Tag: Current Assets
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Billings in Excess
‘Billings in excess’ is a construction industry financial term referring to the dollar value of charges to customers in excess of the costs and profits earned.
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Cash Flow From Operations – Understanding Cash Flow (Part II)
To understand the cash situation, the cash flow from operations is an additional report included in financial statements to basically convert the accrual basis balance sheet and income statement into a cash basis report.
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Working Capital Management – Production and Sales Flow
There is no single management style to address the multitude of working capital cycles existing in the various business sectors and the underlying industries. Taking raw resources and turning them into consumer goods has different time frames depending on the item produced.
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Working Capital Cycle
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 long-term setbacks. Since it is a balance sheet based formula the value is a function of a moment…
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EBITDA – Buyer Beware (Case Study)
This article will illustrate the opposite effect using the same business information. A buyer of a business should be leery of financial information and look for improper accounting processes. The goal is to reduce the operational income and ultimately the value of the business. The goal is to get the business valuation to a realistic…
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Bookkeeping – Proper Balance Sheet Presentation (Lesson 20)
The balance sheet serves as an historical report. It identifies the accumulated change in value since inception.
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Working Capital Management – Fundamentals
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.
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Working Capital
Cash is the lifeblood of every business. Without cash a business operation can come to a standstill. Cash is one component of working capital, a term referring to current assets (Gross Working Capital) less payables and accrued expenses.
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Perpetual Inventory
Most small businesses use the annual inventory system to determine ending inventory value. Any adjustments are to the income statement inside the cost of goods sold formula. This is acceptable if management only wanted accurate financial statements once a year. But this is unrealistic for a small business.
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Construction Accounting – Balance Sheet Construction in Process Accounts
Construction accounting consists of three major groups of accounts. The first and most understood set are the cost of construction accounts found on the profit and loss statement.