What is acid test ratio and ROA ratio?

Investors calculate the acid test ratio, also known as the quick ratio or the pounce ratio. This ratio excludes inventory and prepaid expenses, which the current ratio includes, and it…

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What are other ratios used in financial reporting

The dividend yield ratio tells investors how much cash income they’re receiving on their stock investment in a business. This is calculated by dividing the annual cash dividend per share…

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43 What’s the difference between private and public company reporting

A public corporation is a business whose securities are traded on the public stock exchanges, such as the New York Stock Exchange and Nasdaq. A private company is held solely…

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42 What is price/earnings ratio

The price/earning (P/E) ratio is another measurement that’s of particular interest to investors in public businesses. The P/E ratio gives you an idea of how much you’re paying in the…

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What is earnings per share

Publicly owned companies must report earnings per share (EPS) below the net income line in their income statements. This is mandated by generally accepted accounting practices (GAAP). The EPS gives…

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How to analyze a financial statement

It’s obvious financial statement have a lot of numbers in them and at first glance it can seem unwieldy to read and understand. One way to interpret a financial report…

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Bookkeeping

So what goes on the accounting and bookkeeping departments? What do these people do on a daily basis? Well, one thing they do that’s terribly important to everyone working there…

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Parts of an Income Statement, Part 3

While some lines of an income statement depend on estimates or forecasts, the interest expense line is a basic equation. When accounting for income tax expense, however, a business can…

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Parts of an Income Statement, Part 2

Of course profit and cost of goods sold expense are the two most critical components of an income statement, or at least they’re what people will look at first. But…

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Parts of an Income Statement, part 1

The first and most important part of an income statement is the line reporting sales revenue. Businesses need to be consistent from year to year regarding when they record sales….

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