Accounting Tools

NOVEMBER 7, 2023

Related Courses Business Ratios Guidebook Financial Analysis The Interpretation of Financial Statements Comparing Turnover and Profit Turnover is the net sales generated by a business, while profit is the residual earnings of a business after all expenses have been charged against net sales.

Financial Analysis 75

Financial Analysis Financial Statements 75

Accounting Tools

APRIL 9, 2024

What is the Operating Ratio? The operating ratio compares production and administrative expenses to net sales. The ratio reveals the cost per sales dollar of operating a business. A low ratio in comparison to that of competitors indicates that management is doing a good job of keeping costs in line.

Financial Statements 40

Financial Statements Tax 40

Accounting Tools

JUNE 18, 2023

Related Courses Business Ratios Guidebook The Interpretation of Financial Statements What is Return on Sales? The return on sales is a ratio used to derive the proportion of profits generated from sales. The concept is useful for determining the ability of management to efficiently generate a profit from a given level of sales.

Financial Statements 74

Financial Statements Tax 74

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

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

APRIL 7, 2024

What is the Debt Service Coverage Ratio? The debt service coverage ratio measures whether a business has sufficient cash flow to pay its debt obligations. It may be necessary to calculate this ratio regularly and track it on a trend line , since the net annual operating income figure may vary substantially over time.

Financial Statements 40

Financial Statements Tax 40

Accounting Tools

NOVEMBER 6, 2023

Related Courses Business Ratios Guidebook The Interpretation of Financial Statements What is the Gross Margin Ratio? The gross margin ratio is the proportion of each sales dollar remaining after a seller has accounted for the cost of the goods or services provided to a buyer.

Financial Statements 40

Financial Statements Billing Accounting Accounting 40

Accounting Tools

JULY 24, 2023

Related Courses Business Ratios Guidebook The Interpretation of Financial Statements What is the Operating Margin Ratio? The operating margin ratio shows the proportion of operating income to the net sales of a business. First, it tends to expand into business lines that are less profitable as it pursues increased sales.

Financial Statements 40

Financial Statements 40

Accounting Tools

DECEMBER 18, 2023

The resulting margin represents the amount of cash that is available to pay fixed costs and earn a profit. A high contribution margin implies that a business will probably be able to generate a reasonable profit even if sales decline by a substantial amount. Subtract the aggregated variable costs from the net revenue figure.

Financial Analysis 40

Financial Analysis Financial Statements Payroll Tax 40

Accounting Tools

OCTOBER 19, 2023

Related Courses Business Ratios Guidebook The Interpretation of Financial Statements What is the Return on Net Assets? The return on net assets (RONA) measure compares net profits to net assets to see how well a company is able to utilize its asset base to create profits.

Financial Statements 40

Financial Statements Tax 40

Accounting Tools

JULY 8, 2023

Related Courses Business Ratios Guidebook Financial Analysis The Interpretation of Financial Statements Sales margin is the amount of profit generated from the sale of a product or service. It is used to analyze profits at the level of an individual sale transaction , rather than for an entire business.

Financial Analysis 74

Financial Analysis Financial Statements 74

Accounting Tools

JULY 28, 2023

Related Courses Business Ratios Guidebook Financial Analysis The Interpretation of Financial Statements What is Net Income Margin? Net income margin is the net after-tax income of a business, expressed as a percentage of sales. It is used in ratio analysis to determine the proportional profitability of a business.

Financial Analysis 40

Financial Analysis Accruals Financial Statements Billing 40

Accounting Tools

JANUARY 24, 2024

The degree of total leverage is the proportional change in net income associated with a given change in revenues. When a company has a large amount of operating and financial leverage, even a modest change in its sales can trigger a substantial change in its profitability.

Financial Statements 40

Financial Statements 40

Accounting Tools

MAY 13, 2024

Vertical Analysis Vertical analysis is a proportional analysis of the various expenses on the income statement , measured as a percentage of net sales. This analysis typically includes a review of the debt to equity ratio, as well as the interest coverage ratio. The same analysis can be used for the balance sheet.

Financial Analysis 40

Financial Analysis Financial Statements Accounts Payable Accounts Payable 40

Accounting Tools

DECEMBER 10, 2023

What are Net Operating Assets? Net operating assets are those assets of a business directly related to its operations, minus all liabilities directly related to its operations. This relationship shows the income generated from operations, as a percentage of the net assets used to create that profit.

Financial Statements 40

Financial Statements Accounts Payable Accounts Payable Accounts Receivable 40

Accounting Tools

OCTOBER 6, 2023

Related Courses Business Ratios Guidebook The Interpretation of Financial Statements What is the Investment Turnover Ratio? The investment turnover ratio compares the revenues produced by a business to its debt and equity. How to Calculate the Investment Turnover Ratio? Its investment turnover ratio is 2:1.

Financial Statements 40

Financial Statements 40

Accounting Tools

NOVEMBER 2, 2023

Related Courses Business Ratios Guidebook Key Performance Indicators The Interpretation of Financial Statements What are Cash Flow Ratios? Cash flow ratios compare cash flows to other elements of an entity’s financial statements. Some of the more common cash flow ratios are noted below.

Financial Statements 40

Financial Statements Accounting Accounting 40

Accounting Tools

DECEMBER 30, 2023

What is the Sales to Total Assets Ratio? The sales to total assets ratio measures the ability of a business to generate sales on as small a base of assets as possible. When the ratio is quite high, it implies that management is able to wring the most possible use out of a small investment in assets.

Financial Statements 40

Financial Statements 40

Accounting Tools

AUGUST 31, 2023

Cash flow is the net amount of cash that an entity receives and disburses during a period of time. An alternative way to calculate the cash flow of an entity is to add back all non-cash expenses (such as depreciation and amortization ) to its net after-tax profit, though this approach only approximates actual cash flows.

Accruals 75

Accruals Financial Statements Accounts Payable Accounts Payable 75

Accounting Tools

AUGUST 2, 2023

Related Courses Business Ratios Guidebook The Income Statement The Interpretation of Financial Statements What is Profit Margin? Profit margin is the percentage of sales that a business retains after all expenses have been deducted. The operating margin reveals the percentage of profit generated by operating activities.

Financial Statements 75

Financial Statements Financial Analysis 75

Accounting Tools

OCTOBER 11, 2023

Related Courses Business Ratios Guidebook Key Performance Indicators The Interpretation of Financial Statements Operating ratios compare the operating expenses and assets of a business to several other performance benchmarks. Examples of the more common operating ratios are noted below.

Financial Statements 40

Financial Statements Customer Service Tax 40

Accounting Tools

OCTOBER 19, 2023

Related Courses Business Ratios Guidebook The Interpretation of Financial Statements What is the Proprietary Ratio? The proprietary ratio is the proportion of shareholders' equity to total assets , and as such provides a rough estimate of the amount of capitalization currently used to support a business. from the denominator.

Financial Statements 40

Financial Statements 40

Accounting Tools

OCTOBER 7, 2023

Related Courses Business Ratios Guidebook Financial Analysis The Interpretation of Financial Statements What is Ratio Analysis? Financial ratios compare the results in different line items of the financial statements. The most important of these ratios are the gross profit ratio and net profit ratio.

Financial Statements 40

Financial Statements General Ledger Financial Analysis Customer Service 40

Accounting Tools

SEPTEMBER 26, 2023

Earnings available for common stockholders is net after-tax profit, minus any preferred dividends. Example of Earnings Available for Common Stockholders For example, a business reports net after-tax profit of $100,000 and also pays a $10,000 dividend on its outstanding preferred stock.

Financial Statements 40

Financial Statements Tax 40

Accounting Tools

JANUARY 2, 2024

These can be brief, custom-made reports that are intended for specific purposes, such as a detailed analysis of sales by region, or the profitability of a specific product line. There are multiple profitability measures that can be derived from this report that examine the gross margin, operating margin, and net margin.

Financial Statements 75

Financial Statements Accounting Accounting Budgeting 75

Accounting Tools

JULY 21, 2023

Related Courses Cost Accounting Guidebook Financial Analysis What is the Variable Cost Ratio? The variable cost ratio reveals the total amount of variable expenses incurred by a business, stated as a proportion of its net sales. This is known as the contribution margin , and is calculated as 1 minus the variable cost ratio.

Financial Analysis 40

Financial Analysis Cost Accounting Accounting Accounting 40

Accounting Tools

FEBRUARY 13, 2024

Materiality is sometimes construed in terms of net impact on reported profits , or the percentage or dollar change in a specific line item in the financial statements. Examples of materiality are as follows: A company reports a profit of exactly $10,000, which is the point at which earnings per share exactly meet analyst expectations.

Financial Statements 40

Financial Statements Accounting Accounting 40

Accounting Tools

SEPTEMBER 9, 2023

Related Courses Business Ratios Guidebook The Interpretation of Financial Statements What is Sales per Person? However, a better metric is profit per person, which also incorporates the effects of all company expenses. The result can be higher sales per person, even though profits may worsen.

Financial Statements 40

Financial Statements 40

Accounting Tools

OCTOBER 10, 2023

Related Courses Capital Budgeting Constraint Management What is the Profitability Index? The profitability index measures the acceptability of a proposed capital investment. A higher profitability index increases the attractiveness of a prospective investment. This results in a strong profitability index of 1.4,

Budgeting 40

Budgeting 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? Typical trend lines are for revenue , the gross margin , net profits , cash , accounts receivable , and debt. The general groups of ratios are noted below.

Financial Statements 40

Financial Statements Financial Analysis Accounts Receivable Accounts Receivable 40

Accounting Tools

NOVEMBER 6, 2023

Related Courses Business Ratios Guidebook Financial Analysis The Interpretation of Financial Statements What is Equity Turnover? Equity turnover is a ratio that measures the proportion of a company's sales to its stockholders' equity. Thus, the ratio may place an emphasis on the wrong target.

Financial Analysis 40

Financial Analysis Financial Statements 40

Accounting Tools

OCTOBER 21, 2023

Related Courses Business Ratios Guidebook The Interpretation of Financial Statements What is the Return on Common Equity? The return on common equity ratio (ROCE) reveals the amount of net profits that could potentially be payable to common stockholders.

Accruals 40

Accruals Financial Statements Accounting Accounting 40

Accounting Tools

SEPTEMBER 8, 2023

Related Courses Business Ratios Guidebook The Interpretation of Financial Statements What is the Gross Profit Ratio? The gross profit ratio shows the proportion of profits generated by the sale of products or services, before selling and administrative expenses.

Financial Statements 40

Financial Statements 40

Accounting Tools

JUNE 11, 2023

Related Courses Business Ratios Guidebook The Interpretation of Financial Statements What is Return on Total Assets? The EBIT figure is used instead of net profits in order to focus attention on operating earnings. Example of Return on Total Assets ABC International reports net profits of $100,000.

Financial Statements 75

Financial Statements Tax Accounting Accounting 75

Accounting Tools

DECEMBER 10, 2023

What is the Accounts Receivable Turnover Ratio? 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. The accounts receivable turnover ratio can be used in the analysis of a prospective acquiree.

Accounts Receivable 40

Accounts Receivable Accounts Receivable Account Receivables Accounting 40

Accounting Tools

JULY 13, 2023

Related Courses Business Ratios Guidebook The Interpretation of Financial Statements What is the Dividend Payout Ratio? The dividend payout ratio measures the proportion of earnings paid out to shareholders as dividends. The ratio also reveals whether a company can sustain its current level of dividend payouts.

Financial Statements 40

Financial Statements 40

Accounting Tools

AUGUST 4, 2023

Related Courses Business Ratios Guidebook Financial Analysis The Interpretation of Financial Statements What is Profit Analysis? Profit analysis involves dissecting the reported profit figure of a business to determine the actual extent of its profitability.

Financial Analysis 40

Financial Analysis Financial Statements Accounting Accounting 40