Profitability RatiosProfitability ratios are the most important ratios in financial analysis to company investors. Net profit margin, return on assets, and return on equity are some of the most common profitability ratios.
most profitable businesses 2012Here are ten of the most profitable small businesses opportunities with lower initial investments to start in 2012.
Most Profitable Businesses 2011Here are ten of the most profitable small businesses to start in 2011.
Interest RatesInterest rates are the cost you pay to borrow money on a loan. It's important to know how to calculate interest rates on bank loans. This article shows you how to calculate interest rates using a variety of methods before you take out a bank loan.
How to do Cash Flow AnalysisCash flow can be defined as the way money moves into and out of your business; it is the difference between just being able to open a business and being able to stay in business. A cash flow analysis is a method of checking up on your firm’s financial health. It is the study of the movement of cash through your business to determine patterns of how you take in and pay out money. The goal is to maintain sufficient cash for firm operations from month to month.
Calculate BreakevenLearning how to calculate breakeven point helps a business owner make decisions about fixed costs, variable costs, and the price of the product as they relate to the firm's profit potential.
Debt and Equity FinancingAn overview of debt and equity financing for the small business; the advantages and disadvantages of debt financing for your small business; the advantages and disadvantages of equity financing for your small business; cost of capital
Accounting EquationThe accounting formula represents the relationship between the assets, liabilities and owner's equity of a small business. It represents the relationship between the balance sheet and income statement of the business firm.
Cash Flow StatementHere is a line-by-line explanation of the preparation of a statement of cash flows.
Total Asset Turnover RatioThe total asset turnover ratio is an asset management ratio that measures how efficiently a company can use its assets to generate sales. Turnover ratios, in general, demonstrate a company's efficiency in handling its asset base. This ratio is the summary ratio for the asset turnover ratios as a group.
Journal EntriesWhen a small business makes a financial transaction, they make a journal entry in their accounting journal in order to record the transaction. There are actually two entries made - one is a debit to the appropriate account and the other is a credit.
Inventory Turnover RatioThe inventory turnover ratio is one of the most important ratios in financial ratio analysis. It is a crucial asset management ratio as it measures the efficiency of the firm in managing and selling its inventory.
Direct Indirect CostsPart of the process of pricing your product is including the costs of producing that product. These costs are called direct and indirect costs.
Businesses in RecessionSome small businesses actually prosper in a recession. These are called counter-cyclical businesses. Other small businesses survive but don't actually thrive.
Capitalism SocialismCapitalism and socialism are two different types of political, economic, and social systems.
Income StatementThis article presents an income statement and discusses how to prepare it line by line.
Business Budget WorksheetSmall businesses need to use worksheets to develop their budgets. This is a sample worksheet that a business can use to develop a generic budget.
Cash Flow and ProfitCash flow and profit are not the same thing. Cash flow is the money the business owner has available. Profit or net income is determined by when sales are made.
Average Collection PeriodThe average collection period, or the average time in days it takes to collect a firm's accounts receivables, helps a business owner determine how liquid his accounts receivables are and how quickly his credit customers pay their bills. This ratio is part of the group of asset management ratios that help a small business to know how efficiently it is utilizing its asset base to generate sales. The ratio is also known as days sales outstanding.
Comp Balance SheetsHere is an example of the comparative balance sheets of a business. Analyzing the comparative balance sheets is the first step in preparing and analyzing the firm's Statement of Cash Flows.
Free Cash Flow ExampleFree cash flow is the cash a company has available after meeting all its obligations including increases in fixed assets. Free cash flow is a better method of determining a company's financial health than earnings per share. Here is a free cash flow example.
Debt to asset ratioThe debt to asset ratio measures the percentage of debt financing the firm has in relationship to the percentage of the firm's total assets.
Operating Profit MarginThe operating profit margin is a type of profitability ratio known as a margin ratio. The figures to calculate operating profit margin come from a company's income statement. The operating profit margin tells a business owner a lot about the cost control of the firm.
LIFO and FIFOLIFO and FIFO are two of the most popular methods of inventory accounting. Each has a very different effect on the company's bottom line. Here are the explanations.
Cash Flow RatiosCash flow analysis uses ratios that focus on cash flow and how solvent, liquid, and viable the company is. Here are the most important cash flow ratios with their calculations and interpretation.
Relationship Between Fin StateThis article describes the relationship between the financial statements based on the accounting equation.
quick ratioLiquidity analysis, a part of financial ratio analysis, is important to a business as they need to know whether or not they can pay their short-term debt obligations. The quick ratio is a more specific measure of liquidity than the current ratio.
Asset Management RatiosBusiness firms need to know how effectively they use their assets to generate sales. Asset management ratios or turnover ratios can help them determine this.
Source DocumentA source document in an accounting transaction is evidence that the transaction has occurred. It should be recorded as a journal entry as soon as possible. Examples are canceled checks, invoices, purchase orders, and other business documents.
Market Price Per ShareThe market price per share of stock is the current measure of the price of a share of stock based on information from a company's financial statements instead of historical data.
Retained EarningsThe Statement of Retained Earnings is the second financial statement that should be prepared when a business is preparing financial statements at the end of its accounting cycle. It shows the distribution of net income between dividends and retained earnings.
Fixed and Variable CostsThere are two types of costs or expenses in a small business firm. They are fixed and variable costs. Variable costs change as sales change. Fixed costs do not change with sales volume.
Net Profit MarginThe net profit margin ratio shows how many dollars of after-tax profit a company generates per dollar of sales.
solvency ratiosSolvency ratios measure the ability of the firm to survive in the long run. Solvency ratio are a part of financial ratio analysis that deal with long-term debt servicing as opposed to the concept of liquidity that looks at the short-term.
Financial Statement AnalysisThis article presents an overview of financial statement analysis and preparation for the small business. It touches on the income statement, the statement of retained earnings, the balance sheet, and the statement of cash flows.
Trial BalanceAfter you complete your general ledger entries for an accounting cycle, the next step is to prepare a trial balance. A trial balance is the process of totaling the debits and credits from the general ledger to make sure they balance for the accounting period in question.
Adjusting EntriesAdjusting entries are made in your accounting journals at the end of an accounting period. The purpose of adjusting entries is to adjust revenues and expenses to the accounting period in which they actually occurred.
Liquidity Current RatioA firm's liquidity ratios show its ability to meet its short term debt obligations. The current ratio is the broadest measure of liquidity.
Financial ForecastingSmall business owners have to develop the talent to plan ahead if they want their business to succeed. Part of that process is learning to develop projected financial statements in order to adequately plan for the future.
Categories of Fin RatiosThere are five categories of financial ratios. Each measures a different financial aspect of the business firm.
Shareholder WealthShareholder wealth maximization or maximizing the value of a business firm's stock price should be the goal of businesses in capitalist societies. Shareholders own the firm and money accrues to them through the increased value of their stock. Social responsibility can co-exist with shareholder wealth maximization.
Liquidity Ratio AnalysisAnalyzing liquidity ratios like the current and quick ratios, plus net working capital, give company's a picture of their current financial position. This is a simple version of a liquidity analysis.
Chart of AccountsWhen you start a small business, develop a chart of accounts as part of setting up your accounting and bookkeeping system. The chart of accounts is the basis of your company's accounting system because this is where all the company's financial information is filed. It is the first thing you do when you start the process of setting up your company's financial information.
Net_Working_CapitalNet working capital is a financial formula that accompanies the current ratio in helping the firm determines its liquidity position.
Glass-SteagallThe Glass-Steagall Act, or the Banking Act of 1933, was enacted during the Great Depression to separate the powers of commercial and investment banks. It kept banks from using depositors' money to make risky investments. It was repealed in 1999, but the Obama administration is thinking about re-enacting parts of it again in order to protect depositors money in the future.
limitations of ratio analysisEven though financial ratio analysis is one of the most popular methods of financial analysis, it does have some limitations. Ratio analysis for a company should be benchmarked to ratios in the industry and window dressing should not be used.
Fixed Asset Turnover RatioAsset turnover ratios measure a firm's ability to use its asset base to generate sales. In the case of the fixed asset turnover ratio, the business owner measures how well the investment in plant, property, and equipment generates sales for the firm.
Fixed Charge Cov RatioThe fixed charge coverage ratio is an important debt ratio in financial ratio analysis because it is a broader measure of the ability of a company to cover its fixed charges than the times interest earned ratio.
Small Business LoanThis article is a gateway article to a library of information on how small businesses can successfully apply for a small business loan. There is a series of steps listed that small business firms must take in order to apply for a business loan.
The Balance SheetThis article will give you a line-by-line explanation of how to prepare a basic balance sheet.
Cash ManagementCash is king in small businesses. Without cash and liquidity management, small businesses will not survive one day. Financial ratio analysis is one tool of cash management.
Capitalism: Capitalism is an economic system that emphasizes private ownership of the means of production or a
Debt to Equity RatioAn important debt or financial leverage ratio is the total debt to equity ratio. This ratio measures the amount of debt financing used by the firm as compared to investor financing.
What is a Loan?What is a loan?
Accts Rec Turnover RatioAsset management ratios include the accounts receivable turnover ratio as a part of financial ratio analysis. The accounts receivable turnover ratio, along with the average collection period, measures the efficiency of the firm's credit and collection policies.
Dupont Model ROIUsing the DuPont Model allows the business owner to break the firm's profitability. both ROI and ROE, down into component parts to see where profitability actually comes from and where any problems might exist.
Cash Budget & Cash Flow StateThere is a difference between the cash budget and the Statement of Cash Flows. The cash budget is a monthly view of your cash position. The Statement of Cash Flows is a required FASB financial statement along with the income statement and balance sheeet.
cost of preferred stockPreferred stock is usually the cheapest source of financing for the business firm after debt financing. Here is the calculation of the cost of preferred stock.
Times Interest Earned RatioThe times interest earned ratio is a debt ratio that measures how well a business can cover its interest expense. It is one of the debt or financial leverage ratios that businesses need in order to monitor their debt position.
Closing EntriesClosing entries are journal entries made at the end of an accounting cycle to set the balance of temporary accounts to zero to begin the next accounting period. The accounts that are closed are revenue, expense, and drawing accounts. The assets, liabilities, and owner's equity accounts are not closed because their ending balances are the beginning balances for the next accounting period.
Prime Interest RateBanks use benchmarks to calculate interest rates on small business loans. The annual percentage rate or APR is usually based on the prime interest rate.
Discounted Payback PeriodDiscounted payback period is one of several capital budgeting methods that business owners use to choose between capital projects in their company. It is better than regular payback period because it uses discounted cash flows, but it still is not the best of the capital budgeting methods to use. Net present value usually has that distinction.
APR and Stated RateA tip on the difference between the annual percentage interest rate and the stated interest rate as they relate to debt financing and bank loans.
Accounting CycleBusiness firms complete an accounting cycle every accounting period. This cycle follow a series of approximately eight steps ending with closing the books for that accounting period. Here is a description of each step of the accounting cycle.
top accounting software 2012Here is a list of the top small business accounting software packages for 2012. Some of these are free accounting software packages. One of these software packages should be right for any type of business from the tiny microbusiness to small and medium-sized businesses.
What is a Master Budget?Preparing a master budget every year as a step in the budgeting process is the best way to operate a business. The master budget includes the operating budget and the financial budget and all the associated schedules. This article introduces all the parts of the master budget.
Pricing Using MarkupPricing your product or service using markup is one popular pricing strategy. Pricing your product correctly can mean the success or failure of your business. Product markup as a pricing strategy is the basis of many pricing strategies.
Gross Profit MarginThe gross profit margin is a profitability ratio that falls in the margin category. It shows average profit considering only sales and cost of goods sold.
Top Financial EventsThere have been important, society-changing financial events that have happened in the first decade of the 21st century. Here are the top ten!
Return on Equity RatioThe return on equity ratio is perhaps the ratio investors in a company look at most. This ratio lets the investor know how well the company is utilizing their investment in the firm.
Cash FlowCash flow refers to money that moves into and out of a business firm. Cash flows arise from operations, investing, and financing.
Weighted Average Cost of CapitalCalculating the weighted average cost of capital for a company allows the business owner to compare how much it costs to finance the company's operations versus how much the company earns on its investments. Here are the steps to use to calculate the weighted average cost of capital.
Compare Your Financial RatiosIn order for financial ratios to mean anything, a firm has to have something to compare them to. Usually that means data from previous quarters or years of the firm's financial statements. It can also mean data from companies in the firm's industry.
What Type BookkeepingSmall businesses must make a decision between single-entry bookkeeping and double-entry bookkeeping when they are established.
Loan AmortizationWhen a bank loan is made, an amortization schedule is set up for the business firm.
Example Journal Cash SalesThis is an example of how to handle a double-entry bookkeeping journal entry when selling a product or service for cash.
Return on AssetsWhat is the return on assets ratio, also called the return on investment ratio?
Free Cash Flow CalculationWhat is the free cash flow calculation? There are three ways to calculate free cash flow.
Perpetual or Periodic InventoryShould your business use a perpetual inventory system or a periodic inventory system? Most small businesses still use periodic inventory management, although perpetual inventory management is becoming increasingly popular. Learn about perpetual and periodic inventory management systems.
Short-term LoansSmall businesses most often need short-term loans instead of long-term debt financing. Most term loans, classified as short-term, usually have a maturity of one year or less. They must be repaid to the lender within one year.
Bookkeeping Accounts PayableA small business often buys from a number of vendors or suppliers using store credit or credit based on their relationship with the supplier. Here is an example of a transaction using store credit, or accounts payable.
Successful BudgetingSmall business have to have a working financial budget that they follow every day. Business budgeting is the process of creating a business budget that works for a company and is used as a guideline for daily operations. A budget should estimate income and expenses and record differences in actual and estimated figures.
Asset Turnover RatiosAsset turnover ratios, also called efficiency ratios, measure the efficiency with which a company's assets generate sales.
Financial Ratio AnalysisFinancial ratio analysis is an excellent tool to use for your business. You can compare your firm to other firms in the industry or you can compare one year of data to other years of data. It's all about comparison. This is an overview of how to calculate the ratios and what they mean.
Aging Schedule for ReceivablesIf you offer credit to your customers, you have to monitor your accounts receivables. One method of doing this is to develop an aging schedule for accounts receivable.
Cash Flow Analysis HubThis series of articles will help prepare you to analyze the cash position of your firm. You can show a profit, but unless you have a positive cash position to pay your bills, your firm will not succeed.
Dividends Per ShareDividend per share is important information for investors as they analyze what types of stocks in which they want to invest. Dividends per share indicate whether the firm is a dividend-paying stock, indicating a more mature firm, or a company that is growing.
Bank Term LoansSmall businesses have always survived on the strength of bank loans. Here are the basics of small business financing with commercial loans. A bank term loan has a particular term (length of maturity), such as long-term loans, and interest rate.
LiquidityA definition of the term liquidity
Cash Flow MarginThe cash flow margin is one of the most important profitability ratios. The cash flow margin ratio tells a company how well it converts sales to cash. It takes cash to pay expenses, so the conversion of sales dollars to cash is extremely important.
Debt RatiosFinancial leverage or debt ratios measure a business firm's ability to meet its long-debt debt obligations or those with a maturity of more than one year.
Book Value Per ShareBook value per share is a market value ratio that is used for accounting purposes by financial managers or owners of business firms.
Cash BudgetingThis is a profile of one type of budgeting - cash budgeting. Cash budgeting is a short-term form of cash flow analysis.
Types of OrganizationsThis article summarizes the different types of different business organizations such as sole proprietorships, partnerships, corporations, and limited liability companies from a legal, accounting, and tax perspective.
Tutorial on Debt RatiosDebt management, or financial leverage, ratios are some of the most important for a small business owner to calculate for financial ratio analysis for the small business. This tutorial will show how to calculate the debt to asset ratio, the debt to equity ratio, the times interest earned ratio, the fixed charge coverage ratio, and the long term debt to total capitalization ratio.
Cash Conversion CycleThe cash conversion cycle looks at the time tied up in converting inventory and receivables to cash, as well as the amount of time the company is given to pay its bills without incurring any penalties.
Inventory InvestmentThe amount of your small business's inventory investment directly affects your profit and cash flow. Analyze your dead, slow-moving and productive inventory in order to move out inventory that is dragging down your profitability.
Fin Ratio AnalysisUsing financial ratios as a tool of financial analysis is a powerful tool for the small business firm. Financial ratio analysis is powerful if you compare your ratios to either industry or time-series data.
Initial Investmentinitial investment
5 C's of CreditThe 5Cs of credit are a method of evaluation that a bank or other financial lender uses to determine if a business is a good candidate for a loan. Each of the 5Cs is discussed from the viewpoint of the bank when they evaluate a credit application from a business.
Market Value RatiosMarket value ratios evaluate the economic status of your company in the wider marketplace. Market value ratios give management an idea of what the firm's investors think of the firm's performance and future prospects.
Doing_Outsourcing_WorkYou can start a profitable new business during a recession doing outsourcing work for other companies.
Sources Financing StartupsFinding sources for startup business financing is often difficult. Getting financing approved for a startup business is even more difficult. Here are six sources of business financing for your startup business that may work for you.
Contribution Margin BreakevenHere is an example of a contribution margin income statement illustrating break-even in dollars.
Successful EntrepreneursSome people have the characteristics that make successful entrepreneurs and small business owners and some don't. Also, there are some countries that are better for opening small business than others.
Amended Tax ReturnFiling an amended tax return is important and necessary if you have made certain errors on your return or if you have received new information since filing your federal income tax form.
General LedgerThe general ledger is the main accounting record for your business. All of the business's financial transactions are taken from the general accounting journal and recorded in the general ledger in a summary form.
Make Your Business Budget WorkBudgeting and planning are some of the most important functions that make a small business successful. This article gives you six steps to help make a business budget work.
Cash RatioThe cash ratio is the most stringent and conservative of all the financial ratio analysis liquidity ratios.
Financial StatementsOne of the last steps in the accounting cycle is the preparation of the financial statements. The information from the accounting journals and the general ledger is used to develop the financial statements.
Cost-plus Pricingdefinition of cost-plus pricing
Gross Margin vs CMThere are two reasons that gross margin, or gross profit margin, is different from contribution margin for a company.
ReasonBusBudgetsBusiness owners or financial managers need budgets as guiding and forecasting tools. There are three reasons for businesses to develop budgets that include planning, control, and evaluation of performance.
Liquidity and liquidity ratiosLiquidity, or short-term solvency, is an important metric for a firm to be able to measure. It measures the firm's ability to pay its short-term obligations on time.
cost of debtThere are four components of the cost of capital and debt is one of those. Debt is usually the cheapest component of the cost of capital. Here is how you calculate the cost of debt capital.
Gearing Ratio: What is the Gearing Ratio, What Does it Mean, and How is it Calculated? : A gearing ratio is a financial
SBA LoansThe Small Business Administration (SBA) offers a number of loan programs for small businesses. Loan programs include the 7a program for working capital needs, the 504 program for community development and real estate needs, the Patriot Express program for the military, and many special programs for a variety of needs of small businesses.
Start a New BusinessIf you want to start a new business, there are steps you must take to get it off the ground. There is extensive planning. Here are some steps to show you how to start a business.
LTDebt to Total CapitalizationThe long-term debt to total capitalization ratio is one of the debt ratios in financial ratio analysis that measures the extent of the firm's financing with debt. It measures the extent to which long-term debt is used for the firm's permanent financing.
Example Journal Credit SalesThis is an example of how to handle a double-entry bookkeeping journal entry when selling a product or service on credit. This example is relevant to small businesses who offer credit to their customers.
Travel ExpensesTravel, meal, and entertainment expenses are partially deductible as business expenses.
Loan for StartupThis article discusses how to get a bank loan for a new business or to buy an existing business. It gives business owners four steps to follow to improve their chances of being approved for a bank loan for a startup.
Reasons for a Business LoanThis article covers the reasons that small businesses often need to borrow money or take out a bank loan. Reasons include to purchase real estate for expansion, to purchase equipment, to fund inventory, and to increase working capital.
Bookkeeping vs AccountingBookkeeping and accounting for small businesses are not the same even though the words are sometimes used interchangeably. Bookkeeping is the process of record keeping for the small business. Accounting is the function of interpreting the books and presenting the information.
Manage Petty CashEvery small business needs a petty cash account as a part of accounts payable for small, daily business expenses. Setting up and managing your petty cash account is part of your bookkeeping function and office accounting system.
Bank Loan Application SampleAn example of a bank loan application that a small business might have to complete in order to be considered for a loan.
Reasons for a Business AccountIn order to satisfy a number of Internal Revenue Service requirements and to simplify recordkeeping, you should always keep your business banking and personal banking separate.
Earnings per Share: What is the Definition of Earnings per Share, its Calculation, and Use? The earnings per share discussed
Bookkeeping Entry InventoryIf your business produces products, you have to deal with raw materials inventory in your bookkeeping. This article shows you how to make journal entries for raw materials, work in process, and finished goods inventory.
Limited Liability CompanyThe limited liability company is one form of business organization that business owners can choose when they start a new small business.
Agency CostsAgency cost is the operating expense caused in a business firm when managers and shareholders disagree about firm decisions. This disagreement leads to the agency problem, which is the conflict in businesses between shareholders and management due to this desire on the part of management for self-interested behavior and the goal of the firm which is maximization of shareholder wealth.
Startup in RecessionA recession can be a good time to start a business. Competitors may be dropping out of the marketplace. You may be able to find a niche for your new product or service. Here are reasons that recession may be a good time to start a business.
Example of Discounting SalesThis is an example of how to handle a double-entry bookkeeping journal entry when selling a product or service for cash while offering a discount on the sale.
Types of Profitability RatiosMargin analysis and return analysis are the two types of profitability ratio analysis.
venture capital investmentVenture capitalists tend to favor certain industries over others depending on the state of the economy and industries and sectors within the economy. This quick tip gives you the rundown for 2011 and looks back before the Great Recession.
Corporate Tax Rates 2011Corporate tax rates for 2011 for C-corporations, LLC's taxed as corporations, and non-profits.
Burn RateThe burn rate is a measure of how long a company can keep operating until it has to seek more financing. It is calculated by the interval measure.
Contribution MarginA business firm's contribution margin is the amount of money it has to cover its fixed costs and contribute to its net profit or loss after paying all its variable costs. Here is the analysis.
Credit PolicyAll businesses who extend credit to their customers need to develop a credit policy in order to have a set of guidelines to follow in administering their accounts receivable. Here are some factors you should consider when setting up the credit policy for your business.
Overview Time Value of MoneyTime value of money is one of the core principles of small business finance and small business financing operations. It has to do with interest rates, compound interest, and the concepts of time and risk with regard to money and cash flows.
Cash or Accrual AccountingThere are two methods of accounting - cash accounting and accrual accounting. Cash accounting is usually used by small businesses with relatively simple transactions. Accrual accounting is used by larger businesses with a more complicated accounting system.
Long Term Business LoanLong-term and intermediate-term business loans are appropriate for small businesses so they may grow and expand by purchasing buildings, capital equipment, and other long-term assets.
Mini-medical plansMini-medical health insurance plans go by many names and one of them is limited-benefit plans. That is probably the most descriptive name for this type of insurance plan. These plans won't cover large medical expenses, but they may cover a broken arm or an ear infection. They are offered by employers who can't afford anything else.
Cost of CapitalA company's cost of capital is the cost of money the company uses to finance their operations and purchases of assets. Cost of capital is important because the company has to be vigilant and sure that their cost of capital is lower than their return on capital.
Marketing BudgetMarketing is necessary for your small business to survive but it doesn't have to be expensive. Here are some cost-effective marketing strategies to try.
Prepare Business LoanThis is a discussion of four important factors involved in qualifying for a small business loan. Factors include credit history, how much money you will need for start-up assets, your business plan, and your documentation for your loan officer.
Cash Flow TipsSome tips on keeping a healthy cash flow in a small business. Steps you can take to improve your cash flow.
cost of retained earningsThe cost of retained earnings is an opportunity cost and the cost of common stock used in the weighted average cost of capital formula. It is a component cost included in the cost of capital of a company.
Economic IndicatorsEconomic indicators, released monthly and quarterly, help us understand the state of the economy. Some of them are the Gross Domestic Product, Consumer Price Index, Unemployment Index, Consumer Confidence, Producer Price Index, and others.
Financial EthicsSmall business that engages in ethical financial practices will be more profitable in the long run than small business that does not. Ethical financial practices extend to investors, customers, employees, and society.
Inventory ControlRetail stores can increase their sales revenue during the holidays through inventory control. Controlling inventory and inventory management are especially important during a recession when consumer spending is low.
Net Present ValueCapital budgeting analysis is most accurate if you use the decision method of net present value. That is because net present value uses the discounted cash flow approach to valuing cash flows from a capital investment project; therefore, taking both risk and time into account.
Small Business LoanSmall businesses have to be able to obtain financing in order to be able to survive. Find articles about commercial bank loans and other issues related to small businesses and commercial bank loans right here!
Net Cash FlowWhat is net cash flow? First, it helps indicate a company's short-term financial performance.
Capitalizationdefinition of capitalization
Basics Venture CapitalWhat is venture capital and how do you find it? Venture capital is often the financing choice that start-up business firms must make in order to get financing. Owners have to know the basics of venture capital, what venture capitalists want in return for their money, and how to attract them.
Restrictive Loan CovenantsWhen small businesses make application for a bank loan or a bank term loan, and are approved, the loan agreement often contains loan or restrictive covenants.
economic order quantityThe economic order quantity is the financial metric used to calculate the optimal amount of inventory to order and store based on minimizing costs.
sources of business financingHere is a list of some of the best sources for small business financing in 2012. The economy may be on its way to a real economic recovery and financing for small business may be the best it has been since before the recession. These sources are the best to tap in 2012.
Business Finance Gift BooksChances are that you have a finance or economics aficionado on your holiday gift list this year since everyone seems to be watching the economy. Here are my top 10 business finance and economics books of 2011 that will make terrific holiday gift books for that special person.
Determining ProfitProfit or net income is calculated using accrual accounting. Cash flow is determined by cash accounting.
Increase SalesHow can you increase your sales? Do you see your sales revenue flat or even dropping? Do you need to do something to facilitate a sales increase? If so, follow these tips and you will see an increase in your sales revenue!
Statement Cash Flow HubThere are essentially three steps in developing the Statement of Cash Flows. You have to learn to develop a balance sheet. Then, you have to develop two years of balance sheets for your company. From those comparative balance sheets comes the Statement of Cash Flows.
General Business ExpensesBusiness owners can take a number of deductions for purposes of business tax. These deductions can be cost of goods sold, capital or deductible expenses, and a variety of other expenses such as business use of the home or vehicles. There is a link to all your deductions and business expenses.
Depreciate or ExpenseIt's always confusing whether or not you should depreciate or expense items on your on your income taxes. The rule is to write off current expenses and depreciate long-term assets.
Too Big to FailToo Big to Fail is a history of how the 2008 global financial crisis unfurled in the offices of Lehman Brothers, Bear Stearns, Goldman Sachs and other large banks written moment-by-moment and in extraordinary detail. This was the largest financial crisis, global in nature, since the Great Depression and even though we didn't really know about it until the fall of 2008, Sorkin writes of how the players in Washington and on Wall Street knew about it in the spring of 2008.
Start A BusinessHow do you start a business? If you really want to start a business, this will give you ten steps you should take in order to start a business.
Capital Budgeting OverviewCapital budgeting is the process of acquiring fixed assets and capital investment projects. Capital budgeting projects are some of the largest investments a business will ever make. Business owners choose the project that has the highest rate of return as compared to the firm's weighted average cost of capital.
What Angel InvestorsAngel investors are wealthy individuals interested in investing in profitable companies and earning a return on their investment. They will help growing small businesses with second-tier equity financing.
Contribution Margin RatioContribution Margin Ratio
Increase Your Cash FlowThis article gives you a list of ways your small business can increase its cash flow through proper cash flow analysis.
Types_Bus_BankruptcyThis article discusses the three types of business bankruptcy. Small business bankruptcy includes Chapter 7, Chapter 11, and Chapter 13.
Price Earnings RatioThe price earnings ratio is one of the market value ratios used in financial ratio analysis. It is a very important ratio for publicly traded businesses because it gives investors important information about what they are paying for stock in business firms.
Payback PeriodPayback period is a capital budgeting decision method that has been in use in business for a long time, even though it is certain not the best decision method. It is best used with other decision methods. It has some advantages and many disadvantages. Payback period does not consider risk nor time value of money.
Debit - What is a debitdebit - what is a debit
Economic StimulusThe Economic Stimulus Bill provides tax deductions and credits for small business with regard to depreciation, withholding tax, capital gains tax, and job creation. There are also special breaks for Small Business Administration (SBA) 7(a) loans and 504 loans.
Cost ObjectWhat is a cost object?
Manage Credit ReceivablesNot all small businesses grant credit. Instead, they make all their sales on a cash basis. In many cases, this costs them sales and customers because, like it or not, we live in a credit-driven society.
Just-in-TimeJust-in-time inventory management has as its goal minimizing inventory carrying costs and maximizing return on investment in inventory.
direct materials budgetHere's an example of how to prepare a direct materials purchases budget which is a portion of the operating budget for a business firm.
accounts payable and suppliersGood accounts payable and accruals management can have a major impact on the profitability of a business firm. Business firms should build trust with suppliers in order to obtain the best discounts, service, and information possible.
What are Point of SalesA point of sale inventory management system is a step up from the use of a cash register. Small, start-up businesses may be able to survive with just a cash register and a simple accounting system. If your business is product-based, chances are you will eventually have to switch to at least a basic point of sale inventory system.
sources of business capitalOperating income and the sale of firm assets are two internal sources of business financing.
Clean up Credit ReportIn order to get financing for your business, you have to have good credit. There are often errors on your credit report. Before applying for financing or a loan, get a copy of your credit report and clean it up. Up to 25% of American consumers are denied credit because of inaccurate information on their credit report.
Bernard MadoffBernard Madoff pulled off one of the biggest investor fraud schemes ever through using a Ponzi scheme over three decades.
BudgetingDefinition of budgeting
Bookkeeping Sale InventoryThis is an example of a bookkeeping entry of moving an item from inventory to sell as a product through a cash sale. This type of transaction results in two bookkeeping entries
Cash Through Accts RecUsing accounts receivable to obtain business financing for your small business is a good way to raise short term cash. Small business owners can use pledging or factoring accounts receivable to raise money.
Finance Import BusinessIf you have an import business, or if you plan to start importing and selling products, here are four non-bank methods of financing your imported inventory. If you add importing to your business, your business finance skills have to become more diverse. You have to learn how to import and the basics of importing. Financing your imports is one of those basics.
Merchant Cash AdvancesA merchant cash advance is an alternative source of financing for small businesses. If a business can't get a bank loan, a merchant case advance is a viable alternative if a business has a cash flow problem and an immediate need for cash.
Financial Reform BillCongress and the Obama Administration are trying to find common ground on financial reform and the prevention of another financial crisis such as we experienced in the fall of 2008 which precipitated the Great Recession. Here are some of the issues and people that are important in the debate on financial reform.
The Profitability IndexThe profitability index of an investment by a company is an indication of the costs and benefits of investing in a particular capital project by a business firm.
types capital projectsThere are four major types of capital investment projects that are subject to capital budgeting decisions. Different types of financial analysis is appropriate depending on the type of capital investment project.
Salaries and WagesSalaries and wages paid to employees are tax-deductible business expenses. Other items also fall under the salaries and wags categories.
Operating BudgetBudgeting for your business includes preparing your operating budget which will eventually lead to calculating your operating profit on the income statement.
Types Equity FinancingEquity financing is using other people's money to finance your firm's operations. Here are some of the most common types of equity financing.
How to incorporate businessOne of the first decisions you have to make as a business owner is whether you are going to incorporate your business. There are choices to make about the type of business organization, or business entity, you will start when you start up a business. Some business owners start with a simple sole proprietorship and later move to the corporate form of business organization. Here is a step-by-step tutorial teaching how you can incorporate your business.
Accounting RecordsAccounting records are the financial records of a firm that are kept that reflect the firm's financial position.
Market to BookThe market to book value ratio, also called the price to book ratio, allows investors to see how much a company is worth with regard to its book value.
Bank for Your BusinessBe careful when you choose a bank for your small business. Compare community vs large, regional banks. Compare the services each offers and how accessible they are to you. Look at the business loan packages they offer.