Report Analysis - How to Read the Statements

Debt Ratio

Debt is a natural part of business.   The most volume (number of transactions) of debt occurs with the simple purchase of materials (inventory) or supplies on account.   Every business buys on account whether it is […]

Accounting Concepts and Principles

Amortization of Financing Costs

When a business acquires a loan there are typically closing costs involved.   Generally Accepted Accounting Principles (GAAP) require these costs to be amortized (allocated) over the life of the loan.  There are several principles the […]

Report Analysis - How to Read the Statements

Debt to Equity Ratio

Another leverage ratio used to evaluate the financial integrity of a business is the debt to equity ratio.   It is strictly a bottom half balance sheet ratio.   Its result explains the relationship of volume of debt […]

Report Analysis - How to Read the Statements

Fixed Assets To Debt Relationship

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 […]