The average accounting return (AAR) is a financial metric that measures the average profitability of an investment over a specific period of time. It is calculated by dividing the average annual accounting profit by the initial investment. The formula for AAR is: AAR = Average Annual Accounting Profit / Initial Investment The average annual accounting… Read More »
Asset turnover is a financial ratio that measures a company’s efficiency in using its assets to generate revenue or sales. It is calculated by dividing a company’s net sales by its total assets. The formula for asset turnover is: Asset Turnover = Net Sales / Total Assets Net sales are the total sales revenue earned… Read More »
Asset management refers to the practice of managing a portfolio of assets, typically on behalf of an individual or an organization, with the goal of maximizing the value of those assets over time. The assets can be financial, such as stocks, bonds, and mutual funds, or physical, such as real estate, vehicles, and equipment. Asset… Read More »
In finance, an asset is anything that has value and can be owned or controlled by an individual or a business, and is expected to provide future economic benefits. Assets can be tangible, such as physical objects like buildings, equipment, or inventory, or intangible, such as intellectual property, patents, or copyrights. Assets are classified into… Read More »
An annuity due is a type of financial contract that involves a series of equal payments made at the beginning of each period, instead of at the end of each period as in a regular annuity. This means that the first payment is due immediately at the beginning of the first period, rather than at… Read More »
The acid-test ratio, also known as the quick ratio, is a financial ratio that measures a company’s ability to pay off its short-term debt obligations with its most liquid assets. It is a more conservative measure of liquidity than the current ratio, as it excludes inventory, which may not be easily converted into cash. The… Read More »
The current ratio is a financial ratio that measures a company’s ability to pay off its short-term debt obligations with its current assets. It is a commonly used measure of liquidity, as it provides an indication of a company’s ability to meet its financial obligations in the near future. The formula for calculating the current… Read More »
The cost of equity is the return that a company must offer to its shareholders to compensate them for the risk they take in investing in the company’s stock. It is one of the components used in calculating a company’s weighted average cost of capital (WACC). The cost of equity is calculated using the capital… Read More »
The cash ratio is a financial ratio that measures a company’s ability to pay off its short-term debt obligations with its cash and cash equivalents. It is a more conservative measure of liquidity than the current ratio, as it only considers a company’s most liquid assets. The formula for calculating the cash ratio is as… Read More »
Cash flow to stockholders is a financial metric that measures the net cash flow a company pays to its stockholders (i.e. shareholders) during a given period. It is also known as cash flow to equity. The cash flow to stockholders is calculated by subtracting a company’s dividend payments to its stockholders from its net income… Read More »