Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in eco... Read more
The debt to equity ratio can be misleading unless it is used along with industry average ratios and financial information to determine how the company is using debt and equity as compared to its industry. Companies that are heavily capital intensive... Read more
Advisory services provided by Carbon Collective Investment LLC (“Carbon Collective"), an SEC-registered investment adviser. There is no definitive answer to this question as the ideal debt to asset ratio varies depending on the industry a comp... Read more
A high ratio like this makes it harder for the company to find additional debt financing. You will after reading about debt ratio, an easy calculation used to illustrate financial viability. Debt can be scary when you’re paying off college loa... Read more
The IRS allows several different methods (FIFO or LIFO, for example), depending on the type of inventory. The IRS has detailed rules for which identification method you can use and when you can make changes to your inventory cost method. The Interna... Read more
If one product takes 100 machine hours and another product requires 200 machine hours, then the applied overhead is $10,000 for the first product and $20,000 for the second product. These expenses must be paid to stay in business, but they are not d... Read more
This includes bills and obligations you still need to pay, such as what you owe to your suppliers, lenders, or service providers. Continuing with the example, if you owe $678,000, you will subtract this amount from your $2.158 million, leaving you w... Read more
Options traders also use the technique to figure out what price level the underlying price must be for a trade so that it expires in the money. A breakeven point calculation is often done by also including the costs of any fees, commissions, taxes,... Read more
Or, it could use its earnings to reduce liabilities, which would also result in an increase in its common equity and BVPS. Another way to increase BVPS is to repurchase common stock from shareholders and many companies use earnings to buy back share... Read more
This may also include limiting the number of clients it offers credit to in an effort to increase cash sales. It can also offer pricing discounts for earlier payment (i.e. 2% discount if paid in 10 days). The best way that a company can benefit is b... Read more
