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.

Financial Statements 75

Financial Statements Accruals Billing Collections 75

Accounting Tools

JULY 13, 2023

Related Courses Business Ratios Guidebook The Interpretation of Financial Statements What is the Cash Flow to Debt Ratio? The cash flow to debt ratio reveals the ability of a business to support its debt obligations from its operating cash flows. This is a type of debt coverage ratio.

Financial Statements 75

Financial Statements 75

Accounting Tools

OCTOBER 24, 2023

Related Courses Business Ratios Guidebook Key Performance Indicators The Interpretation of Financial Statements What are Efficiency Ratios? Efficiency ratios measure the ability of a business to use its assets and liabilities to generate sales.

Accounts Payable 75

Accounts Payable Accounts Payable Accounts Receivable Accounts Receivable 75

Accounting Tools

MAY 21, 2023

Related Courses Business Ratios Guidebook The Interpretation of Financial Statements What is the Profit Ratio? The profit ratio compares the earnings reported by a business to its sales. First, it includes items that do not relate to the core operations of the business, such as interest income and interest expense.

Accruals 75

Accruals Financial Statements Tax Accounting 75

Accounting Tools

APRIL 15, 2024

Thus, the ratio is quite a reliable and comparable measure of asset performance across an industry. The formula is as follows: Cash flow from operations ÷ Total average assets = Cash return on assets In the calculation, the cash flow from operations figure comes from the statement of cash flows.

Accruals 40

Accruals Financial Statements Accounting Accounting 40

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

OCTOBER 10, 2023

Related Courses Business Ratios Guidebook Key Performance Indicators The Interpretation of Financial Statements What are Leverage Ratios? Leverage ratios are used to determine the relative level of debt load that a business has incurred. The two main leverage ratios are noted below.

Financial Statements 75

Financial Statements Budgeting 75

Accounting Tools

OCTOBER 4, 2023

An organization must have a business model that allows its ongoing operations to generate a profit, or else it will eventually fail. How to Measure Profitability Profitability is measured with the net profit ratio and the earnings per share ratio. Related Articles Profitability Index Profitability Ratios

Accruals 75

Accruals Financial Statements Tax Accounting 75

Accounting Tools

MAY 7, 2024

Related AccountingTools Courses Business Ratios Guidebook Key Performance Indicators The Interpretation of Financial Statements Advantages of Using Performance Measurements There are several advantages to using performance measurements, which are as follows: Feedback loop.

Financial Statements 40

Financial Statements Collections Accounts Receivable Accounts Receivable 40

Accounting Tools

JANUARY 24, 2024

It is a combination of the degree of operating leverage and the degree of financial leverage. 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

MARCH 29, 2024

What is the Fixed Asset Turnover Ratio? The fixed asset turnover ratio compares net sales to net fixed assets. A high ratio indicates that a business is doing an effective job of generating sales with a relatively small amount of fixed assets. They may be eliminating excess assets promptly, rather than keeping them on the books.

Financial Statements 40

Financial Statements 40

Accounting Tools

MARCH 5, 2024

What are Coverage Ratios? Coverage ratios are used to evaluate the ability of a business to meet its debt obligations. These ratios are most commonly used by lenders and creditors to review the finances of a prospective or current borrower. The most common coverage ratios are noted below.

Financial Statements 40

Financial Statements Tax 40

Accounting Tools

JANUARY 24, 2024

The degree of relative liquidity is the proportion of an organization’s cash flows generated by normal operations that is available for the settlement of its current liabilities. What is the Degree of Relative Liquidity?

Financial Statements 40

Financial Statements 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. Terms Similar to Return on Sales The return on sales is also known as the operating margin.

Financial Statements 74

Financial Statements Tax 74

Accounting Tools

MARCH 3, 2024

A person or business acquires debt in order to use the funds for operating needs or capital purchases. Finally, liabilities are measured with liquidity ratios to see if they can be paid when due, while debt is measured with leverage ratios to see if a firm is at risk of becoming insolvent.

Bookkeeping 75

Bookkeeping Auditing Accounting 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. This a strong indication that a business is no longer operating in any growth markets.

Accruals 75

Accruals Corporate Finance Collections Accounting 75

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

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 14, 2023

Related Courses Business Ratios Guidebook The Interpretation of Financial Statements What is the Operating Assets Ratio? The operating assets ratio can be used as part of an analysis to eliminate those company assets that are not contributing to operations.

Accounts Receivable 40

Accounts Receivable Accounts Receivable Account Receivables Financial Statements 40

Accounting Tools

MAY 13, 2024

Related AccountingTools Courses Business Ratios Guidebook Financial Analysis The Interpretation of Financial Statements Liquidity Analysis Liquidity analysis is a detailed review of working capital , involving the calculation of turnover rates for accounts receivable , inventory , and accounts payable.

Financial Analysis 40

Financial Analysis Financial Statements Accounts Payable Accounts Payable 40

Accounting Tools

MARCH 20, 2024

This is calculated as follows: $40,000 Dividends paid+ $10,000 Stock buybacks - $70,000 Stock sale = -$20,000 Cash flow to stockholders Related AccountingTools Courses Business Ratios Guidebook The Interpretation of Financial Statements Related Articles Cash Flow After Taxes Cash Reinvestment Ratio Cash Return on Assets Operating Cash Flow Ratio

Financial Statements 40

Financial Statements Tax 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. It has generated an operating margin of 12%.

Financial Statements 40

Financial Statements 40

Accounting Tools

FEBRUARY 15, 2024

This description addresses what the company does, the industry in which it operates, and its competitive advantages (if any). This may include selected ratios, pie charts, trend lines, and so forth. Company Overview The report begins with a description of the company. There are several ways to do so.

Financial Analysis 72

Financial Analysis Financial Statements 72

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. The essential operating performance measurements are noted below.

Financial Statements 40

Financial Statements Accounts Payable Accounts Payable Collections 40

Accounting Tools

SEPTEMBER 9, 2023

Related Courses Business Ratios Guidebook The Interpretation of Financial Statements What is the Cash Reinvestment Ratio? The cash reinvestment ratio is used to estimate the amount of cash flow that management reinvests in a business. Doing so focuses attention solely on new fixed asset additions.

Financial Statements 40

Financial Statements 40

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

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

OCTOBER 14, 2023

Related Courses Business Ratios Guidebook The Interpretation of Financial Statements What is the Return on Operating Assets? The return on operating assets measurement focuses attention on only those assets used to generate revenue. Two issues related to the calculation are: Depreciation. Unusual income.

Financial Statements 40

Financial Statements 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. Operating assets and liabilities are those assets and liabilities required to run an organization’s core operations.

Financial Statements 40

Financial Statements Accounts Payable Accounts Payable Accounts Receivable 40

Accounting Tools

AUGUST 2, 2023

Related Courses Business Ratios Guidebook The Income Statement The Interpretation of Financial Statements What is Profit Margin? What is Operating Margin? The operating margin reveals the percentage of profit generated by operating activities. They may also include the returns generated by discontinued operations.

Financial Statements 75

Financial Statements Financial Analysis 75

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

SEPTEMBER 26, 2023

Related Courses Business Ratios Guidebook The Interpretation of Financial Statements What is Cash Flow After Taxes? Cash flow after taxes is the amount of net cash flow relating to operations that remain after all related income tax effects have been included. It is usually calculated by adding back all non-cash charges to net income.

Tax 40

Tax Financial Statements Accounting Accounting 40

Accounting Tools

MARCH 2, 2024

What is Operating Cash Flow? Operating cash flow is the net amount of cash that an organization generates from its operating activities. This information is used to determine the viability of the core operations of a business, since positive cash flow is needed to maintain and grow a firm’s operations over time.

Financial Statements 40

Financial Statements Accounts Payable Accounts Payable Accounts Receivable 40

Accounting Tools

JULY 8, 2023

Related Courses Business Ratios Guidebook Financial Analysis The Interpretation of Financial Statements What is Financial Analysis? It may result in the reallocation of resources to or from a business or a specific internal operation. Financial analysis is the examination of financial information to reach business decisions.

Financial Analysis 75

Financial Analysis Financial Statements 75

Accounting Tools

OCTOBER 28, 2023

Related Courses Business Ratios Guidebook The Interpretation of Financial Statements What is Capital Turnover? Profit Issues The ratio ignores whether a company is generating a profit , concentrating instead on the generation of sales. Cash Flow Issues The ratio ignores whether a company is generated any cash flow.

Financial Statements 40

Financial Statements 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

OCTOBER 14, 2023

Related Courses Business Ratios Guidebook The Interpretation of Financial Statements Working Capital Management What is Working Capital Productivity? From a financing perspective, management wants to maintain low working capital levels in order to keep from having to raise more cash to operate the business.

Financial Statements 40

Financial Statements Accounts Payable Accounts Payable Accounts Receivable 40