What is Capital Expenditure (CAPEX) Following Key points will be discussed in this Article: What is Capital Expenditures? Capital Expenditure Formula Cash Flows to Capital Expenditures Can Capital Expenditure be Negative? Capital Expenditures Budget Definition of Capital Expenditure Capital Expenditure, or CapEx, are assets utilized by an organization to gain or redesign physical resources, for example,… Read More »
Fixed cost Vs Variable cost Companies generally have to bear cost of production. It can be divided in to two parts specifically. There are known as variable cost and fixed cost. What is Fixed cost? Fixed cost does not depend on the others at any given occasion. Output comes across as an independent one. It… Read More »
Difference between Cash discount And Trade discount Goal of each and every company in the market is to gain profit within a stipulated amount of time. In order to ensure the amount of profit, it is necessary to increase product sales. Diverse ranges of techniques are utilized for profit. Discounts, advertisements and new products are… Read More »
FOB shipping Vs FOB destination FOB stands for Free on Board In case of international trade, terms like FOB or Free on board shipping and FOB destination are noticed. It helps to determine the goods title that is generally transferred from a seller to a buyer. Through the FOB shipping point, indication is given that… Read More »
Book Value vs Market Value For the purpose of investment, it is important to know the difference between book value and market value. There is no doubt in the fact that it is one of critical aspects of business. The process is simple and yet complicated. While investing in a company, you have to know… Read More »
After-Tax Cost of Debt There is a part in the WACC formula – r (D) × (1 – t) that stands for after-tax cost of debt. The debt holders must earn this after-tax rate of return till the debt reaches to maturity. The cost of debt formula of a company should be based on the… Read More »
Cost of Equity The cost of equity is the rate of return required on the common stock of a company. This minimum rate of return is essential for the company to earn so that it prevents its common stocks price from falling. There are several models such as capital asset pricing model (CAPM) and dividend discount… Read More »
Revenue Expenditure Revenue expenditure refers to the cost that is obliged to spend immediately after the cost is earned. By following this matching principle, it is possible for a business to link up the incurred expenses to the generated revenues within the same accounting term. Thus, a correct income statement result can capitulate. Usually, revenue… Read More »
What is a Deferred Asset? Deferred asset refers to that expenditure that is paid in advance, but is not yet spent. There can be two situations from where deferred asset may arise – Short-term consumption – For short term consumption, the purchased item is likely to be spent within few months after the expenditure is… Read More »
What is deferred credit? Deferred credit indicates the money taken in advance prior to being earned like unearned revenue, customer advances or more familiar term of deferred revenue. Money taken as deferred credit is not considered as income for the company. Usually, deferred credit is taken as a receipt from the customer in advance. In… Read More »