Recent Articles

Current Liabilities

A section of the Liabilities and Equity side of the balance sheet. It refers to accounts payable, credit card debts, short term debts, and payroll items owed to staff or taxes owed.

Current Ratio

02/22/2017

The current ratio is an inappropriate relationship to use or rely on in small business.   The ratio is best suited for large publicly traded organizations.   This article explains the basic formula for the current ratio, how to identify the ratio [...]

Bookkeeping – Cash Disbursements (Lesson 45)

02/20/2017

Cash disbursements is the process of remitting payment to vendors, suppliers and third party contractual obligations.   Better managed offices pay bills in regular cycles including weekly and monthly obligations.   Preparation, reconciliation and [...]

Bookkeeping – Purchases Via Credit Cards (Lesson 42)

02/17/2017

It is more common in small business, especially small contractors, to buy materials using credit cards.  Often the credit card accounts are the owner’s personal accounts.  Sometimes the cards are merchant cards.  As the bookkeeper it is your [...]

Bookkeeping – Tracking Purchases (Lesson 41)

02/17/2017

In business purchases describes the process of acquiring the necessary goods and materials for operations.  Many novice business individuals believe the term is strictly limited to those materials purchased for resale.  In reality it is much [...]

Bookkeeping – Tracking Sales Tax (Lesson 40)

02/17/2017

Many businesses especially retail have to collect sales tax as a function of their legal mandate from state governments.  In effect the business is a collection agent for the state.  If properly set up, this collection process is automated using [...]

Working Capital Cycle

02/13/2017

The college textbook definition of working capital is current assets minus payables and accrued expenses.  The term explains the dollar value of flexibility a business operation has to take advantage of immediate opportunities or endure sudden or [...]

EBITDA – Buyer Beware (Case Study)

02/12/2017

In the article EBITDA the fundamentals of Earnings Before Interest, Taxes, Depreciation and Amortization were introduced.   In general EBITDA is commonly used with the market comparable valuation approach.   In that article it was illustrated how [...]

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 [...]

Working Capital Management

01/01/2016

Working capital management is a function of finance whereby management ensures adequate cash is available to meet operational needs over the typical working capital cycle.   The underlying elements of working capital management include 1) [...]
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