Understanding Company Finances: Assets, Liabilities, and Equity
Net Worth
Net Worth is calculated by adding the value of one’s property and rights to the amount obtained by subtracting the value of their obligations.
The value of corporate assets must be equal to the value of its liabilities plus equity, so the total assets must be equal to the sum of the values of liabilities and equity. This expression is called the fundamental equation of heritage. It follows that: AP = PN
- The elements or components are the individual property assets, rights, and obligations
Franchise Business and Financing Options for Entrepreneurs
The Franchise
Many times it is the right time to engage in that which is related to our studies, but nevertheless, if it is maybe to take some kind of business that is completely foreign to us. Today it is not a problem to undertake in areas remote from our experience or academic training through the franchise, a form of trade associated with each day wins adherents. In this business relationship, a parent company (franchisor) grants to small independent dealers (franchisees) the right to operate
Read MoreAccounting Standards: AS-3, AS-12, AS-19, and Internal Reconstruction
Cash Flow Statements (AS-3)
Introduction
This standard deals with the financial statement, which summarizes for a given period the sources and applications of funds of an enterprise. This standard supersedes Accounting Standard (AS) 3, *’Changes in Financial Position’*, issued in June 1981. Cash flows are to be classified into three categories: operating activities, investing activities, and financing activities.
Meaning
A cash flow statement provides additional information to the user of a financial
Read MoreFinancial Structure, Profitability, and Solvency Analysis
Item 8: Financial Structure and Analysis of Balances
Profitability Analysis
The profitability of an investment measures the relationship between the benefit and the resources used to obtain such a benefit. There are two types of profitability: economic and financial.
RE = Return on Equity
RF = Return on Assets
RE = Profit / Assets
RF = (Profit – Interest on Debts) / Equity
The company’s goal is to maximize performance for its owners. The most attractive profitability for investors is the financial return,
Read MoreEconomic Growth and Development: Impact on Society and Environment
Economic Growth and Development
Unit 12: Economic Growth and Development
Economic growth refers to the continued increase in a country’s real output. When a country’s actual production increases, it raises the level of employment and income of its citizens, therefore increasing consumption. The state collects more taxes, which will raise revenue and increase public spending. The variables used to measure economic growth are real GDP and real GDP per capita.
Development occurs when there are a number
Read MoreBusiness Operations: Departments, Functions, and Processes
**Integration**
Integration is a business meeting in the human and material elements necessary to achieve the objectives of the company, within the framework of its organizational structure.
In selecting the principles to integrate staff, one must:
- Find items that fit the job, i.e., the right man for the right job.
- A post cannot cover two functions. In small enterprises, it is difficult to apply, and it goes on to be an ideal to be applied as soon as permitted by the material elements.
- Place each post