How are net tangible assets calculated?

June 30, 2024 No Comments

A: Net tangible assets are listed on a company’s balance sheet and indicate its book value based on the amount of its total assets less all liabilities and intangible assets. Net Tangible Assets Net tangible assets are calculated similar to a company’s stockholders’ equity. However,

How are operating income and EBITDA different?

June 30, 2024 No Comments

A: EBITDA (earnings before interest, taxes, depreciation, and amortization) measures a company’s profitability and is typically used to determine the earnings potential of a company. EBITDA removes the costs of debt financing as well as depreciation, and amortization expenses from profits. Also, EBITDA shows a company’s profit without taxes and interest expenses on debt. As a result, EBIDTA can be

How are profit margin and markup different?

June 30, 2024 No Comments

A: Profit margin and markup are two different accounting terms that use the same inputs and analyze the same transaction, yet they show different information. Typically, profit margin refers to the gross profit margin for a specific sale, which is revenue minus the cost of goods sold, but the

How are the three major financial statements related to each other?

June 30, 2024 No Comments

A: The information found on the financial statements of an organization is the foundation of corporate accounting. This data is reviewed by investors and lenders for the purpose of assessing the company’s level of financial stability. Data found in the balance sheet, the income statement

Do all countries follow the same GAAP?

June 30, 2024 No Comments

A: Generally accepted accounting principles, formally designated in the United States as GAAP, vary from country-to-country, and no universally accepted accounting recording and publishing system currently exists. The GAAP are a combination of procedures and standards utilized by a company when generating its financial statements.

Do dividends go on the balance sheet?

June 30, 2024 No Comments

A: Cash dividends offer a typical way for companies to return capital to their shareholders. The cash dividend affects the cash and shareholders’ equity accounts primarily. There is no separate balance sheet account for dividends after they are paid. However, after the dividend declaration and

Do plane tickets get cheaper closer to the date of departure?

June 30, 2024 No Comments

A: The price of flights usually increases one month prior to the date of departure. Flights are usually cheapest between three and seven weeks prior to departure. This answer has some exceptions, notably the winter holidays. If the trip is planned during a holiday, the

Does a capital expenditure (CAPEX) immediately affect income statements?

June 30, 2024 No Comments

A: A capital expenditure, or CAPEX, is considered an investment into the business. The money spent is not immediately reported on the income statement; rather, it is treated as an asset on the balance sheet. A CAPEX is deducted over the course of several years

Does the balance sheet always balance?

June 30, 2024 No Comments

A: Yes, a balance sheet should always balance. The name “balance sheet” is based on the fact that assets will equal liabilities and shareholer’s equity every time. The assets on the balance sheet consist of what a company owns or will receive in the future and

Does U.S. GAAP prefer FIFO or LIFO accounting?

June 30, 2024 No Comments

A: Unlike the inventory reporting rules under the International Financial Reporting Standards, or IFRS, the generally accepted accounting principles, or GAAP, do not require companies to use the first-in first-out, or FIFO, method exclusively. American companies are allowed to decide between FIFO or last-in first-out,

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