What is Capital Allocation? Capital allocation is a method through which a company chooses to invest its funds. Its primary objective is to increase profits for shareholders. It’s a significant financial decision taken by the CEO and CFO together. They decide how and where the company will invest its profits. Therefore, it’s an essential step for a business’s long-term success. … Read more
Income Statement vs. Balance Sheet: The income statement and balance sheet are two important financial statements that serve different purposes. The income statement shows a company’s revenue, expenses, and profits over a specific period of time. The balance sheet summarizes a company’s assets, liabilities, and equity at a specific point in time. It’s essential to … Read more
A balance sheet is one of the major financial statements of a company. It shows the assets, liabilities, and equity of a company at the closing date. The assets of a company provide future economic benefits through which income can be generated. Examples include cash in hand or bank, inventory, accounts receivables, or fixed assets … Read more
In simple non-accounting terms, the liquidity ratio is a financial ratio that helps to determine the assets to pay off the remaining short-term debts. Companies can use current assets to pay off their current liabilities. For example, a company will use its cash in hand, accounts receivables, and inventory to meet its obligations. It is … Read more
Financial Statement Analysis: It is the process of analyzing the financial statements of the company or organization. These are used in the decision-making process. It helps the external stakeholders to evaluate the performance of the company. It helps in understanding the overall condition of the company. The departments and employees inside the company use 3 … Read more
What is Auditing An assessment and evaluation of the financial statements of a company are called auditing. it is performed by a third party. In auditing, they evaluate a person, company, strategy, methods, enterprise, project, or product. In short, it can apply to all parts of the company or specific portions. It is a process … Read more
What is Capital: Capital is a broad term. It refers to cash or liquid assets that people use to make expenditures, or, in other words, money used to make more money. This is linked to cash that serves investment purposes. Without it, not a single activity takes place. Moreover, companies have needs in the production … Read more
Financial Management Definition: The financial management definition includes planning, organizing, directing, and controlling financial activities. Moreover, the financial activities consist of procurement and fund utilization of the company or enterprise. It is a useful and productive way of utilizing financial resources. Objectives of Financial Management: Financial management is an important business function that is associated … Read more
Definition of Securities: Financial instruments or certificates that hold value and can be traded are called securities. In addition, “any financial instrument that has a monetary value” is another way to define securities. Financial instruments are cheques, bonds, or securities such as debt and equity. However, it provides quick and easy exchange, buying, selling, and … Read more
What is Finance: Finance is defined as a body of facts, principles, and theories, dealing with the raising and usage of money by individuals, businesses, and governments. This is a broad term and is derived from the French word. To be more specific, it is a specialized study of how an individual and company manage … Read more
