When you borrow, you’re essentially using someone else’s funds, and interest is the cost you pay for doing it. The amount of interest expense has a direct bearing on profitability, especially for companies with a huge debt load. Heavily... Read more
However, there is a standard formula used for calculating the loan payoff amount of a mortgage based on the principal, the interest rate, the number of payments made, and the number of payments remaining. This article provides detailed information t... Read more
For example, the payback period on a home improvement project can be decades while the payback period on a construction project may be five years or less. Unlike other methods of capital budgeting, the payback period ignores the time value of money... Read more
Owner's equity is simply the on-paper value of a company's assets minus its liabilities. Owner's equity refers to the portion of a business that is the property of the business' shareholders or owners. The simple explanation of owner's equity is tha... Read more
As you use the formula, you will come to the realization that opportunity cost is a plain, common-sense concept that is explored in-depth by investors and economists. There are plenty of dollar signs throughout the pathway, but you will definitely h... Read more
Since 5% of the inventory is defective, that means 500 units require repairs. Suppose a manufacturing company has 10,000 units of inventory that it intends to sell. It is essential to remember that we are performing our analysis as of 31 December 20... Read more
Below, we dig into three ways net sales help business leaders spot areas of opportunity and make better decisions. They're an indication of how effective your sales strategies are and how well your sales team is performing. Net sales allowances are... Read more
Operating income (EBIT) represents the point on the income statement where all operating costs have been deducted. Therefore, all costs recognized on the income statement onward are non-operating items. Since each line item above net profit, such as... Read more
While the benchmark for the average collection period will differ by industry, the most often cited figure for cash retrieval is around 30 to 90 days. Credit sales are recorded when a company has delivered a product or service to a customer (and thu... Read more
There are several actions that could trigger this block including submitting a certain word or phrase, a SQL command or malformed data. The following formula is used to calculate a net fixed assets value. To calculate net fixed assets, subtract th... Read more
