Common Business Accounting Calculations
No matter the type of business or industry, being able to analyze and deduce patterns is essential to discovering a business’ financial health. Here are four commonly used calculations to help internal and external stakeholders determine an organization’s ability to manage its finances. Break-Even Analysis This formula analyzes fixed costs versus the profitability a business […]
Cash Conversion Cycle (CCC) Defined
This metric, which is also referred to as the cash cycle or the net operating cycle, looks at the time a business takes to recover its investment in inventory to eventually sell. The process starts from selling its goods, collecting on outstanding receivables or invoices, and satisfying its operating costs with the sale proceeds. It’s […]
How to Measure the Quality of Accounts Receivable
Analyzing a company’s Accounts Receivables is an effective way to measure its current cash flows and the likelihood of maintaining healthy cash flows. According to the U.S. Chamber of Commerce’s Small Business Index (Third Quarter 2024), 68 percent of small business owners reported being content with their third quarter cash flow performance. This illustrates the […]
Looking at the Expanded Accounting Equation
Whether it’s a private equity transaction or an institutional or retail investor, analyzing a company’s financial statements is an important part of fundamental analysis. One important but basic way to analyze whether a company is worth investing in is through the expanded accounting equation. The most straightforward equation to analyze a business’s balance sheet is: […]
Understanding 1031 Exchanges: How Our Firm Can Ensure Your Tax Reporting is Spot On
If you’re a real estate investor, you’re likely familiar with the powerful tax-deferral strategy known as the 1031 exchange. This tool allows investors to defer capital gains taxes when they sell a property by reinvesting the proceeds into a new “like-kind” property. While 1031 exchanges can be highly beneficial, the tax implications are complex, and […]
Accounting Considerations for Capital Expenditures and Operating Expenses
When it comes to running a business, there are a lot of expenses incurred during operations. As of January 2024, New York University’s Stern School of Business had recorded nearly $1.2 trillion in capital expenditures by U.S. sectors. Considering this, there are two important concepts that are imperative to study for effective accounting treatment: capital […]