Generally Accepted Accounting Principles

Generally Accepted Accounting Principles (GAAP) is a set of guidelines and rules related to financial reporting. The primary goal is to create a set of reporting principles for all publicly traded companies in which to compare similar financial reporting issues between companies. Smaller businesses are not legally required to comply with GAAP, but many financial lenders require compliance in order to properly evaluate a business when a loan is requested.

Valuation Ratios

Valuation Ratios

Valuation ratios are the only group of business ratios that are externally and not internally driven. The market dictates valuation ratios. All three core valuation ratios are determined by the market price of the stock.  All three have the same numerator, the market share price or market capitalization value of the company. 

Various Sets of Accounting Books

Accounting Books

Accounting’s primary purpose is to measure economic activity. There are several different methods to determine the economic value generated in your business each year. In accounting this is referred to as sets of books. There are four basic sets of accounting books. Each has a different purpose and end goal.

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