Whether a firm makes sales or not, it must pay its fixed costs, as these costs are independent of output. While it usually makes little sense to compare variable costs across industries, they can be very meaningful when comparing companies operating in the same industry. They denote the amount of money spent on the production […]
Once the free cash flow is calculated, it can be discounted back to the present at either the firm’s WACC or the appropriate hurdle rate. The payback method calculates how long it will take to recoup an investment. One drawback of this method is that it fails to account for the time value of money. For […]
Instead, they reallocate a portion of the RE to common stock and additional paid-in capital accounts. This allocation does not impact the overall size of the company’s balance sheet, but it does decrease the value of stocks per share. On the other hand, though stock dividends do not lead to a cash outflow, the stock […]
The ultimate objective is for the purchasing and sales departments of a company to work in harmony. This guarantees that demand is not only high but also satisfied. In the end, inventory turnover ensures that you are not overbuying inventory and spending excessive amounts of money to keep it in stock when no one wants […]
To use our interest rate and loan calculator, input your deposit or loan amount, interest rate, compound interest frequency, compounding or loan term, and any estimated monthly payment. Though broadly used across the financial sector, there are several downsides of EAR. The calculation of EAR assumes that the interest rate will be constant ...
Interest is usually incurred whenever a company finances its assets through debt, because it’s the cost of borrowing money. If your business leases assets from another company, this might also generate an interest expense. If any of this financing involves borrowing money, you’ll need to make interest payments as you repay the ...