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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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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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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Income Statement: Definition, Types, Templates, Examples, and More

Financial Statements

Definition: The income statement is one of the five financial statements that report and present an entity’s financial transactions or performance, including revenues, expenses, net profit, or loss, and other P&L Items for a specific period of time. This is also known as the statement of financial performance because it shows how the entity financially …

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Ultimate Guide to Financial Accounting (For Beginner)

Financial Accounting

Definition: Financial accounting is one of the essential functions of Financial Management in the Financial Department or Financial Division. Because of its usefulness and necessity,  we can say that this function is one of the strategic functions of the entity. This function is responsible for preparing financial reports, controlling the financial position and cash flow, …

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Operating Expenses: Definition, Example, Formula, and List

Financial Accounting

Definition: Operating expenses are the expenses incurred in the entity for its normal operational purposes and activities that generally include both the cost of products or services and sales & administrative expenses. Operating expenses are generally defined when identifying and assessing the theentity’ss operating profits. Like other income statement items, these expenses are recorded in …

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