When you start a company, you should generally know how you are going to exit the company. It could be a merger or acquisition, leave it to family, an initial public offering (IPO), a management buyout, etc.. Whatever the case, planning your exit strategy is almost as important as running your company because it’s the
Back in the day, month end reports consisted of a income statement, balance sheet, and maybe a cash flow statement. These are the three statements that made up your financial statements for month end reporting. As technology advanced and people got smarter about tracking trends, analysis, and operations today, the month end report includes much
See Also: ROE (Return on Equity) ROIC (Return on Invested Capital) ROCE (Return on Capital Employed) Definition ROCE stands for Return on Capital Employed; it is a financial ratio that determines a company’s profitability and the efficiency the capital is applied. A higher ROCE implies a more economical use of capital; the ROCE should be
See: Balance Sheet Balance Sheet Definition The balance sheet is a financial statement that shows a company’s financial position at a point in time. The balance sheet format comes in the following three sections: Assets Liabilities Owners’ equity The assets represent what the company owns. Then, the liabilities represent what the company owes. Finally, the owners’ equity represents shareholder interests in the company. The value of the company’s assets must equal the
A balance sheet is a statement of the companies health. How does the liabilities and equity compare to the assets? Balancing the balance sheet is a critical part of accounting as it gives the company, bankers, and investors an idea of how the company is doing. Does the balance sheet need to balance? Yes. It
Growth is great for companies, right? Not always. There are so many problems when experiencing business growth that can occur if the leadership is not careful. Besides the uncertainty of how long this growth period will last and how big the company will grow, companies loose focus on some basic key factors. This can include
Sales are great, but wouldn’t they be better if you were actually able to reap the rewards? Many CEOs that were not trained with an accounting/finance background struggle to understand profitability. They think that if sales are great, then the business is great. But when sales increase, inventory and overhead increases. Productivity also decreases –
Timely close of the financial records – this is a topic every company needs to address. Whether you are a publicly traded or private company, the issue of closing the books is ongoing. Publicly traded companies usually have well established processes in place to meet the deadlines imposed on by the regulators. However, closely held
Ever seen a black swan? The term was coined by Nassim Nicholas Taleb. A finance professor and former Wall Street Trader, Taleb created the term in his book, “The Black Swan”. It describes a situation that is both unexpected and hard to predict. Events like 9/11, Brexit, and natural events (like an earthquake) have caused
Job costing, cost accounting, manufacturing costs, what does all of this mean? Oftentimes, job costing, cost accounting, and manufacturing costs are used interchangeably. As a manufacturer, it does not matter what you call it. But it is critical that as a manufacturer, you capture all of your conversion costs. Simply put, you are taking raw material
Many people use Chief Financial Officer (“CFO”) and Controller interchangeably because they think it is the same position. In some companies, a Controller could be the top financial leader. But that does not mean they are a CFO or CFO-level. Before we answer the question of do you hire a Controller or a CFO, we
Now, this is a topic that hits every company: what accounting system should your purchase? There is no question that technology has changed the way we do business. When I started working in the late 80’s, we had our first system implementation in an oil and gas company I worked for. It was a huge server(s),
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