Financial Statement

Understanding Sensitivity analysis

Suppose you expect a new product line to start generating a certain amount of annual profit a year from now. What if some variable in the scenario changed? How would that affect your overall evaluation of the investment opportunity? Sensitivity… Read More ›

Understanding Payback period analysis

With every investment made, you’ll want to know the payback period that is how long it will take to recoup the costs of the investment and start reaping benefit of the investment made. Payback period can be calculated, divide the total amount… Read More ›

Understanding Return on investment (ROI) analysis

Smart investments generate valuable returns, such as cost savings, new profit, or appreciation in value of the company’s equity. Companies use return on investment (ROI) analysis to compare returns on money spent internally with returns available elsewhere, such as investment in government… Read More ›

Budget for business or organization

A budget is the financial blueprint or action plan for an organization, division, business unit, or department. It translates strategic plans into measurable expenditures and anticipated returns over a period of time. Organizations use different types of budgets for different purposes: An operating… Read More ›

Business cycle defined

The business cycle refers to the recurring and fluctuating levels of activity that an economy goes through such as expansion, peak, contraction, trough, and recovery. These levels are measured by changes in gross domestic product (GDP), trade activity, and other factors. Business… Read More ›

Valuation Methods

Valuation methods are the methods used by investors and stock analysts when they want to know whether the market price of a company’s share is a good deal relative to the underlying value of the piece of the company the… Read More ›

Understanding Operating ratios

Operating ratios, like profitability ratios, link various income statement and balance sheet figures. In addition, they help you assess an organization’s operating efficiency—everything from how efficiently it uses its assets to how solvent it is. The table below describes some… Read More ›