Bookkeeping

The FIFO method is most common when you’re selling perishable goods that may go bad quickly. The LIFO method is most commonly used in industries where the cost of inventory rises over time, since it can better match costs with revenues and also help defer taxes. Safety stock represents the amount of extra inventory you...

It is a day all startup founders fear and it is a day you should work toward never getting too close to. You want to make sure you’re not… You want to make sure that you run out of cash when you expect to run out of cash which hopefully aligns with you being worth...

For instance, the balance sheet can be used as proof of creditworthiness when the company is applying for loans. By seeing whether current assets are greater than current liabilities, creditors can see whether the company can fulfill its short-term obligations and how much financial risk it is taking. A balance sheet serves as reference documents...

WACC is the average cost that the company has to pay to acquire the capital to use in the investment. So, if you are a company that manufactures chairs and you would need to get a loan from your local bank at a 8% interest rate in order to a do project, you might use...

Let’s say that a company’s balance sheet has long-term liabilities of $10 million at the beginning of the year and $11 million at the end of the year. A persistent negative CFF may signal that the company is repaying more debt than it is raising, which could be a positive sign of deleveraging. However, assessing...