Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling. Information about potential future financial commitments, such as legal cases or warranties, falls under this category. Hiring legal teams and keeping any cushion of funds for settling lawsuits … Read more
The interest is a “fee” applied so that the lender can profit off extending the loan or credit. Whether you are the lender or the borrower, you must record accrued interest in your books. Since March has 31 days, we can use the accrued interest formula to calculate your interest payable for the month. Sean … Read more
Say you invest $5,000 in a six-year bond paying a coupon rate of five percent per year, semi-annually. Assuming you hold the bond to maturity, you will receive 12 coupon payments of $125 each, or a total of $1,500. The bond issuer also agrees to repay you the original sum loaned at the bond’s maturity date. … Read more
Accounting Rate of Return is a metric that estimates the expected rate of return on an asset or investment. Unlike the Internal Rate of Return (IRR) & Net Present Value (NPV), ARR does not consider the concept of time value of money and provides a simple yet meaningful estimate of profitability based on accounting data. … Read more
Double-entry bookkeeping is an important concept that drives every accounting transaction in a company’s financial reporting. Business owners must understand this concept to manage their accounting process and to analyze financial results. Use this guide to learn about the double-entry bookkeeping system and how to post accounting transactions correctly. These rules provide a framework for … Read more
Let’s say an investor is considering a five-year investment with an initial cash outlay of $50,000, but the investment doesn’t yield any revenue until the fourth and fifth years. The required rate of return (RRR) can be calculated by using either the dividend discount model or the capital asset pricing model. The annualized perspective on … Read more
Converting to percentage form displays how balance sheet accounts compare proportionally. Companies can evaluate financial leverage, working capital management, or liquidity over time using vertical analysis. Horizontal analysis is a great way to see how your business has grown over time. You can use horizontal analysis to compare your current financials to your financials from … Read more
The difference, known as the bottom line, is net income, also referred to as profit or earnings. TD Ameritrade, Inc. has been acquired by Charles Schwab, and all accounts have been moved. At Schwab, you get access to thinkorswim® trading platforms and robust trading education, along with great service, a commitment to low costs, and a wide range of … Read more
“One of the greatest features of ShipBob’s software is the inventory management functionality, which lets us track inventory change and velocity over time. Being able to monitor which styles are selling quickly helps us always keep our best sellers in stock. While writing off small amounts of inventory is often unavoidable, obsolete stock doesn’t need … Read more
Using this information, the company decides to adjust their strategy next quarter. Conversely, by calculating inventory turnover ratios for your products, you’ll know exactly which products to discontinue, as well as when and how many units to reorder for low-turnover SKUs. Calculating your inventory turnover ratio means you can avoid getting blindsided by slow-moving stock. … Read more