July 2016 - Wikiaccounting

Fixed Charge Coverage Ratio: Definition | Using | Formula | Example | Explanation

Definition: Fixed Charge Coverage Ratio is one of the Financial Ratios used to measure an entity’s ability to pay interest expenses and fixed charge obligations from its profit before interest and tax. Fixed charge simply mean assets or similar kind that company use to secured loan that it borrow from the bank. The assets that […]

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Internal Rate of Return (IRR): Definition, Formula, Use, Problems, Example, and Analysis

Financial Ratios

What is the Internal Rate of Return? Internal Rate of Return is the rate or cost of capital that makes a project or investment’s Net Present Value exactly zero. The internal Rate of Return is quite important for management in decision-making for new investment proposals and performance appraisal. It is also used in performance appraisal

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Net Working Capital: Definition | Using | Formula | Example | Analysis

Financial Ratios

Overview: Net Working Capital is the net of total current assets of an entity with its total current liabilities. When we want to assess the liquidity problems in the company, networking capital is one of the most important items to be included. Sometimes we use this ratio to assess how efficiently the company uses its

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Return on Capital Employed: Definition, Using, Formula, Example, Explanation

Financial Ratios

Overview Return on Capital Employed is one of the profitability ratios used to assess the profits before interest and tax that the company could generate from its business by using shareholders’ Capital employed. Capital employed is the fund that shareholders injected into the company plus other Capital and long-term debt. In other words, the fund

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What is Interest Coverage Ratio? (Definition, Using, Formula, Example, Explanation)

Financial Ratios

Definition: The interest Coverage Ratio is one of the Financial Ratios used to assess the profitability and abilities that interest expenses could be paid by profit before interest and tax. It assesses how profitable the entity could pay the interest liabilities or expenses. Most of the investors and shareholders will look very strictly to see

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Accounts Payable Turnover Ratio: Definition, Using, Formula, Example

Financial Ratios

In primitive accounting methods, the cash basis of accounting was a general practice. Either expenses or income was recorded once the cash was involved in the transaction. What is meant to say, if a sale occurs, it will not be registered as a sale in the accounts until the buyer pays the cash. It adds

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How to Calculate Inventory Turnover Ratio? (Definition, Using, Formula, and Example)

Financial Ratios, Inventories

Inventory Turnover Ratio: The Inventory Turnover Ratio is one of the Financial Ratios used to assess how often the inventories are replaced and sales performance over a specific period. This ratio is normally used to assess how well the inbound and outbound system of inventories are, based on the strong relationship between the Cost of

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Return on Equity Ratio: Definition, Analysis, High Vs. Low, And Formula

Equity Ratio

Definition: Return on Equity (ROE) is one of the Financial Ratios use to measure and assess the entity’s profitability based on the relationship between net profits over its averaged equity. Two main important elements of this ratio are Net Profits and Shareholders’ Equity. Return on Equity (ROE) is the ratio that mostly concerns shareholders, management teams, and investors

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Debt to Equity Ratio: Formula, Definition, Using, And Example

Debt ratio

Definition: The debt to equity ratio is one of the liquidity ratios used to assess the liquidity problems of an entity by using total debts to total equity over a period of time. Debt to equity ratio concerns all debt, short-term and long-term debt over the total equity, including share capital, retain earning, and others.

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The Concept of Predetermined Overhead Rate: (Formula, and Example)

Financial Accounting

Predetermined Overhead Rate Predetermined Overhead Rate is the overhead rate used to calculate the Total Fixed Production Overhead. It is part of the Absorption Costing calculation. The Predetermined Rate is usually calculated annually and at the beginning of each year. This rate will be recalculated if the predetermined is materially incorrect or different from the

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