The Purpose of Budget vs. Actuals Analysis
Introduction Running a business comes with many responsibilities. One of the more challenging aspects is being able to forecast future performance and being able to plan and prepare to achieve the business goals correctly. More often than not, budgeting and forecasting concepts are associated with larger enterprises where multiple departments need to work together, and […]
Days Working Capital: What It Is and How To Track It
Businesses use financial metrics to measure their performance over time. One such metric is Days Working Capital (DWC) which shows us the number of days the company takes to convert working capital into sales revenue. Many investors use DWC as a liquidity indicator to track working capital management efficiency. In this article, we explore some […]
The Residual Income Valuation Model: How to Use It
The Residual Income Model is a popular option for valuing businesses. The model assumes that the value of a company equals the present value of all future residual incomes, discounted at the cost of equity. This model uses the principle of residual income, which is an estimation of the free cash flow available to the […]
What is Standard Costing and How Does It Work
Standard Cost Accounting (or Standard Costing) is a form of cost accounting that uses predetermined costs for materials, labor, and overhead to estimate the costs of goods or services. Standard costing is typically used in manufacturing to determine the cost of products based on standard rates for materials, labor, and overhead. Companies use standard costing […]
Loan Calculator: What Is It And How Can It Help Your Business?
To make an informed decision about a loan, business owners and managers must understand how much their monthly payments will be. A loan calculator can help you do just that. You can get a good idea of your monthly payments by inputting the principal amount of the loan, the interest rate, and the number of […]
9 Best Practices to Simplify Your Accounting Month-End Close Process
An important financial event for any organization is the month-end close process. Whether the business entity you work with is a corporation, small business, or non-profit, closing the books is universally important. This activity indicates an organization’s revenue, debt, accounts payable, and profits. For newly minted accountants, the first-ever accounting month-end close process is a […]
Understanding the Gordon Growth Model for Stock Valuation
Understanding the Gordon Growth Model for Stock Valuation The Gordon Growth Model (GGM) is a method for the valuation of stocks. Investors use it to determine the relationship between value and return. The model uses the Net Present Value (NPV) of future dividends to calculate assets’ intrinsic value. It’s the most popular variation of the […]
Vacation Days and Unused Paid Leave Accrual
When a company hires employees, they provide it with services. In turn, the company, as their employer, reimburses their time spent with a remuneration package. This usually consists mostly of a salary but can include various other benefits, some of which may be mandated by law or local legislation. One of those benefits is the […]
Accounts Receivable Aging Report in Excel
The Receivables Aging (or Ageing, if you prefer British English) report is a tool that lists all unpaid customer balances by pre-defined date ranges (buckets). It shows the relationship between open invoices and their due dates. It is the primary tool to determine overdue balances for collection. It’s useful for the company’s management, as it […]
Hypothesis Testing for Complete Beginners
Gathering data in itself is meaningless unless we can analyze it and draw powerful insights. What makes data interesting is the ability to evaluate and interpret it. Hypothesis testing refers to a term in statistics where we, as the analysts, evaluate an assumption related to a data set parameter. Based on the purpose of the […]