What's it: Shareholder equity is money that can be associated with a company's owner or shareholder. It is a residual claim on company assets after deducting liabilities. Although there are several accounts in it, the two most significant are
Investing Fundamentals
Financial Statement Analysis: Scope, Required Information, Steps, And Methods
What's it: Financial statement analysis is a process to assess and evaluate the past performance and future prospects of the company. To do this, you need not only financial statements but also other relevant information. You need data such as
Balance Sheet: Componance, Importance
What's it: A balance sheet presents the company's current financial position. It consists of three subparts: assets, liabilities, and shareholder equity. Also called a statement of financial position or a statement of financial conditions.The
Income Statement: Formula, Components, and Importance
What's it: An income statement tells you the company's financial performance during a specific period, quarterly or annually. It shows you three basic elements, namely, revenue, expenses, and profit. Other names for the income statement
Book Value Per Share: Meaning, Formula, How to Calculate, Drawbacks
Book value per share is one alternative to assess whether the market price for a stock is overvalued or undervalued. Although it contains weaknesses. Calculating it is also easy, you only need to use arithmetic calculations. For the data, you can
Financial Statement: Importance, Components, Users
Analyzing financial statements is a way to understand how healthy a company is. Companies exist to make profits and money. And, to do this, they produce goods or provide services. Therefore, financial performance should be a reflection of the
Cost of goods sold (COGS): Why It Matters, How to Calculate It
Cost of goods sold (COGS) is all costs the company incurred in producing goods and providing services. It consists of labor costs, raw materials, overhead, finished goods inventory costs.COGS covers most of the company's expenses. The value is
Selling, general and administrative expenses (SG&A expenses)
Selling, general, and administrative expenses are operating expenses unrelated to the production of goods or services provided. Examples are executive salaries, salaries of non-production staff, insurance, advertising and promotions, and travel and
Net Revenue: Why It Matters, How To Calculate It
Net revenue is gross revenue after adjusted for deductions. When selling a product, your company records it as gross revenue. To get it, you need to reduce it by factors such as:Discounts, i.e., the value or percentage of the deduction on the
Gross Revenue: Why It Matters, How To Calculate It
Gross revenue is the sum of all sales of goods and services. That is the total invoice value for the goods and services you send to customers. You can calculate it by multiplying the units sold by the selling price per unit.If you reduce it with
Gross Profit: Formula, Importance, How To Calculate It, Its Limitations
Calculating the gross profit is the first step in the analysis of the company's profitability. That tells you how profitable the company's production is. But it's not a complete picture to assess the profitability of a company. Factors such as the
Accrued liabilities
Accrued liabilities, such as trade payables, work in reverse with trade receivables. They become a source of liquidity if the company can extend it. But, if many of them are due at the same time, it could drain the company's cash and could lead to