The balance sheet is the document where assets, liabilities, and equity of a particular company or a person are recorded. It’s a crucial financial statement wildly used in accounting, investing, analytics, and other areas. In this article we’ll explain what a balance sheet is, cover its essential components, and answer the most common questions.
Assets, liabilities, and equity are three core accounting concepts. It’s impossible to evaluate a company properly without a thorough knowledge of them. The word “equity” has many meanings but, in this article, we focus on equity in the general accounting sense, although we briefly cover other kinds of equity too.
Assets, liabilities and equity are three basic building blocks that form the balance sheet equation and any investor should have a deep understanding of what they mean. In this article, we’ll explain what liabilities are and we’ll also provide a real example using a balance sheet of a public company.
The main purpose of any investment is to generate more money than the amount invested, the time it takes to do so is called the payback period (PBP) in capital budgeting. Payback period is wildly used by investors and entrepreneurs when they consider to open a new enterprise, invest in an existing business, or when they try to pick the best opportunity among two or more possible options.
More than 20 years ago, in 1997, Robert Kiyosaki and Sharon Lechter released their book “Rich Dad Poor Dad” which became an immediate success. This book is about personal finance, entrepreneurship, business, investing and economics and it has become some kind of a bible for a lot of people.
Most of the people can read nowadays (the literacy level is close to 99%), yet reading an annual report of a company is a different story. It can be very confusing for an investor to figure out what are the key things to look after and what information is worth reading.
When you open your first bank account an adviser would often propose you to get checking (otherwise known as current) and savings accounts. The first one, without any interest for your day-to-day transactions and the second one with a very small interest.
When it comes to fundamental analysis of a company, there is one crucial metric that just can’t be ignored and it’s called EBITDA. It’s wildly used by investors, portfolio managers, and market analysts. Today we’ll try to explain what does this metric mean and we’ll also provide a few examples.
The Quick Ratio is one of the most basic liquidity ratios used in the company’s analysis. Some accountants call it the acid-test ratio or the working capital ratio. The Quick Ratio is easy to calculate and it has some advantages over similar ratios like the current ratio.
Return on Assets (ROA) is one of the key fundamental indicators used by financial analysts. ROA can give you a lot of hints on what’s going on with a particular company and how effective it’s managed. In this article, we’ll explain what ROA is with some simple examples, and show how this financial ratio can be used in the analysis of a business’ profitability.
In fundamental analysis, the current ratio plays an important role by expressing the liquidity of the firm in just one number. This is a basic financial indicator in accounting which is easy to calculate. Today we’ll have a look at this ratio and explain how it can be useful for an investor.