesses need help when they are called up. VA loans are there to help them. Small business loans for veterans such as the Patriot Express Loan can help with almost any business need for a soldier or a spouse when you return. The Military Reservist Economic Injury Disaster Loan helps keep your business afloat while you are gone.
Military men and women who have businesses need help when they are called up. VA loans are there to help them. Small business loans for veterans such as the Patriot Express Loan can help with almost any business need for a soldier or a spouse when you return. The Military Reservist Economic Injury Disaster Loan helps keep your business afloat while you are gone.
Average Collection Period
The average collection period, or the average time in days it takes to collect a firm's accounts receivables, helps a business owner determine how liquid his accounts receivables are and how quickly his credit customers pay their bills. This ratio is part of the group of asset management ratios that help a small business to know how efficiently it is utilizing its asset base to generate sales. The ratio is also known as days sales outstanding.
The average collection period, or the average time in days it takes to collect a firm's accounts receivables, helps a business owner determine how liquid his accounts receivables are and how quickly his credit customers pay their bills. This ratio is part of the group of asset management ratios that help a small business to know how efficiently it is utilizing its asset base to generate sales. The ratio is also known as days sales outstanding.
Income Statement
This article presents an income statement and discusses how to prepare it line by line.
This article presents an income statement and discusses how to prepare it line by line.
Weighted Average Cost of Capital
Calculating the weighted average cost of capital for a company allows the business owner to compare how much it costs to finance the company's operations versus how much the company earns on its investments. Here are the steps to use to calculate the weighted average cost of capital.
Calculating the weighted average cost of capital for a company allows the business owner to compare how much it costs to finance the company's operations versus how much the company earns on its investments. Here are the steps to use to calculate the weighted average cost of capital.
Net Present Value
Capital budgeting analysis is most accurate if you use the decision method of net present value. That is because net present value uses the discounted cash flow approach to valuing cash flows from a capital investment project; therefore, taking both risk and time into account.
Capital budgeting analysis is most accurate if you use the decision method of net present value. That is because net present value uses the discounted cash flow approach to valuing cash flows from a capital investment project; therefore, taking both risk and time into account.
corporate tax rates 2012
Here are the corporate tax rates for 2012.
Here are the corporate tax rates for 2012.
Debits and Credits Tutorial
There are accounting conventions governing how to record debits and credits for expense accounts from the income statement.
There are accounting conventions governing how to record debits and credits for expense accounts from the income statement.
profitable industries 2013
Some industries are more profitable than others for start-up businesses. Check out these industries if you are thinking about starting up a business.
Some industries are more profitable than others for start-up businesses. Check out these industries if you are thinking about starting up a business.
Perpetual or Periodic Inventory
Should your business use a perpetual inventory system or a periodic inventory system? Most small businesses still use periodic inventory management, although perpetual inventory management is becoming increasingly popular. Learn about perpetual and periodic inventory management systems.
Should your business use a perpetual inventory system or a periodic inventory system? Most small businesses still use periodic inventory management, although perpetual inventory management is becoming increasingly popular. Learn about perpetual and periodic inventory management systems.
Liquidity Current Ratio
A firm's liquidity ratios show its ability to meet its short term debt obligations. The current ratio is the broadest measure of liquidity.
A firm's liquidity ratios show its ability to meet its short term debt obligations. The current ratio is the broadest measure of liquidity.
Asset Management Ratios
Business firms need to know how effectively they use their assets to generate sales. Asset management ratios or turnover ratios can help them determine this.
Business firms need to know how effectively they use their assets to generate sales. Asset management ratios or turnover ratios can help them determine this.
quick ratio
Liquidity analysis, a part of financial ratio analysis, is important to a business as they need to know whether or not they can pay their short-term debt obligations. The quick ratio is a more specific measure of liquidity than the current ratio.
Liquidity analysis, a part of financial ratio analysis, is important to a business as they need to know whether or not they can pay their short-term debt obligations. The quick ratio is a more specific measure of liquidity than the current ratio.
Free Cash Flow Calculation
What is the free cash flow calculation? There are three ways to calculate free cash flow.
What is the free cash flow calculation? There are three ways to calculate free cash flow.
Accounting Cycle
Business firms complete an accounting cycle every accounting period. This cycle follow a series of approximately eight steps ending with closing the books for that accounting period. Here is a description of each step of the accounting cycle.
Business firms complete an accounting cycle every accounting period. This cycle follow a series of approximately eight steps ending with closing the books for that accounting period. Here is a description of each step of the accounting cycle.
Comp Balance Sheets
Here is an example of the comparative balance sheets of a business. Analyzing the comparative balance sheets is the first step in preparing and analyzing the firm's Statement of Cash Flows.
Here is an example of the comparative balance sheets of a business. Analyzing the comparative balance sheets is the first step in preparing and analyzing the firm's Statement of Cash Flows.
Cash Flow and Profit
Cash flow and profit are not the same thing. Cash flow is the money the business owner has available. Profit or net income is determined by when sales are made.
Cash flow and profit are not the same thing. Cash flow is the money the business owner has available. Profit or net income is determined by when sales are made.
Pricing Using Markup
Pricing your product or service using markup is one popular pricing strategy. Pricing your product correctly can mean the success or failure of your business. Product markup as a pricing strategy is the basis of many pricing strategies.
Pricing your product or service using markup is one popular pricing strategy. Pricing your product correctly can mean the success or failure of your business. Product markup as a pricing strategy is the basis of many pricing strategies.
Dividends Per Share
Dividend per share is important information for investors as they analyze what types of stocks in which they want to invest. Dividends per share indicate whether the firm is a dividend-paying stock, indicating a more mature firm, or a company that is growing.
Dividend per share is important information for investors as they analyze what types of stocks in which they want to invest. Dividends per share indicate whether the firm is a dividend-paying stock, indicating a more mature firm, or a company that is growing.
Debt to asset ratio
The debt to asset ratio measures the percentage of debt financing the firm has in relationship to the percentage of the firm's total assets.
The debt to asset ratio measures the percentage of debt financing the firm has in relationship to the percentage of the firm's total assets.
Short-term Loans
Small businesses most often need short-term loans instead of long-term debt financing. Most term loans, classified as short-term, usually have a maturity of one year or less. They must be repaid to the lender within one year.
Small businesses most often need short-term loans instead of long-term debt financing. Most term loans, classified as short-term, usually have a maturity of one year or less. They must be repaid to the lender within one year.
company vision statement
A vision statement for a company is an articulation of where you see your company going in the long-term. It is your perspective on your company's future. It should reflect your dreams and your passion for your business. Writing a compelling vision statement for a business plan will help you secure funding for your business.
A vision statement for a company is an articulation of where you see your company going in the long-term. It is your perspective on your company's future. It should reflect your dreams and your passion for your business. Writing a compelling vision statement for a business plan will help you secure funding for your business.
Gross Margin vs CM
There are two reasons that gross margin, or gross profit margin, is different from contribution margin for a company.
There are two reasons that gross margin, or gross profit margin, is different from contribution margin for a company.
Sources Financing Startups
Finding sources for startup business financing is often difficult. Getting financing approved for a startup business is even more difficult. Here are six sources of business financing for your startup business that may work for you.
Finding sources for startup business financing is often difficult. Getting financing approved for a startup business is even more difficult. Here are six sources of business financing for your startup business that may work for you.
What is a Master Budget?
Preparing a master budget every year as a step in the budgeting process is the best way to operate a business. The master budget includes the operating budget and the financial budget and all the associated schedules. This article introduces all the parts of the master budget.
Preparing a master budget every year as a step in the budgeting process is the best way to operate a business. The master budget includes the operating budget and the financial budget and all the associated schedules. This article introduces all the parts of the master budget.
Net_Working_Capital
Net working capital is a financial formula that accompanies the current ratio in helping the firm determines its liquidity position.
Net working capital is a financial formula that accompanies the current ratio in helping the firm determines its liquidity position.
The Balance Sheet
This article will give you a line-by-line explanation of how to prepare a basic balance sheet.
This article will give you a line-by-line explanation of how to prepare a basic balance sheet.
Contribution Margin
A business firm's contribution margin is the amount of money it has to cover its fixed costs and contribute to its net profit or loss after paying all its variable costs. Here is the analysis.
A business firm's contribution margin is the amount of money it has to cover its fixed costs and contribute to its net profit or loss after paying all its variable costs. Here is the analysis.
Cash Budget & Cash Flow State
There is a difference between the cash budget and the Statement of Cash Flows. The cash budget is a monthly view of your cash position. The Statement of Cash Flows is a required FASB financial statement along with the income statement and balance sheeet.
There is a difference between the cash budget and the Statement of Cash Flows. The cash budget is a monthly view of your cash position. The Statement of Cash Flows is a required FASB financial statement along with the income statement and balance sheeet.
5 C's of Credit
The 5Cs of credit are a method of evaluation that a bank or other financial lender uses to determine if a business is a good candidate for a loan. Each of the 5Cs is discussed from the viewpoint of the bank when they evaluate a credit application from a business.
The 5Cs of credit are a method of evaluation that a bank or other financial lender uses to determine if a business is a good candidate for a loan. Each of the 5Cs is discussed from the viewpoint of the bank when they evaluate a credit application from a business.
Debt to Equity Ratio
An important debt or financial leverage ratio is the total debt to equity ratio. This ratio measures the amount of debt financing used by the firm as compared to investor financing.
An important debt or financial leverage ratio is the total debt to equity ratio. This ratio measures the amount of debt financing used by the firm as compared to investor financing.
Relationship Between Fin State
This article describes the relationship between the financial statements based on the accounting equation.
This article describes the relationship between the financial statements based on the accounting equation.
Retained Earnings
At the end of its accounting cycle, the second statement that should be prepared is the Statement of Retained Earnings.
At the end of its accounting cycle, the second statement that should be prepared is the Statement of Retained Earnings.
Financial Forecasting
Small business owners have to develop the talent to plan ahead if they want their business to succeed. Part of that process is learning to develop projected financial statements in order to adequately plan for the future.
Small business owners have to develop the talent to plan ahead if they want their business to succeed. Part of that process is learning to develop projected financial statements in order to adequately plan for the future.
Dupont Model ROI
Using the DuPont Model allows the business owner to break the firm's profitability. both ROI and ROE, down into component parts to see where profitability actually comes from and where any problems might exist.
Using the DuPont Model allows the business owner to break the firm's profitability. both ROI and ROE, down into component parts to see where profitability actually comes from and where any problems might exist.
Cost of Capital
A company's cost of capital is the cost of money the company uses to finance their operations and purchases of assets. Cost of capital is important because the company has to be vigilant and sure that their cost of capital is lower than their return on capital.
A company's cost of capital is the cost of money the company uses to finance their operations and purchases of assets. Cost of capital is important because the company has to be vigilant and sure that their cost of capital is lower than their return on capital.
Market Value Ratios
Market value ratios evaluate the economic status of your company in the wider marketplace. Market value ratios give management an idea of what the firm's investors think of the firm's performance and future prospects.
Market value ratios evaluate the economic status of your company in the wider marketplace. Market value ratios give management an idea of what the firm's investors think of the firm's performance and future prospects.
Return on Equity Ratio
The return on equity ratio is perhaps the ratio investors in a company look at most. This ratio lets the investor know how well the company is utilizing their investment in the firm.
The return on equity ratio is perhaps the ratio investors in a company look at most. This ratio lets the investor know how well the company is utilizing their investment in the firm.
Long Term Business Loan
Long-term and intermediate-term business loans are appropriate for small businesses so they may grow and expand by purchasing buildings, capital equipment, and other long-term assets.
Long-term and intermediate-term business loans are appropriate for small businesses so they may grow and expand by purchasing buildings, capital equipment, and other long-term assets.
Financial Statement Analysis
This article presents an overview of financial statement analysis and preparation for the small business. It touches on the income statement, the statement of retained earnings, the balance sheet, and the statement of cash flows.
This article presents an overview of financial statement analysis and preparation for the small business. It touches on the income statement, the statement of retained earnings, the balance sheet, and the statement of cash flows.
Discounted Payback Period
Discounted payback period is one of several capital budgeting methods that business owners use to choose between capital projects in their company. It is better than regular payback period because it uses discounted cash flows, but it still is not the best of the capital budgeting methods to use. Net present value usually has that distinction.
Discounted payback period is one of several capital budgeting methods that business owners use to choose between capital projects in their company. It is better than regular payback period because it uses discounted cash flows, but it still is not the best of the capital budgeting methods to use. Net present value usually has that distinction.
Successful Budgeting
Small business have to have a working financial budget that they follow every day. Business budgeting is the process of creating a business budget that works for a company and is used as a guideline for daily operations. A budget should estimate income and expenses and record differences in actual and estimated figures.
Small business have to have a working financial budget that they follow every day. Business budgeting is the process of creating a business budget that works for a company and is used as a guideline for daily operations. A budget should estimate income and expenses and record differences in actual and estimated figures.
Bookkeeping Accounts Payable
A small business often buys from a number of vendors or suppliers using store credit or credit based on their relationship with the supplier. Here is an example of a transaction using store credit, or accounts payable.
A small business often buys from a number of vendors or suppliers using store credit or credit based on their relationship with the supplier. Here is an example of a transaction using store credit, or accounts payable.
Small Business Loan
This article is a gateway article to a library of information on how small businesses can successfully apply for a small business loan. There is a series of steps listed that small business firms must take in order to apply for a business loan.
This article is a gateway article to a library of information on how small businesses can successfully apply for a small business loan. There is a series of steps listed that small business firms must take in order to apply for a business loan.
Fixed Asset Turnover Ratio
Asset turnover ratios measure a firm's ability to use its asset base to generate sales. In the case of the fixed asset turnover ratio, the business owner measures how well the investment in plant, property, and equipment generates sales for the firm.
Asset turnover ratios measure a firm's ability to use its asset base to generate sales. In the case of the fixed asset turnover ratio, the business owner measures how well the investment in plant, property, and equipment generates sales for the firm.
sources of business financing
Here is a list of some of the sources for small business financing. The key for small businesses is finding a source of financing that fits your individual business and has a favorable interest rate.
Here is a list of some of the sources for small business financing. The key for small businesses is finding a source of financing that fits your individual business and has a favorable interest rate.
Aging Schedule for Receivables
If you offer credit to your customers, you have to monitor your accounts receivables. One method of doing this is to develop an aging schedule for accounts receivable.
If you offer credit to your customers, you have to monitor your accounts receivables. One method of doing this is to develop an aging schedule for accounts receivable.
financial statement analysis
In order to stay solvent and profitable, financial statement analysis is a necessary activity for a business firm to perform on a regular basis. Here are some of the best techniques to use for financial statement analysis.
In order to stay solvent and profitable, financial statement analysis is a necessary activity for a business firm to perform on a regular basis. Here are some of the best techniques to use for financial statement analysis.
Debt Ratios
Financial leverage or debt ratios measure a business firm's ability to meet its long-debt debt obligations or those with a maturity of more than one year.
Financial leverage or debt ratios measure a business firm's ability to meet its long-debt debt obligations or those with a maturity of more than one year.
What Type Bookkeeping
Small businesses must make a decision between single-entry bookkeeping and double-entry bookkeeping when they are established.
Small businesses must make a decision between single-entry bookkeeping and double-entry bookkeeping when they are established.
Sarbanes-Oxley Act Enron
The Sarbanes-Oxley Act of 2002 was passed in response to a number of corporate fraud incidences in the early 2000's and increases the rules on corporate governance and corporate accountability in order to protect investors.
The Sarbanes-Oxley Act of 2002 was passed in response to a number of corporate fraud incidences in the early 2000's and increases the rules on corporate governance and corporate accountability in order to protect investors.
Cash Management
Cash is king in small businesses. Without cash and liquidity management, small businesses will not survive one day. Financial ratio analysis is one tool of cash management.
Cash is king in small businesses. Without cash and liquidity management, small businesses will not survive one day. Financial ratio analysis is one tool of cash management.
Example Journal Cash Sales
This is an example of how to handle a double-entry bookkeeping journal entry when selling a product or service for cash.
This is an example of how to handle a double-entry bookkeeping journal entry when selling a product or service for cash.
Categories of Fin Ratios
There are five categories of financial ratios. Each measures a different financial aspect of the business firm.
There are five categories of financial ratios. Each measures a different financial aspect of the business firm.
Equity
Definition of equity; business definition of equity
Definition of equity; business definition of equity
cost of preferred stock
Preferred stock is usually the cheapest source of financing for the business firm after debt financing. Here is the calculation of the cost of preferred stock.
Preferred stock is usually the cheapest source of financing for the business firm after debt financing. Here is the calculation of the cost of preferred stock.
Financial Ratio Analysis
Financial ratio analysis is an excellent tool to use for your business. You can compare your firm to other firms in the industry or you can compare one year of data to other years of data. It's all about comparison. This is an overview of how to calculate the ratios and what they mean.
Financial ratio analysis is an excellent tool to use for your business. You can compare your firm to other firms in the industry or you can compare one year of data to other years of data. It's all about comparison. This is an overview of how to calculate the ratios and what they mean.
accounting information sys
Business firms collect and process their financial data using accounting information systems.
Business firms collect and process their financial data using accounting information systems.
General Ledger
The general ledger is the main accounting record for your business. All of the business's financial transactions are taken from the general accounting journal and recorded in the general ledger in a summary form.
The general ledger is the main accounting record for your business. All of the business's financial transactions are taken from the general accounting journal and recorded in the general ledger in a summary form.
accounts payable and suppliers
Good accounts payable and accruals management can have a major impact on the profitability of a business firm. Business firms should build trust with suppliers in order to obtain the best discounts, service, and information possible.
Good accounts payable and accruals management can have a major impact on the profitability of a business firm. Business firms should build trust with suppliers in order to obtain the best discounts, service, and information possible.
Fin Ratio Analysis
Using financial ratios as a tool of financial analysis is a powerful tool for the small business firm. Financial ratio analysis is powerful if you compare your ratios to either industry or time-series data.
Using financial ratios as a tool of financial analysis is a powerful tool for the small business firm. Financial ratio analysis is powerful if you compare your ratios to either industry or time-series data.
Contribution Margin Breakeven
Here is an example of a contribution margin income statement illustrating break-even in dollars.
Here is an example of a contribution margin income statement illustrating break-even in dollars.
Accts Rec Turnover Ratio
Asset management ratios include the accounts receivable turnover ratio as a part of financial ratio analysis. The accounts receivable turnover ratio, along with the average collection period, measures the efficiency of the firm's credit and collection policies.
Asset management ratios include the accounts receivable turnover ratio as a part of financial ratio analysis. The accounts receivable turnover ratio, along with the average collection period, measures the efficiency of the firm's credit and collection policies.
Fixed Charge Cov Ratio
The fixed charge coverage ratio is an important debt ratio in financial ratio analysis because it is a broader measure of the ability of a company to cover its fixed charges than the times interest earned ratio.
The fixed charge coverage ratio is an important debt ratio in financial ratio analysis because it is a broader measure of the ability of a company to cover its fixed charges than the times interest earned ratio.
Loan for Startup
This article discusses how to get a bank loan for a new business or to buy an existing business. It gives business owners four steps to follow to improve their chances of being approved for a bank loan for a startup.
This article discusses how to get a bank loan for a new business or to buy an existing business. It gives business owners four steps to follow to improve their chances of being approved for a bank loan for a startup.
Cash Conversion Cycle
The cash conversion cycle looks at the time tied up in converting inventory and receivables to cash, as well as the amount of time the company is given to pay its bills without incurring any penalties.
The cash conversion cycle looks at the time tied up in converting inventory and receivables to cash, as well as the amount of time the company is given to pay its bills without incurring any penalties.
Start a New Business
If you want to start a new business, there are steps you must take to get it off the ground.
If you want to start a new business, there are steps you must take to get it off the ground.
Book Value Per Share
Book value per share is a market value ratio that is used for accounting purposes by financial managers or owners of business firms.
Book value per share is a market value ratio that is used for accounting purposes by financial managers or owners of business firms.
Cash or Accrual Accounting
There are two methods of accounting - cash accounting and accrual accounting. Cash accounting is usually used by small businesses with relatively simple transactions. Accrual accounting is used by larger businesses with a more complicated accounting system.
There are two methods of accounting - cash accounting and accrual accounting. Cash accounting is usually used by small businesses with relatively simple transactions. Accrual accounting is used by larger businesses with a more complicated accounting system.
Top Financial Events
There have been important, society-changing financial events that have happened in the first decade of the 21st century. Here are the top ten!
There have been important, society-changing financial events that have happened in the first decade of the 21st century. Here are the top ten!
Market to Book
The market to book value ratio, also called the price to book ratio, allows investors to see how much a company is worth with regard to its book value.
The market to book value ratio, also called the price to book ratio, allows investors to see how much a company is worth with regard to its book value.
Capital Budgeting Overview
Capital budgeting is the process of acquiring fixed assets and capital investment projects. Capital budgeting projects are some of the largest investments a business will ever make. Business owners choose the project that has the highest rate of return as compared to the firm's weighted average cost of capital.
Capital budgeting is the process of acquiring fixed assets and capital investment projects. Capital budgeting projects are some of the largest investments a business will ever make. Business owners choose the project that has the highest rate of return as compared to the firm's weighted average cost of capital.
Internal Rate of Return
Internal rate of return is one of several decision methods that financial managers use when evaluating a capital budgeting project. It is usually compared to net present value and has several flaws.
Internal rate of return is one of several decision methods that financial managers use when evaluating a capital budgeting project. It is usually compared to net present value and has several flaws.
horizontal vertical mergers
Horizontal and vertical mergers are two types of mergers that are considered to be non-financial mergers. These mergers occur along business and industry lines. In the case of horizontal mergers, two firms in the same business merge. With regard to vertical mergers, two firms along the same supply chain merge. Both lead to possible anti-trust issues.
Horizontal and vertical mergers are two types of mergers that are considered to be non-financial mergers. These mergers occur along business and industry lines. In the case of horizontal mergers, two firms in the same business merge. With regard to vertical mergers, two firms along the same supply chain merge. Both lead to possible anti-trust issues.
Payback Period
Payback period is a capital budgeting decision method that has been in use in business for a long time, even though it is certain not the best decision method. It is best used with other decision methods. It has some advantages and many disadvantages. Payback period does not consider risk nor time value of money.
Payback period is a capital budgeting decision method that has been in use in business for a long time, even though it is certain not the best decision method. It is best used with other decision methods. It has some advantages and many disadvantages. Payback period does not consider risk nor time value of money.
Doing_Outsourcing_Work
You can start a profitable new business during a recession doing outsourcing work for other companies.
You can start a profitable new business during a recession doing outsourcing work for other companies.
Cash Flow Margin
The cash flow margin is one of the most important profitability ratios. The cash flow margin ratio tells a company how well it converts sales to cash. It takes cash to pay expenses, so the conversion of sales dollars to cash is extremely important.
The cash flow margin is one of the most important profitability ratios. The cash flow margin ratio tells a company how well it converts sales to cash. It takes cash to pay expenses, so the conversion of sales dollars to cash is extremely important.
cost of trade credit
Trade credit, or accounts payable, are a small businesses most important source of financing. There is a cost of trade credit stated in the form of not taking a cash discount if offered by a supplier.
Trade credit, or accounts payable, are a small businesses most important source of financing. There is a cost of trade credit stated in the form of not taking a cash discount if offered by a supplier.
Earnings per Share
: What is the Definition of Earnings per Share, its Calculation, and Use? The earnings per share discussed
: What is the Definition of Earnings per Share, its Calculation, and Use? The earnings per share discussed
Credit Policy
All businesses who extend credit to their customers need to develop a credit policy in order to have a set of guidelines to follow in administering their accounts receivable. Here are some factors you should consider when setting up the credit policy for your business.
All businesses who extend credit to their customers need to develop a credit policy in order to have a set of guidelines to follow in administering their accounts receivable. Here are some factors you should consider when setting up the credit policy for your business.
Initial Investment
initial investment
initial investment
future value lump sum
The future value of an investment is one type of time value of money calculation. Here are three methods you can use to make this calculation.
The future value of an investment is one type of time value of money calculation. Here are three methods you can use to make this calculation.
Types of Business Entities
This article summarizes the different types of different business entities such as sole proprietorships, partnerships, corporations, and limited liability companies from a legal, accounting, and tax perspective.
This article summarizes the different types of different business entities such as sole proprietorships, partnerships, corporations, and limited liability companies from a legal, accounting, and tax perspective.
Liquidity and liquidity ratios
Liquidity, or short-term solvency, is an important metric for a firm to be able to measure. It measures the firm's ability to pay its short-term obligations on time.
Liquidity, or short-term solvency, is an important metric for a firm to be able to measure. It measures the firm's ability to pay its short-term obligations on time.
Compare Your Financial Ratios
In order for financial ratios to mean anything, a firm has to have something to compare them to. Usually that means data from previous quarters or years of the firm's financial statements. It can also mean data from companies in the firm's industry.
In order for financial ratios to mean anything, a firm has to have something to compare them to. Usually that means data from previous quarters or years of the firm's financial statements. It can also mean data from companies in the firm's industry.
Amended Tax Return
Filing an amended tax return is important and necessary if you have made certain errors on your return or if you have received new information since filing your federal income tax form.
Filing an amended tax return is important and necessary if you have made certain errors on your return or if you have received new information since filing your federal income tax form.
Return on Assets
What is the return on assets ratio, also called the return on investment ratio?
What is the return on assets ratio, also called the return on investment ratio?
Make Your Business Budget Work
Budgeting and planning are some of the most important functions that make a small business successful. This article gives you six steps to help make a business budget work.
Budgeting and planning are some of the most important functions that make a small business successful. This article gives you six steps to help make a business budget work.
Agency Costs
Agency cost is the operating expense caused in a business firm when managers and shareholders disagree about firm decisions. This disagreement leads to the agency problem, which is the conflict in businesses between shareholders and management due to this desire on the part of management for self-interested behavior and the goal of the firm which is maximization of shareholder wealth.
Agency cost is the operating expense caused in a business firm when managers and shareholders disagree about firm decisions. This disagreement leads to the agency problem, which is the conflict in businesses between shareholders and management due to this desire on the part of management for self-interested behavior and the goal of the firm which is maximization of shareholder wealth.
Inventory Investment
The amount of your small business's inventory investment directly affects your profit and cash flow. Analyze your dead, slow-moving and productive inventory in order to move out inventory that is dragging down your profitability.
The amount of your small business's inventory investment directly affects your profit and cash flow. Analyze your dead, slow-moving and productive inventory in order to move out inventory that is dragging down your profitability.
Cash flow statement direct
A business owner can prepare the Statement of Cash Flows using one of two methods - the direct method or the indirect method. This article gives the pros and cons of each.
A business owner can prepare the Statement of Cash Flows using one of two methods - the direct method or the indirect method. This article gives the pros and cons of each.
Cash Flow
Cash flow refers to money that moves into and out of a business firm. Cash flows arise from operations, investing, and financing.
Cash flow refers to money that moves into and out of a business firm. Cash flows arise from operations, investing, and financing.
Just-in-Time
Just-in-time inventory management has as its goal minimizing inventory carrying costs and maximizing return on investment in inventory.
Just-in-time inventory management has as its goal minimizing inventory carrying costs and maximizing return on investment in inventory.
Gross Profit Margin
The gross profit margin is a profitability ratio that falls in the margin category. It shows average profit considering only sales and cost of goods sold.
The gross profit margin is a profitability ratio that falls in the margin category. It shows average profit considering only sales and cost of goods sold.
return on invested capital
Return on invested capital, also called return on capital employed, is a performance and profitability ratio that is one of the most important valuation measures. It indicates the firm's ability to generate returns from its available capital or debt and equity.
Return on invested capital, also called return on capital employed, is a performance and profitability ratio that is one of the most important valuation measures. It indicates the firm's ability to generate returns from its available capital or debt and equity.
ReasonBusBudgets
Business owners or financial managers need budgets as guiding and forecasting tools. There are three reasons for businesses to develop budgets that include planning, control, and evaluation of performance.
Business owners or financial managers need budgets as guiding and forecasting tools. There are three reasons for businesses to develop budgets that include planning, control, and evaluation of performance.
direct materials budget
Here's an example of how to prepare a direct materials purchases budget which is a portion of the operating budget for a business firm.
Here's an example of how to prepare a direct materials purchases budget which is a portion of the operating budget for a business firm.
economic order quantity
The economic order quantity is the financial metric used to calculate the optimal amount of inventory to order and store based on minimizing costs.
The economic order quantity is the financial metric used to calculate the optimal amount of inventory to order and store based on minimizing costs.
Overview Time Value of Money
Time value of money is one of the core principles of small business finance and small business financing operations. Time value of money is the basis of discounted cash flow analysis when analyzing financial assets and physical assets owned by the business firm.
Time value of money is one of the core principles of small business finance and small business financing operations. Time value of money is the basis of discounted cash flow analysis when analyzing financial assets and physical assets owned by the business firm.
what is a business plan
A business plan is a document that companies prepare to help them achieve the mission and objectives of their business. The business plan serves as a road map for the business so that it may achieve its goals and ultimately, profitability.
A business plan is a document that companies prepare to help them achieve the mission and objectives of their business. The business plan serves as a road map for the business so that it may achieve its goals and ultimately, profitability.
venture capital angel funding
Even though venture capital and angel investing are both ways for a fledgling firm to obtain equity financing and get off the ground, only a few will qualify and be of interest. It is worth pursuing, however, for many businesses particularly in New Economy fields such as biotech, software, and just about any technology field. Here are some differences between venture capitalists and angel investors.
Even though venture capital and angel investing are both ways for a fledgling firm to obtain equity financing and get off the ground, only a few will qualify and be of interest. It is worth pursuing, however, for many businesses particularly in New Economy fields such as biotech, software, and just about any technology field. Here are some differences between venture capitalists and angel investors.
Financial Statements
One of the last steps in the accounting cycle is the preparation of the financial statements. The information from the accounting journals and the general ledger is used to develop the financial statements.
One of the last steps in the accounting cycle is the preparation of the financial statements. The information from the accounting journals and the general ledger is used to develop the financial statements.
Budgeting
Definition of budgeting
Definition of budgeting
cost of retained earnings
The cost of retained earnings is an opportunity cost and the cost of common stock used in the weighted average cost of capital formula. It is a component cost included in the cost of capital of a company.
The cost of retained earnings is an opportunity cost and the cost of common stock used in the weighted average cost of capital formula. It is a component cost included in the cost of capital of a company.
basic business valuation
When doing a business valuation, there are basic factors that you should consider as a set of best practices.
When doing a business valuation, there are basic factors that you should consider as a set of best practices.
Manage Petty Cash
Every small business needs a petty cash account as a part of accounts payable for small, daily business expenses. Setting up and managing your petty cash account is part of your bookkeeping function and office accounting system.
Every small business needs a petty cash account as a part of accounts payable for small, daily business expenses. Setting up and managing your petty cash account is part of your bookkeeping function and office accounting system.
opportunity cost
opportunity cost definition
opportunity cost definition
What are Point of Sales
A point of sale inventory management system is a step up from the use of a cash register. Small, start-up businesses may be able to survive with just a cash register and a simple accounting system. If your business is product-based, chances are you will eventually have to switch to at least a basic point of sale inventory system.
A point of sale inventory management system is a step up from the use of a cash register. Small, start-up businesses may be able to survive with just a cash register and a simple accounting system. If your business is product-based, chances are you will eventually have to switch to at least a basic point of sale inventory system.
amortization schedule
Every business owner should know how to amortize a loan. Loan amortization simply means figuring out how much interest and principal you have to pay on a loan each time the loan comes due, along with how much the balance is reduced. It is always a good idea to double check your lender's calculations.
Every business owner should know how to amortize a loan. Loan amortization simply means figuring out how much interest and principal you have to pay on a loan each time the loan comes due, along with how much the balance is reduced. It is always a good idea to double check your lender's calculations.