The cost of debt is a term that companies use as a part of internal calculations, particularly for WACC (weighted average cost of capital). It represents the expense companies incur for the debt accumulated as a part of their capital structure. In other words, the cost of debt is the …

Similar to ROI or return on investment, cash-on-cash return measures the percentage of cash flow that’s returned to the investor after accounting for all operating expenses. CCR is a good metric to use when considering real estate investments because it focuses on the cash that’s being generated by the property, …

Companies may encounter bad debts as a part of their credit policy toward customers. These bad debts result in an expense that can lead to losses. Over the years, companies accumulate experience that helps them forecast future balances that may go bad. Companies can also create an allowance for bad …

When it comes to quality control, businesses need to ensure that their appraisals are accurate and meet the required standards. To do this, businesses need to have a clear understanding of the costs associated with appraisals. This will help businesses make informed decisions about which appraisal methods are best suited …

Companies use fixed assets to operate and generate revenues. Usually, these assets have a limited life beyond which companies don’t consider them useful. At this point, companies may either write it off or sell it for its scrap value. In some cases, companies may also be required to restore an …

When two companies come together, they can do so in a variety of ways. The type of merger will be dependent on the goals that each company has and what they hope to achieve by coming together. Mergers are basically an agreement that two companies make which allows them to …

Cost allocation requires companies to identify, accumulate and allocate costs to various cost objects. This process is crucial to assigning costs to departments, projects, segments, and other units within a company. Usually, the first step in this process is identifying cost objects to which companies can allocate costs. Therefore, it …

In microeconomics, the point of diminishing returns is a concept that refers to a point after the optimal level of capacity is reached. It refers to a situation where every added unit of production results in a smaller increase in output. The point of diminishing returns is often used as …

Most audit processes take a top-to-bottom approach. However, some companies may also conduct a horizontal audit, which differs in approach. On top of that, it also seeks to achieve a different objective than vertical audits. Companies use both types to identify potential improvements across departments and processes. Horizontal audits can …

Household debts are common in today’s society. While some debt is necessary, such as for a mortgage or education, too much debt can be crippling. While there are many reasons for this high level of indebtedness, one of the main culprits is the increasing cost of living. In addition, wages …