Invoices and bills are payable within a certain number of days after the invoice date. This is called the credit period, and the length of time between the invoice date and payment date is called the days payable outstanding (DPO). It is an important metric used in accounts receivable management, …

Financial ratios are a relative measure of a financial metric to another. These ratios fall under different categories and are essential to evaluating a company. However, some are more relevant in some cases than others. In those cases, users must calculate specific ratios based on the type of investment they …

Debt Service Coverage Ratio (DSCR) is a common term used in corporate, government, and personal finance. It’s mostly used to measure the cash flow of a business and gives investors an idea of how well a company can pay its debts. The higher the DSCR, the better. In this article, …

The balance sheet presents a company’s assets, liabilities, and equity. Usually, these elements appear after some adjustments to the costs or base amounts. With fixed assets, the presentation occurs net of various figures. This presentation is known as the net of fixed assets. Before discussing the net of fixed assets …

When it comes to businesses, a retainer fee is one of the most common terms used. The retainer fee is mostly used by small businesses that don’t have enough money to afford a full-time employee. The retainer fee is also used by businesses who want to keep an employee on …

Inventory valuation refers to an accounting practice that requires companies to evaluate their unsold inventory. This process involves estimating the value of the goods not sold at the end of each year. Usually, companies cannot calculate this value reliably without inventory valuation techniques. However, accounting standards require them to report …

A fixed asset is a resource that companies own or control for the long term. They include tangible assets that result in inflows of economic benefits in the future. Usually, companies acquire these assets and keep using them in business until the end of their useful lives. Once they reach …

Every business has different types of assets that offer different values. One of the most important types of assets for a business is called Prepaid Expenses. This is one of those expenses that are considered an asset because it provides future economic benefits to the company. In this article, we …

Companies can use multiple inventory valuation methods to estimate the value of their goods. This process is crucial to account for those goods. However, accounting standards only allow specific valuation methods when reporting inventory in the financial statements. On the other hand, companies may use another inventory valuation method internally. …

In the world of accounting, there are so many terms and ratios that it is easy to get confused. The accounts receivable turnover ratio is one ratio that you will want to become familiar with because it is used often in the business world. It is an important business measure …