The Balance Sheet
The balance sheet is one of the four key financial statements that are provided in a company’s annual report. Also known as a statement of financial position, the balance sheet tells you about what a...
View ArticleLiquidity Ratios
Before we dive into calculating liquidity ratios, it is important to understand what liquidity is and why it is so important. One key fact to remember about business is that many transactions are...
View ArticleCash Conversion Cycle
The very essence of a business is to take cash on hand and spend it on business operations to generate more cash. Different businesses do this in different ways, but the process occurs in one form or...
View ArticleWorking Capital
Working capital is a figure that is used to measure a company’s liquidity. To calculate it, you simply take the company’s current assets and subtract out its current liabilities: Working Capital =...
View ArticleRevenue Recognition
To understand financial statements prepared under the accrual system of accounting, it is necessary to understand how accountants recognize revenue. Unlike with the cash-basis system of accounting,...
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