Author: ann

Average Total Assets

May 28, 2020 Bookkeeping 101 by ann
While the ratios for Linda’s Jewelry company may seem positive, we would need to compare this number to the asset turnover ratio of other companies in the jewelry industry to be sure. Shareholders’ equity is the net of a company’s total assets and its total liabilities. These investments might include things such as building facilities,
Read More

Days Sales Of Inventory – DSI Definition

May 28, 2020 Bookkeeping 101 by ann
This means your inventory has been sold, or turned over, three times during the year. To find out how many days’ worth of inventory you keep on hand, divide three into 365 days. In this case, you have 122 days’ worth of inventory stock on hand on any given day. The inventory turnover ratio measures
Read More

Total Cost in Economics: Definition & Formula

May 28, 2020 Bookkeeping 101 by ann
The Average Cost method will come somewhere between the two figures. FIFO involves selling the oldest items or those that have been in the warehouse the longest first, hence the term, first-in, first-out. The average cost method, which is sometimes called the weighted average cost, is calculated by dividing the total cost of goods in
Read More

Return on Equity – ROE Definition

May 28, 2020 Bookkeeping 101 by ann
Return on equity (ROE) is a measure of financial performance calculated by dividing net income by shareholders’ equity. Because shareholders’ equity is equal to a company’s assets minus its debt, ROE is considered the return on net assets. START YOUR BUSINESS ROE is considered a measure of how effectively management is using a company’s assets
Read More

Average accounts receivable calculation

May 27, 2020 Bookkeeping 101 by ann
The debt to equity ratio can be misleading unless it is used along with industry average ratios and financial information to determine how the company is using debt and equity as compared to its industry. Companies that are heavily capital intensive may have higher debt to equity ratios while service firms will have lower ratios.
Read More