Recent Articles

Cash Flow

The ability of a business to turn its assets and liabilities along with production into cash. It is typically measured in dollars and is reported in a separate financial statement at the end of the accounting cycle.

Cash Flow From Operations – Basic Formula

07/02/2017

The cash flows statement in accounting is broken out into three major sections as follows: 1) Cash Flow from Operations 2) Cash Flow from Investing 3) Cash Flow from Financing Of the three, cash flow from operations is the most prominent.   It [...]

Accounts Payable Turnover Rate (Ratio)

11/04/2016

The accounts payable turnover rate is a business activity ratio measuring the frequency of the company’s ability to pay its vendors and suppliers.  The numerical value is customarily reported as an annual value.  The higher the number, the [...]

Gathering Data from Sales

08/08/2016

In business the best source of new business is the existing customer.  Discovering the customer’s habits and characteristics allows the sales department to expand into new geographical territories with similar customer characteristics and/or [...]

Fixed Assets To Debt Relationship

12/08/2015

Every business owner, especially young entrepreneurs, must understand how long-term debt  is used to finance the purchase of fixed assets . It is a basic principle especially for start-ups. There is a relationship that exists between the two. If [...]

Cash Flows – Introduction

10/19/2015

Insolvency is defined as the inability to pay liabilities as they come due. To meet the demand of creditors cash is required. For most small businesses there are as little as a single source to multiple sources of cash. Think about these two [...]

Financial Statements for the Small Business

07/02/2015

Financial statements serve the purpose of presenting economic activity and status related to a particular date and over a particular time frame.  Accountants record monetary transactions and via financial reports present the information in an easy [...]

Accounting

07/21/2014

Accounting refers to the business function of recording economic activity.  Accounting includes the processing of information and a reporting role.   The accounting term encompasses a broad range of functions for every business.  It starts out [...]

Insolvency and Bankruptcy – Know the Difference

02/01/2014

Every business owner needs to know the difference between insolvency and bankruptcy.  Often these two terms are misunderstood and improperly used in conversation.  You need to know their correct meaning because both are used in civil law and both [...]

Quick Ratio – Definition, Explanation and Proper Use

01/14/2014

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).  In the large markets this formula is one of the financial industry [...]
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