How to Understand Financial Ratios

Businesses use financial ratios to compare performances of various business activities over a period of time. Since trends keep changing with time, it is recommended comparing ratios of current year to earlier years as calculating ratios for one year doesn’t … Continue reading

Management Accounting Versus Financial Accounting

Professionals believe accounting gives necessary information that businesses require for making financially viable business decisions.  Businesses follow the practice of preparing two kinds of accounting reports: financial and management. Both are equally necessary. Here, we’ll talk about management accounting versus … Continue reading

Relationship Between Financial Statements

Companies essentially need to prepare four financial statements. Fundamentally, all these statements comprise of same series of accounting entries, but each statement focuses on a different financial aspect. It is important to understand the relationship between financial statements to know … Continue reading

How to Read a Financial Statement?

The four most essential statements of a company are: balance sheet, cash flow statement, income statement and statement showing stockholders’ equity. These statements illustrate the financial health of a company, its incoming and outgoing cash, profit and loss and shift … Continue reading

Equity Method of Accounting for Investments

Companies require funds for their setups and maintaining and running of their profit generating operations. The companies, in order to obtain funds, can either bring into financial obligations from other companies or procure the same by way of investment funds. … Continue reading