Bookkeeping

A good inventory turnover ratio varies by industry, but it’s often said that a ratio between 4 and 6 is generally acceptable for many types of businesses. Like other financial ratios, the inventory turnover ratio is only one piece of information about a company’s ability to manage its inventory. I’ve found that comparing your industry …

Inventory Stock Turnover Ratio Formula: How to Calculate Lire la suite »

Every investor, be it individual or corporate will want to assess how long it will take for them to get back the initial capital. This is because it is always worthwhile to invest in an opportunity in which there is enough net revenue to cover the initial cost. The payback period equation also doesn’t take …

Payback Period: Definition, Formula, and Calculation Lire la suite »

Conversely, declining net profit margins might signal operational issues or increasing competition, affecting a company’s stock price negatively. As the name suggests, it is the value of all expected future cash flows after considering all expected cash inflows and outflows at a specific discount rate. Most of the time, the net present value (NPV) format …

How to Calculate Cap Rate: Everything Investors Need to Know Lire la suite »

Effective management of AR is important for maintaining a healthy cash flow and avoiding bad debt. Efficient accounts payable management maintains a healthy cash flow and good supplier relationships. If you habitually pay invoices late, vendors may refuse to do business with you. On the other hand, when you pay your obligations promptly and in …

Accounts Payable Vs Notes Payable What Is It, Differences Lire la suite »

Let’s dive deeper into this concept with an example to better illustrate how capitalized cost works in practice. But later on, the company’s return on assets (ROA) and return on equity (ROE) are lower because net income is higher with a higher assets (and equity) balance. Based on the useful life assumption of the asset, …

Capitalize vs Expense Cost Accounting Rules + Examples Lire la suite »

The key difference is that with receivables financing, the business retains ownership of the invoices and the risk of non-payment. Understanding the step-by-step process of accounts receivable factoring helps you grasp how it can provide immediate cash flow by converting your outstanding invoices into working capital. Now, let’s move on to the next section and …

Accounts Receivable Factoring: How It Works, How Much It Costs Lire la suite »

Bookkeeping services bookkeeping arlington to help Arlington, Virginia businesses unlock the time and insights needed to grow. Join over 35,000 US-based business owners who have streamlined their finances and have grown their businesses with Bench. Our team takes the time to deeply understand your business, answer your questions, help you link your accounts, and show …

Capital Balance Bookkeeping Lire la suite »

When calculating the contribution margin, you only count the variable costs it takes to make a product. Gross profit margin includes all the costs you incur to make a sale, including both the variable costs and the fixed costs, like the cost of machinery or equipment. A “good” contribution margin varies across industries and depends …

Unit Contribution Margin What Is It, Formula, Examples Lire la suite »

The accounting equation, which states that assets equal liabilities plus equity, serves as the foundation for analyzing a company’s financial health. Analysts rely on this equation to evaluate various aspects of a business, including its liquidity, operational efficiency, and overall stability. Understanding the implications of this equation is crucial for any financial analysis as it …

The Accounting Equation: A Beginners’ Guide Lire la suite »

The margin of safety is the difference between a company’s intrinsic value (its estimated 10-year cash flow minus inflation) and the current stock price. If the intrinsic value is $100 and the stock price is $80, the margin of safety is 25%. The Margin of Safety is calculated to ensure that the company does not …

The Margin of Safety Defined, Explained and Calculated Lire la suite »