Gross profit represents a company’s earnings from its products and services before considering operating and other expenses. It comes after subtracting a company’s cost of goods sold from its revenues. However, it does not provide insights into a company’s profitability. Therefore, some stakeholders may prefer sales margin as a better …

Vertical and horizontal analysis provide valuable insights into multiple aspects of a company’s financial performance. However, they differ in the way they help analyze financial statements. What is Vertical Analysis? Vertical analysis (or common-size analysis) is a financial evaluation method focused on dissecting and comparing individual components within financial statements …

When it comes to a company going public, there are two main ways to do it: through an initial public offering (IPO) or through direct listing. While IPOs have long been the traditional route for companies looking to become publicly traded, direct listings have gained popularity in recent years. It’s …

When it comes to issuing new securities, flotation costs play a major role. It’s important to understand how much capital they will be able to raise from those new securities and how much it will cost them to do so. It’s an important factor that helps businesses determine if issuing …

When it comes to understanding how well a company is doing, there’s more than just looking at the numbers. It’s crucial to dig deeper and see the real picture behind those figures. This is where the significance of a certain type of analysis becomes important. It provides a clearer, more …

Understanding normal profit is crucial when it comes to running a successful business. Normal profit is basically a condition where a business earns enough revenue to cover all its expenses and achieve zero economic profit. By understanding how normal profit works, businesses can make better financial decisions and plan for …

In capital budgeting, the discounted payback period measures how long it takes for a project’s discounted cash flows to cover its initial investment – it helps assess the profitability of the project. It not only helps in understanding the payback time but also considers the time value of money by …

What are Bilateral Agreements? Bilateral agreements are fundamental instruments in international relations and commerce, facilitating mutually beneficial arrangements between two parties. In this blog post, we’ll explore the scope, examples, advantages, and disadvantages of bilateral agreements to gain a deeper understanding of their significance in various contexts. Scope of Bilateral …

When it comes to trusts and beneficiaries, distributable net income plays a major role. It is essentially the amount of income that can be distributed to beneficiaries without incurring additional tax liabilities. It is a base amount that is used to calculate the trust’s tax liability and determine how much …

A budget is a financial plan that serves as a benchmark against which a company can compare its financial results. However, having a plan alone does not suffice. Companies must have a robust budgetary control process to make it worthwhile. What is Budgetary Control? Budgetary control is a strategic and …