Cash is Critical for SurvivalFor startup companies or companies in financial distress, cash is critical for survival. In their first few years, startup companies often report losses and negative net cash flows from operations. In such case, the ratio of cash to monthly cash expenses is useful for assessing how long a company can continue to operate without:
Stay connected with us on social media to learn more about the importance of performing analysis of your company as a monthly task. Source: Corporate Financial Accounting 12E
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Why go small, dream big." - Fontenot & Associates Solutions The Receivables result in SalesThe receivables that result from sales on account are normally accounts receivable or notes receivable. The term receivables includes all money claims against other entities, including people, companies and other organizations. Receivables are usually a significant portion of the total current assets. Notes receivable are amounts that customers owe for which a formal, written instrument of credit has been issued. If notes receivable are expected to be collected within a year, they are classified on the balance sheet as current asset. Notes are often used for credit periods of more than 60 days. For example, an automobile dealer may require a down payment at the time of sales and accept a note or a series of notes for the remainder. Such notes usually provide for monthly payments. Other receivables include interest receivable, taxes receivable, and receivables from officers or employees. Other receivable are normally reported separately on the balance sheet. If they are expected to be collected within one year, they are classified as current assets. Source: Corporate Financial Accounting 12E
Let's Talk Fixed AssetsAs an entrepreneur the plan to expand your brand by purchasing a store front or Land to build you must understand all of the cost which will be incurred during this process. You will need to update your budget. Increase your forecast of expense because expanding does mean more cost. The cost of acquiring fixed assets include all amounts spent getting the asset in place and ready for use. For example, freight costs and the cost of installing equipment are part of the asset's total cost. The snapshot below provides a few of the common cost of acquiring fixed assets. These cost are recorded by debiting the related fixed assets account, such as Land, Building, or Machinery and Equipment. Only cost necessary for preparing the fixed asset for use are included as a cost of the asset.
Accounting BasicsPatents, copyrights, trademarks, and goodwill are long-lived assets that are used in the operations of a business and are not held for sale. These assets are called intangible assets because they do not exist physically.
The accounting for intangible assets is similar to that for fixed assets. The major issues are:
Oil & Gas Industry? What does it mean?Before an oil and gas company drills for oil, it first evaluates where oil and gas reservoirs might be economically discovered and developed.
Did you know? The earth is made up of a core over 4,000 miles in diameter surrounded by the earth's mantle, which is approximately 2,000 miles thick. The earth's surface is under lain by the lithosphere, a relatively thin layer, some 125 miles in thickness, that is composed of the crust and upper mantle. Commercial oil and gas are found only in the crust of the earth. ACAP (Accounting Career Awareness Program) is Taking ApplicationsAccounting Career Awareness Program (ACAP) primary objective is to increase the understanding of accounting and business career opportunities among high school students from underrepresented ethnic groups. This program is a one-week residency program for high school students held at a local college or university. I personally have had the opportunity to speak to young students and share my life and professional experience with them. Students are able to see first hand what the accounting and business profession could mean for them. The program now is in more than fifteen cities across the country.
Help the program by sharing this information. LinkedIn has an article posted about the ACAP program also. Out of the way world. I've got my sassy pants on today." - Unknown What Does that Look Like?The basic financial statements are useful to bankers, creditors, stockholders and others in analyzing and interpreting the financial performance and condition of a company. One tool we will share is useful in analyzing the ability of a company to pay its creditors.
The relationship between liabilities and stockholders' equity is expressed as a ratio of liabilities to stockholder's equity, is computed as following example: Ratio of Liabilities to Stockholders' Equity = Total Liabilities/Total Stockholder's equity Ratio of Liabilities to Stockholders' Equity = $400/$26,050 = 0.015 The rights of creditors to a business's assets come before the rights of the owners or stockholders. Thus, the lower the ratio of liabilities to stockholders' equity, the better able the company is to withstand poor business conditions to pay its obligations to creditors. Do You have an Online Presence?Is your business in the start-up phase? Are you considering expanding your business? Does your business have an online profile? Did you know this may impact qualifying for a small business loan? An article published in the Inc. Magazine, "Want a small business loan? Your business better have an online presence", discusses and provides eight great tips. "You have more control than ever over your ability to qualify for a loan" -- set your business up for success. Everything you want is on the other side of fear." - Jack Canfield The retained earnings statement reports the changes in the retained earnings for a period of time. Retained earnings are used to improve the company through investment in research and development, investment in plant and equipment, paying off debt, and other programs. It is prepared after the income statement because the net income or net loss for the period must be reported in this statement. Similarly, it is prepared before the balance sheet, since the amount of retained earnings at the end of period must be reported on the balance sheet. Because of this, the retained earnings statement is often viewed as the connecting link between the income statement and balance sheet. The trick is to enjoy life. Don't wish away your days, waiting for better ones ahead." - Marjorie Pay Hinckley Source: CorporateFinancialAccounting
Why is it Important?What are long-term investments? It has been defined as an account on the asset side of a company's balance sheet that represents the investments that a company intends to hold for more than a year. They may include stocks, bonds, real estate and cash. Undoubtedly, one of the keys to successful investing is to have a vision for the future, ie, have a long time horizon. Reviews have shown the main key to maintaining a long-term perspective and not deviate at any time the plan are: 1. Keep the focus of concentration as well as maintain the overall allocation of their investment. 2. Select the key long-term investments depending on their merit. It is important not to engage in any changes impulsively. 3. We must not lose sight of the evolution that has the short-term market. It is also important not buy or sell new investments unless you are part of the plan set. While long-term investments are not given much thought during the start-up phases of entrepreneurship, do keep in mind as you plan future goals and expansion of your success. Long term investments are meant to payoff in the future but you must start them in order to capitalize in the next five to ten years. Here is another article worth reading to learn more! Source: Investopedia, Business Insider It's better to walk alone, than with a crowd going in the wrong direction." - Diane Grant |
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