What are the differences between comprehensive income and other comprehensive income?

July 9, 2024 No Comments

A: In financial accounting, income is broken down in a multitude of ways, and firms have some latitude on when to recognize and report their earnings. To compensate for this, the Financial Accounting Standards Board (FASB) has firms collect and report information that helps to

What are the differences between deferred expenses and prepaid expenses?

July 9, 2024 No Comments

A: Companies have the option to pay expenses forward for certain costs associated with doing business, creating an accounting entry known as prepaid expense or deferred expense. For accounting purposes, both prepaid expense and deferred expense amounts are recorded on a company’s balance sheet, and

What are the differences between dilutive securities and antidilutive securities?

July 9, 2024 No Comments

A: Publicly traded companies can offer either dilutive or antidilutive securities. These terms commonly refer to the potential impact of any securities on the stock’s earnings per share. The fundamental concern of existing shareholding after new securities are issued, or after securities are converted, is

What are some important financial ratios to evaluate with respect to consumer packaged goods?

July 9, 2024 No Comments

A: Since companies that sell consumer packaged goods are traditionally low-margin, high-volume businesses, the most important financial ratios used to evaluate companies in the consumer packaged goods industry are the activity ratios. In addition, to ensure that the company is successful in the long term,

What are some of the advantages and disadvantages of absorption costing?

July 9, 2024 No Comments

A: Companies must choose between using absorption costing or variable costing in their accounting systems. There are advantages and disadvantages with either choice. Some of the primary advantages of absorption costing are the fact that it recognizes all of the costs involved in production (including

What are some of the limitations and drawbacks of using a payback period for analysis?

July 9, 2024 No Comments

A: Limitations, or disadvantages, of using the payback period method in capital budgeting include the fact that it fails to take into account the time value of money and does not factor in the value of additional cash flows beyond the payback period. Capital budgeting

What are some prominent examples of hostile takeovers?

July 9, 2024 No Comments

A: One of the most prominent hostile takeovers of all time was the leveraged buyout (LBO) of RJR Nabisco by investment bank KKR in the late 1980s. This takeover was well-documented in “Barbarians at the Gate: The Fall of RJR Nabisco.” RJR Nabisco was created

What are some ways a company can improve on its Return on Capital Employed (ROCE)?

July 9, 2024 No Comments

A: Options available to a company seeking to improve on its return on capital employed (ROCE) ratio include reducing costs, increasing sales, and paying off debt or restructuring financing. ROCE is a metric that measures the profitability of a company. It helps analysts assess how

What are some ways to make a distribution channel more efficient?

July 9, 2024 No Comments

A: While there are many ways to make a distribution channel more efficient, the three high-level ways to increase the efficiency of a distribution channel are increasing or carefully picking the channel intermediaries, increasing the focus on supply chain management or consolidating the various distribution

What are the advantages and disadvantages of horizontal integration?

July 9, 2024 No Comments

A: A company that seeks to expand through a horizontal integration can achieve economies of scale, economies of scope, increased market power or market share, reduction of production costs, reduction of competition and increases in other synergies. However, a company that decides to integrate horizontally

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