Typically, an investor may negotiate a clause in a financing deal to reduce staff or compensation if a company is experiencing a high burn rate. Layoffs often occur in larger start-ups that are pursuing a leaner strategy or that have just agreed to a new financing deal. You must also factor in whatever revenue the […]

Typically listed on a company’s balance sheet, this financial metric is commonly used by analysts to determine a company’s overall fiscal health. Shareholders’ equity refers to the owners’ claim on the assets of a company after debts have been settled. The first is the money invested in the company through common or preferred shares and other investments made […]

It’s up to the business’s board of directors (even if you are the only person on the board) to determine when a stock dividend should be issued and in what amount. Stock dividends increase the shares that a company will have outstanding, but the stock price must decrease in accordance with that change. Essentially, you […]

The accounting equation shows the amount of resources available to a business on the left side (Assets) and those who have a claim on those resources on the right side (Liabilities + Equity). However, due to the fact that accounting is kept on a historical basis, the equity is typically not the net worth of the organization. […]

There are a few potential drawbacks to accounting for government grants. One is that it can be difficult to determine the nature of the grant and how it should be accounted for. Another is that grants can have a significant impact on financial statements, so accountants need to be aware of this. Transitioning into a […]

Let’s say you’re a photographer who’s snapped some wedding photos, leaving a pair of happy customers in your wake. And, while the instant gratification of a Venmo request and instant payment seems the easy route, creating a sales invoice is a better financial choice. Sales invoices help paint a picture of your business’s cash flow, […]

Hence, the reference to a time period is essential for the concept of fixed costs. If you’re interested in cutting costs but can’t cut back on materials and labor without sacrificing quality, it’s time to look for ways to reduce fixed costs. Once you know your total cost, you can use that number to calculate […]

NPV can be used to assess the viability of various projects within a company, comparing their expected profitability and aiding in the decision-making process for project prioritization and resource allocation. On the topic of capital budgeting, the general rules of thumb to follow for interpreting the net present value (NPV) of a project or investment […]