A penny saved… Expenses are the cost of producing revenues. The largest expense for most companies is something called cost of goods sold. This is the cost of buying or making the products that you sell. For example, if you buy vitamins for $10/bottle and sell them for $30/bottle, then your cost of goods sold […]
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Accountants like to talk about transparency, the principle that financial statements should give a clear and accurate portrait of a company’s performance. Accounting is important because you need a transparent view of your business’s performance. What are your sales? Your expenses? How profitable is your company? What assets do you own? How much cash do […]
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A Balance Sheet lists a company’s assets, liabilities, and owners” equity at a given point in time. It follows the accounting equation and will help you understand a company’s solvency and liquidity. Assets = Liabilities + Owners’ Equity. The Balance Sheet is sometimes called the Statement of Financial Position. The name “balance sheet” comes from the fact that a […]
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Earnings per share is perhaps the most followed accounting figure by investors. It is so important that they refer to it as “the bottom line.” Earnings per share (“EPS”) is calculated by dividing a company’s net income by the average number of common shares outstanding during the period. The resulting number represents how profitable a […]
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