What is the Statement of Cash Flows? The Statement of Cash Flows, also known as Cash Flow Statement, is one of the primary financial statements. It summarizes the amount of the cash and cash equivalents entering and exiting a company or business. The Statement of Cash Flows consists of all …

A company’s or business’s net income is one of the most critical line items on its Income Statement. It is a favourite figure for most stakeholders. Through net income, stakeholders can establish a company’s profitability. Similarly, companies may also use the net income figure for various purposes, such as decision-making …

What is an Embedded Derivative? An embedded derivative constitutes a part of a financial instrument that also includes a non-derivative host contract. When a hidden derivative contract exists in a non-derivative host that does not go through the profit and loss account is called an embedded derivative. In an embedded …

The Balance Sheet of a company may consist of several account balances. Companies need to classify these balances as either assets, liabilities, or equity. Each of these represents an element of the financial statement. Among these balances, most companies report Accounts Payable balances on their Balance Sheets. However, there’s often …

A company’s Balance Sheet may show various balances. Companies break up their balances into three categories. These are assets, equity, and liabilities. Each of these represents different aspects of a business. The classification comes as a result of the accounting standards. One balance that often is a part of the …

When it comes to decision-making, whether for companies or investors, there are two figures they can use. These are the profits or cash flows of a company. However, some people tend to confuse the two and not be able to differentiate between them. Therefore, it is necessary to understand what …

There are various financial ratios that investors can use to evaluate a company and its performance. Most of these ratios that focus on the financial performance of a company consider its profits. Out of those, one of the primary ratios that investors can use is the Earnings Per Share (EPS). …

What is Normal Distribution? A normal distribution is a probability distribution that is symmetric about the mean. It shows that data near the mean occur more frequently than data that exists far from it. Graphically, the normal distribution resembles the shape of a bell curve. It is a prevalent distribution …

When it comes to saving money and investing it, there are various options that one may have. However, they need to evaluate all these options separately to identify which one’s the best for their needs. Among these options, two of the well-known choices are money market accounts and high yield …

What is Capital Budgeting? Capital budgeting is a process that companies or businesses use to evaluate projects or investments. Usually, these techniques relate to long-term projects that require heavy investments. When there is a long-term plan involved, companies need to use capital budgeting to evaluate whether it will be successful. …