To make any investment decision, a rational investor shall make a study the propositions of investment and weigh them in terms of strengths, weaknesses, opportunities, and threats. Making an investment analysis is tough. It takes into account the type of investor, his risk appetite, the books of the company, and ultimately the compounding factor that […]
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Meaning of Accounts receivables Accounts receivables generally mean Trade receivables in the financial statement of large listed public companies. Accounts receivables are disclosed under the headings “Current Assets”. These are trade or non-Trade receivables that have been specified by the company or regulations and meet the criteria of being classified separately. Accounts receivables are characterized
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Meaning of materiality There is no specific definition of materiality under U.S. Generally Accepted Accounting Principles (GAAP). However, the gist per the Conceptual Framework for Financial Reporting under International Financial Reporting Standards states that information is to be considered material if it influences the decisions of stakeholders who depend on the financial information of the
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Meaning of retained earnings The company operates in a business environment and strives to obtain higher and higher profits each year. The net profit is obtained by deducting the expenses from the revenues. These net profits are appropriated to reserves and surplus. Such profits when transferred to reserves and surplus after paying off the dividend
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Meaning of share capital Share capital is the amount invested by a company’s shareholders for use in business operations. After the company’s creation, the shareholders bring in the contribution through cash or in-kind which is shown on the balance sheet on the liability side as an equity account. Share capital is also called shareholders’ capital,
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Meaning of Investments Investment is the deployment of capital in order to earn interest, dividend, or capital appreciation. Investments are basically either held to maturity or available for sale securities. Held to maturity securities are those that are held with intent until maturity. These are reported at cost, provided for amortization and accretion of discounts.
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What is Revenue? Revenues that the entity recognizes in the income statement during the year are the income that the entity sells the goods or services to its customers. These revenues are recognized when the control is passed from the entity to its customers. It is recognized either when the customer pays immediately or is
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Cost of goods sold refers to the costs involved in making the goods or services that are being sold. It is basically the direct materials, direct labor, and direct expenses involved in making the products. These are easily traceable costs and can be easily identifiable from looking at the products. The other costs that cannot
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How does a real estate company work? Real estate consists of property such as land, buildings, and any natural resource. Real estate also includes commercial properties such as offices, stores, hotels, services, and other businesses. Industrial properties include structures used in manufacturing, such as factories, warehouses, and research centers. The real estate business primarily used
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Hair Salon Business Model A hair salon business model includes the different sources of business that as services and retail sales, a hair salon has, value the hair salon delivers like the coloring of hair, pricing the value, and the type of customer who pays for it. Understanding the business model is vital to understanding
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