Accounting Tools

FEBRUARY 25, 2024

What are Solvency Ratios? Solvency ratios allow you to discern the ability of a business to remain solvent over the long term. Solvency ratios are commonly used by lenders and in-house credit departments to determine the ability of customers to pay back their debts. A ratio of 2:1 is considered reasonable.

Financial Statements 74

Financial Statements Billing Budgeting Collections 74

Accounting Tools

JULY 27, 2023

Related Courses Business Ratios Guidebook The Interpretation of Financial Statements What is the Collection Ratio? The collection ratio is the average period of time that an organization’s trade accounts receivable are outstanding.

Collections 40

Collections Financial Statements Accounts Receivable Accounts Receivable 40

Accounting Tools

FEBRUARY 13, 2024

Days' sales uncollected is a liquidity ratio that is used to estimate the number of days before receivables will be collected. It can also be used by management to estimate the effectiveness of its credit and collection activities.

Collections 40

Collections Accounts Receivable Accounts Receivable Account Receivables 40

Accounting Tools

OCTOBER 11, 2023

Related Courses Business Ratios Guidebook Key Performance Indicators The Interpretation of Financial Statements What are Financial Ratios? Financial ratios compare different line items in the financial statements to yield insights into the condition and results of a business. Operating income ratio. Net profit ratio.

Financial Statements 75

Financial Statements Accruals Billing Collections 75

Accounting Tools

SEPTEMBER 7, 2023

Since there is a possibility that some receivables will never be collected, the account is offset (under the accrual basis of accounting ) by an allowance for doubtful accounts ; this allowance contains an estimate of the total amount of bad debts related to the receivable asset. This amount appears in the top line of the income statement.

Accounts Receivable 75

Accounts Receivable Accounts Receivable Account Receivables Accounting 75

Accounting Tools

SEPTEMBER 26, 2023

Related Courses Corporate Finance Investor Relations Guidebook Public Company Accounting and Finance What is the Payout Ratio? The payout ratio is the proportion of dividends that a company pays to investors in relation to its reported net income. It is expressed as a percentage of the firm’s reported earnings.

Accruals 75

Accruals Corporate Finance Collections Accounting 75

Accounting Tools

DECEMBER 10, 2023

What is the Accounts Receivable Turnover Ratio? Accounts receivable turnover is the number of times per year that a business collects its average accounts receivable. The ratio is used to evaluate the ability of a company to efficiently issue credit to its customers and collect funds from them in a timely manner.

Accounts Receivable 40

Accounts Receivable Accounts Receivable Account Receivables Accounting 40

Accounting Tools

OCTOBER 19, 2023

Related Courses Business Ratios Guidebook Treasurer's Guidebook Working Capital Management What is the Liquidity Index? Use the following steps to calculate the liquidity index: Multiply the ending trade receivables balance by the average collection period.

Collections 40

Collections Billing 40

Accounting Tools

NOVEMBER 7, 2023

Related Courses Credit and Collection Guidebook Effective Collections The Interpretation of Financial Statements What is the Altman Z Score? Related Articles Bad Debt Forecast Collection Dispute Cycle Time Collection Effectiveness Index Debtor Days Calculation

Collections 75

Collections Financial Statements Tax 75

Accounting Tools

JULY 16, 2023

This relationship between receivables and sales should remain about the same over time, unless there have been changes in the customer base, the credit policy of the organization, or its collection practices. This is a form of ratio analysis. Review the current ratio over several reporting periods.

Auditing 75

Auditing Financial Records Accounts Payable Accounts Payable 75

Accounting Tools

JULY 25, 2023

Related Courses Business Ratios Guidebook Key Performance Indicators The Interpretation of Financial Statements What are the Ratios for Analyzing a Balance Sheet? Balance sheet ratios compare the various line items on a balance sheet in order to infer the liquidity , efficiency , and financial structure of a business.

Accounts Payable 40

Accounts Payable Accounts Payable Accounts Receivable Accounts Receivable 40

Accounting Tools

NOVEMBER 8, 2023

Related Courses Business Ratios Guidebook The Interpretation of Financial Statements What is the Asset Coverage Ratio? The asset coverage ratio measures how well an organization can pay its debts. In particular, a lender wants this ratio to exceed a minimum threshold level before it will agree to lend money to a borrower.

General Ledger 40

General Ledger Financial Statements Collections Accounts Receivable 40

Accounting Tools

JULY 10, 2023

Related Courses Business Ratios Guidebook The Interpretation of Financial Statements What is the Equity Ratio? The equity ratio measures the amount of leverage that a business employs. Conversely, a low ratio indicates that a large amount of debt was used to pay for the assets.

Collections 40

Collections Financial Statements Accounts Receivable Accounts Receivable 40

Accounting Tools

JUNE 15, 2023

Related Courses Business Ratios Guidebook The Interpretation of Financial Statements What is the Cash Ratio? The cash ratio compares a company's most liquid assets to its current liabilities. This ratio may be too conservative, especially if receivables are readily convertible into cash within a short period of time.

Accounts Receivable 40

Accounts Receivable Accounts Receivable Account Receivables Financial Statements 40

Accounting Tools

DECEMBER 10, 2023

How to Improve Your Creditworthiness You can improve your creditworthiness over time by engaging in such activities as paying bills when due (or early), reducing the overall level of debt , and/or reducing your debt-to-income ratio. The Risk of Default The reverse of creditworthiness is the risk of default.

Financial Statements 40

Financial Statements Collections Billing 40

Accounting Tools

OCTOBER 10, 2023

Related Courses Business Ratios Guidebook Key Performance Indicators The Interpretation of Financial Statements Operating performance ratios are intended to measure different aspects of an organization's core operations. A high ratio indicates that a business is creating a large volume of sales with very few employees.

Financial Statements 40

Financial Statements Accounts Payable Accounts Payable Collections 40

Accounting Tools

MAY 10, 2024

Related AccountingTools Courses Credit and Collection Guidebook Effective Collections Credit Policy Main Body The main body of the policy can include a number of statements regarding credit policy, along with more detailed application information. Related Articles Credit Analysis Credit Granting Procedure Five Cs of Credit

Collections 40

Collections Accounts Receivable Accounts Receivable Account Receivables 40

Accounting Tools

JUNE 18, 2023

Related Courses Business Ratios Guidebook Credit and Collection Guidebook The Interpretation of Financial Statements What is the Accounts Receivable Collection Period? The accounts receivable collection period compares the outstanding receivables of a business to its total sales.

Accounts Receivable 40

Accounts Receivable Accounts Receivable Account Receivables Collections 40

Accounting Tools

JUNE 14, 2023

Related Courses Business Ratios Guidebook Key Performance Indicators What is a Key Performance Indicator? Among the more common KPIs related to finances are a firm's gross margin , net profit , current ratio , and debt to equity ratio. KPIs will vary by industry, due to differences in their operational and financial structures.

Computation 40

Computation Customer Service Collections 40

Accounting Tools

OCTOBER 24, 2023

This type of liquidity-related analysis can involve the use of several ratios, include the cash ratio , current ratio , and quick ratio. Related Articles Net Current Assets Operating Current Assets Other Current Assets Terms Similar to Current Asset Current assets are also known as current accounts.

Accounts Receivable 40

Accounts Receivable Accounts Receivable Account Receivables Collections 40

Accounting Tools

JULY 14, 2023

This can be a concern when calculating the current ratio , which compares current assets to current liabilities. Lenders and creditors rely on the current ratio to evaluate the liquidity of a borrower , and so might incorrectly lend money based on an excessively high current ratio.

Accounts Receivable 75

Accounts Receivable Accounts Receivable Account Receivables Financial Statements 75

Accounting Tools

SEPTEMBER 6, 2023

Related Courses Business Ratios Guidebook Credit and Collection Guidebook Effective Collections The Interpretation of Financial Statements What is the Collection Effectiveness Index? The collection effectiveness index (CEI) is a measure of the ability of the collections staff to collect funds from customers.

Collections 40

Collections Financial Statements 40

Accounting Tools

JULY 14, 2023

Related Courses Credit and Collection Guidebook Effective Collections The Interpretation of Financial Statements What is the Days Sales Outstanding Calculation? Days sales outstanding (DSO) is the average number of days that receivables remain outstanding before they are collected. days to collect a typical invoice.

Collections 40

Collections Accounts Receivable Accounts Receivable Account Receivables 40

Accounting Tools

MAY 19, 2023

Related Courses Business Ratios Guidebook Key Performance Indicators The Interpretation of Financial Statements What are Activity Ratios? Activity ratios measure how well an organization uses its assets to generate revenue. The most common activity ratios are noted below.

Accounts Payable 40

Accounts Payable Accounts Payable Financial Statements Collections 40

Accounting Tools

JUNE 21, 2023

Related Courses Business Ratios Guidebook The Balance Sheet The Interpretation of Financial Statements What is the Defensive Interval Ratio? The defensive interval ratio compares a set of liquid assets to expenditure levels to determine how long a business can keep paying its bills.

Accounts Receivable 40

Accounts Receivable Accounts Receivable Account Receivables Financial Statements 40

Accounting Tools

JUNE 18, 2023

Related Courses Business Ratios Guidebook Effective Collections The Interpretation of Financial Statements What is Accounts Receivable Days? Accounts receivable days is the number of days that a customer invoice is outstanding before it is collected. days to collect a typical invoice. days to collect a typical invoice.

Accounts Receivable 40

Accounts Receivable Accounts Receivable Account Receivables Accounting 40

Gaviti

OCTOBER 30, 2023

In this article, we explore the advantages of autonomous finance, especially as it relates to accounts receivable, and at what point your company should consider employing them, so you can decide if it’s a worthwhile investment for your business. What are the Benefits of Autonomous Finance in A/R Collections?

Collections 75

Collections Invoicing Bank Reconciliation Account Reconciliation 75

Accounting Tools

FEBRUARY 9, 2024

Note: Current assets are any assets considered to be collectible within one year, while current liabilities are any liabilities expected to be settled within one year. The other concern is that it may be impossible to collect old accounts receivable, which might really be bad debts.

Accounts Payable 40

Accounts Payable Accounts Payable Accounts Receivable Accounts Receivable 40

Accounting Tools

SEPTEMBER 10, 2023

Related Courses Business Ratios Guidebook The Interpretation of Financial Statements What is the Quick Ratio? The quick ratio is used to evaluate whether a business has enough liquid assets that can be converted into cash to pay its bills. What is Included in the Quick Ratio? Marketable securities. Accrued liabilities.

Accounts Receivable 40

Accounts Receivable Accounts Receivable Account Receivables Financial Statements 40

Accounting Tools

JUNE 20, 2023

Related Courses Business Ratios Guidebook Credit and Collection Guidebook The Interpretation of Financial Statements What is Accounts Receivable Analysis? How to Conduct a Ratio Analysis A third type of accounts receivable analysis is ratio analysis.

Accounts Receivable 40

Accounts Receivable Accounts Receivable Account Receivables Accounting 40

oAppsNet

MAY 9, 2024

This article aims to demystify the accounts receivable process, elucidating its significance, operational mechanisms, challenges, and optimization strategies. This includes sending payment reminders, negotiating terms in cases of financial difficulty, and, if necessary, undertaking collections efforts for delinquent accounts.

Accounts Receivable 40

Accounts Receivable Accounts Receivable Account Receivables Accounting 40

Nanonets

MAY 8, 2023

The third party then becomes responsible for collecting payment from the client. If a company defaults on its accounts payable, its creditors can take legal action to collect the money owed. This will help you track which accounts receivable are still outstanding and make it easier to collect customer payments.

Accounts Receivable 52

Accounts Receivable Accounts Receivable Account Receivables AR 52

Accounting Tools

JULY 27, 2023

Related Courses Corporate Finance Credit and Collection Guidebook Treasurer's Guidebook What is Credit Enhancement? Yet another possibility is to adopt a more conservative financial structure by keeping more cash on hand, thereby improving the liquidity ratios being examined by lenders.

Corporate Finance 40

Corporate Finance Collections 40

Accounting Tools

MARCH 2, 2024

Related AccountingTools Courses Business Ratios Guidebook The Interpretation of Financial Statements The Statement of Cash Flows How to Analyze Operating Cash Flow Operating cash flow is closely watched by analysts, since it can provide insights into the financial condition of a business.

Financial Statements 40

Financial Statements Accounts Payable Accounts Payable Accounts Receivable 40

Accounting Tools

JUNE 14, 2023

Related Courses Business Ratios Guidebook The Interpretation of Financial Statements What is the Acid-Test Ratio? The acid-test ratio compares a company’s most short-term assets to its short-term liabilities. The intent of this ratio is to evaluate whether a business has sufficient cash to pay for its immediate obligations.

Accounts Receivable 40

Accounts Receivable Accounts Receivable Account Receivables Financial Statements 40

Accounting Tools

OCTOBER 9, 2023

These are trade receivables with customers, and may also include other receivables, such as those with employees, if these items can be collected within one year. This is especially useful when calculating the current ratio , which divides current assets by current liabilities.

Petty cash 40

Petty cash Financial Statements Collections Accounts Receivable 40

Accounting Tools

SEPTEMBER 11, 2023

Related Courses Business Ratios Guidebook Financial Analysis Education Bundle The Interpretation of Financial Statements What is Financial Statement Analysis? Proportion Analysis An array of ratios are available for discerning the relationship between the size of various accounts in the financial statements. Cash coverage ratio.

Financial Statements 40

Financial Statements Financial Analysis Accounts Receivable Accounts Receivable 40