Most businesses run on a cycle of purchasing, inventorying, and then selling their products or services. When it comes to purchasing and selling, it is done through a process of credit. This simply means that the seller gets paid after some time, and the buyer pays after some time. To …

In a corporate structure, a shareholder or stockholder owns a company’s shares. The shareholder owns rights in the company’s assets for their investment. For the company, finance received from a shareholder constitutes equity, which it must ultimately repay. This finance gets reported on the financial statements as stockholders’ equity. What …

Liquidity is a key thing of concern for every business or individual, especially when it comes to money in a bank account. Cleared balance is the amount of money available to you that has been verified and confirmed by your bank. This means that any deposits and withdrawals have been …

Banking checks are a great instrument for any transaction as they are easy to use and offer a secure way to transfer money. Non-negotiable checks are an even more secure form of banking check, as they cannot be transferred or negotiated further. Non-negotiable checks will include the phrase “non-negotiable” on …

Every market may contain uncertainty due to the inflation prevalent in the country. Usually, inflation increases, impacting investment strategies for investors. Investors around the world aim to invest in assets that can help protect against the rise in inflation in their respective countries. Therefore, they also contemplate their investment strategies …

Every individual, business, or organization that wants to open a bank account, needs to determine the correct title of the account. Bank account titles can range from simple – such as “John Smith” or “ABC Corporation” – to more complex, depending on the type of ownership and other factors. A …

Variations can exist in any process. In finance, identifying and analyzing these variations falls under management accounting. Companies may use several tools to achieve that. One of these includes the exception report. However, its application is not limited to the financial field. It can be beneficial in other areas as …

In every business venture, it is important to incorporate a margin of safety when calculating risks and rewards. This buffer allows investors to protect their investments from any unexpected losses and maximize profits in the long run. A margin of safety is the difference between the estimated intrinsic value of …

A bond’s value may fluctuate depending on various factors. Sometimes, these factors can be internal. However, external factors play a more prominent role in the changes. There are several metrics to measure this sensitivity, including PV01 and DV01. Both methods differ in their application. Before understanding the differences between the …

Dividends are not only a way to reward shareholders, but they can also provide important insight into a company’s financial health. A key measure of dividend performance is the dividend payout ratio. This ratio compares the number of dividends paid out to shareholders relative to the total profits earned by …