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Introduction Profit (contribution) margin is the difference between sales revenue and variable costs. Moreover, both of these indicators – revenue and costs – are taken for a specific volume of production. We can also say that marginal profit is the part..

The impact of accounts receivable on the company’s financial position is ambiguous. A significant amount of accounts receivable can lead to a need to attract additional funds due to the outflow of the company’s own cash. On the other hand, selling..

Definition The definition of Notes payable is a formal debt in which a note is signed for the repayment of any obligations due to the creditor. In other words, we are owning money or something to a creditor (someone else). This..

All enterprises, regardless of their type and forms of ownership, maintain accounting records in accordance with the current legislation. If you are in a position where you will be using the financial data to make management decisions, knowing at least the..

Definition The quick liquidity ratio (QR) is an indicator that shows the solvency of a business entity in the short term. This indicator shows whether it will be able to pay off its short-term liabilities at the expense of the most..

Definition and formula The double declining balance method is the most popular variation of the accelerated depreciation method. Here, the depreciation rate is higher at the start of the asset’s life. This particular method never completely reduces the asset value to..

Definition and Explanation Depreciation is the process of gradually transferring the cost of the means of production (long-term assets) to the manufactured product. Depreciation is also used to deduct the costs of buying and improving a rental property. For example, we..

Definition The debt to asset ratio falls under the solvency category of the ratios. Solvency ratios evaluate the entity’s ability to survive over a longer period of time. This ratio calculates what portion of assets the business owner(s) financed with the..

Business cost planning can be characterized as a special decision-making process, in which information about the past financial and production activities of an economic entity is analyzed, potential resources are assessed and the organization’s goals for the future as well as..