GAAP, or generally accepted accounting principles, is the foundation for careers in accounting. These principles explain how an accountant should approach all aspects of the job and seek to standardize financial reporting. In this guide, we’ll go over: What Is GAAP? GAAP stands for generally accepted accounting principles. These principles govern the accounting profession in …
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The current ratio is a metric used by accountants and finance professionals to understand a company’s financial health at any given moment. This ratio works by comparing a company’s current assets (assets that are easily converted to cash) to current liabilities (money owed to lenders and clients). In this guide, we’ll cover: Current Ratio Definition …
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The quick ratio is a formula and financial metric determining how well a company can pay off its current debts. Accountants and other finance professionals often use this ratio to measure a company’s financial health simply and quickly. In this guide, we’ll go over: Quick Ratio Definition The quick ratio, also called an acid-test ratio, …
EBITDA stands for earnings before interest, taxes, depreciation, and amortization. Finance professionals use EBITDA, calculated from details reported in annual financial statements, to determine a company’s profitability. Essentially, EBITDA looks at how much money a company makes before expensing taxes and interest without considering the depreciation of assets. EBITDA Definition EBITDA is a measure of …
Assets are resources that either an individual or a company uses. For example, someone’s personal assets may include their work experience or a life insurance policy. On the other hand, a business’s assets are things the company can use to generate revenue. In this guide, we’ll go over: Asset Definition An asset is generally any …
The accounting equation is a principle in accounting that says that a company’s assets must be equal to its liabilities and equity. This equation relies on the double-entry system of accounting, where every transaction results in positive or negative changes to at least two of these accounts: assets, liabilities, or equity. In this guide, we’ll …
Revenue shows how much a company makes from selling goods or services. Revenue, or income, is found on several financial statements and is used by finance professionals to determine profitability. For straightforward business models, calculating revenue is fairly simple. But, the more complex the business, the harder it is to determine income accurately. In this …
Understanding how to calculate profit margins is a core responsibility of accountants and many other finance professionals. Profit margins are an easy way to determine if a company is profitable and can inform investing decisions and help with crafting budgets. In this guide, we’ll go over: What Is a Profit Margin? A profit margin is …
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Essential accounting skills include strong attention to detail and an understanding of financial statements. When writing your accounting resume, skills should be a priority: you want to convey an in-depth knowledge of accounting principles and proven reliability and adaptability. But, what skills do you need for accounting resumes? Read on to find out! Must-Have Skill …
Technical analysis is the practice of predicting the future using historical price and volume data. Using principles set out by Charles Dow in the late 1800s, technical analysis involves finding patterns and forecasting future prices. While that may seem confusing, it is fairly straightforward in concept. In this guide, we’ll go over: What Is Technical …
