What's it: A cash equivalent is a financial asset that can easily be converted to cash and have minimal risk of changing prices. Because of this nature, companies combine cash accounts with cash equivalents into one: cash and cash equivalents.
Financial Analysis
Cash in Accounting: Meaning, Reporting, Pros, Cons
What's it: Cash is money in the form of banknotes or coins. In accounting, other examples of cash are checks, notes, and demand deposits.Cash is the most liquid asset and vital to the liquidity of the company. Companies can use them
Noncurrent Liabilities: Meaning, Items, Why They Matter
What it is: Noncurrent liabilities represent liabilities which due more than one year or one operating cycle. Together with current liabilities, they make total liabilities in the balance sheet. Other names for noncurrent liabilities are
Noncurrent Assets: Meaning, Items, Why They Matter
What it is: Noncurrent assets are long-term assets, in which the full value will not be realized during the accounting period. They represent illiquid assets. Examples are property, plant, and equipment (PP&E).Another term for noncurrent
Types of Financial Ratios: Their Analysis and Interpretation
Financial ratios are important metrics for analyzing a company's finances. In rating or stock analyst reports, we will find various ratios. Likewise, banks also use various ratios to measure a company's financial health. Ratios provide them
Shareholders Equity: Meaning, Formula and Components
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
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
Profitability Ratio: Formulas, Types, and Examples
What's it: Profitability ratio is a financial ratio to measure the company's ability to generate profit. Profitability ratios are a key driver of a firm's value and hence, an important factor for valuing its share price. As a result,