Profitability ratios measure a company’s ability to generate income relative to revenue, balance sheet assets, operating costs, and equity.Gross Profit Rate = Gross Profit ÷ Net Sales...
Read More Liquidity Ratio | Accounting – Formulas, Examples, Questions, Answers
Liquidity Ratio Liquidity ratio is a financial ratio that measure a company’s ability to repay both short and long-term obligations. Current Ratio = Current Assets ÷ Current Liabilities It evaluates the ability of a...
Read More Solvency Ratio | Accounting – Formulas, Examples, Questions, Answers
Solvency Ratio A solvency ratio is a performance metric that helps us examine a company’s financial health. In particular, it enables us to determine whether the company can meet its financial obligations in the...
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8 Minutes
Market Value Ratio | Accounting – Formulas, Examples, Questions, Answers
Market Value Ratio Market value ratios are used to evaluate the share price of a company’s stock. It compares the company’s stock price to its earnings or assets. Market ratios show how investors feel...
Read More Efficiency Ratio (Activity Ratio) | Accounting – Formulas, Examples, Questions, Answers
Efficiency Ratio (Activity Ratio) Efficiency ratio, also known as activity financial ratios, are used to measure how well a company is utilizing its assets and resources. Efficiency Ratio Formulas Receivable Turnover = Net Credit...
Read More Leverage Ratio (Debt Ratio) | Accounting – Formulas, Examples, Questions, Answers
Leverage Ratio (Debt Ratio) Leverage ratio in finance is a general term for any technique intended to multiply profits and losses. Common leverage techniques are debt, the purchase of long-term assets and derivatives (such...
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10 Minutes
Profitability Ratio Analysis and Fundamental Analysis Criterion | Formulas and Examples
Profitability Ratio Analysis You think only by the evolution of turnover and bottom line to know if you are dealing with a good value. The truth is, they don’t give a meaningful indication of...
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5 Minutes
Aging Balance for Accounts Receivable and Payable
Aging Balance in Accounting The aging balance is an accounting document that summarizes a certain amount of information concerning accounts receivable and accounts payable. It is very popular with companies because it allows to...
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7 Minutes
Balance Sheet | Definition, Structure, Example, Free Template
Balance Sheet Balance sheet or financial statements is a statement that shows the value of a company’s assets and its debts. This is prepared by accountants to represent the financial situation of the company....
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7 Minutes
Bank Reconciliation and Examples
Bank Reconciliation The bank reconciliation is a control, carried out by the accountant in order to bring the bank accounts as close as possible to the reality of the account statements, that is to...
Read More Accounting Journals | What are Journal Entries in Accounting?
Accounting Journals To keep accounts, it is necessary to set up accounting journals, with necessarily a general journal which constitutes the legal support of the accounts. Most companies use for practical reasons several accounting...
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11 Minutes
Accounting Formulas | Definition, Calculation and Utility
Accounting Formulas Accounting formulas are mathematical expressions used in financial accounting to calculate and analyze various financial metrics. These formulas play a crucial role in interpreting financial data, making informed business decisions, and ensuring...
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