The income statement heading will specify the name of the company at the top and then just below it is the name of the financial statement and also the reporting period. The gross profit in the income statement is the amount of money that remains after the cost of sales has been deducted from the […]
The goal for companies when purchasing their own stocks is usually to reduce their share count, which can result in an increase in earnings per share (EPS) if all other factors remain constant. Companies may also reissue their treasury stocks if they believe it will be beneficial for them at a later date. The company’s […]
Understanding the IRR is crucial for investors as it provides insights into the attractiveness and viability of an investment project. It helps investors assess the potential returns on their capital, compare different investment options, and determine the feasibility of a project. The ultimate goal of IRR is to identify the rate of discount, which makes […]
As shown in the screenshot below, the annuity type does make the difference. With the same term, interest rate and payment amount, the present value for annuity due is higher. It lets you clearly understand how much money you need to invest today to reach the target amount in the future. Also, it can help […]
Understanding this number can help businesses get the most out of their investments so they can maximize profits and keep their operations running smoothly. On the other hand, net book value is used to describe the actual amount that an asset is worth at present. As these calculations concern a company’s assets, net asset value […]
It’s also important to understand that NBV is affected by the depreciation method used by a company. Depreciation is always accumulated, and netted against the asset to get the NBV. Many factors, such as residual value and estimated useful life, will affect the amount of depreciation applied to an asset each year, making the net […]
The bulk of those expenses fall under cost of sales, which is another name for the cost of goods sold. By reviewing a company’s income statement, you can quickly pinpoint areas that have room for improvement. For example, a company could cut costs in one area and put more money into others, such as sales […]
Understanding the practical application of FIFO and LIFO methods can help businesses make informed decisions about their inventory valuation. Here are some industry-specific examples of where these inventory accounting methods are commonly used. Under the FIFO method, the oldest inventory costs are assigned to the COGS, resulting in lower COGS and higher earnings when prices […]
This information plays a critical role in business decisions based on the company’s financial circumstances, forecasts and trends. Management accounting is a branch of accounting that assists managers with their decision-making. It focuses on the revenues and expenses of a business, as well as asset usage. These activities can assist in tax planning and decision-making, […]