Introduction The accounts receivable days is an efficiency measure that evaluates the efficiency of the business in collecting payments. Therefore, it deduces the efficiency by which the company utilizes its assets. And there is no particular standard to measure how good or bad an accounts receivable days ratio is for a company. This is because …

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Introduction: When it comes to gauging the efficiency of your business, several formulas can help find out how well you are managing the collection of debts within your business. One such measure is the Accounts Receivable Turnover Ratio. The accounts receivable turnover ratio helps evaluate how effectively a business can recover its payments from its …

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Introduction The company buys fixed assets for long-term use. They are not sold for cash in the short term, which means they essentially last longer than 12 months. Such assets would include land, building, or equipment owned by a business. A misrepresentation of fixed assets can lead to an imbalance of the balance sheet on …

What Is the Key Control for Fixed Asset? (Three Key Control You Should Know) Read More »

Definition As part of an accounting procedure, amortization is the process of lowering the book value of an asset or loan over a finite period of time. During the amortization of a loan, payments are spread out over a period of time. This concept is similar to depreciation and amortization that reduces book value with …

How Do We Calculate Amortized Loan Cost? Definition, Explanation, and More Read More »

Definition An annuity is an arrangement where parties agree to pay/receive the fixed amount after a fixed time. In other words, it’s a system where a series of equal payments is made at equal intervals for a specific period under consideration. The payment frequency of an annuity may vary depending on the contract between parties, …

What is An Annuity in Accounting? (Definition, Explanation, Example, and More) Read More »

DISPOSAL OF ASSETS includes eliminating resources from the bookkeeping records. This is important to totally eliminate all hints of a resource from the monetary record (known as disposal). Liquidation of assets might require acknowledgment of the increase or loss of exchange in the detailing time frame in which the liquidation happens. For the reasons for …

Accounting for Assets Disposal: Journal Entries, Example, and More Read More »

This article covers the broad topic of Asset Coverage Ratio. It is a risk measure whose purpose is to calculate a company’s capability to repay the debt by selling its existing assets. So, through this ratio, the investor can determine how much assets are needed to pay off any current debt. Typically, companies have three …

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Assets management ratios (ACM) proportions contrast an organization’s assets with its business income. Assets management ratios show how effectively an organization utilizes its resources to create pay. Examination of assets management ratios shows how proficiently and successfully an organization utilizes its resources to produce income. They demonstrate the capacity of an organization to change over …

What Are the Assets Management Ratios? (Explanation and Formula) Read More »