This category covers all aspects of performance management such as budgeting, forecasting, performance measure and performance evaluation.
In this article, we cover the working capital management. This includes the definition of working capital management, its objectives as well as working capital management strategies. So, let’s dive in! Overview Liquidity is one of the most vital parts of a business. Liquidity refers to how easily a business can convert its assets into cash. […]
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In this article, we will cover how to calculate interest coverage ratio. This includes the key definition, formula, example calculation, advantages and limitation as well as other areas which you should know. Overview Businesses seek an optimal balance for the gearing level. Basically, debt financing is cheaper than equity financing. The interest paid on the
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In this article, we will cover how to calculate the residual income in management accounting or performance management. Before jumping into detail, let’s understand some overview as well as some key definitions of the residual income. Management of a company appraises the income yielded after paying all the relevant costs of capital in order to
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In this article, we will cover how to calculate the variable overhead rate variance. This includes the definition, important, formula, example, reasons for favorable and adverse as well as the limitation of variable overhead rate variance. What is Variable Overhead Rate Variance? The variable overhead rate variance is the difference between the actual and budgeted
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In this article, we will cover how to calculate sales mix variance. This includes the definition, important of sales mix variance, example calculation, causes for favorable and adverse variance as well as the limitation of sales mix variance. Variance reports are developed at the closing of each control period (say, at the end of each
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Budgeting is the process of making a plan or forecast for the future of a business. Budgeting is an important part of the management and cost accounting of a business. The budgeting process of a business consists of forecasting its incomes and expenses. Once these incomes and expenses are determined, the forecasted profits of the
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Overview In this article, we will cover how to calculate EBITDA. Before going in detail, let’s go through the overview and basis definition of EBIDTA. Basically, there are many ratios and statistics that investors use to check whether investing in a particular business is profitable for them. These ratios can tell the investor different information
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In this article, we will cover the budgetary slack. This includes the definition, causes, the Repercussion of budgetary slack and how to control budgetary slack. First, let’s go through the overview together before going further detail. Typically, all businesses prepare budgets of various types; budgets are an estimation of future expenses, revenue, cash flows, etc.
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In this article, we will cover the six common performance measures for inventory management. This performance measures are sometimes called performance metrics or performance indicators (KPIs). Inventory management plays a key role in business efficiency. Businesses adopting lean manufacturing and total quality management approaches are particularly keen on inventory management. Efficient inventory management can affect
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Overview In this article, we will cover in detail for the break-even analysis. This involves the calculation of break-even point for a business. Before going in detail, let’s go through the overview and the basic definition. Typically, the ultimate goal of any business is to make profits. These profits are calculated by subtracting all the
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