FINANCIAL STATEMENTS

The cash conversion cycle measures the time it takes for a company to convert its sales of merchandise into cash. It is a key metric used to assess a company’s liquidity. Components of the Cash Conversion Cycle: Accounts Payable Period: The time it takes for a company to pay its accounts payable. Accounts Receivable Period: […]

Impairment is a condition where a person’s ability to perform a specific task or function is reduced or hindered in some way. It can be caused by a variety of factors, including injury, illness, aging, and certain medical conditions. Types of Impairment: Physical impairment: Affects the ability to perform physical tasks, such as walking, climbing […]

Accrual Accounting Accrual accounting is a type of accounting that records transactions when they are incurred, regardless of when payment or receipt of cash occurs. This method is commonly used for businesses that have extended credit to customers or received credit from suppliers. Key Features of Accrual Accounting: 1. Revenue Recognition: Revenue is recorded when […]

Weighted Average The weighted average is a calculation method that finds the average of a set of numbers, where each number is assigned a weight. The weights are used to account for the relative importance of each number in the calculation. Formula for Weighted Average: Weighted Average = (Sum of Weighted Values) / Total Weight […]

Financial Statement Analysis Financial statement analysis is the process of examining a company’s financial statements to assess its overall financial health and performance. It involves analyzing various financial ratios and other metrics to provide insights into a company’s financial standing, liquidity, solvency, profitability, and growth. Key Steps in Financial Statement Analysis: 1. Gather Financial Statements: […]

Deferred Revenue Deferred revenue is revenue that is received for services or products that will be provided in the future. Why Deferred Revenue Exists: When a company receives payment for services or products that will be delivered in the future, the revenue is recorded as deferred revenue. The revenue is deferred because it is not […]