Ratios that are likely to help the management
Ratio analysis is the process that involves analyzing and interpreting data coming from different financial accounts, such as the balance sheet and profit & loss account. It is comparing one number with another. It interprets financial statements easy to do for the users, including shareholders, investors, creditors, the government, and analysts. Ratio analysis is an […]
What Are Dependent and Independent Investments?
In evaluating the investment proposals presented to management, it is important to know the possible interrelationships between pairs of investment proposals. A given investment proposal may be economically independent of, or dependent on, another investment proposal. Economically Dependent Investments An investment proposal is economically independent of a second investment if the cash flows (or the […]
What is financial reconstruction? Objectives and Impacts
Financial reconstruction refers to the process of revamping or restructuring a company’s financial situation to improve its viability and profitability. This can be necessary when a company faces significant financial difficulties that cannot be resolved through other measures, such as cost-cutting. Financial reconstruction aims to help companies become more financially stable and sustainable by addressing […]
Factors determining the dividend policy of a company
A dividend policy is a company’s guidelines strategy to decide how much money it will distribute as a dividend to its shareholders. It can be important for a company to have a diverse set of dividends so that the corporation’s shareholders are not allocating the same percentage of their income to different investments. A dividend […]
What are limited liability companies?
A limited liability company, LLC, is a form of business organization that incorporates elements of corporations and partnerships. As such, the owners of this business are given limited personal liability, which allows their personal assets to be secured from the claims of debts in business as well as other litigation. An LLC also allows tax […]
The Infamous Enron Accounting Scandal
In the late 1990s, Enron was one of the largest companies in the United States. It was an energy company with a high-flying stock price and a reputation for being innovative and forward-thinking. In 2001, it all came crashing down. Enron was revealed to be a fraud. The company had been overstating its earnings and […]
Treatment of Goodwill in a Business Purchase
The treatment of goodwill in a business purchase is a crucial aspect that can impact the overall financial picture and success of the transaction. Goodwill represents the intangible assets of a business, such as its reputation, brand, and customer relationships. While it’s a valuable asset, the treatment of goodwill can be complex when it comes […]