Important Balance Sheet Ratios measure liquidity and solvency (a business’s ability to pay its bills as they come due) and leverage (the extent to which the business is dependent on creditors’ funding). They include the following ratios: Liquidity Ratios. These ratios indicate the ease of turning assets into cash. They include the Current Ratio, Quick…
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Calculation of the Cost of Goods Sold category in the Statement of Income (or Profit-and-Loss Statement as it is sometimes called) varies depending on whether the business is retail, wholesale, or manufacturing. In retailing and wholesaling, computing the cost of goods sold during the accounting period involves beginning and ending inventories. This, of course, includes…
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Financial Statements record the performance of your business and allow you to diagnose its strengths and weaknesses by providing a written summary of financial activities. There are two’ primary financial statements: the Balance Sheet and the Statement of Income. The Balance Sheet The Balance Sheet provides a picture of the financial health of a business…
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