Business Finance: Most Popular Articles
These articles are the most popular over the last month.
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.
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.
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.
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.
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.
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.
How to do Cash Flow Analysis
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. A cash flow analysis is a method of checking up on your firm’s financial health. 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. A cash flow analysis is a method of checking up on your firm’s financial health. 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.
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
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.
Cash Flow Statement
Here is a line-by-line explanation of the preparation of a statement of cash flows.
Here is a line-by-line explanation of the preparation of a statement of cash flows.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
Retained Earnings
The Statement of Retained Earnings is the second financial statement that should be prepared when a business is preparing financial statements at the end of its accounting cycle. It shows the distribution of net income between dividends and retained earnings.
The Statement of Retained Earnings is the second financial statement that should be prepared when a business is preparing financial statements at the end of its accounting cycle. It shows the distribution of net income between dividends and retained earnings.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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. This is a simple version of a liquidity analysis.
Analyzing liquidity ratios like the current and quick ratios, plus net working capital, give company's a picture of their current financial position. This is a simple version of a liquidity analysis.
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 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.
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.
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.
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.
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.
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.
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.
Capitalism
: Capitalism is an economic system that emphasizes private ownership of the means of production or a
: Capitalism is an economic system that emphasizes private ownership of the means of production or a
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.
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.
Fixed Asset Turnover Ratio
The fixed asset turnover ratio measures the company's ability to generate sales from its investment in plant, property, and equipment.
The fixed asset turnover ratio measures the company's ability to generate sales from its investment in plant, property, and equipment.
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.
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.
What is a Loan?
What is a loan?
What is a loan?
Glass-Steagall
The Glass-Steagall Act, or the Banking Act of 1933, was enacted during the Great Depression to separate the powers of commercial and investment banks. It kept banks from using depositors' money to make risky investments. It was repealed in 1999, but the Obama administration is thinking about re-enacting parts of it again in order to protect depositors money in the future.
The Glass-Steagall Act, or the Banking Act of 1933, was enacted during the Great Depression to separate the powers of commercial and investment banks. It kept banks from using depositors' money to make risky investments. It was repealed in 1999, but the Obama administration is thinking about re-enacting parts of it again in order to protect depositors money in the future.
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.
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.
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.
Times Interest Earned Ratio
The times interest earned ratio is a debt ratio that measures how well a business can cover its interest expense. It is one of the debt or financial leverage ratios that businesses need in order to monitor their debt position.
The times interest earned ratio is a debt ratio that measures how well a business can cover its interest expense. It is one of the debt or financial leverage ratios that businesses need in order to monitor their debt position.
Prime Interest Rate
Banks use benchmarks to calculate interest rates on small business loans. The annual percentage rate or APR is usually based on the prime interest rate.
Banks use benchmarks to calculate interest rates on small business loans. The annual percentage rate or APR is usually based on the prime interest rate.
APR and Stated Rate
A tip on the difference between the annual percentage interest rate and the stated interest rate as they relate to debt financing and bank loans.
A tip on the difference between the annual percentage interest rate and the stated interest rate as they relate to debt financing and bank loans.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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!
Loan Amortization
When a bank loan is made, an amortization schedule is set up for the business firm.
When a bank loan is made, an amortization schedule is set up for the business firm.
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.
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.
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?
Asset Turnover Ratios
Asset turnover ratios, also called efficiency ratios, measure the efficiency with which a company's assets generate sales.
Asset turnover ratios, also called efficiency ratios, measure the efficiency with which a company's assets generate sales.
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.
Cash Flow Analysis Hub
This series of articles will help prepare you to analyze the cash position of your firm. You can show a profit, but unless you have a positive cash position to pay your bills, your firm will not succeed.
This series of articles will help prepare you to analyze the cash position of your firm. You can show a profit, but unless you have a positive cash position to pay your bills, your firm will not succeed.
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.
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.
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.
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.
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.
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.
Bank Term Loans
Small businesses have always survived on the strength of bank loans. Here are the basics of small business financing with commercial loans. A bank term loan has a particular term (length of maturity), such as long-term loans, and interest rate.
Small businesses have always survived on the strength of bank loans. Here are the basics of small business financing with commercial loans. A bank term loan has a particular term (length of maturity), such as long-term loans, and interest rate.
Tutorial on Debt Ratios
Debt management, or financial leverage, ratios are some of the most important for a small business owner to calculate for financial ratio analysis for the small business. This tutorial will show how to calculate the debt to asset ratio, the debt to equity ratio, the times interest earned ratio, the fixed charge coverage ratio, and the long term debt to total capitalization ratio.
Debt management, or financial leverage, ratios are some of the most important for a small business owner to calculate for financial ratio analysis for the small business. This tutorial will show how to calculate the debt to asset ratio, the debt to equity ratio, the times interest earned ratio, the fixed charge coverage ratio, and the long term debt to total capitalization ratio.
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.
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.
Types of Organizations
This article summarizes the different types of different business organizations 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 organizations such as sole proprietorships, partnerships, corporations, and limited liability companies from a legal, accounting, and tax perspective.
Cash Budgeting
This is a profile of one type of budgeting - cash budgeting. Cash budgeting is a short-term form of cash flow analysis.
This is a profile of one type of budgeting - cash budgeting. Cash budgeting is a short-term form of cash flow analysis.
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.
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.
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.
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.
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.
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.
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.
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.
Initial Investment
initial investment
initial investment
Liquidity
A definition of the term liquidity
A definition of the term liquidity
LTDebt to Total Capitalization
The long-term debt to total capitalization ratio is one of the debt ratios in financial ratio analysis that measures the extent of the firm's financing with debt. It measures the extent to which long-term debt is used for the firm's permanent financing.
The long-term debt to total capitalization ratio is one of the debt ratios in financial ratio analysis that measures the extent of the firm's financing with debt. It measures the extent to which long-term debt is used for the firm's permanent financing.
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.
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.
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.
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.
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.
Example Journal Credit Sales
This is an example of how to handle a double-entry bookkeeping journal entry when selling a product or service on credit. This example is relevant to small businesses who offer credit to their customers.
This is an example of how to handle a double-entry bookkeeping journal entry when selling a product or service on credit. This example is relevant to small businesses who offer credit to their customers.
Start a New Business
If you want to start a new business, there are steps you must take to get it off the ground. There is extensive planning. Here are some steps to show you how to start a business.
If you want to start a new business, there are steps you must take to get it off the ground. There is extensive planning. Here are some steps to show you how to start a business.
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.
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
Successful Entrepreneurs
Some people have the characteristics that make successful entrepreneurs and small business owners and some don't. Also, there are some countries that are better for opening small business than others.
Some people have the characteristics that make successful entrepreneurs and small business owners and some don't. Also, there are some countries that are better for opening small business than others.
Cash Ratio
The cash ratio is the most stringent and conservative of all the financial ratio analysis liquidity ratios.
The cash ratio is the most stringent and conservative of all the financial ratio analysis liquidity ratios.
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
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.
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.
Cost-plus Pricing
definition of cost-plus pricing
definition of cost-plus pricing
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.
SBA Loans
The Small Business Administration (SBA) offers a number of loan programs for small businesses. Loan programs include the 7a program for working capital needs, the 504 program for community development and real estate needs, the Patriot Express program for the military, and many special programs for a variety of needs of small businesses.
The Small Business Administration (SBA) offers a number of loan programs for small businesses. Loan programs include the 7a program for working capital needs, the 504 program for community development and real estate needs, the Patriot Express program for the military, and many special programs for a variety of needs of small businesses.
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.
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.
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.
Travel Expenses
Travel, meal, and entertainment expenses are partially deductible as business expenses.
Travel, meal, and entertainment expenses are partially deductible as business expenses.
Reasons for a Business Account
In order to satisfy a number of Internal Revenue Service requirements and to simplify recordkeeping, you should always keep your business banking and personal banking separate.
In order to satisfy a number of Internal Revenue Service requirements and to simplify recordkeeping, you should always keep your business banking and personal banking separate.
Bookkeeping vs Accounting
Bookkeeping and accounting for small businesses are not the same even though the words are sometimes used interchangeably. Bookkeeping is the process of record keeping for the small business. Accounting is the function of interpreting the books and presenting the information.
Bookkeeping and accounting for small businesses are not the same even though the words are sometimes used interchangeably. Bookkeeping is the process of record keeping for the small business. Accounting is the function of interpreting the books and presenting the information.
Example of Discounting Sales
This is an example of how to handle a double-entry bookkeeping journal entry when selling a product or service for cash while offering a discount on the sale.
This is an example of how to handle a double-entry bookkeeping journal entry when selling a product or service for cash while offering a discount on the sale.
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.
Burn Rate
The burn rate is a measure of how long a company can keep operating until it has to seek more financing. It is calculated by the interval measure.
The burn rate is a measure of how long a company can keep operating until it has to seek more financing. It is calculated by the interval measure.
Reasons for a Business Loan
This article covers the reasons that small businesses often need to borrow money or take out a bank loan. Reasons include to purchase real estate for expansion, to purchase equipment, to fund inventory, and to increase working capital.
This article covers the reasons that small businesses often need to borrow money or take out a bank loan. Reasons include to purchase real estate for expansion, to purchase equipment, to fund inventory, and to increase working capital.
venture capital investment
Venture capitalists tend to favor certain industries over others depending on the state of the economy and industries and sectors within the economy. This quick tip gives you the rundown for 2011 and looks back before the Great Recession.
Venture capitalists tend to favor certain industries over others depending on the state of the economy and industries and sectors within the economy. This quick tip gives you the rundown for 2011 and looks back before the Great Recession.
Bookkeeping Entry Inventory
If your business produces products, you have to deal with raw materials inventory in your bookkeeping. This article shows you how to make journal entries for raw materials, work in process, and finished goods inventory.
If your business produces products, you have to deal with raw materials inventory in your bookkeeping. This article shows you how to make journal entries for raw materials, work in process, and finished goods inventory.
Types of Profitability Ratios
Margin analysis and return analysis are the two types of profitability ratio analysis.
Margin analysis and return analysis are the two types of profitability ratio analysis.
sources of business financing
Here is a list of some of the best sources for small business financing in 2012. The economy may be on its way to a real economic recovery and financing for small business may be the best it has been since before the recession. These sources are the best to tap in 2012.
Here is a list of some of the best sources for small business financing in 2012. The economy may be on its way to a real economic recovery and financing for small business may be the best it has been since before the recession. These sources are the best to tap in 2012.
Net Cash Flow
What is net cash flow? First, it helps indicate a company's short-term financial performance.
What is net cash flow? First, it helps indicate a company's short-term financial performance.
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.
Limited Liability Company
The limited liability company is one form of business organization that business owners can choose when they start a new small business.
The limited liability company is one form of business organization that business owners can choose when they start a new small business.
Inventory Control
Retail stores can increase their sales revenue during the holidays through inventory control. Controlling inventory and inventory management are especially important during a recession when consumer spending is low.
Retail stores can increase their sales revenue during the holidays through inventory control. Controlling inventory and inventory management are especially important during a recession when consumer spending is low.
Cash Flow Tips
Some tips on keeping a healthy cash flow in a small business. Steps you can take to improve your cash flow.
Some tips on keeping a healthy cash flow in a small business. Steps you can take to improve your cash flow.
Marketing Budget
Marketing is necessary for your small business to survive but it doesn't have to be expensive. Here are some cost-effective marketing strategies to try.
Marketing is necessary for your small business to survive but it doesn't have to be expensive. Here are some cost-effective marketing strategies to try.
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.
Economic Indicators
Economic indicators, released monthly and quarterly, help us understand the state of the economy. Some of them are the Gross Domestic Product, Consumer Price Index, Unemployment Index, Consumer Confidence, Producer Price Index, and others.
Economic indicators, released monthly and quarterly, help us understand the state of the economy. Some of them are the Gross Domestic Product, Consumer Price Index, Unemployment Index, Consumer Confidence, Producer Price Index, and others.
Corporate Tax Rates 2011
Corporate tax rates for 2011 for C-corporations, LLC's taxed as corporations, and non-profits.
Corporate tax rates for 2011 for C-corporations, LLC's taxed as corporations, and non-profits.
Prepare Business Loan
This is a discussion of four important factors involved in qualifying for a small business loan. Factors include credit history, how much money you will need for start-up assets, your business plan, and your documentation for your loan officer.
This is a discussion of four important factors involved in qualifying for a small business loan. Factors include credit history, how much money you will need for start-up assets, your business plan, and your documentation for your loan officer.
Bank Loan Application Sample
An example of a bank loan application that a small business might have to complete in order to be considered for a loan.
An example of a bank loan application that a small business might have to complete in order to be considered for a loan.
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.
Overview Time Value of Money
Time value of money is one of the core principles of small business finance and small business financing operations. It has to do with interest rates, compound interest, and the concepts of time and risk with regard to money and cash flows.
Time value of money is one of the core principles of small business finance and small business financing operations. It has to do with interest rates, compound interest, and the concepts of time and risk with regard to money and cash flows.