Positive leverage arises if a business or individual borrows funds and invests the funds at the consequences higher than the rate at which they were lent. The use regarding positive leverage can greatly increase the…

The particular plowback ratio measures how much earnings that have been retained after investor dividends have been paid out. It’s used by investors to evaluate the ability of any business to pay out dividends. The…

Profit margin is the percentage of sales that a business retains of course expenses has already been deducted. This margin is a explanation indicator of the financial health of the entity. The calculation of the…

Operating margin shows the percentage associated with profit generated through operating activities. This percentage is useful for determining the productivity on the basic underlying operations of an business, excluding all financing considerations. The measurement may…

The business entity concept states how the transactions of a business must become separately recorded via those of the owners or various other businesses. Doing so requires the employment of separate accounting records for that…

Solvency is the ability of an organization to purchase its long-term obligations on the regular basis. If it can’t marshal the resources to take action, then an organization cannot continue operational, and will likely be…

Profitability index steps the acceptability of the proposed capital purchase. It does so by comparing the initial investment to the current value of the longer term cash flows regarding that project. Formula is: When the…

Return on assets compares the total earnings of a business to its complete assets. It provides an estimate of the efficiency of administration in using assets to manufacture a profit and so is known as…

Monetary or Financial ratios compare different line items inside the financial statements for you to yield insights in to the condition and results of a business. These ratios are in most cases employed by individuals…