EBITDA and gross profit are different ways that analysts or investors might look at a company. One is not necessarily better than the other since each is designed to measure something different. EBITDA strips interest, taxes, depreciation, and amortization from operating income, while gross profit strips the cost of labor and materials from revenue. For […]

If finance isn’t your strong point, you’re likely not looking forward to dealing with the accounting side of the business. Some businesses, including publicly owned companies, are legally obligated to followGAAP http://eempc.org/pathways-out-of-the-productive-safety-net-programme-lessons-from-ethiopia/ principles. Private companies that use accrual bookkeeping also have to apply double-entry bookkeeping. If the two sides of this equation are out of […]

To get started, check out our Google Sheets Cash Flow Projection Template. First, download a free invoice template for Excel, http://czechcenter.ru/?item=122 or get one for Google Sheets. Copy and paste the data from the invoice template you downloaded into the new sheet. Key Financial Records Maintained A ledger (also called a general ledger, accounting ledger, […]

Management uses this metric to understand what price they are able to charge for a product without losing money as production increases and scale continues. It also helps management understand which products and operations are profitable and which lines or departments need to be discontinued or closed. The contribution margin measures how efficiently a company […]

Investors often look at contribution margin as part of financial analysis to evaluate the company’s health and velocity. For example, the main advantage of the plantwide overhead rate method is: if a company has more than 10 product lines, investors study the contribution margin of each product to see if the company is properly investing […]

If you have earned revenue but a client has not yet paid their bill, then you report your earned revenue in the accounts receivable journal, which is an asset. Over time, the revenue is recognized once the product/service is delivered (and the deferred revenue liability account declines as the revenue is recognized). However, unearned revenue […]

However, they are shown in the cashflow statement and reduce the owner’s equity in the statement of financial position. This guide covers the ins and outs of business expenses, including common types of expenses, what you might be able to deduct on tax, and why expense management is so important. The cost of goods sold […]

Financial accounting guidance dictates when transactions are to be recorded, though there is often little to no flexibility in the amount of cash to be reported per transaction. International public companies also frequently report financial statements in accordance with International Financial Reporting Standards (IFRS). In this example, four specific financing activity transactions have been identified […]

A balance sheet shows you how much you have (assets), how much you owe (liabilities), and how much is left over (equity). It’s a snapshot of your whole business as it stands at a specific point in time. The single-step format is good at giving you a snapshot of your company’s profitability, and not much […]

Every time a word with the prefix bi- in front of it comes up, make sure to look at the usage notes to understand and use the word in the most accurate and precise way. One of the most popular ways to speak with more clarity when using this word is to switch the prefix […]