Transparency

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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The balance sheet explained

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

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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