What is the difference between terminal value and residual value?

July 9, 2024 No Comments

A: For the purposes of business accounting or financial management, the terms residual value and terminal value refer to the same concept. The only major difference between the two is context; residual value tends to be used in some circumstances and terminal value in other

What is the difference between the capital adequacy ratio vs. the solvency ratio?

July 9, 2024 No Comments

A: Both the capital adequacy ratio and the solvency ratio provide ways to evaluate a company’s debt versus its revenues situation. However, the capital adequacy ratio is usually applied specifically to evaluating banks, while the solvency ratio metric can be used for evaluating any type

What is the difference between the current account and the capital account?

July 9, 2024 No Comments

A: The current account and capital account comprise the two elements of the balance of payments in international trade. Whenever an economic actor (individual, business or government) in one country trades with an economic actor in a different country, the transaction is recorded in the

What is the difference between operating margin and contribution margin?

July 9, 2024 No Comments

A: Operating margin is one of the three main measures of overall profitability for a company that analysts consider, whereas contribution margin is a more specific analysis of production costs for individual products, usually an internal analysis done by a company to look for ways

What is the difference between the dividend yield and the dividend payout ratio?

July 9, 2024 No Comments

A: Stated most simply, the dividend yield tells you what the simple rate of return is in the form of cash dividends to shareholders, but the dividend payout ratio represents how much of a company’s net earnings are paid out as dividends. While dividend yield is the more commonly

What is the difference between operating margin and EBITDA

July 9, 2024 No Comments

A: Operating margin and EBITDA – which stands for “earnings before interest, taxes, depreciation and amortization” – are two measures of a company’s profitability. While related, they provide different profit measurements and different points of financial analysis for a company. Operating margin, also referred to

What is the difference between positive correlation and inverse correlation?

July 9, 2024 No Comments

A: In the field of statistics, positive correlation describes the relationship between two variables which change together, while an inverse correlation describes the relationship between two variables which change in opposing directions. Inverse correlation is sometimes described as negative correlation, which describes the same type

What is the difference between prime cost and conversion cost?

July 9, 2024 No Comments

A: Prime costs and conversion costs are relied upon heavily in the manufacturing sector as a metric to determine efficiency in production of a specific product. Prime cost is defined as the expenditures directly related to creating finished products, while conversion costs are the expenses

What is the difference between financial forecasting and financial modeling?

July 9, 2024 No Comments

A: The difference between financial forecasting and financial modeling is that the former is the process in which a company thinks about and prepares for the future, while the latter is the act of calculating, forecasting or estimating a company’s financial numbers. Financial Forecasting When

What is the difference between fixed cost and total fixed cost?

July 9, 2024 No Comments

A: A fixed cost is a cost that remains the same and does not depend on the amount of goods and services a company produces. It is an expense that a company has to pay and is usually time-related. For example, a fixed cost would

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