This category covers all aspects of performance management such as budgeting, forecasting, performance measure and performance evaluation.
Overview Cost is a term used in business and finance to represent the monetary value of a company’s spending. Usually, companies incur expenses in various fields, such as repair and maintenance, salaries, etc. However, these do not represent cost. Instead, the term cost refers to any expenses that companies incur on producing assets. Therefore, an […]
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What is Throughput Accounting? Throughput accounting is a process used in management accounting that focuses on a company’s production efficiency. It looks at the rate at which a company converts its raw materials into finished goods and makes money from them. The purpose of throughput accounting is to identify any bottlenecks in a production process.
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What is Variance Analysis? Variance analysis is a process used by companies to identify any inefficiencies or deviations from a plan or budget. They do so by first establishing a budget and then comparing actual performances with it. By doing so, companies can identify any deficiencies in their operations and, sometimes, the budgets. This process
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What is Variance Analysis? Variance analysis is the process of calculating and analyzing any differences in budgeted and actual performances. It is a tool that companies use to monitor and control their costs. However, it only takes a reactive approach to controlling, which means that it cannot prevent problems. Despite that, variance analysis plays a
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Management accounting is a part of accounting that concerns a company’s internal matters. Usually, it consists of establishing costs for various products or services and preparing forecasts or budgets. The purpose of management accounting is to help companies with planning, controlling, and decision-making. There are no specific requirements for management accounting, unlike financial accounting, which
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The operating assets of a company are directly responsible for producing income from operations. These assets include both fixed and current assets. The net operating assets figure deducts the operating liabilities from the operating assets. The return on net operating assets would then indicate the relation between the net income and operational efficiency of the
Return on Net Operating Assets (RNOA): Definition, Formula, and How to Calculate It Read More »
Large companies work with several divisions and different segments. For publically held companies, the SEC requires them to report profits from each segment or division separately. The profit margins arising from each segment or division are termed as the Segment margin. What is Segment Margin? The segment margin is the profit (or loss) arising from
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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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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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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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