Fundamental Analysis
Accounts payable is an account of unpaid debt for goods & services received. A/P is an obligation that a company or individual is under to pay unpaid bills or invoices to venders or service providers. Accounts payable is listed as a current liability on the balance sheet. You can look at A/P as an IOU from you to the creditor.
Any asset you own for investment purposes is considered a capital asset. This can include, stocks, bonds, real estate, or even a baseball card. When you acquire this asset, the cost is considered to be the basis and the difference between the sales price and the basis is known as a capital gain or capital loss. Capital gains and losses are recorded on your 1040,
When companies have to compare multiple projects against each other, they commonly employ the use of IRR, or internal rate of return, to create a level playing field to evaluate each project against. Internal rate of return refers to the yield of an investment, or the compounded rate of return on investment. While the net present value aims to und
What is Net Present Value?
The valuation technique, known as net present value or NPV, allows a company to project the projects potential profitability by discounting future cash flow expectations and comparing the sum of these cash flows to the initial capital expenditure required to fund the project.
The accrual method of accounting stipulates that revenue or expense recognition occurs on the date that the transaction occurs, regardless of whether or not cash was paid or received. For example, assume that your business sold 100 printers for $100,000, which will be be due to you within 3 months. Under the accrual method, the $100,000 revenue will be recognized as of the date that the purchase order was made.
Cash Method Vs. Accrual Method
Accrual based accounting has its benefis and drawbacks when compared to its counterpart, the cash method of accounting.
Earnings per share, or EPS, represents profits which accrue for the shareholders on a per share basis and can be found on the income statement. This figure is very important as it allows investors and analysts to determine the
Leverage ratio's provide investors and lenders with insight into a companies ability to meet its short term debt obligations. We will be covering three of more popular leverage ratios; the current ratio, quick ratio, and cash ratio. When we look at the ratios, you will see that the difference between them all lies in the assets that are used to perform the calculations
What is Asset Mix
Asset mix, or asset allocation is the percentages of the holdings within a portfolio. More aggressive investors will seek out funds where growth stocks make up the majority of the asset mix. While retirees and investors looking to protect wealth will invest in funds with an asset mix heavily weighted in
An Income Statement is also known as a "profit and loss" statement for a given period of time, you may also see it referred to as the "statement of income". As you can see below, the income statement is a record of all revenues and expenses during the reporting period and gives the company and investors alike the opportunity to see how profitable the comp
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