Every organization needs to work effectively and efficiently to be profitable. Internal control is one of those essentials that play a vital role in a company’s betterment and progress. No organization can thrive without following the right strategies. Proper plans are set up to ensure that the organization is working in the way it’s meant …
What Are the Key Components of Internal Control? Read More »
Organizations today are in dire need of calculating the difference between their budgeted sales and breakeven sales. This helps them in scaling their performance. They use this margin of safety formula to calculate and ensure that their budgeted sales are greater than the breakeven sales. The Margin of Safety is the difference between budgeted sales …
What is the Margin of Safety? Definition, Formula, and Example Read More »
Standard cost is a term used for the expected cost of a product produced in the company. Similarly, standard costing is a traditional cost accounting method. Accounting firms use this method to compare their standard costs and revenues with the final results. Standard costing is a new technique of assigning a standard cost to a …
5 Objectives of Standard Costing You Should Know Read More »
Definition: Good Received Note, also referred to as GRN can be defined as a two-way document that mainly acknowledges delivery of the goods by a certain supplier, in addition to their subsequent receipt by their customer. When the customer issues a purchase order, the supplier is mostly obligated to deliver them in accordance with the …
Goods Received Note – Definition, Uusages, Importance, And More Read More »
Definition: Average Total Assets can be defined as the average amount of assets that are recorded on the Balance Sheet of the company, at the end of two given financial years. This can either include both, the current year, as well as the preceding year. Alternatively, it can also constitute two different time periods across …
How to Calculate Average Total Assets? (Definition, Formula, Example, and More) Read More »
Definition of Cash-flow to Debt Coverage Ratio Current Cash Coverage Ratio can be defined as a liquidity ratio that measures the efficiency of an entity’s cash management. This operating cash ratio measures the percentage of the company’s total debts, which can be covered by the company’s operating cash flow for a given accounting period. In …
Gering ratios are helpful metrics in the assessment of the business debt. These ratios highlight if the financing structure of the business is stable and leverage remains under control. Again, it’s an excellent tool for lenders to assess if the business/financial risk aligns with the risk appetite. Further, the price setting of the loan and …
Definition A predetermined overhead rate is used by businesses to absorb the indirect cost in the cost card of the business. It’s a budgeted rate that is calculated by budgeted inputs. Further, this rate is calculated by dividing budgeted overheads by the budgeted level of activity. However, if there is a difference in the total …
Predetermined Overhead Rate (Definition, Example, Formula, and Calculation) Read More »
Definition Average total assets are the assets used by businesses throughout the accounting period. These assets are calculated with the opening and closing of the total assets in the business’s balance sheet. This figure is mostly used in calculating the activity ratio, where revenue generated by the business is compared with the total assets implied …
Average Total Assets (Definition, Formula, Example, and More) Read More »
Financial managers perform a wide range of calculations and activities to analyze a company’s yearly and quarterly performance. Cost to income ratio is one of the efficiency ratios used in financial management. The cost to Income ratio is used to evaluate a company’s performance. Its fundamental role is to validate the profitability of the company. …
Cost Income Ratio: Definition, Formula, Calculation, and Interpretation Read More »
