The SCF is necessary because the income statement is prepared using the accrual method of accounting (as opposed to the cash method). When companies are unable to adequately allocate equity capital in ways that yield targeted profits, they may return a portion of stockholders’ equity to stockholders. Share buybacks are a type of reverse capital …
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Creditors are people who extend lines of credit to the company, so creditor money would flow OUT of the business to pay back the loan. Debtor and creditor in contract law refers to the two parties concerned with the borrowing and lending of funds including bank loans, bond sales, notes payable and credit extended. The …
A company might be in financial distress if it has too much debt, but also the maturity of the debt is important to monitor. Investors should consider whether the business could afford to cover its short-term debts if the company’s sales decreased significantly. Accounts payable is typically one of the largest current liability accounts on …
Fixed costs are one-time purchases for things like machinery, equipment or business real estate. Below is a breakdown of contribution margins in detail, including how to calculate them. To perform a more detailed analysis on either a quarterly or year-over-year (YoY) basis – or comparisons to comparable companies in the same industry – the CM …
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However, contribution margin should be viewed in conjunction with overheads and your growth rate. A high contribution margin could mean you’re not investing enough in growth, and a low contribution margin could mean you’re burning too much cash. Accordingly, the net sales of Dobson Books Company during the previous year was $200,000. In the meantime, …
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So how do sales tax exemptions and non-taxable sales factor into this question? First, sales tax exemptions occur when your customer has a valid reason to not pay sales tax in a state – maybe they are a non-profit or are buying good for resale. Exemptions must be documented with any state where your customer …
Solved: Do I include sales tax collected from customers in my gross sales on schedule C? Read More »
The good news is they only want exempt and non-taxable sales that occurred in their state. The terms gross sales and taxable gross sales are not the same and can make a huge difference in determining the profits of a company. Total sales (also known as gross sales) is the sum of all of your sales, …
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You also have enough safety stock units – to cover problems with Supplier B (or any point along the supply chain) or a sudden increase in demand. As the name suggests, safety stock is the inventory you keep on hand “just in case” there’s an issue with selling or receiving your inventory. A reorder point …
Your suppliers might also carry their pressure points that can change at any moment. Market conditions might gradually or suddenly move in unexpected directions. Do it well, and this results in not just a balance in your inventory, but better management and cost reductions. You’ll always have enough stock to sell because you know when …
Reorder Point Guide: Formula + How to Calculate 3 ROPs Read More »
