The classic measure of the profitability of goods and services sold is gross margin, which is revenues minus the cost of goods sold. The cost of goods sold figure is comprised of a mix of variable costs (which vary with sales volume) and fixed costs (which do not vary with sales volume) and you will […]
As referred to in the Acid Test Ratio explanation, the Current Ratio is a liquidity ratio that measures a company’s ability to pay short-term and long-term obligations. To gauge this ability, the current ratio considers the total value of assets of the company (both immediately liquid and illiquid) relative to that of the company’s total […]
Current Liabilities are a company’s debts or obligations that are due within the next one year. Current liabilities appear on the company’s balance sheet and include short term debt such as bank loans and overdrafts, accounts payable (money owed to suppliers – trade creditors), accrued liabilities and other debts.
Current assets are cash and other assets expected to be converted to cash or consumed either in a year or in the operating cycle (whichever is longer), without disturbing the normal operations of a business. These assets are continually turned over in the course of a business during normal activity. There are 5 major strands included […]
A key business metric as business rely on cash flow to survive, and many profitable business have failed as they have simply run out of cash. Cash flow is the movement of money in and out of the business. Cash flows out of the business when bills are paid Cash flows into the business as […]
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