Archives: Countly Learning
Understanding Expenses in a Profit and Loss Statement
What is an Expense? In the context of a Profit and Loss statement, expenses are the costs incurred by a company in the process of earning revenue. These are the amounts spent on operating the business, including everything from raw materials to salaries and rent. Expenses are deducted from a company’s revenue to calculate the […]
Understanding Current and Non-Current Assets in the Balance Sheet
In the world of finance and accounting, a balance sheet provides an essential snapshot of a company’s financial health. Among the most important components of the balance sheet are the assets, which are classified into two main categories: current assets and non-current assets. These classifications help businesses, investors, and analysts understand how a company’s resources […]
Statement of Changes in Equity
The reconciliation of the opening and closing balances of shareholder equity is known as the Statement of Changes in Equity. The Statement of Changes in Equity functions as a financial statement, detailing the transactions related to the shareholder’s equity during a given financial period. This report captures fluctuations in retained earnings, additional reserves, and adjustments […]
Stakeholders and Its Informational Needs
A stakeholder is defined as any individual or organization with an interest in a company or project. In other words, stakeholders are any people, association, or institution that has the ability to influence and be influenced by a business due to a vested interest in it. A stakeholder is defined as any individual, group of […]
Shareholder’s Equity
The three main parts of a company’s financial statement are its assets, liabilities, and shareholders’ equity. Every one of these elements is crucial for assessing a company’s financial health, which helps investors assess the long-term sustainability of the business. For a broad understanding, the following is an explanation of shareholder equity, including its components and […]
Overview of Financial Statements: Objectives, Applications & Importance
Financial statements deliver an abstract of the accounts of an organization, the balance sheet representing assets and liabilities, and the income statement demonstrating the outcomes of operational activities in the specified period. These statements function as a primary source of information as they deliver organized and simple-to-comprehend information concerning the business operations of an organization. […]
Profit & Loss Statement
What is Profit & Loss Statement? A profit & loss statement can be defined as a financial report that shows a firm’s expenses, revenue, and net profit & loss for a required period of time. The required time period depends on the company’s desire, and it can usually be a month, quarter, or year. Typically, […]
Net Income: The Ultimate Measure of Financial Health
Net income is more than simply an accounting word; it refers to how much money remains after all bills, taxes, and other expenses have been paid. After deducting expenditures and taxes, the profit is what remains. Let’s break it down, simplify the arithmetic, and understand why this is so important in personal finance and business. […]
Liabilities (Non-Current and Current)
In relation to financial accounting, liability can be described as a financial commitment of the company to the creditors. One common issue for small business owners is accounts payable, sometimes referred to as money owed to suppliers. The balance sheet, a crucial financial document that displays a company’s assets and liabilities, is created by accountants […]
Formats of Balance Sheets
Financial statements are represented by balance sheets, which are essential tools in financial reporting because they show a snapshot of an organisation’s financial condition and summarise its assets, liabilities, and equity at a given time. The Indian financial system offers several formats of balance sheets that are customised for various purposes, such as increasing transparency, […]
Quick Ratio
Quick ratio is the financial measure that helps in identifying how well it is performing by the capacity of paying its current debts. It aids in spotting the ability of the company to complete short-term liabilities with liquid assets. What is Quick Ratio? The quick ratio can be described as the financial ratio that shows […]
Optimizing Accounts Receivable in Working Capital Management
To run the business seamlessly, cash is the first and foremost requirement, and managing accounts receivable is an integral part of the cash flow. In case the customers owe money to the company but they are not paying on time, then problems can occur. The company can have plenty of invoices that are not yet […]
Operating Cycle of Working Capital
The operating cycle is a crucial part of understanding how a business works, especially when it comes to managing cash flow. It’s about the time a company takes to turn its investments in inventory into cash. In simple terms, it’s how long it takes for a company to buy inventory, sell it, and then get […]
How to boost Working Capital through Accounts Payable
The market kept changing because of different trends that came time to time. Nevertheless, money always stays constant in any business. It is vital to improve working capital for businesses to be consistent in their operations. Accounts payable plays a great rule for making improving working capital more pivotal. Accounts payable are often viewed as […]
Efficient Inventory Management
What is inventory management? Inventory management is the way for efficiently tracking, systemizing, and directing the stock of goods of the company. It includes managing inventory efficiency, reducing costs, and ensuring on-time availability to meet the demands of customers, which results in increasing the profitability and satisfaction of the customers. Why inventory management is required? […]