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A document indicating ownership in a corporation is often referred to as common stock. It identifies an equity position in a business. The document or certificate is commonly referred to as a security and provides certain rights to the holder (owner). These rights include voting and residual value upon liquidation of the company.
Common Stock – Definition Read More »
The quick ratio is a formula used in business to identify the ability of a business to pay its current liabilities. It is also known as the ‘Acid Test’ formula (ratio).
Quick Ratio – Definition, Explanation and Proper Use Read More »
The current liabilities section of the balance sheet identifies those amounts due to third parties within the current year. These include accounts payable, credit card accounts, accrued payroll, taxes, unearned revenue, deposits and those amounts due within one year related to debt instruments.
Current Liabilities Section of the Balance Sheet Read More »
The fixed assets section of the balance sheet is one of the easiest sections to read and understand. This article is written to describe and illustrate some simple examples of the fixed assets section.
The Fixed Assets Section of the Balance Sheet Read More »
Universally accepted as the first economic bubble, the Great Dutch Tulip Craze, also known as Tulipmania, of the late 1620’s to February 1637 serves as a reminder to all of us involved in business, that value can be driven by greed and not intrinsic worth. During this time period, a tulip bulb rose in price from 60 times its original value to over 150 times the original price.
Economic Bubble – The Great Dutch Tulip Craze Read More »
Contribution margin is a core business concept and is often used in cost accounting to identify the amount of financial contribution a sold product provides to the company. Simply put, contribution margin is the sales price less the direct costs (sometimes referred to as variable costs).
Definition of Contribution Margin Read More »
Current assets carry the most value to the small business entrepreneur because of the cash conversion aspect.
An Explanation of Current Assets Read More »
The closest definition of Goodwill is devotion. Customers become devoted due to the way the small business treated them. It was worth paying a little more or going out of your way to go to the business that treated you well. How does a business generate goodwill? What is it worth?
An Explanation of Goodwill – Part I – Generating Goodwill Read More »
The equity section of the balance sheet equals assets minus liabilities. Traditionally the equity section is referred to as the net worth of the company. If you were to dispose of all the assets through a sale and pay off liabilities, the money left over would be available for distribution to the shareholders. The shareholders basically own the equity section of the balance sheet.
How to Read a Balance Sheet – Equity Section (Simple Format) Read More »
The second most weighted factor in the risk multiplier series for the Discretionary Income Multiplier Formula is business and industry growth. This factor evaluates the overall change in an industry and in particular the business under review over the most recent three years.
Business and Industry Growth Read More »
