Accounting

Return on Net Assets Ratio: Definition, Formula, and How to Calculate

Net assets are an important metric for equity evaluation for shareholders and lenders. Shareholders in particular are keener on evaluating the impact of their investment. Net assets are theoretically equal to the book value of equity of the shareholders. However, equity is always higher than the book value of net assets with goodwill and fair […]

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Activity-Based Depreciation Method: Formula and How to Calculate It

The activity-based depreciation method of assets takes into account the output of assets. It mainly differs from other methods of depreciation on the very nature of the cost spreading method. Other depreciation methods consider time as the main cost spreading factor. The activity-based depreciation method considers the number of units or the output from the

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Delivery Cycle Time: What is it and How to Calculate?

We can define the delivery time as the time spent between an order placement and order delivery. The cycle of time from the moment a confirmed order is placed and the moment by it is delivered to the customer. The delivery cycle time can be for products or services. Understanding the Delivery Cycle Time The

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What is the Weighted Average Contribution Margin in Break-Even Analysis?

The contribution margin for a single product is deducting the variable costs from the sales or revenue figure. The break-even point is the stage where the company makes no profit or losses. Estimating the break-even point for a multiple product facility can take different methods. One of such methods in calculating the weighted average contribution

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Types of Errors in Accounting: All You Should Know!

Error in accounting incurs as a result of the wrong entry recorded by bookkeeper or accountant. There are different types of errors in accounting; some of them can result in an imbalance of trial balance. Error is considered as an unintended mistake during the course of recordkeeping. Typically, material errors would lead to incorrect decision

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How to Improve Inventory Turnover?

To improve inventory turnover we need to increase the efficiency of a business to turn stock into sales. For any business in any industry, the faster it turns inventory into sales, the better it works. However, in practice, businesses need to cater to many factors that affect inventory management. Each business sector and industry set

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Working Capital Cycle: Definition and How to Calculate It!

Working capital is the measure of a company’s short-term financial health and liquidity. The term working capital also means the difference between the current assets and current liabilities of the company. Current assets are more liquid than fixed assets, so a higher working capital equates favorable liquidity for the company. What is Working Capital Cycle?

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What is Program Budgeting? Definition and Example

Budgeting can be defined in several ways on a financial and non-financial basis. The simplest of the budgeting definition is to allocate resources and compare the results against the allocations. The traditional line-item budgeting focuses on cost items and reducing the cost per item basis. Modern budgeting requirements call for activity-based resource allocations. One of

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What is Job Order Costing?

When your business is routinely producing exceptional items for clients, you may require a job order costing system to appropriately keep a check of each request. By utilizing a job order costing system, you can rest assured that the time and assets you’re utilizing to manufacture an item will bring in benefits for your organization.

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How to Calculate Earnings per Share (EPS)?

Earnings per share is the part of an organization’s benefit, which is distributed to every individual share of the stock. It holds much significance to shareholders and individuals who exchange in the stock market. When the earnings per share of a business are high, then its productivity also increases. For determining the earnings per share,

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