December 28, 2020
Charles Lutwidge
Contribution Margin Ratio
Introduction Profit (contribution) margin is the difference between sales revenue and variable costs. Moreover, both of these indicators – revenue and costs – are taken for a specific volume of production. We can also say that marginal profit is the...
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December 25, 2020
Charles Lutwidge
Accounts Receivable Turnover Ratio
The impact of accounts receivable on the company’s financial position is ambiguous. A significant amount of accounts receivable can lead to a need to attract additional funds due to the outflow of the company’s own cash. On the other hand,...
December 23, 2020
Charles Lutwidge
A Guide to Notes Payable
Definition The definition of Notes payable is a formal debt in which a note is signed for the repayment of any obligations due to the creditor. In other words, we are owning money or something to a creditor (someone else)....
December 22, 2020
Charles Lutwidge
Accounting Basics for Beginners
All enterprises, regardless of their type and forms of ownership, maintain accounting records in accordance with the current legislation. If you are in a position where you will be using the financial data to make management decisions, knowing at least...
December 14, 2020
Charles Lutwidge
Quick Ratio
Definition The quick liquidity ratio (QR) is an indicator that shows the solvency of a business entity in the short term. This indicator shows whether it will be able to pay off its short-term liabilities at the expense of the...
December 09, 2020
Charles Lutwidge
Depreciation Expense Overview and Calculation
Definition and Explanation Depreciation is the process of gradually transferring the cost of the means of production (long-term assets) to the manufactured product. Depreciation is also used to deduct the costs of buying and improving a rental property. For example,...
December 04, 2020
Charles Lutwidge
Flexible Budget
Business cost planning can be characterized as a special decision-making process, in which information about the past financial and production activities of an economic entity is analyzed, potential resources are assessed and the organization’s goals for the future as well...
December 02, 2020
Charles Lutwidge
Explanation and Calculation of the Owner’s Equity
Definition Owner’s equity is the enterprise’s funds embodied in net assets, funds initially invested by its founders or participants, as well as its financial results accumulated (lost) in the course of its activity – profits and losses received (incurred) over...
